MOORLACH UPDATE — OC Parks — June 30, 2010

This story is front-page, top-of-the-fold news in today’s OC Register.  The article is quite brief.  But the topic is big!

There is an adjoining article interviewing Donald Bren.

I’m including a photo and the map.

Get ready for more day hiking opportunities!

Just to provide some perspective, the Catalina Island Conservancy is 42,000 acres.

OC Parks now has some 60,000 acres under management.

We are a blessed county!

Please accept my best wishes for a safe and family-filled 4th of July weekend!

Supervisors accept 20,000-acre gift



Orange County supervisors accepted a 20,000-acre gift from the Irvine Co. on Tuesday, increasing the holdings of OC Parks by 50 percent and clearing the way for a brand-new wilderness park.

The land includes rolling hills and craggy canyons, including Fremont, Weir and Gypsum canyons, and fulfills a 20-year promise by the Irvine Co.


"This is so historic," said Orange County Supervisor John Moorlach just before the vote. "I am just tickled pink to be on the Board of Supervisors for an opportunity like this, to vote on something as amazing as this gift."

Parks officials say they plan to carve a new 2,000-acre park, Black Star Canyon Wilderness Park, from the property.

For now, public access will continue to be mostly docent-led.



June 29


June is the traditional month for the Grand Jury to conclude its one-year stint and issue its reports.  They issued a fun one in the summer of 2005 and it garnered significant media attention.  It was titled “Another County Crisis.”

Ironically, this summer the San Diego County Grand Jury issued a report encouraging the City of San Diego to file for Chapter 9 bankruptcy to deal with its unfunded pension plan crisis.

Here is what the Associated Press had to say.  (San Diego’s NBC affiliate also provided a portion of the AP article in “Orange County May Face Pension Crisis Too – Grand Jury Warns of Financial Mess.”)

                A grand jury is warning of a potential financial mess for Orange County.

                In a recent report, the grand jury says new pension perks for county workers, rising health care costs plus an 800 million dollar bankruptcy payoff could cause “another possible exposure in the county’s financial structure.”

                A county employees’ union representative denounced the report as biased.  However, county treasurer John Moorlach calls the report accurate.

The OC Register’s Peggy Lowe covered the story in “Grand jury warns of ‘another county crisis’ – Report cites potential for $4.4 billion gap; employees union leader says findings reflect ‘rhetorical bias.’”  Here are selected quotes.

County Treasurer-Tax Collector John Moorlach, who has long been saying much of what the report pointed out, also blamed the supervisors. In a controversial 3-2 vote last year and formalized Tuesday, the board approved an increase in retirement benefits that workers may now take when they reach age 55.  

“I think the first step in a 12-step program is admitting there’s a problem,” Moorlach said. “We need our board to get to that point.”


And Moorlach expects the situation to get worse. A county-ordered report on the unfunded health-care costs, set to be released in the next few weeks, may show a $2 billion shortfall instead of the $1.3 billion estimated now.


“We may be underwater to the tune of $5 billion,” Moorlach said.

San Diego’s Channel 10 News also picked up the story in “Financial Storm Brews in Orange County – Other Communities Dealing With Unfunded Promises.”  In a strange twist of fate, and I repeat myself, the San Diego County Grand Jury recommended this month (2010) that the City of San Diego file for Chapter 9 bankruptcy protection.  When someone else is in a similar quandary, it made news south of our border.  Here are the opening paragraphs.

            San Diego’s $1.4 billion pension deficit has been making headlines, but you don’t have to look far to find other communities in a similar financial boat.

            Just 80 miles north of San Diego – along the sunny pristine coastline of Orange County – a financial storm is brewing.

            “Orange County is now looking at another $120 million in budget cuts annually,” county treasurer and tax collector John Moorlach said.

            Moorlach said the latest actuary report revealed Orange County’s unfunded pension liability now tops $2.39 billion.

            Moorlach puts the blame on politicians who he said are giving concessions to powerful unions, without really having the means to pay for them.

            “San Diego county raised benefits – San Diego city did, Orange County did, LA did not, Ventura County did not, Santa Barbara County did not.  There are some elected officials who say we’ll take the heat, and we’ll do what’s right,” Moorlach said.

June 30


The following day after the Grand Jury’s report was released, the editorials arrived.  This one is from the OC Register and it was their lead editorial, titled “Grand Jury indicts pension-spiking – Another confirmation that the county can’t afford the increases approved just a year ago.”  Here it is in its entirety, with minor editing changes.  (It’s remarkable how vogue it is to today’s fiscal turmoil at the county.)

Last August, when the Orange County Board of Supervisors was considering a union-sponsored measure to significantly increase pensions for county employees, Treasurer John Moorlach argued that the assumptions underlying the proposal were flawed and that the plan would soon cause a crisis that could rival the financial mess created by the 1994 county bankruptcy.


Others, including the Register Editorial Page and the Orange County Taxpayers Association, likewise warned against approving the deal, especially against the provision that would grant 62 percent pension increases retroactively to current county employees.

[Three] Supervisors . . . voted in favor of the measure (with Chris Norby and then-Supervisor Chuck Smith voting no), and they criticized Mr. Moorlach. Don’t worry, they insisted, the county can afford the new level of benefits.

There are times when there’s little more one can say than, “I told you so.” This is one of those times, following the release of an Orange County Grand Jury report this week that paints a dismal picture of the impact of the pension benefits that will go into effect Friday. Once in effect, they will be set in concrete for 30 years, with nothing anyone can do to save the county or its taxpayers from paying the costs.


Called “Another County Crisis,” the grand jury report makes the following point: “It appears the current board of supervisors is repeating the pattern of granting generous benefits – this in light of tight county budgets and the residual effects of the bankruptcy 10 years ago.”


The report points to new pension projections: “[C]ounty liabilities … should total approximately $4.4 billion ($2.3 billion unfunded pension, $1.3 billion unfunded health care, and $800 million bankruptcy payoff).” Even in Orange County, that’s real money – an amount that dwarfs the bankruptcy numbers.


Ironically, [one] Supervisor . . . told the Register the report was “very accurate in describing the situation.” But it was he who led the charge for the pension spike, allowing county workers to go from retirement at age 57 (after 30 years) at 50 percent of pay to retiring at age 55 with 81 percent of pay – benefits far higher than those enjoyed by the taxpayers who will have to pick up the slack for at least $114 million more each year.


County workers will find an interesting surprise in their paychecks, also, as younger workers get to pay far more each month so that longtime county employees can enjoy a retroactive benefit that they had never expected.


“We screamed and yelled and told them not to do this,” Mr. Moorlach told us. “How do we fix this? It’s a lobster trap. You don’t.”


“We can’t defer forever and hope the stock and bond markets rally like crazy,” he said.


Nonetheless, Mr. Moorlach recommends ending defined-benefit plans for new hires. Those are the costly plans that guarantee a level of benefits, as opposed to typical private-sector plans that simply guarantee that the employer contributes a certain percentage.


And Mr. Moorlach points to possible layoffs. But, as he rhetorically would put it to county employees, “Who do we lay off, unions? Now that you’ve done this to yourself, who do you lay off?”


Mr. Moorlach is opposed to any tax increase, as are we. Why should taxpayers have to bail out these decisions by unions and their supporters on the board? Mr. Moorlach notes that Orange County taxpayers would be unlikely to vote themselves a sales-tax increase to pay for mistakes made by supervisors and to pay for pension benefits that are far beyond what most of them enjoy.


What a fine mess. Until the county figures out how to fix it, remember those leaders who caused it: the public employees unions and [three] Supervisors . . .

The pension crisis was the topic in the City of San Diego.  In fact, so was Chapter 9 bankruptcy.  Speaking of Chapter 9 bankruptcy, the San Diego County Grand Jury recently recommended that the city of San Diego consider filing.  In 2005 it was a topic in the Mayor’s race during a special election.  The San Diego Union-Tribune’s Matthew T. Hall covered it in one candidate’s campaign theme in “Lawyer’s cure is bitter pill – Shea says bankruptcy is city’s best route to financial recovery.”  Five years later we still don’t know with full certainty if Chapter 9 will address bargaining unit agreements.

                [Pat] Shea will need all of his powers of persuasion, not to mention his grasp of detail, to persuade San Diego voters to swallow something else:  his strong-medicine message that the city needs to file for bankruptcy.

                Orange County Treasurer John Moorlach said Shea’s push toward bankruptcy is premature.  He said there is no guarantee San Diego will be able to reduce the employee benefits that each mayoral candidate sees as the root of the problem.

                “If he’s wrong and he drives that puppy into a cul-de-sac, then that’s a lot of money to spend without positive results,” Moorlach said.

As if the last day of the month wasn’t busy enough on the pension and Chapter 9 fronts, a letter writer took me to task on my pension in the OC Register, titled “Will Moorlach cap his county pension?”  Answer:  I asked to be exempted but, again, I was not permitted to do so.  Two weeks later, the county started withholding 7.59 percent of my paycheck to pay for this unconscionable OCEA tribute (some $11,000 per year!).  The Auditor-Controller said I was out of luck.  Appeals to the CEO of OCERS also went without success.  The withholdings are for the UAAL (unfunded actuarially accrued liability) resulting from the retroactive component of the negotiated pension enhancement.  It’s not even earmarked or credited to my retirement account.  (Please, please do not get me started – as the move to Supervisor would cost another $30,000 per year.)

Recently, County Treasurer-Tax Collector John Moorlach announced that he will run for a county supervisor’s seat.  His credentials make him well-suited for such a position:  He foresaw the county bankruptcy and now has weighed in on the county pension issue.  The only questions remaining are whether he will commit to having his pension pegged at the old yearly multiplier of 1.67 percent and forego the newer rate of 2.7 percent and whether he will make this announcement before seeking the seat on the Board of Supervisors.

                Mike Padore


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