Two days before voting down a new labor contract for the county's top managers last month, the Orange County Board of Supervisors quietly gave them a pay raise under a controversial bonus program called "Pay 4 Performance."
Supervisors voted unanimously in a Nov. 8 closed session — with Supervisor Janet Nguyen abstaining — to grant these merit bonuses retroactive to 2010. Then on Nov. 10, the board voted down a new contract that had been ratified by the managers, citing objections to the same kinds of executive bonuses.
Controversy surrounding the compensation of the county's executives and managers has been in the headlines since May when the county's performance auditor issued a scathing report on the merit bonus program. He concluded that the executive bonuses were de facto salary hikes because they were given to virtually every manager.
More disclosures in June about the bonuses apparently torpedoed the new contract for managers.
The issue comes at a particularly delicate time for the board as it continues to face declining revenues while having to gear up for the Super Bowl of labor talks. Contracts for virtually all the county's major unions are up for renewal in 2012.
Supervisors have repeatedly told all employee groups that they will be expected to pay more for their pensions. Offering managers bonuses without higher pension contributions potentially complicates negotiations with other labor groups.
Supervisors Chairman Bill Campbell said he supported the managers contract negotiated by the county's human resources staff, pointing out that the managers had stepped up to pay their portion of their annual pension contribution.
Yet the other four supervisors balked, because managers also sought to be reimbursed for pension contributions with raises and bonuses.
This is a key issue and one that will surely be a sticking point in next year's negotiations. General employees already pay significantly more toward their pensions than do executives, managers and public safety workers.
At the Nov. 10 board meeting, Supervisor John Moorlach said the debate is over excutives "having a pension benefit or having a [bonus] paycheck."
"It's one or the other. But it's difficult to do both," Moorlach said.
Moorlach said during the meeting that he was "very uncomfortable" with the concept of smoothing concessions on pension pickups for executives through expanded salary bonuses.
"Salary increases and Pay 4 Performance just don't make sense right now to me," Moorlach said before voting against the manager's 2012 labor contract.
"We're going to have to come back and ask the employees to pay more," he said, adding that Gov. Jerry Brown's recent pension plans have workers picking up as much as 50 percent of the annual costs of funding their pensions.
But Moorlach's statements don't seem to jibe with actions supervisors are taking behind closed doors. They aren't talking much at all about their 4-0 vote in closed session to grant the most recent Pay 4 Performance bonuses.
While managers have forgone salary raises in recent years, sources close to the negotiations said the managers union pressed for the bonuses from their 2010 labor contract, and supervisors were advised they were legally obliged to pay.
Moorlach would not comment specifically on the bonuses because they were negotiated in closed session. But he indicated that the payment frustrated him.
Supervisor Nguyen, when asked how she rationalized limiting such bonuses yet granting them retroactively to 2010, replied: "How do I rationalize it? I abstained."
Labor groups are already characterizing the supervisors' action as a precedent.
"At least we know the beginning number for us when we start our negotiations in three months," said Nick Berardino, general manager of the Orange County Employees Association.
"We start negotiations in a few months, so I guess we'll know we have 2½ percent in the bank because they just did it for themselves," Berardino said. "They just gave themselves a 2.5 percent increase."
Yet both Nguyen and Moorlach insist supervisors will be seeking further concessions from employees on pension contributions during next year's negotiations.
"I think heading into next year, it's going to be difficult with all negotiations," Nguyen said. "All the employee unions know where we need to get to."
Said Moorlach, "Stay tuned."