The Orange County Employees Retirement System board in session.

It’s not often that a simple appointment to the local retirement board gets much discussion at the Orange County Board of Supervisors.

But today’s vote on whether to appoint local real estate developer David Ball to the board of the Orange County Employees Retirement System or OCERS could signal the beginning of the end for the system itself.

For months, the OCERS board has been engulfed in a pitched battle between county supervisors’ appointees to the retirement system, labor representatives and plan sponsors such as county government and the county Fire Authority over how best to manage yearly payments into the retirement system.

The argument centers over how best to manage the impacts of a soaring unfunded liability that has grown after Orange County’s all-Republican county Board Supervisors approved a series of pension benefit increases for public safety in 2001 and for general workers in 2004.

A series of investment losses, such as the catastrophic Wall Street collapse in 2008 along with actuarial changes, also contributed over the past decade to a nearly $5-billion spike in unfunded liability — the gap between promised benefits and the revenues identified to fund them.

Republican appointees to the OCERS board are now pushing for higher annual payments into the system. That has triggered stiff opposition from labor officials, plan sponsors and some city officials, who warn that such an approach could trigger steep cuts in public services.

Pushing back against protests from labor leaders and several city council members, supervisors last week reappointed the head of Orange County’s Lincoln Club to the retirement panel.

Based on Republican pressure, Orange County Treasurer-Tax Collector Shari Freidenrich has sought to change her votes on amortization schedules.

Last week, supervisors delayed action on Ball’s appointment after Supervisor Todd Spitzer asked for more time to consider the impact of his appointment on local cities and agencies like the Fire Authority.

Yet in his Aug. 27 letter to supervisors, Ball makes it clear that he supports a more aggressive approach to paying down obligations.

“The current crisis in retirement systems throughout the United States has its roots in faulty investment return assumptions combined with incorrect projected benefit payment obligations,” Ball wrote seeking the appointment after being urged by Republican leaders.

The battle is already affecting plan sponsors’ confidence in the system.

After public testimony against the changes sought by supervisors’ appointees, Fire Authority board members debated in closed session in July whether to sue OCERS over accusations of violating the state’s open meetings laws.

Most recently, the Association of Orange County Deputy Sheriff’s openly questioned supervisors’ appointments as too extreme and discussed transferring to the state retirement system, known as CalPERS.

Tom Dominguez, president of the deputy sheriffs organization, called on supervisors to consider appointing a public member from the local cities who contract for county services and thus have a direct stake in the rates that are adopted for plan sponsors.

In a letter dated Sept. 11, Dominguez wrote:

Article 16 of the constitution of the state of California dictates members of a public pension or retirement system “shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system.

This week, county court officials communicated with OCERS, stating their intent to transfer from the local retirement system.

In an email Monday to OCERS Chief Executive Officer Steve Delaney, Denise Leat, human resources director for the Orange County Superior Court, wrote:

We share the concerns of other Plan Sponsors about the ongoing and significant rate increases for both employers and employees. With implementation of the “hybrid” plan and PEPRA [the state Public Employees’ Pension Reform Act] coupled with the economy beginning to rebound, we reasonably expected to contain retirement costs over the next several years. However, recent policy decisions and continuing discussions about further reducing amortization periods on top of the reduced earnings assumptions are making short and long term financial planning problematic.

Access to critical public services and sound fiscal stewardship of public resources must be balanced. The Court needs to explore alternatives to OCERS to fulfill that obligation.

OCERS officials are sponsoring a daylong strategic planning session Thursday at the Irvine Marriott hotel, where amortization rates will be discussed. A series of formal votes on amortization rates and investment assumptions are expected to be on the agenda for the November monthly meeting.

Please contact Norberto Santana Jr. directly at and follow him on Twitter:

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