Orange County Treasurer-Tax Collector Shari Freidenrich continues to draw attention as she waffles over a pension vote she cast as a member of the Orange County Employees Retirement System or OCERS.
In June, she consistently voted with plan sponsor staffers, such as county government, the Orange County Fire Authority and labor groups on nearly a half dozen votes during several hotly debated motions to shorten amortization rates down to 25 years or 15 for pension-related obligations.
Again and again, Freidenrich voted during the June OCERS public meeting to stick with a 25-year amortization for unfunded liabilities, defying the representatives placed on the OCERS boar by the county Board of Supervisors, including the president of Orange County’s most conservative group, the Lincoln Club.
With another vote scheduled for November, Freidenrich now is scrambling to backtrack on her previous votes.
In a July 23 letter sent to all retirement board members, Freidenrich wrote that she wants to vote again, because when the initial votes were cast, she was out of town, was participating in the board meeting via phone and lost track of the discussion regarding the pension vote.
“After moving outside the building to continue the call on my cell phone, I did my best to try to follow the board discussion," Freidenrich wrote. "Unfortunately, when the actuary and board members discussed various slides, I was not able to see them to follow along. The discussion was difficult to hear due to traffic and street noise. These led to my mistakes when voting on the two motions,”
Freidenrich has avoided any public comments on the issue.
Her June votes apparently unleashed a torrent from a series of Republican leaders, such as Flash Report publisher Jon Fleischman, who also serves on the Voice of OC Community Editorial Board, and Supervisor John Moorlach, who said he implored Friedenrich to support shortening repayment periods for pension-related liabilities.
OCERS' unfunded pension liabilities were at just over $1 billion in 2004 before the latest benefit enhancements for public safety and general workers took effect. Now those liabilities soaring past the $5-billion mark. Moorlach and other Republican leaders insist that unfunded liabilities should be paid off faster to avoid extending the debt into the next generation.
Labor leaders and other Republicans, such as Stanton Mayor David Shawver, acknowledged the challenges faced by the pension system and support tackling unfunded liabilities faster — but not at the rate supported by Moorlach and others.
Labor leaders criticize Moorlach for supporting an overly aggressive repayment plan, arguing the supervisor, who doesn’t pay for his own pension benefit as most county supervisors do, and others are utilizing the issue for political benefit.
“You pump up the liability, and then you say we can’t afford it, we’re broke,” said OCERS Trustee Chris Prevatt, who represents general employees, at the June 16 meeting.
Some local Republican elected officials like Shawver have also argued that speeding up repayment rates so aggressively could push cities like his straight into bankruptcy or at least drastically cut public services.
Freidenrich, who as treasurer-tax collector has a seat on the retirement board, has become a key swing vote with supervisors representatives and labor representatives deadlocked over key issues involving amortization of debt.
She’s also getting a lesson in politics.
Moorlach said that Freidenrich contacted him after her vote and told him she had balanced out the needs of the retirement system along with other goals, such as the level of unfunded liability and intergenerational equity, and decided she needed to make plan payments manageable for plan sponsors.
Moorlach said he strongly disagreed with her arguments.
Friedenrich has now told her board colleagues that those impressions are under review.
“I am deeply sorry for the difficulties that my mistakes have caused," .Freidenrich wrote. "I assure you that I am committed to requesting input from appropriate parties on this item, reviewing the June 16 meeting tape and coming to a conclusion that reflects my responsibilities as a trustee. I take my responsibilities to manage the fund ‘solely in the interest of, and for the exclusive purpose of providing benefits to particpants and their beneficiaries, and minimizing employer contributions thereto’ very seriously.”
According to parliamentary rules, Freidenrich can recast her vote, because she was on the prevailing side. Yet it’s not clear what she is going to review, because her arguments against speeding up amortization schedules were clear and well-articulated through numerous motions where she bucked Republican appointees at every turn.
For example, at one point when OCERS board Chairman Thomas Flanagan kept questioning her votes at the June 16 meeting, Freidenrich fired back at him that she knew what she was doing.
“Did you understand the motion?,” Flanagan asked as he witnessed her votes go the opposite way. “Did you mean to vote no?”
(Click on the adjacent sound file to hear Frieidenrich's comments during the board vote.)
Freidenrich restated the motion with amazing accuracy, saying, “This was to take both the current and the $900 million of the change from 7.75 (interest rate assumption) to 7.25, right? To take that portion also from the lower amortization?"
“Correct,” said OCERS CEO Steve Delaney, who was shepherding the series of votes.
At one point, Flanagan even started lobbying Freidenrich in public, reminding her of the impact of her votes in terms of more interest payments over the long term. That drew a terse reaction from labor representatives, who told Flanagan to stop arguing the motion and let Freidenrich vote.
Then she strongly disputed Flanagan and the others attempting to shorten amortization.
“There’s balance, and I do agree that we certainly need to take steps as we go down,” Freidenrich said. “But I do think that is too dramatic of a step. I heard from the plan sponsors. I am certainly very fiscally conservative. I know I don’t like negative amortization, but we have to have that balance between what is too much volatility and too much intergenerational transfer. So that was my vote on that.”
She then voted against the Board of Supervisors’ appointees consistently over a half dozen votes.
Moving forward, Freidenrich may not be in same position for long, because some supervisors’ appointees are moving off the retirement board.
This month, longtime member Reed Royalty, president emeritus of the OC Taxpayers Association, informed his colleagues that he will be stepping down. That will likely set up another battle to seek his replacement.