After the city council rejected previous proposals to consider contracting with the Los Angeles County Fire Department, Councilman Muir Davis put forward a vote for a study – this time, one that would come at no cost to the city.
Still Mayor Don Kendrick and council members Robin Carder and Tim Hepburn voted against the measure, effectively killing the proposal, during the Feb. 4 city council meeting.
Davis said he put the feasibility study on the agenda because it was time to reconsider this option.
“It’s a long lead time item, and we’ve made a great deal of progress on our financial sustainability plan, so now’s the right time to bring it up,” Davis said.
The city’s financial status came to light when Bradferd A. Welebir, partner at Rogers, Anderson, Malady & Scott, LLP, presented a summary of a yearly audit. The audit reflects La Verne’s financial position as of June 30, 2018 and summarizes the transactions and accounts of the city, Welebir said.
“I’m happy to say, in this audit we performed, we didn’t have any findings that we needed to report to management that we are suggesting for improvement,” Welebir said.
Rick McGuern, La Verne resident, asked how retirement funds factored into the audit. La Verne’s retirement plan is funded through California Public Employees Retirement System, or CalPERS.
“One of the things I hear a lot recently from cities and counties is percent of funding for retirement benefits and I’m wondering if this is appropriate at this time for the city,” McGuern said. “Is that analyzed? How we’re doing in terms of funding retirements?”
“As of right now, this liability is paid off, so to speak,” Welebir said. “Fully funded, because of the pension obligation bond.”
At the Feb. 4, 2018, meeting, City Council had voted to start issuing a $50 million pension obligation bond.
At the time, the city was facing steady increases in annual payments owed to CalPERS: the La Verne website had reported that annual payments to CalPERS jumped from $2.6 million to $3.9 million a year, and a CalPERS report projected a jump to $8.2 million.
The pension bond, with interest accumulating over a 30-year period, will result in La Verne paying about $90 million, but Councilman Davis said at the 2018 meeting that paying off CalPERS directly would have cost about $950 more per citizen.
“Okay, so today, we’re in good shape,” McGuern said. “But a year from now, two years from now, we know what we can project our obligations are going to be to people who retire one or two or three years from now. How are we looking for that?”
City manager Bob Russi said that CalPERS evaluates La Verne’s liabilities based on the city’s employees, the benefits those employees anticipate post-retirement and what assets La Verne can devote to CalPERS.
“We have paid to what is the unfunded liability now, and we’ll be paying an annual normal cost,” Russi said. “But if the market does dip, that could affect what our future liability could be.”
An example of such a market dip was the Great Recession of 2007-2009, after which CalPERS lowered discount rates to extract more money from La Verne, according to a city document.
Russi said a feasibility study conducted for the city of San Gabriel was called an initial evaluation, and while subsequent studies would come at the cost to the city, the initial evaluation was conducted free of charge.
It is at this level that Davis proposed conducting a feasibility study that meeting.
Hepburn and Carder said cost-for-cost comparisons must be present within the study. Carder expressed concern for potentially slower response times after contracting with Los Angeles County, and the possibility of misleading reports due to the study coming from Los Angeles County – the very department La Verne would hypothetically contract with.
“The county has us at a disadvantage,” Carder said. “They know what we think of their fire services and personnel right now, which will make it easier to quote the services lower at this time, but raise the cost at an elevated premium in the later years.”
Councilman Charlie Rosales urged the residents to consider the shift in quality of service that would come with switching to Los Angeles County Fire Department.
“Understand that our advance paramedic unit will not be part of that agreement,” Rosales said. “The county of Los Angeles has paramedics, but they come with a pick up truck and utility bags. So just so you understand that. But I think in light of what I’ve heard and seen, it’s important that we explore that part of Councilman Muir’s suggestion that we advance this to at least a preliminary study. That I’m totally in favor of.”
Hepburn asked Bob Kress, city attorney, if pursuing Davis’ suggestion would irritate the sensitive situation La Verne has found itself in, as it pertained to lawsuits.
The La Verne Fire Association had filed a lawsuit against the city in 2017, in which they alleged that certain cost-saving measures implemented by City Council as part of a three-year financial sustainability plan to pay off CalPERS, such as the elimination of engineer/firefighter positions, served as retaliation against the LVFA for their political involvement in the 2017 mayoral election.
Andrew Glaze, then-president of LVFA, had proposed during the 2018 meeting that the city council pursue a feasibility study as an alternative to such cost-saving measures.
“I couldn’t tell you that, but we were all sitting in the community center a year ago when the firefighter association brought forth the suggestion that the council do this,” Kress said. “I don’t know whether the opinion of the association has changed, I’d have to ask them.”
La Verne resident Jim Murphy said that last year, the city council voted against the feasibility study because of the price tag associated with it.
Orange County Fire Authority had conducted a study on one of its cities, which cost $30,000, Murphy said.
David Bonanno had reported receiving the same quote for a feasibility study from Los Angeles County Fire Department.
“I just know, talking to L.A. County and Orange County, they both said it’s a very significant undertaking for county to come in and assess,” Murphy said. “What we’re all looking for is if call-times are going to change – there’s a lot of people that don’t want to see county services, that’s the end game – and I don’t think that’s going to be covered in a free study. That’s the outlier that everyone wants to assess: how does the change in service affect our call-time.”
Rick Bowen, La Verne retiree, said he does not understand the reluctance to pursue a free feasibility study.
“There’s a lot of discussion on what might be in it. Why don’t we do it and find out? If it’s free, can it hurt us at all?” Bowen asked. “And as far as I’ve heard about the lawsuit, I’m not sure how that might be affected. I have heard that, I thought that the lawsuit was going to court this month, and I can’t imagine that the feasibility study would be done in a month. I say, ‘it’s free, why not? Let’s do it!’”
Kendrick maintained a consistent to contracting with Los Angeles County, saying that he does not see the point of pursuing a study if the city has no plans to go further than the evaluation stage.
“I’ve talked to Pomona extensively, when they went to county, and they said it was the worst decision they ever made,” Kendrick said. “They said they came in with a low-ball offer, and they can’t afford them anymore.”
Aryn Plax can be reached at firstname.lastname@example.org.