ORANGE COUNTY PERSPECTIVE : A Bitter Lesson in Huntington Beach

For many, Huntington Beach symbolizes the lifestyle of “The Endless Summer,” a city of sun, surf, clean air and a relaxed, carefree manner. The city of course is much more than a waterfront Shangri-La; it has its fair share of wrangling over development issues, and it has some of the same political battles as other places. Perhaps nothing symbolizes that mundane side of the community as much as the recent pension scandal, involving the inflation of public employees’ salaries to enlarge the benefits package at retirement time.

The numbers are now in and the city has learned the difficult lesson of the scandal. It will cost $13 million to close the gap in the unfinanced portion of pension obligations for retired or about-to-retire city employees whose pensions have been artificially inflated by adding sick leave, vacation days, automobile allowances and other perks.

The problem never should have happened in the first place, and the city must resolve to prevent the recurrence of anything like it.

In fact, new state legislation that will go into effect in July should curtail most of the problems associated with public employees inflating their pensions as retirement nears.

However, Huntington Beach was one of several California cities cited two years ago in an audit that grew out of allegations of pension fraud in a Sacramento County fire protection district.

The city now will be stuck for most of the shortfall. The liability that will fall to the city, and to the state as well, essentially came about because these inflated pension benefits were approved without due consideration to the obvious problem of not having sufficient funds in pension accounts to cover the new obligations.

A committee of the City Council is investigating the matter, but it is clear already--as Councilman David Sullivan, chairman of the subcommittee, suggests--that past city councils probably were never briefed adequately on the fiscal ramifications of allowing the pension spiking to occur. No doubt, had they been they would have recognized that the numbers did not justify this commitment to retiring employees.

Clearly, a city can’t make pension obligations that it doesn’t have the money to cover. For the city, it turns out that the average underfunded cost of a spiked pension for a retired employee--such as a police officer or firefighter--was $104,939. What a painful lesson. The city appears to be getting some help from the state’s Public Employees’ Retirement System, but that will only ease some of the fiscal discomfort.