MOORLACH UPDATE — OC’S $100,000 Club — July 9, 2010

The Los Angeles Times provides their “100,000 Club” story in today’s issue.  It is the first piece below.  It was my first interview with the reporter and I provided a tutorial on defined benefit pensions and their recent enhancements.  Of the many reasons for why our Board of Supervisors may have voted to approve “3% @ 50,” she provided one of them.

The OC Register has their “100,000 Club” story on their website.  It’s also already on KNBC’s website.  I would guess that it will appear in their Sunday edition.  So the second piece is a “bonus.”  The theme that starts with this article is the awareness that there was very little resistance from management to discourage our Board of Supervisors to vote against the recent pension enhancements.  This gets covered in more detail in the third piece.  Also, double-dipping gets some play in the Register’s piece that should make your eyes pop out (or bulge).

The Voice of OC continues on yesterday’s theme.  The County’s negotiations with its management union will be reviewed going forward.  As Ronald Reagan used to say, “facts are stubborn things.”

In closing, Norberto Santana of The Voice of OC was able to wrap Sunday’s World Cup Finals into the pension theme.  I highlighted the opening and closing paragraphs as their humor content is worth catching before the big game.

Convicted Orange County sheriff collects $215,000 pension

Mike Carona is among more than 400 county pensioners who received more than $100,000 in retirement payments in 2009, according to data released following a lawsuit filed by pension reform advocates.

By Paloma Esquivel, Los Angeles Times

Orange County pension records show that convicted former Sheriff Michael S. Carona collected about $215,000 last year in retirement payments — and he was just one of more than 400 county pensioners who received more than $100,000 in retirement in 2009.

Carona, who was convicted last year of witness tampering, remains free on bail pending appeal. But his indictment in 2007 rocked the county and forced major changes to the county’s top law enforcement agency.

Also on the list is former county Treasurer-Tax Collector Robert L. Citron, whose investments led Orange County into bankruptcy in 1994. He collected about $142,000 last year.

The information was released by the Orange County Employees Retirement System following a lawsuit by the California Foundation for Fiscal Responsibility, which advocates for pension reform and has filed similar suits throughout the state. The county retirement agency initially refused to provide the information, saying that releasing the names of those who receive large pensions would compromise their privacy.

For many in the county — whose leaders tend to portray themselves as stringent boosters of fiscal responsibility — the data have put renewed focus on how pension benefits are doled out. The county’s retirement system currently faces a $3.7-billion unfunded liability.

"I am thrilled that finally the truth is coming out," said Nick Berardino, general manager of the Orange County Employees Assn., the county’s largest public employees union. "It is not the workers who are huge recipients of these pensions. It is the managers and the executives that are hauling away the big, big bucks."

The data also have reopened debate over a generous pension plan for retired public safety workers that was approved in 2001, when Carona was sheriff and deputies unions throughout the state were pushing for similar benefits.

About 36% — or about 150 — of the highest paid Orange County pensioners are former sheriff’s employees, according to the data.

The benefit is called "3% at 50," which means deputies can retire at age 50 and receive 3% of their highest year’s pay for every year of service. It was applied retroactively to previous years of service. Before the change, the employees received 2%. At the time, critics said the new plan amounted to a retroactive pay raise.

"It was right after Sept. 11," recalled Orange County Supervisor John Moorlach. "All of a sudden, public safety people became elevated to god status…. The Board of Supervisors were tripping over themselves to make the motion."

Ultimately, Moorlach said, "it was one of the biggest shifts of money from the private sector to the public sector." He was not on the board when the pension plan was approved.

Moorlach led county supervisors to file suit to repeal the benefit, saying voters should have been given the chance to approve the change. The suit was rejected in Los Angeles County Superior Court last year and is now pending appeal.

At the time the suit was initially pursued, Carona voiced strong opposition, calling its filing a "nuclear bomb" for deputies.

paloma.esquivel@latimes.com

O.C.’s six-figure retirees outpace state

By TONY SAAVEDRA and RONALD CAMPBELL

THE ORANGE COUNTY REGISTER

More than five hundred former high-level Orange County employees are collecting six-figure pensions — as much as $244,000 per year.

Those top-paid pensioners pocketed nearly $60 million in 2009 from the financially troubled Orange County Employees Retirement System.

The 515 top retirees, just 4 percent of all county pensioners, got 13 percent of all benefits, according to an Orange County Register analysis.

The percentage of Orange County retirees receiving $100,000 or more is nearly three times the proportion in the statewide California Public Employees Retirement System.

"What that shows is the Ponzi scheme of the benefits," said Marcia Fritz, president of the California Foundation for Fiscal Responsibility, a pension reform group. "The high-paid, low-turnover employees are getting the goodies."

OCERS released the information June 30 after losing a lawsuit brought by Fritz’ group. The Register had been demanding the information under the California Public Records Act for more than a year, and filed a brief in support of the lawsuit.

The Register analysis showed that 515 county retirees were in the "100,000 club" in 2009 out of 12,244 pensioners. The average retiree gets $37,000 a year.

The large pensions are all legal and largely the product of retirement formulas approved by policy-makers during good economic times. The generous pension plans have encouraged employees to retire earlier with a larger share of their salaries – pushing OCERS long-term debt to $3.7 billion. The tax-guaranteed pensions come from employee contributions, contributions by the government agencies and retirement system investments.

Fritz has a theory why the $100,000 list was riddled by manager after manager.

"The people that negotiate those benefits are negotiating for themselves (too)," Fritz said.

Fifteen Orange County pensioners are set to collect at least $200,000 in 2010, with former Orange County Sanitation District finance director Gary Streed topping the list at $20,363 a month in May, or $244,359 yearly. Former Orange County Chief Executive Officer Michael Schumacher collected $19,929 in May, or $239,150 annually.

Streed said his No. 1 status is merely the product of working 38 years for the same agency. Streed noted that he left two years shy of securing 100 percent of his salary.

"I went to work, I stayed at work and this is what I get for it," said Streed, 64. "I just followed the rules."

Current county Chief Executive Officer Thomas Mauk said he is troubled by the high numbers, noting that Orange County, like many other municipalities, is struggling with runaway pensions, budget deficits and a down economy.

"Pension reform is necessary and it should come faster than it is, so let’s all get to the table," Mauk said. "Everybody feels that way."

Orange County’s $100,000 pension club collected $58.5 million in 2009, with one-third of the money going to sheriff’s department retirees, by far the most of any agency in the retirement system. The department is less than one-fifth of the county’s workforce.

Public safety workers can retire at age 50 with 90 percent of their income – a formula called "3 at 50" – the most lucrative of all retirement plans.

Until this year, Orange County sheriff’s sworn employees did not pay toward their retirement benefits.

"Most people should be able to retire at 60 percent of their salaries. You don’t need 100 percent," said County Supervisor John Moorlach, a long-time opponent of large public pensions. Since 2008, the county – led by Moorlach – has been suing the sheriff’s union to roll back the "3 at 50" plan for retroactive retirees.

The release of the retirement data ends a yearlong battle by the Register with OCERS for the information. In June, Orange County Superior Court Judge Luis Rodriguez ruled that the information should be released under the California Public Records Act to "expose corruption, incompetence, inefficiency, prejudice and favoritism." Rodriguez was the third judge in California to rule that the retirement information is public, joining jurists in Contra Costa and Stanislaus counties.

Many other public retirement agencies, including the giant Public Employees Retirement System and the State Teachers Retirement System released their retirement data months ago. But OCERS continued to insist that the public records law did not apply to its pension data.

The Register’s analysis of retirees earning $100,000 or more found a number of executives who were forced from their jobs – including two convicted and sentenced to jail. There were also "double-dippers’ who substantially increased their incomes by taking another high-paying government post after retirement and several ex-employees who are currently suing the county for wrongful termination.

Among the top 10 highest paid retirees is convicted ex-Sheriff Michael S. Carona, who in May received $18,121, putting him on track to collect at least $217,457 annually. Carona resigned in 2008 after being indicted on federal corruption charges. He was convicted of one charge of witness tampering and sentenced to 5.5 years in federal prison. He is free on appeal.

Joining Carona among the top paid is disgraced county treasurer Robert Citron, who led Orange County into what remains as the largest municipal bankruptcy in the nation in 1994. While Citron took no money for himself, he was convicted of skimming $89 million in interest from schools and other agencies, putting the money on the county books to hide his risky investments. Citron received $12,360 in pension benefits in May, for a projected $148,327 annually.

County CEO Mauk said he has a problem with huge retirements going to public officials who commit crimes on the job.

"If you’ve been convicted of a felony, it ought to be taken into account," he said. "I don’t have the answers, but it ought to be on the table for discussion."

Other high-paid retirees left their jobs under a cloud.

Former Assistant Sheriff Dennis LaDucer was fired in 1997 amid allegations that he sexually harassed and groped female sheriff’s employees. The county paid more than $1 million to settle five harassment lawsuits against him, according to a 1999 report in the Los Angeles Times. As one of the top retirees, LaDucer got $10,251 in May, for a projected annual $123,012.

Another former assistant sheriff, Charles Walters, was in charge of the jails in October 2006 when inmate John D. Chamberlain was killed while a guard watched television. Walters is the third highest paid pensioner, collecting $19,332 in May, for an annual rate of at least $231,990. Grand jury testimony revealed that, under Walters, deputies at Theo Lacy jail enlisted inmates as enforcers, slept at their posts and failed to make their rounds. Walters was never accused of any wrongdoing.

Also collecting hefty pensions are two more sheriff’s executives who were forced out of their jobs in the backlash surrounding the Chamberlain killing. Former undersheriff Jo Ann Galisky is set to collect at least $131,628 annually, while former assistant sheriff Steve Bishop will receive at least $202,615. Both top-tier sheriffs executives were accused of not being fully truthful in their testimony before a special grand jury investigating the Chamberlain slaying.

Galisky has filed a discrimination suit against the county, seeking more money in damages.

Former county counsel Benjamin DeMayo caused a stir after he retired last year and cashed out $352,097 in unused leave. DeMayo also is one of the highest paid retirees, receiving $18,798 in May, for an annual rate of at least $225,580. The high cashout was allowed because DeMayo worked for the county since before 1977, when there was no limit on how much leave could be amassed.

One of the most criticized, but legal, practices among pensioners is to retire and go to work for another government agency, thus collecting a pension and a salary, a practice known as double-dipping.

Even Gary Streed, the county’s highest paid retiree, draws the line at double-dipping.

"The day I retired, I committed to not doing anything I would be paid for. I didn’t think it was right," Streed said.

Others don’t have that problem.

Jan Sturla, former head of Orange County Child Support Services, became an expert at squeezing dollars out of deadbeat parents – so good that Gov. Arnold Schwarzenegger appointed him in 2008 to head the California Department of Child Support Services. In May, he collected $15,980 in Orange County retirement benefits, amounting to at least $191,770 a year. That’s on top of the $142,965 that he makes with the state.

Sturla declined an interview for this story.

Newly retired Orange County Fire Authority Deputy Chief Patrick McIntosh picked up $15,192 in pension benefits in May, putting him in line to collect at least $182,304 over the next year. McIntosh also earns another $204,880 as the new chief of the Huntington Beach Fire Department – more than doubling his compensation.

McIntosh said his financial arrangement is not costing the fire authority or Huntington Beach any more money.

"I don’t think any reasonable person would suggest I be denied the benefits I worked for and contributed to over a 27-year public service career at OCFA and its predecessors," McIntosh said. "By the same token, who would benefit by telling the city it can’t hire the fire chief it wants?"

Jack Dean, who publishes a pension reform website at pensiontsunami.com, said double-dippers are misusing the retirement system.

"The system is supposed to be set up so people are comfortable when they can no longer work, not to set up a lavish lifestyle at 55," Dean said. "

Contact the writer at 714-796-6930 or tsaavedra@ocregister.com

County’s Executive Ranks Are in for Some Tough Talks

Relatively speaking, contract talks have largely been pleasant experiences for the management ranks in Orange County government. After all, when representatives of a managers union negotiate for wages and benefits, they are essentially negotiating with themselves.

But any government exec who thinks next January’s contract talks will be pleasant, should probably think again. This is especially true now that the Orange County Employees Retirement System has released a list of 500 former top-tier executives and high-level employees whose annual pension checks total more than $100,000.

The numbers are making supervisors’ eyes bulge.

"These guys are getting paid a lot," said Orange County Supervisor John Moorlach after reading the list.

"It points out to you why they didn’t protest. You didn’t see management very vocal in 2004," said Moorlach, referring to the 2.7 at 55 pension enhancement that county supervisors adopted that year.

The benefit allows long-time workers to retire earlier, at age 55, and enhanced the amount of their monthly check as retirees. This enhancement is one reason why the county’s unfunded liability has ballooned to more than $3 billion.

Moorlach gets upset over the payouts because the executives receiving them were in many cases the very people who were representing taxpayers during the negotiations and called him a "Chicken Little" because he voiced concerns about the county’s unfunded liability.

Now, he’s negotiating on behalf of the county across from the same managers who supported the expansion that he railed against in 2004.

"Everything’s on the table," said Moorlach, while avoiding any comment on the county’s specific negotiating plans.

One thing is clear: Every employee group can expect to be asked to pay more to help fund their pensions. And after last week’s disclosure of top tier retirement payouts, nobody can expect pressure like the managers union.

Board of Supervisors Chairwoman Janet Nguyen also saw the retiree payout figures published by Voice of OC and the Orange County Register.

She said those kinds of payouts are going to influence county supervisors’ outlook going into negotiations with manager and other groups.

"Everyone has to chip in more for their own pension. How much depends on the negotiations," Nguyen said.

"Going into these negotiations, we’re going to ask, they have to understand we can’t continue to afford these pensions. If the system is broken, the money won’t be there. … We either work together or we go down together."

Nguyen also said the brewing confrontation with the county attorney’s union — which covers prosecutors, public defenders and county counsels — isn’t helping her mood.

"It’s very unfortunate. I’m shocked," Nguyen said. "The managers last year took a 3 percent (pay raise) deferral, OCEA (Orange County Employees Association) also gave up. Everybody has given up something. The attorneys have decided not to (defer a 3.5 percent increase). We’ll have to do what we have to do as a county … layoffs, furloughs."

Karen Davis, executive director of the Orange County Managers Association, acknowledges tough challenges ahead for negotiations, which start officially in January for the roughly 1,000 managers throughout the county bureaucracy.

Davis notes that the retirement benefits given to top tier executives are "negotiated retirement rates approved by the Board of Supervisors. … It’s hard to remake history," she said.

She also points out that many of the executives retiring in the $100,000 club also paid into the 2.7 at 55 benefit when they were at the county. But she admits that the payouts on the list released by the Orange County Employees Retirement System present a stark picture: "It gets very expensive," Davis said.

Davis said the managers union’s approach to negotiations with the county will be cooperative. "The managers are certainly interested in looking at the options the county is working on," Davis said.

Orange County Employees Association General Manager Nick Berardino says one clear option would be for managers to pay into the pension system at the same rate that rank-and-file employees do.

"Any further discussion on pensions, the precondition is that everybody gets on a level playing field. … They (managers and executives) have to pay 100 percent of the employee costs," Berardino said.

This is the same drum that Berardino has pounding for years. Davis and Mauk, meanwhile, have consistently resisted calls for more concessions from the executive ranks.

"We oftentimes don’t have the same perspective that OCEA has," Davis said. "Instead of pointing the finger at other groups, it’s more productive to work within the system and determine what is the best solution for everyone."

Mauk’s patented response is this: "There’s not different classes of the Orange County employees. I’m not going to get involved in treating people differently."

However, it is an issue in which Moorlach and Berardino, who are often at odds with each other, are in agreement.

"It’s the one thing Nick keeps reminding everybody on," Moorlach said.

Please contact Norberto Santana, Jr., directly at nsantana@voiceofoc.org. And add your voice with a letter to the editor.

John Moorlach and His Long Shots

I chuckled with everyone else at last month’s Orange County Board of Supervisors meeting when Supervisor John Moorlach led the invocation and asked the Lord to favor the Netherlands (Moorlach is proud of his Dutch heritage) in its David-and-Goliath quarterfinal matchup against Brazil in the World Cup.

We all know what happened.

"Who’s laughing now," said Moorlach after I reminded him of the prayer.

Moorlach said he has a similar feeling regarding the county’s lawsuit against the Orange County deputies union. The suit argues that the retroactive pension hike that sheriff’s deputies received in 2001 was unconstitutional.

County supervisors lost badly in a Los Angeles court on the issue, and many observers, including Attorney General Jerry Brown, don’t think it’s a winnable case.

That may be true. But there was another time when people said Moorlach was way off.

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