Is Orange County Headed for a Pension Ballot Initiative?

Former Orange County Supervisor John Moorlach looks to be heading to the state Senate.

Former Orange County Supervisor John Moorlach looks to be heading to the state Senate.

 Orange County Supervisor John Moorlach (Photo by: Violeta Vaqueiro)

Just as county leaders begin labor negotiations, there’s talk about the potential of seeking pension ballot measures like those seen earlier this month in San Jose and San Diego.

John Moorlach. chairman of the Orange County Board of Supervisors,  has asked County Counsel Nick Chrisos to brief supervisors at Tuesday's meeting about the terms of the measures in both cities as well as the legal challenges already arising from labor groups.

The message seems clear: If negotiations stall this summer, supervisors will head for the ballot.

“If our bargaining doesn’t work out, at least we have some options,” Moorlach said.

For Moorlach, those options include blowing up the Orange County Employees Retirement System, also known as OCERS.

Moorlach argues that appointment to the county’s retirement board is structurally tilted toward labor and thus prevents a more conservative approach toward the county’s pension debt, now estimated at more than $4 billion.

Moorlach said more than a dozen years ago, OCERS officials under pressure that the county might leave for the state retirement system changed many of their assumptions, such as investment earnings and amortization of losses.

“It was a great ploy to try to lower the unfunded actuarial accrued liability,” Moorlach said, “but you did it through math.”

If this year’s labor talks don’t produce more contributions from employees toward their pensions or benefit reductions, Moorlach said, it’s time to replace the local retirement system with one that really reflects the values of Orange County.

He said July 31 would be the deadline for supervisors placing a measure on the ballot.

Meanwhile, the county’s most senior labor leader, Nick Berardino of the Orange County Employees Association, said the most recent pension ballot measures in San Jose and San Diego are likely illegal and called Moorlach a hypocrite.

“You have to take what Moorlach says with a grain of salt,” said Berardino. “He voted against transparency measures that would have required the board to disclose political contributions from contractors before voting to award them contracts. He has forced the taxpayers to pay his employee share of the retirement contribution since 2004. And in addition to his pension, he has forced the taxpayers to pay for a 401k plan, which taxpayers put an additional 8 percent of his salary into, making it the largest pension enhancement for any elected official in California.”

When asked about his own retirement and his resistance to any changes to his own retirement formula, Moorlach said he’s getting ready to produce a detailed response, because he often hears the same critique from labor leaders.

“I don’t think unions would begrudge me some type of retirement,” Moorlach said.

“When I got here [as an appointed county treasurer-tax collector in the wake of the 1994 bankruptcy], I signed a form to opt out,” Moorlach said, adding that it had never been attempted.

He said officials told him they could not allow him to opt out because the county had to do some kind of Federal Insurance Contributions Act (FICA) withholding.

Yet many labor leaders also have pointed out that Moorlach could have used a state law in 2006 that allows him to opt out, just as Supervisor Shawn Nelson did in 2010.

That year, when Moorlach was reelected to the board, he also avoided opting out.

Now Moorlach argues that his compensation can’t be changed as an elected official.

“There’s no reasonable alternative,” he said.

Nelson has offered a littany of different options since being elected, such as swapping a pension for FICA, but no other supervisor, including Moorlach, supported moving down that path.

Instead, the Board of Supervisors now has a combination of retirement approaches for supervisors, with Pat Bates and Shawn Nelson opting out and Moorlach, Bill Campbell and Janet Nguyen taking the most expensive pension option available.

Supervisors, like county managers, also have their employee portion of their annual pension payments paid by taxpayers.

Moorlach said he’s happy to end that practice, but only if others do as well.

“When it comes to paying my portion, if we’re successful in our negotiations with management to pay theirs, I’m happy to pay mine. No better, no worse. When everybody moves, I’m moving with them.”

Given the current situation of rising pension payments amidst flat revenues, Moorlach said the goal of this year’s negotiations is simple.

“If we’re talking about an inability to increase total compensation, then the unions have to decide do we really keep these benefits or is there a strategy that we can pursue to meet the total compensation goal,” Moorlach said. If it’s not pension formulas, then “maybe it’s a different health insurance plan, an HMO.”

“If our real estate revenues are flat, we’re stuck,” he said. “And that doesn’t mean we’re bad people. We’re just dealing with reality.”

Yet Moorlach’s comments, Berardino said, are just “more political grandstanding.”

Please contact Norberto Santana Jr. directly at nsantana@voiceofoc.org and follow him on Twitter: twitter.com/norbertosanana.

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