Study warns of pension problems but workers’ group decries backers’ conservatism
A study by a Tustin-based think tank recently ranked Costa Mesa near the top of California cities facing financial strain for their pension obligations, but an association representing public employees dismissed the report, asserting that the study was performed by an organization with a conservative bias.
The statewide survey by Marc Joffe, a policy analyst with the California Policy Center, ranked Costa Mesa No. 2 under two methods of ranking the financial strain.
The first was based on the percentage of Costa Mesa City Hall’s pension contributions in 2015, nearly $19 million, compared to its estimated annual revenue that same year, or $132.2 million. The number did not include what employees pay into their pensions.
The resulting figure was 14.4% of the city’s total budget — the highest in Orange County, ahead of No. 16 Orange, whose amount was 10.6%.
No. 1 was San Rafael, in Marin County, at 17.6%.
Using figures from 2013, the second method was a comparison of Costa Mesa’s estimated pension liability, $220 million, to its annual revenue, $120.9 million — a figure of 182%.
Costa Mesa was several notches behind No. 1 Oakland’s 203%, but was far ahead of the next-highest ranking Orange County city, No. 19 Orange, which had 123.9%.
Joffe called his study, which took about six weeks, unbiased and objective, using data acquired from actuarial valuation reports published by the California Public Employees’ Retirement System, or CalPERS, which Costa Mesa pays into.
“I’m from Northern California,” Joffe said in an interview. “I had never heard of Costa Mesa before I did this study.”
Joffe, who has master’s degrees in public administration and business administration, said he brought his experience to the report. He is also a former director for Moody’s Analytics.
“The center gives me the opportunity to do this research and enrich the public dialogue,” he said. “As long as I can do accurate work, where the calculations are not politically biased, I don’t have any particular preference whether I work for a so-called liberal organization or a conservative organization.”
A spokeswoman for the Orange County Employees Assn., which helps represent Costa Mesa municipal workers, criticized the study.
The California Policy Center “doesn’t just have a ‘conservative bent,’” Jennifer Muir said in an email. “Its board is stacked with political insiders ... their efforts have only deepened the divide between the wealthiest 1% and the rest of us who work hard and play by the rules every day just to get by.”
Costa Mesa city employees pay “a considerable amount” of their paychecks “to ensure they will be able to cover their basic needs in retirement,” Muir added. “This so-called policy group would be doing a much greater public service if they focused their efforts on how to achieve retirement security for all Americans, instead of providing misleading political fodder.”
In a statement, Ed Ring, executive director of the California Policy Center, said his nonprofit presents policy options “designed to reform public education and public finance throughout our great state. The common-sense, bipartisan reforms that we promote are opposed by government unions, which is why they have chosen to label our efforts as divisive.”
Jeff Arthur, a retired financial professional, CalPERS recipient and chairman of Costa Mesa’s Pension Oversight Committee — which has been studying the issue since May 2013 — said he was surprised to see the city’s poor ranking.
Arthur called the estimated $220-million unfunded liability — the amount City Hall could owe to its retiring employees but that it won’t have — “one of the hardest things in the world to communicate. It’s a long-term problem that hasn’t hit.”
