We are now at the point where the enhanced pension benefits granted in the last ten years is the budget buster.
Over the past four years our Board has been proactive in addressing the employee medical retirement unfunded liability. We negotiated “no” pay raises for the next three years. We provided for new pension tiers for new hires for the two largest bargaining units. We started employee withholdings for the employee portion of the pension contribution with the Deputy Sheriff’s union this past year. We initiated a lawsuit to address the constitutionality of the unconscionable granting of retroactive pension benefits. We had a strong voter support of Measure J, requiring voter approval of future negotiated retirement benefit increases. These were all difficult actions for our Board to pursue. But, now we are a model for how others can address these “unsustainable” benefits.
The overriding concern I have is this: did we do enough and did we do it soon enough?
Last year the Public Safety component of our overall budget consumed 45 percent of our General Fund budget. This year it consumes 50 percent. If this trend continues, Public Safety will consume our entire General Fund in 10 years.
Neither the Sheriff nor the District Attorney has been sitting still. They have been making cuts, eliminating positions, reducing overtime, and pursuing revenue sources (like Beds for Feds).
Our CEO and budget staff has been working diligently as well.
The income levels for Proposition 172, the sales tax measure that partially funds public safety, is back to 2001-02 levels. Ironically, so are our staffing levels. The District Attorney had some 638 employees ten years ago and has the same number today. The Sheriff’s Department is still in the 3,200 range. Probation has declined by 100.
Regretfully, the net county cost (NCC) for the DA since 2001-02 is up 156 percent, the Sheriff’s Department is up 43 percent, and Probation is up 35 percent. We have the same staffing levels, but in this brief time period our salary and benefit costs have been moving up at a rapid pace.
Our Public Safety pension plan contributions were $62.8 million in 2002-03. They will be $122.7 million in 2010-11. That represents a 95.3 percent increase!
This past year we established a Public Safety Working Group, with Supervisors Bates and Campbell working with our Public Safety agencies to “glide down” their expenditures. The net result was a combination of cuts and dipping into our reserves.
Even after their valiant efforts, the DA’s NCC is up 16.6% over last year and the Sheriff’s NCC is up 19.1%. And both departments are overspending their 2009-10 budgets to the tune of $4 million each. The other departments in the county have made NCC reductions.
Something has to give in order for the kidney stone to pass.
We must renegotiate our pensions back to the formulas in place before this millennium began. It may be a blended benefit. And it must drop the retroactive component. This will lower the retirement costs for both the employer and the employees. Consequently, I directed our CEO to ask the Orange County Employees Retirement System to provide the actuarial numbers for such a proposal. We should include these numbers in a module of our annual Strategic Financial Plan this fall to see the ramifications. Then the employees can see how we can address this long-term fiscal dilemma together.
The real solution to our budget quagmire is for the unions to step up, once again, and bring down our future pension plan contribution commitments. Otherwise, our reserves will be depleted and we cut into the bone.
The Voice of OC covered yesterday’s budget session. We concluded the hearings this morning. Therefore, there may be further articles on the topic tomorrow.
I also have a bonus article at the bottom – an update of my recent travails. I’m on a new prescription regime and things seem to be “moving” in a positive direction.
County Faces Uncertainty and Ugliness for 2010-11 Budget
Orange County supervisors spent much of Tuesday afternoon in a budget session so uncomfortable it featured worried local law enforcement leaders, angry hospital leaders and a supervisor reduced to tears.
Yet it was increasingly clear that in balancing the 2010-11 budget, the most important decisions will be made in Washington, D.C., and Sacramento.
Today, Sheriff Sandra Hutchens is meeting with officials from the Immigration and Customs Enforcement agency to hammer out final details of a program called "Beds for Feds" that will dictate whether Hutchens’ department is able to last out the year without significant layoffs and service cuts.
"We have a very critical meeting tomorrow with ICE, and we hope to have some definite answers," Hutchens told a visibly nervous county Board of Supervisors on Tuesday at their annual budget straw vote session. The budget will be formally adopted June 29.
Supervisors on Tuesday helped Hutchens approach a balanced budget for next year by dipping into reserves, redevelopment funds and sales tax revenue to restore more than $23 million in planned cuts.
But a significant portion of that plan rests on negotiations — which Hutchens has spent the last year conducting with ICE — to house undocumented felons at county jails.
The bed rate Orange County will receive from the federal government is unclear, and budget planners are hesitant to mention what the rate is that achieves an estimated $2.5 million in revenue from the contract.
Even Supervisor John Moorlach — Hutchens’ staunchest supporter on the board — wondered, and warned, out loud about what happens if the feds can’t work out a deal, already a year in the works.
Supervisor Pat Bates asked Hutchens whether she’s ready to implement backup plans if "Beds for Feds" doesn’t work out. Hutchens replied: "While we are optimistic, we know it’s a competitive environment."
And, she added, "we have a backup plan."
Hutchens warned that the backup isn’t pretty because it includes layoffs and service cuts.
Another wrinkle recently tossed into the sheriff’s budget plans are designs from Sacramento budget planners to use county facilities throughout the state for housing state prisoners.
That could complicate bed space that Orange County has planned for undocumented felons. And judging how bad Sacramento has been about paying its bills, Hutchens and the supervisors called such plans "disastrous" for county hopes for a balanced budget.
"If we had to implement this, we would be looking at overcrowding or early release," Hutchens said of the state plans, which she and law enforcement leaders across California oppose.
At this point, the Sheriff’s Department has cut more than $53 million in recent years. Hutchens said any more cuts mean fewer deputies patrolling unincorporated areas; fewer investigators, bomb squads and helicopter patrols; and backlogs at crime labs.
"We would become a reactive instead of proactive department," Hutchens said. "To deconstruct this department anymore will have devastating impacts, in terms of who we service."
That was the same message delivered by District Attorney Tony Rackauckas, who has spent the last few years doling out furloughs, reducing prosecutors and even using volunteer law students and civil lawyers to deal with caseloads.
"We are struggling to cover all these courtrooms," Rackauckas said, noting he is down 40 frontline prosecutors.
"A price is paid," he warned. He added, "We are stretched as far as we can go."
Any further cuts are "not sustainable."
Supervisors dipped into the same mix of reserves, redevelopment funds and sales tax projections to steer nearly $12 million to the district attorney to achieve a balanced budget.
After that, the afternoon got ugly.
At one point, County Supervisor Bill Campbell openly wept as he described the critical work of the county’s human relations commission — which is in jeopardy of losing a $300,000 county subsidy.
Also potentially on the chopping block is the recently formed Office of Independent Review — also on the hook for $300,000 — because some supervisors are looking for ways to keep other agencies afloat and are unimpressed with public results from the watchdog agency.
County hospital administrators also walked out of the budget workshop enraged that supervisors are unwilling to steer more money to reimburse medical care for indigents. They warned that a health crisis is on the way.
The most terrifying fact facing supervisors Tuesday was the warning from budget staffers that every estimate by budget planners for the $5.4 billion budget hashed out for fiscal 2010-11 hangs on what Sacramento does. And with the state facing a $20 billion deficit as well as a gubernatorial election, no one is expecting a budget on time.
"If these risk factors don’t materialize, then layoffs and furloughs in the public safety arena are next up," county CEO Tom Mauk said, warning about the impact of decisions from Washington on "Beds for Feds" and Sacramento’s budget plans.
That’s when it gets really ugly, Mauk warned.
"It will affect front-line services."
Please contact Norberto Santana, Jr., directly at firstname.lastname@example.org
FIVE-YEAR LOOK BACKS
Alicia Robinson’s “The Political Landscape” column in the Daily Pilot titled, “Campbell leads in poll – But undecided voters are the majority, 39%, in election to replace Chris Cox,” included a section, titled “And the next domino,” that would become profoundly accurate.
In other political-jockeying news, Huntington Beach Assemblyman Tom Harman said this week he would consider a run for Campbell’s Senate seat if the other dominoes fall into place. First, Cox must be confirmed, then Campbell must win the Congressional seat. Harman has been running for the Fifth (sic) District seat on the Orange County Board of Supervisors.
So, let’s get this straight: If Cox is confirmed, Campbell runs. If Campbell runs, Harman goes after the Senate seat. A run by Harman for Senate would open up the field for Orange County Treasurer-Tax Collector John Moorlach, who is officially running for Orange County Supervisor . . .
In this week’s edition of the Orange County Business Journal, June 14 edition, Rick Reiff makes a mention of my “This Too Shall Pass” “philosophical” thoughts:
John Moorlach doesn’t have an easy election even when he’s running unopposed. The provocative county supe, given a pass by the public labor unions this time around, collected 100% of the vote while stuck in bed: “It’s my turn to experience passing a kidney stone. No election night events for me.” He underwent surgery (lithotripsy) and concluded, “Running for public office is sort of like passing a kidney stone. It’s painful, intense and all-consuming. And, this too shall pass.” Moorlach, who is termed out in 2014, said this “may be my last election victory” …
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