The anatomy of a deal

Fourth in a series about Costa Mesa's political battle.


He could have spent his retirement traveling the country with his wife or volunteering at a museum, but Tom Arnold decided his 30 years as a firefighter weren't enough.

Arnold had retired after climbing the ranks of the Newport Beach Fire Department. He was settling into a life of leisure and community service.

Then, after rising from relative obscurity, he brokered a truce between the Costa Mesa firefighters and the City Council — two groups who had bickered publicly for years. There was talk of the city outsourcing services to the Orange County Fire Authority, a move municipal firefighters didn't oppose because of the Fire Authority's more-generous retirement plan and other factors.

But the council wanted to keep fire services in-house and signaled a willingness to play ball with the union, sources familiar with negotiations said.

As the city's interim fire chief, Arnold crunched data about emergency response times and convinced both sides his plan could reduce personnel costs while maintaining public safety. In return, firefighters were assured they won't be laid off, and the council can now point to the deal as a rare instance of compromise.

"When the fiscal crisis hit, I said, 'Oh my gosh, I better start paying attention to what's going on in my community,'" said Arnold, a 35-year Costa Mesa resident.

He became a fixture at council meetings, and met with city CEO Tom Hatch and firefighters months before his eventual appointment as interim chief.

Once he joined the department, city administrators bought Arnold specialized software to analyze emergency response times. His data shaped negotiations and helped him gain trust from both sides, labor leaders and council members say.

For much of the negotiations, the two camps were hung up on one issue: minimum staffing. The firefighters' contract required 29 crew members per each of the three shifts, for a total of 87 workers. From the council's point of view, it was a matter of control.

Should a contract dictate how the brass can deploy firefighters, or should the chief and the city CEO have the authority to restructure as they see fit?

Going into the negotiations, the city was in a costly position: The contract required this amount of firefighters, while the department was short-staffed because of early retirements and a hiring freeze. Overtime filled the gap at a cost of more than $3 million in the 2010-2011 fiscal year.

Today, the department is down nine firefighters.

"It was pretty clear we had to change how we were doing business, as the economy was changing and the [firefighting] business was changing," Arnold said.

High overtime costs drew criticism from both sides of Costa Mesa's debate: Labor critics claimed firefighters were milking the system, and supporters said the city's excessive employee cuts forced wasteful spending and endangered the community.


Overtime costs

Reining in overtime costs was one of the reasons the council hired Arnold in October 2011.

About the same time, it brought on labor negotiator Richard Kreisler from the Los Angeles law firm Liebert Cassidy Whitmore. Before then, a city staff member and the chief executive or city manager represented the city.

"With an independent negotiator, we extract ourselves from the process and look at the numbers," Councilman Steve Mensinger said.

The firefighter associations already had an offer on the table at that point: to pay into their pension accounts for three months while the city studied a proposal to outsource their jobs to the Orange County Fire Authority, a regional agency that serves Irvine, Santa Ana and 21 other cities.

Pension costs, however, are a political lightning rod. In 2010 the firefighters agreed to pay 5% of their earnings into their retirement fund — roughly $500,000 in total savings to the city annually — in exchange for a two-year extension of their contract through 2014.

But the payments were set to expire in November 2011. Mayor Pro Tem Jim Righeimer railed against that agreement, which he called a raw deal for the city.

The council balked at the offer to extend payments for three months, beginning in October, and insisted the association agree to pay through the end of the contract.

With the stalemate, the payments expired, and the firefighters reverted to paying 1% of their earnings into their pensions. Labor supporters criticized the council for its obstinacy and the forgone $500,000.

"The council majority refused an offer of half a million dollars in order to allow politicians ... to accuse us of refusing to work for a solution," Costa Mesa Firefighters Assn. President Tim Vasin wrote in a March commentary for the Daily Pilot.

Meanwhile, the fire associations endorsed one of the OCFA proposals. While it could save the city $2 million annually, it could also mean better compensation for the firefighters, who would likely be hired by OCFA. Council members, though, believed they could wring more savings while maintaining control of the department.

Enter Arnold. He was gathering data behind the scenes and analyzing the OCFA proposal: Could the city make some of the changes itself?

As this was happening, the city's civilian employees agreed to a second pension tier in February 2010. New planners, clerks and other general workers would be hired under a less-generous retirement formula.

An earlier version of this story said that Costa Mesa’s civilian employees agreed to a second pension tier in 2012. They actually agreed to the pension tier in 2010, but the plan did not take effect until 2012.

About a month later, the fire associations came to the council with an offer to also create a second tier, Mensinger said, in exchange for job security through 2017 and an extension of the contract beyond the 2014 term.

Since the contract was not expiring for more than two years, the associations weren't obligated to make a deal. But they recognized the outsourcing risk and thought they could win some concessions while the council had less leverage.

The council rejected the full contract extension, but "we saw the job security as a reasonable request," Mensinger said. That was when they laid out a request to end minimum staffing.


Restructuring plan

By April, Arnold was honing his restructuring plan, which council members said could save millions. Citing that prospect, the council voted to keep the Fire Department in-house instead of contracting with OCFA.

"I think we need to talk to our organization and resolve the issues that we have and solve the problem," Councilwoman Wendy Leece said at the time.

But restructuring required flexibility to shuffle employees, and minimum staffing was blocking any significant changes.

The associations agreed to consider eliminating minimum staffing in the second round of negotiations, Mensinger said.

In exchange, they told the council they wanted pay security — no deductions or raises until 2017.

"I think they understand that they're well-paid," Mensinger said. "They all get it."

Also, the council agreed to pay some fringe benefits that Righeimer and other leaders criticized in the past as exorbitant.

In one, the administration counts some retirement fund payments toward the firefighters' compensation, thus inflating the final salary number used in pension calculations. Another allows employees to bank their unused sick leave. Also, current firefighters get to keep their retirement benefits, which allow them to retire at age 50 with up to 90% of their compensation after working 30 years.

"It was really important to get the minimum manning down, so we had to give on something," Righeimer said.

During the final two rounds of negotiations, Arnold presented his restructuring plan to both sides: shift resources to more effectively respond to medical emergencies, close a fire station, eliminate some vacant positions and buy new ambulances.

If all goes as planned, it could save millions, he said.

"It was kind of a long, drawn-out process, but it took awhile to get to the point where we agreed with the city," Vasin said. "For us, it took some time to build a level of trust."

With the November election approaching, Mensinger hopes the firefighter associations don't spend money campaigning against him and Councilman Gary Monahan, as they have both been targeted by organized labor in the past.

But Mensinger and Righeimer denied there being any agreements between their camp and the firefighters' associations to stay out of the election.

Even the council's critics praised the deal, although they were wary of cutting too much.

"I'm just a little concerned that with the number of staffing that there's going to be now if the response times are going to be as good," said Robin Leffler, president of Costa Mesans for Responsible Government. "I hope they are."

After resting his reputation on the response data, Arnold said he plans to lead the transition and stay on for two to three years.

"It's my community. I love it, I live here," he said. "I want to contribute, and that's what I'm doing.";

Twitter: @mreicher and @lawilliams30

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