Supervisors’ Choice for Pension Board Draws Controversy

The Orange County Board of Supervisors is poised today to reappoint the head of the conservative Lincoln Club to represent it on the local retirement board, a move that local labor leaders say will trigger public-service cuts and surely fuel a confrontation over the future of the Orange County Employees Retirement System.

In addition, another last-minute nominee — David Ball of Costa Mesa — has raised concerns from Stanton Mayor David Shawver, who applied for consideration but wasn’t granted an interview. Shawver asserted that county supervisors are disregarding the destabilizing impact of increasing retirement costs for cities like Stanton that contract for county services.

Ball could not be reached for comment Monday.

Lincoln Club President Wayne Lindholm has been a leader in the effort to shorten amortization of the county’s unfunded pension liability, now hovering well above $5 billion. Unfunded liability is the long-term gap between obligations and revenue.

In 2004 the county pension system's unfunded liability was about $1 billion. Since then the county’s unfunded liability has skyrocketed because of benefit increases granted to public safety workers by Republican supervisors in 2000, enhancement for general employees in 2004, investment losses and actuarial changes.

While that rise has triggered alarm bells in all circles, Republican leaders have adopted a more aggressive approach to paying it down.

Lindholm was instrumental in a private lobbying effort over the summer to pressure Orange County Treasurer-Tax Collector Shari Freidenrich to support aggressive amortization schedules that would effectively hike pension payments for participating plan sponsors such as the county government and the Orange County Fire Authority.

Reached by phone Monday, Lindholm defended his activism on behalf of lowering assumptions and shortening amortization schedules, saying an aggressive approach is needed to place Orange County’s pension system on more stable footing.

Lindholm said that in the private sector, a system funded at below 80 percent would prompt the government to force aggressive action. While he acknowledged that private-sector pension are under different rules, he said the same approach should apply to public pensions and should be addressed quickly.

“If I was a retiree, I would be scared at a system that is 63 percent funded,” Lindholm said. “The retirees should be scared.”

Lindholm declined to discuss his efforts to corral votes for a more aggressive approach toward unfunded liabilities at county's retirement system or OCERS.

According to email records reviewed by Voice of OC, Lindholm went after Freidenrich right after she voted in June against a plan supported by supervisors’ conservative appointees to speed up amortization of pension-related obligations.

Lindholm sent Freidenrich a June 18 email that started with the word “OUCH!” and outlined a mock Op-Ed titled, “Treasurer’s Vote Costs $1 Billion to Orange County Taxpayers.”

Freidenrich immediately reacted to Lindholm’s activism by scrambling to insist that retirement board attorneys allow a revote. So far, she has refused to publicly comment on her effort.

County supervisors declined to discuss their support for their proposed members to the retirement system.

Yet Lindholm’s activist approach has caused  concern among labor leaders and the finance staff at many public agencies who use OCERS.

“What retirees should be afraid of is politically appointed trustees like Mr. Lindholm, who repeatedly make policy decisions aimed at destroying the system,” said Jennifer Muir, assistant general manager of the Orange County Employees Association. Muir said Lindholm’s approach has the effect of overcharging taxpayers “unnecessarily and irresponsibly."

“If retirees need to be scared of anything, it’s of them,” said Muir. Lindholm’s emails to Freidenrich raise troubling questions about whether he understands his fiduciary duties as opposed to his role as leader of the Lincoln Club, Muir said.

Tom Dominguez, president of the Association of Orange County Deputy Sheriffs, also plans to head to today’s meeting and publicly oppose the proposed appointments. Dominguez is arguing that supervisors should be more open in finding appointees to represent county interests.

He described Lindholm and Ball as “just a pair of very well-connected, wealthy Republican extremists who do not connect with your typical Orange County taxpayer.”

Dominguez said when it comes to public pensions, supervisors should “balance fiscal responsibility with affordability.”

Correction: A previous version of this story incorrectly spelled Lincoln Club President Wayne Lindholm's name. The incorrect spelling was taken from the Orange County Supervisors meeting agenda. We regret the error.

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

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