Woolery: County Auditor Controller is Right to Question Supervisor Pension Payout

I was elected by the voters of Orange County to be their fiscal watchdog.

That’s exactly what I’ve been striving to do this past year by questioning a very suspicious pension payout, nearly a quarter million dollars, with no back up, to Supervisor Shawn Nelson — who has very publicly stated he does not want to take a pension.

I have no ax to grind as to whether or not Supervisor Nelson or any other elected official should get a pension.

I don’t make the law on pensions.

My only concern and responsibility as the County Auditor-Controller is to make sure that any payment to any vendor or County employee is appropriate, legal and accurate.

The issue between my office, the Orange County Employee Retirement System (OCERS) and Supervisor Nelson is whether the request for a retroactive payment of $247,625 to Nelson’s OCERS retirement account is justified.

When Nelson was first sworn into office in June of 2010 to finish the term of Supervisor Norby, he signed up for the County’s most lucrative pension plan, 2.7% at 55. Two months later, in August of 2010, Nelson announced he had signed an irrevocable agreement to take no pension. Instead, he opted for an enhanced 401(a) retirement plan in lieu of a defined benefit pension.

Apparently his agreement to irrevocably opt out was acceptable to OCERS, the County Counsel, and Nelson as there was no issue between August of 2010 and now. OCERS held on to his money, but Nelson didn’t pay anything else into the plan. Then, in December 2014, (after Nelson had been re-elected to a second full term) OCERS apparently decided to refund Supervisor Nelson and Supervisor Bates for the money that had gone into the OCERS fund. In Nelson’s case it was for the 3 months Nelson was a member. Bates accepted the refund but Nelson refused.

Somehow the attempt to refund a few thousand dollars to Nelson turned into OCERS claiming Nelson had never left the pension system. Early this year, shortly after I took office, I was notified that not only was Nelson still a member of OCERS, but that he was owed retroactive county contributions, plus interest, going back to 2010 under the 2.7 plan he had originally chosen.

This was a highly irregular situation that in my view required much more backup than OCERS and Nelson’s word for it. County Counsel, which represents the Board of Supervisors, opined that the payment was allowable, but in court that opinion is just an opinion, it does not carry the force of law. The problem for my office is that I do not have the ability to hire outside counsel to represent the interest of the Auditor-Controller’s office. County Counsel is supposed to advise me, but he is an employee of the Board of Supervisors – a clear conflict of interest.

To justify the payment, I requested documentation from both Supervisor Nelson and OCERS pertaining to his withdrawal in August 2010. Both acknowledged it existed but refused to provide it. The only documents I received were two memoranda showing a “settlement agreement” reached between County Counsel, OCERS and Nelson. There is a County resolution that requires County Counsel to obtain the approval of the Board of Supervisors on any settlement agreement in excess of $75,000. Therefore I requested the Supervisors vote to authorize the $247,625 settlement to be paid to Nelson. Again, I was told that since the OCERS Executive Committee had approved the agreement there was no need for the Supervisors’ approval.

By July, I was promised the documentation would be forthcoming along with a check request for the first installment of $88,117, the first of four annual installment payments. Instead, surreptitiously, CEO Budget processed a journal voucher entry from Nelson’s 4th District budget account into OCERS payroll account that would have gone unnoticed had one of my managers not caught it.

I believe the funds were illegally transferred in a highly unorthodox manner so I directed staff to reverse the entry. A few days later, while I was out on planned medical leave, OCERS made an outrageous claim that we had “embezzled” funds and contacted the DA’s fraud unit who sent investigators to my office. Staff explained the situation and we have heard nothing more from the District Attorney’s office. Since I was unavailable at the time, my staff was placed under extraordinary pressure from the CEO, County Counsel and OCERS. One of my staff was told by the County Counsel that if she didn’t authorize payment, she should get her own criminal lawyer. Ultimately, in my absence, my executive management team agreed to let CEO transfer funds to the retirement account for the first installment after indemnifying this office.

Recently, we received notice that instead of a payment plan extending to the end of Nelson’s term in 2018, OCERS is now requesting payment of the balance, $143,517 by October 31 of this year. I continue to believe that this is an improper and possible “gift of taxpayer funds”.

Incidentally, no mention of the recent countywide Ballot Measure B, which was co-authored by Nelson, was ever given as an official reason to justify the retroactive payments. Measure B requires all Supervisors to take the lower 1.62% retirement plan. The ballot measure does not provide an option to opt out of the pension plan altogether. Neither was any IRS or other state or federal laws referenced as justification. The first I heard of these rationales was from reporters covering the revelation about the retroactive payments.

This country was founded on a system of checks-and-balances, not just in the Federal government, but all the way down to the local level. An independently-elected Auditor-Controller is an essential part of that equation. In fact, independence is even more important locally because often the Board of Supervisors acts as both the legislative branch (creating laws/ordinances) and the Executive Branch (implementing policy). For more than 20 years, the Office of Auditor-Controller did not perform its independent oversight function.

I ran for Auditor-Controller to change this and I take my responsibility to the taxpayers very seriously.

Eric Woolery is Orange County’s elected Auditor Controller.

  • Theresa Roberts

    David Wiggins is with County Counsel. He is not Supervisor Nelson’s Chief of Staff. That distinguished position is occupied by Denis Bilodeau, Chief of Staff to Supervisor Nelson.

  • LFOldTimer

    I don’t generally say this about County execs. But Woolery seems like a nice down to earth guy with solid character who’s not afraid to make a wave or two. Makes me wonder how he got to where he is? Those kind almost always get washed out long before they get that high in the food chain. I just hope to God that they don’t gang up and Guillory him. Besides, it would give renewed hope to the peasant moralists to see good prevail over not-so-good in high places every so often.

  • Jacki Livingston

    Good for you, sir. Shawn Nelson is a fraud. He has repeatedly covered up and ignored information of substantive wrongdoing within departments at SSA. He even ignored a call from his old friend Rep. Ken Calvert, telling him that he needed to look at this situation, before it went out of control. All he did was send his CoS Dave Wiggins to shut up the people with the proof. Add into that the fact that Chairman Spitzer and his wife have rigged Worker’s Comp claims against employees, and you have a first class organized crime situation, right here in the Big OC. And it is not just still going on, but flourishing.

  • John Claxton

    Woolery wins by TKO in the 3rd round. Nelson gets caught with a big helping of public funds. Chairman Spitzer and wantabe District Attorney appears to have fallen asleep at the helm. Another day in OC politics.

  • Steve W.

    If that $250K is coming out of his office budget, how is Nelson able to serve his constituents? A hit of that size has got to cripple his office operations. Can they even afford to buy paper and toner for the copier? Or are they bumming office supplies off the other Supervisor offices?

    • Jacki Livingston

      You can bet he isn’t cutting back on the taxpayer paid Starbucks coffee and scones.

  • Bob Brock

    Looks like Nelson got his hand caught in the cookie jar of taxpayer dollars. I believe people are mostly upset at the hypocrisy of someone who portrays himself as a “taxpayer advocate” finding underhanded and unethical way to pilfer the retirement system and bastardize the process.
    I’m so glad Woolery is shining a light into Nelson’s office and we’re seeing Nelson and his henchmen scurry. Nelson may legally be able to pocket that quarter million dollars, but he should pay the political price.

    • Jacki Livingston

      Why? He has never paid any political price before. Neither has Spitzie, Janet from another planet Nguyen or Do-nothing. That would be firmly against County policy…all of that paying and suffering.

  • Steve W.

    No wonder Shawn Nelson was so opposed to transferring the internal audit functions away from his lackey Peter Hughes and back to the Auditor-Controller: Woolery isn’t afraid of Nelson, and now Woolery is shining a light on Nelson’s hypocrisy.

    And can some reporter ask Nelson the obvious question: when you wrote Measure B, why did you choose to exclude giving supervisors the option to opt out of taking a pension? We all know the answer, but Nelson should be asked to go on the record. It would at least be entertaining to read whatever fable he comes up with as an excuse.

    • Jacki Livingston

      Woolery isn’t afraid of Nelson, but he should be. As a first hand survivor of a County smear and slice campaign, I know what they can do to a low level employee. I shudder to think what they will do to Woolery.

  • David Zenger

    Mr. Woolery, welcome to the ethics-free atmosphere of Building 10, where County Counsel and the CEO breath the air allotted to them by the Board of Supervisors.

    They are not permitted professional integrity and learn to do just fine without it.