LAFAYETTE — The city should explore ending its police services contract with the county and forming its own department, possibly joining with other Lamorinda cities, according to a report the City Council received last week.

But a top city official cautions against making any quick decisions.

The report, by the Matrix Consulting Group, says rising pension payments are driving the cost of contracting with the Contra Costa County Sheriff's Office to unsustainable levels.

As an alternative, the city should consider creating a locally controlled Lafayette police department or partnering with Orinda and/or Moraga to form a joint department.

City Manager Steven Falk, however, told the council the best approach may be to wait and see.

"I think it is natural for us to want to jump in immediately to try to arrive at a solution," Falk said. "My counsel to you this evening is not to do that."

Falk stressed last week that no one in Lafayette is unhappy with the quality of service the sheriff's office provides. Rising costs, however, are forcing the city to look at alternatives.

Matrix prepared the report for Lafayette as well as for Orinda and Danville. All three cities are under contract with the sheriff's office, where retirement benefits are paid through the county's retirement association, not with the California Public Employees Retirement System, or CalPERS.

Estimates of how much retirement costs will rise

have ranged from 100 percent two years ago to just 20 percent more recently, Falk said. Because of that wide range, the report estimated the cost of the sheriff's contract under three scenarios — a 20 percent rise in retirement costs, a 50 percent rise and a 100 percent rise.

As a result, cost estimates vary widely. For example, by 2015-16, Lafayette would be spending about $5.5 million on police under the 20 percent scenario, but more than $7 million under the 100 percent scenario.

The 20 percent scenario is likely unrealistic, Matrix's Randy Tan said.

Lafayette's 2009-10 police services budget is about $4.42 million.

The various alternatives — including a partnership with Danville that Matrix did not recommend — would all cost the city roughly the same amount. All of those alternatives would be more expensive than the county scenario in which retirement costs rise 20 percent. But under the 50 percent scenario, they would become cost effective in three years, and in two years under the 100 percent scenario.

Getting a local department up and running would cost between $745,000 and $1 million, according to the report.

That cost uncertainty is one of several reasons Falk said the council should wait to make a decision. Among the others:

Whether the city would have to offer CalPERS to police and, potentially, all employees.

If a pension reform initiative qualifies for the November 2010 ballot and passes, how it would affect the ability to recruit officers from other agencies.

Orinda's and Moraga's interest in forming a joint department.

Several council members had questions about the report, but given the complexity of the issue, Falk and Mayor Don Tatzin suggested they submit them to staff individually in advance of the next public hearing on the issue.

The Orinda City Council will hold a workshop Dec. 7 to discuss the study.

Reach Jonathan Morales at 925-943-8048. Follow him at Twitter.com/sosaysjonathan.

By the numbers
Anticipated cost increases for Lafayette police services over next six years, to 2015-16, from the 2009-2010 budget of $4.42 million, under various sheriff's contract scenarios and local alternatives:
Contracting with county sheriff's office:

Assuming a 20 percent increase in retirement costs 24%

Assuming a 50 percent increase in retirement costs 37%

Assuming a 100 percent increase in retirement costs 59%
Alternatives

Lafayette police department 27%

Danville-Lafayette-Orinda police department 28%

Lafayette-Orinda police department 36%

Lafayette-Moraga-Orinda police department 31%
-- Source: Police Services Study, Matrix Consulting Group