The City Council this week unanimously approved an amendment to the Orange County Fire Authority’s joint powers agreement that formalizes the fire agency’s commitment to pay down its pension deficit. This amendment, the fourth to the Fire Authority’s joint powers agreement, was an item on the Consent Calendar. The council votes on Consent Calendar items collectively, without public discussion unless they are pulled from the calendar to be considered individually.
The item was pulled from the calendar for discussion and a presentation by Fire Authority Deputy Chief Lori Zeller.
According to the staff report by Assistant City Manager Patrick Gallegos, the OCFA Board of directors voted in 2013 to adopt the so-called “snowball” plan to pay down the fire agency’s pension debt.
“Since the plan was adopted, the OCFA’s unfunded pension liability has steadily declined from $473.8 million to $400.6 million, and the funding status has consistently improved from 65% to 79%. Per OCERS’ actuary, OCFA is on track to achieve an 85% funding level by December 2020, and has achieved interest savings to date totaling $18.3 million,” according to Gallegos’ report.
Zeller gave the same figures to the council Monday night, Feb. 11. According to Zeller, the OCFA is working to achieve 100 percent pension funding by 2027.
“We’re committed to this with or without Irvine,” Zeller said.
According to Gallegos’ report, “OCFA is now seeking approval of a Fourth Amendment to formalize the OCFA’s commitment to its “snowball” accelerated pension liability pay down plan. In order to become effective, the Fourth Amendment must be approved by at least two-thirds (e.g., 16 of 24) of the member agencies’ governing bodies.”
Why is this amendment being approved now? According to the Gallegos report, “On June 13, 2018, the City [sic] of Irvine provided a proposal to the OCFA requesting, among other proposal elements, that OCFA commit to a pension pay down strategy. On June 21 and June 25, the OCFA responded to the City’s proposal reiterating its commitment to OCFA’s “snowball” accelerated pension liability paydown plan, in addition to other commitments made by OCFA regarding proposed service enhancements. On June 27, 2018, the City provided OCFA with a Notice of Withdrawal seeking the initiation of good faith negotiations.”
Outgoing District One Councilwoman Ellery Deaton, who currently sits on the OCFA board, said she liked the idea of putting the program into the Fire Authority’s joint powers agreement. Deaton also pointed out that the city of Irvine would not be voting on the amendment to the Fire Authority’s joint powers agreement.
District Five Councilwoman Sandra Massa-Lavitt wanted to know how the agreement would be affected if the city of Irvine pulls out of the OCFA.
Zeller said Irvine will still be served by the Fire Authority and will be until 2020. She said the city is not on Fire Authority board at this time.
Zeller said Irvine could go back into the OCFA if the city rescinds its notice of withdrawal before June 30.
The OCFA member cities had until June of last year to decide whether to stay with the county fire agency or leave. In May, the Seal Beach Ad Hoc Fire Committee voted 5 to 1 to recommend that Seal Beach stay with the OCFA.
Two of the voting committee members were also sitting City Council members. Seal Beach City Council decided last year to stay with the county fire agency.
Irvine pulled out of the OCFA after urging the fire agency, among other things, to reduce the unfunded pension liability. According to a 2018 Orange County Grand Jury report, Irvine provided 15 percent of the Fire Authority’s revenue.
According to the Gallegos report to the Feb. 11 council meeting, “The OCFA is hopeful that, with these continued actions honoring its commitments, the City [of Irvine] will elect to rescind its Notice of Withdrawal.”