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Seal Beach budget pressured by OCFA contract rise; council hears plan for extra CalPERS payments
Summary
Council members and staff discussed a 4.5% increase in the Orange County Fire Authority contract and proposed supplemental CalPERS payments as part of the FY25-26 budget workshop.
Seal Beach staff told the city council at the May 6 budget workshop that a year-over-year increase in the Orange County Fire Authority contract and rising pension costs are among the largest drivers of the city’s projected operating-cost increases.
Finance Director Barbara Arenado and Interim City Manager Gallegos described the Orange County Fire Authority, or OCFA, increase as roughly 4.5% for the coming year and said the city pays about $7.8 million annually for contracted fire services from the general fund.
The nut graf: staff said the OCFA contract increase and CalPERS actuarial changes are structural cost pressures that the city cannot directly control and that the proposed budget includes measures—reserves and small additional pension prepayments—intended to smooth long-term liabilities.
Arenado said the OCFA increase reflects the authority’s negotiated costs, including position additions and pension-related liabilities, and noted the city’s contract allows annual adjustments up to 4% with carryover or catch‑up mechanisms; this year’s adjustment exceeded that 4% guideline. Council members asked whether Seal Beach pays proportionally more than other jurisdictions; staff said allocation and negotiating history vary by city and that Seal Beach is a contract city, not a structural‑fire‑tax city.
On pension liabilities, staff reported the city previously made a prepayment to the closed Fire pension fund that produced ongoing annual savings (Arenado estimated “over $50,000 a year”), and the proposed budget includes a $250,000 additional CalPERS payment to further reduce unfunded liabilities. Staff cautioned that CalPERS returns and actuarial assumptions affect future employer contribution rates.
Council members discussed the city’s limited leverage over the OCFA contract and noted Seal Beach has representation on OCFA’s governing board. Staff said the city will continue to explore prepayment strategies and other planning steps to limit long‑term cost exposure.
