The Story Behind OC’s Hard-Line Negotiations With Deputy Sheriffs

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What a difference a county line makes.

In San Diego, a majority Republican Board of Supervisors is handing out big salary raises to sheriff’s deputies. Meanwhile, Orange County’s all-Republican Board of Supervisors is not only holding the line on salaries but demanding that deputies pay significantly more toward their pensions.

While San Diego deputies are set to receive an 8-percent salary hike and graduated payments to their pensions, Orange County deputies are looking at no raises and a demand that they pay the full employee pension share, estimated to be as much as 16 percent of their paychecks.

This hard line is, of course, drawing heavy return fire, with deputies arguing that supervisors are playing politics and in the process jeopardizing the quality of law enforcement in Orange County.

“It is unconscionable for the Board of Supervisors to propose what amounts to between a 15 percent and 18 percent pay cut to deputy sheriffs and district attorney investigators,” said Tom Dominguez, president of the Association of Orange County Deputy Sheriffs.

Yet supervisors say, don’t look at us, look at Gov. Jerry Brown. Then look in the mirror.

Supervisors’ Chairman Shawn Nelson has been publicly critical of county unions for their inability to sell their allies in Sacramento on a deal that would have won back for the county $73 million in disputed annual property tax revenues.

Supervisor Todd Spitzer on Tuesday also criticized unions from the dais for their inability to influence Brown.

“They told us they had it locked up,” Nelson said about the deputies publicly flexing their lobbying muscle in Sacramento back in the spring.

Nelson said, that given the incredible clout of law enforcement at all levels of government, the supervisors delayed cuts while that union attempted to lobby Sacramento.

“They just wasted a lot of our time making us believe they were going to be able to move the needle,” Nelson said. “We knew Orange County, based on the label, wasn’t going to win anything.”

Had the county gotten back the disputed property taxes, it all would have gone to fund raises, Nelson said.

The issue stretches back to 2006 when supervisors decided to refinance the 1994 bankruptcy debt of nearly $1 billion. With interest rates at a historic low, supervisors were elated to cut nearly a decade of payments and $100 million off the debt.

But they took a risk. They knowingly disconnected an important legislative authorization from Sacramento that automatically delivered the county’s share of vehicle license fees directly to Wall Street bondholders.

So in essence, if Sacramento wanted to harm Orange County, they’d have to walk through Wall Street first.

That protective umbrella disappeared when supervisors refinanced the debt in 2006 to much public celebration about the savings.

But the vulnerability remained, and Brown’s staff seized upon it during the massive budget crisis in 2010. They found the extra money going to Orange County and demanded it back.

The supervisors responded by convincing then Auditor-Controller David Sundstrom to ignore Sacramento’s allocations and keep the millions.

Litigation from the state and local community colleges ensued.

The county lost and now owes nearly $150 million to the state to cover the two years without collections plus this year’s take. And the reduction in tax revenue will be ongoing.

That’s in addition to one of the weakest bangs-for-buck on property tax revenue in the state.

Which is why supervisors say they essentially have no choice but to play hardball.

“When you have an increasing cost for pensions but you don’t have a strong increasing revenue base … it doesn’t give you a lot of wiggle room,” said Supervisor John Moorlach. “That’s just the new reality we all have to work with. I know not giving raises is a source of burnout. But I also know that giving raises exacerbates the pension problem.”

Moorlach said deputies themselves created this situation.

“A decade ago, they decided that pension was more important than raises. Now we have to live with that paradigm,” Moorlach said.

As she awaited joining a closed session at the Hall of Administration Tuesday to talk with supervisors about the labor negotiations, Sheriff Sandra Hutchens said she supported the concept of having her deputies pay the full employee share of their pensions.

Hutchens refused to elaborate on whether salary raises should be granted to cover them, as done in San Diego and other jurisdictions recently.

Dominguez noted numerous reasons why the current labor deal is a horrible idea. He points mainly to retention issues, especially when other jurisdictions are handing out raises to cover extra pension costs.

Orange County may see hundreds of deputies retire if the current approach is followed and be faced with filling slots, which brings its own challenges, such as the problems in background checks at Los Angeles County, Dominguez said.

Moorlach said he understands but insists the county is locked in.

“We just have different circumstances. If it’s about going somewhere else to get a pay raise, I can’t counter at this time, and I understand. That’s an opportunity everyone has the ability to pursue,” he said.

Nelson said deputies have been delaying the inevitable for years and only have themselves and the previous Board of Supervisors to blame.

“Had we done this four years ago, all they’d be getting now is a raise,” Nelson said.

Nelson is referring to the fact that during the last labor negotiation with te\he sheriff’s deputies union in 2009, supervisors delayed asking the deputies to pay their full employee share of their pensions.

Supervisors instead instituted an approach whereby deputy pension payments for their employee share scaled up from 1 percent to 3 percent to the current 6.6 percent over the course of several years.

This was while the county’s unfunded pension obligation soared past the $5 billion mark.

As it stands, county coffers pick up about 64 percent of each deputy’s salary in pension payments. Another 16 percent is supposed to be picked up by the employee.

That means that sheriff’s deputies’ pension costs each year equal about 80 percent of their paychecks.

While other labor groups, such as the Orange County Employees Association or OCEA, have been paying their full employee share since at least 2004, supervisors have largely spared deputies from that obligation.

Until now.

“They should have paid the employee share all the time,” Nelson said. “We paid it. … Apparently no good deed goes unpunished.”

“They are getting a raise,” Nelson added. “We are paying more for their services next year. It’s just going to pensions.”

Nelson said deputies have boxed themselves in to large pension obligations and should rethink that negotiation strategy. “We are strapped to this incredibly expensive benefit. It’s the most expensive benefit anybody has ever heard of,” he said.

“If all that matters is the paycheck, then lets get rid of 3@50 [a pension enhancement that allows a deputy to retire at age 50 with 3 percent of pay for each year worked], change to 2.7 going forward and we can drop a boatload on pay,” Nelson said. “They could all get a 30-percent raise.”

“I didn’t create 3@50. They are the ones that wanted it. That’s causing all these retirements,” Nelson said. “What am I supposed to do, print money?”

Again, Nelson pointed to Gov. Brown and Sacramento, saying they have to begin to address the incredible shortage of return on property tax dollars provided by the state to Orange County.

“We do an incredible job with six cents on the dollar. Show me anybody that does what we do. Los Angeles gets 4.5 times what we get,” Nelson said.

Yet one of Nelson’s colleagues on Tuesday openly doubted that approach.

In an interview just after the supervisors’ regular session, Supervisor Todd Spitzer questioned whether the aggressive style of Nelson is the best approach moving forward.

“He got us to this discussion,” Spitzer said of the ongoing labor talks with all the county’s major unions and the demand that all employees pay the full employee share of their pensions without being compensated in salary, as many other jurisdictions are doing.

It’s been ugly.

Both managers and attorneys have faced imposed terms. Managers agreed after mediation. The attorneys are suing.

More than 10,000 members from OCEA recently voted by a 99 percent margin to reject the last, best and final offer from the county.

Now the deputies and district attorney investigators are looking at a last, best and final offer without raises and with a 10-percent take, on average, being diverted from their paychecks and into their pensions.

All that has Spitzer, who said he is very pro-law enforcement, troubled by the approach to the deputy sheriffs.

Spitzer, who voted for the original 3@50 proposal in 2001 that significantly enhanced law enforcement pensions, acknowledged that times have changed and that law enforcement have to pay the employee share of their pensions as do other employee groups.

That will not change, Spitzer said.

Yet Spitzer also said he is very concerned about deputy retention, citing concerns about retirements or transfers to counties such as San Diego or Riverside that are hiring.

He seemed to be more open to upcoming mediated salary talks this week, indicating that there might be a more creative way of approaching the “total compensation” approach touted by Nelson.

“I don’t want to have a nuclear meltdown with our employees,” Spitzer warned, “and we’re headed in that direction.”

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

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