Orange County Leaders Take Another Bite From the Pension Reform Apple

Rep. Loretta Sanchez Thursday announced a new approach toward stalled legislation she has been pushing that would allow county workers across the country to opt into a lower-tier pension benefit.

Because of continuing opposition from the U.S. Treasury Department and national labor organizations like Service Employees International Union and American Federation of State, County and Municipal Employees, Sanchez said she would introduce legislation aimed instead at allowing the experiment in Orange County to proceed as a pilot project.

“We’re trying to ensure that the federal government helps locals implement decisions at the local level,” said Sanchez after a private summit conference with leaders across Orange County to talk about the pension legislation.

Her legislation, HR 2934, has several Republican co-sponsors from Orange County, including Ed Royce, John Campbell and Ken Calvert. It is the product of a local deal negotiated several years ago by Bill Campbell, then chairman of the county Board Supervisors, and Nick Berardino, general manager of the Orange County Employees Association.

The premise was simple: A worker should be able to voluntarily opt out of the county’s most lucrative pension benefit in exchange for a lesser benefit but a lower monthly payroll deduction.

As opposed to the 401k-type plans often touted by Republican leaders, the Orange County hybrid pension plan was supposed to offer a model for reducing swelling pension liabilities that could still offer workers a viable retirement plan.

But according to Campbell, treasury officials halted the hybrid plan’s implementation, arguing that allowing any current worker to opt into a lower-tier pension benefit would make the county’s entire pension plan subject to taxes.

At that point, Campbell and Berardino reached out to Sanchez and the other Orange County members of Congress to see whether they could change the tax code. That apparently ran into opposition from national unions because of the voluntary nature of having workers opt into lower tier pension benefits.

On Thursday, Berardino acknowledged that opposition has been an obstacle. The service employees and municipal employees unions “have not been in favor of this at the national level,” Berardino said.

So instead, Sanchez has announced she’s changing tactics and going after what’s called a “rifle bill” in Congress, which seeks only to change a narrowly defined situation like the one in Orange County.

“What we’ve learned is taking small bites at this makes sense,” Berardino said.