MOORLACH UPDATE — OC Register — July 13, 2010

Yesterday’s Orange County Transportation Authority (OCTA) Board meeting was going to be short and sweet.  Unfortunately, the discussion on charging for bus-schedule books provided some illumination and some unanswered concerns.  To sum it up, it was an example of why the Board is necessary to provide a forum to discuss matters that may not have been considered by staff.

My concern was of an accounting nature.  OCTA is required by the state to have fare revenues that cover, at a minimum, 20 percent of the costs of providing bus services.  You, the taxpayer, subsidize the other 80 percent.  My argument was that if only fare payers are purchasing the bus books, then the $1 cost should be considered fare revenue and applied toward the 20 percent requirement.  Staff was uncertain about the state’s computation code requirements and will provide a clarification at our next Board meeting in two weeks.

The OC Register covers the meeting in the first of two pieces below.

The second OC Register piece is its lead editorial.  I get an honorable mention.  What the OC Register’s editorial staff would consider as modest is actually very significant.  In the negotiating world, public employee unions are not the easiest group to make concessions.  The County’s public employee unions usually have their financially backed-candidates on the Fifth Floor to negotiate with, yet this has not been the case of late.  Consequently, we’ve worked together to make the necessary changes to deal with the total compensation packages provided for the County’s employees.  Could we do more?  Yes.  But, changing from a defined benefit to a defined contribution plan is something that needs to be embraced by the public employee unions, as such a change cannot be imposed.  The public sector is protected by state code from such an attempt, unlike the private sector (see MOORLACH UPDATE — VOICE OF OC — July 8, 2010).

All the same, the LOOK BACK provides a perspective as to why I decided to run five years ago to address the upcoming train wreck.  Simply put, when other counties and cities are looking for solutions in the area of pension reform, they point to the County of Orange as a model to follow.

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OCTA to charge for bus-schedule book

By ALEJANDRA MOLINA

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Bus riders will soon have to pay $1 for their bus-scheduling books, officials said.

Over the years there has been a significant decrease in the amounts of books that are provided to bus riders. In fiscal year 2005-06, 800,000 books were printed as opposed to the 360,000 provided in fiscal year 2009-10, according to an agency report.

"The ultimate goal for the bus book sales program is to ensure that OCTA maintains abilities to provide enough bus books to be available to customers from a few weeks before a service change until the next service change," said Stella Lin, marketing manager with OCTA.

The bus book identifies all of the bus routes and schedules and provides details about fares and passes. The pilot books sales program will begin in September and it’s the first time OCTA charges for bus books. Customers will pay through the fare box.

A 2007 bus customer survey indicated 60 percent would purchase a bus book, according to an agency report. The bus book is the most preferred use of information, officials said.

At Monday’s OCTA board meeting, some board members expressed discontent with having to charge bus riders another fee while others questioned whether the agency should still provide the printed books.

Board members Curt Pringle and Bill Campbell discussed outsourcing the bus book program to a private entity.

"I think there’s many avenues by which people can access bus schedules – internet, at the library, mobile connectivity," Pringle said. "A printed bus book is an obsolete practice."

The book sales revenue will not count toward fare box recovery but will help support the bus information program, officials said. A regular fare costs $1.50. In January 2009, fares increased 25 cents.

"I don’t think that’s fair to do to our fare payers when we just raised their fare and we’re contemplating another increase and if we cannot designate that toward fare revenue then I’m uncomfortable with another tax or fee," said board member John Moorlach, also a county supervisor.

According to OCTA, Transit Advocates of Orange County – an all-volunteer group that works to improve bus, rail, biking and walking in the county – approves of the book sales program.

Roy Shahbazian, a member of Transit Advocates, said that over the years the information available to passengers has been lacking.

"…Faced with the choice of having the bus books further reduced, which is what we heard from the staff, it seemed reasonable to do what we could to make sure that the information continued to be available…especially in a time when the buses are less frequent."

Since September 2008, OCTA has reduced bus service by 20 percent in response to a reduction in state funding, a drop in sales tax revenue, and declining ridership.

At the end of the Monday meeting, the OCTA board of directors and Teamsters Local 952 announced they had reached a deal on a new three-year collective bargaining agreement.

After two years of bus service cuts and layoffs to coach operators and administrative staff, the contract will allow the county’s public transit system to begin emerging from the worst financial crisis in its history, according to OCTA.

The contract calls for no change in wages the first two years. In the third year, there is a possibility to reopen the contract and discuss a wage increase if positive financial progress is made.

Contact the writer: amolina@ocregister.com

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Editorial: Pension data cries out for reform

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Orange County has been a leader in reforming public employee pensions, calling into question lucrative retirement benefits paid for – legally – in part by taxpayer expense. A Register investigation, published Sunday, shows that some public workers here receive more generous benefits than many people would expect.

While incremental progress has been made for reform in Orange County, the county Board of Supervisors and local city officials need to take even more drastic steps to address grossly generous benefits and a growing unfunded liability.

The Register’s Watchdog reporters studied public employee pension data, made public under court order. In June, Orange County Superior Court Judge Luis Rodriguez ordered that the Orange County Employees Retirement System release information pertaining to people in the county earning more than $100,000 a year in pension benefits. OCERS did so June 30.

The data show that as of 2009, 515 retired county employees are receiving more than $100,000 apiece annually, some earning a staggering $200,000 a year, out of a total of 12,244 pensioners. The top earner, a former county sanitation district worker, is earning $244,359. Disgraced former sheriff Mike Carona receives $217,457 annually. Robert Citron, who, as treasurer, led Orange County into the largest municipal bankruptcy in history at the time, gets nearly $150,000. OC Register Watchdog reporters compiled an online searchable database with the information at ocregister.com. The average county retiree receives $37,000 a year.

Watchdog reporters also compared the data with statewide figures on retired public employees making more than $100,000 a year and found that the percentage of public retirees receiving six-figure pensions in Orange County is more than three times that for the state’s California Public Employees Retirement System.

To top it off, Orange County faces a $3.7 billion unfunded pension gap.

These new findings should outrage, if not enrage, county taxpayers and should push local elected officials back to the negotiating table with more substantial pension reform proposals. The most drastic and necessary reform would be to shift the current pension system for new employees from a defined-benefit plan, where retirees are guaranteed a set amount of money, to a defined-contribution, 401(k)-style retirement system. That would be the most sustainable and comparable to plans in the private sector.

In recent years, the Board of Supervisors, led by Supervisor John Moorlach, has made modest strides in reforming pensions and righting systemic wrongs. Those steps include the creation of an opt-in, defined-contribution plan for newly hired county workers as well as the board’s continuing to pursue a lawsuit challenging retroactive pension benefits.

Orange County should keep pushing beyond incremental steps, and lead the way on pension reform. That’s the best way to protect taxpayers, secure reasonable retirement benefits and end the outrages revealed in the OCERS pension data.

FIVE-YEAR LOOK BACKS

2005

July 14

Peggy Lowe of the OC Register did side-by-side articles, contrasting my perspectives with that of a recent county retiree (who moved to Texas).  The article on me was titled Moorlach back at it – O.C. treasurer pushes warning that county could face another financial crisis.”

                                                                                                                                                                                          

As vanity license plates go, it wasn’t very vain.

The plate on the 1990 silver Avanti sports car read DULLCPA — how its owner, John Moorlach, portrayed himself to the public. But the boring-accountant schtick soon ended.

In 1994, Moorlach ran for county treasurer, decrying then-Treasurer Bob Citron as running such a high risk with the county’s investment funds that the scheme could implode.

Moorlach lost the election. Six months later the county filed for bankruptcy, citing investment pool losses of $1.7 billion. Moorlach was appointed treasurer in 1995 and has been re-elected twice.

He got a new vanity plate: SKYFELL is attached to his 1996 black Chevy Impala SS.

Now, a friend has suggested another license plate for Moorlach, and he’s got the scrap of white paper taped to his office door: SKY FL 2X.

Because now, more than 10 years later, Moorlach finds himself returning to his town-crier role and back to using the B-word — bankruptcy. Moorlach has been telling anyone who will listen — and many who don’t want to — that Orange County could face a $5 billion shortfall largely due to the new, expanded retirement benefits for county employees.

"You know this is a train wreck coming, then it happens," he said. "You kind of want to thump your chest but at the same time, you want to cry because you have to deal with the problem."

Moorlach‘s train-wreck scenario began last August when the supervisors approved the union’s contract that included the pension hike. Moorlach argued that any increase placed more stress on a system that was already believed to be $1 billion short.

He also argued that to encourage people to think about retiring earlier when they are living longer was to court disaster.

Union representatives fume when they hear Moorlach‘s name.

They say he ignores how much the workers’ concessions will save the county — nearly $16 million over the next two years. And, they say Moorlach distorts the financial facts to further his ambitions.

"Time after time, John’s tired old M.O. is trying to create imaginary crises to solve," said Nick Berardino, general manager of the Orange County Employee’s Association. "He views himself as a white knight riding to the rescue. But he’s more of a Chicken Little."

Chicken Little. Town crier. Whistleblower. Moorlach has heard all the names. Mostly, he relishes the attention.

His supporters say he was unfairly called Chicken Little and that speaking up earned him respect.

"I supported John for treasurer in ’94 and he proved to be the prophet at that time," said Chris Norby, a county supervisor since 2003. "Many people in public life didn’t have the financial expertise and education John had to understand what Bob Citron was doing. When you’re right on an issue like that, you garner lots of credibility."

Detractors say Moorlach is fussing because he is running for county supervisor.

Moorlach‘s run for political office was part of the reason people — from politicians to the press — didn’t believe his claims in 1994.

Moorlach calls himself "stupid" to leave the treasurer’s job, which has no term limits, for a supervisor’s job, which is limited to two four- year terms. Supervisors also make less, $119,300 to Moorlach‘s $143,000 a year.

Moorlach said he wants to be a supervisor because the board has taken the county from $1 billion in debt five years ago to Moorlach‘s estimation of $5 billion in debt.

Thinking back to 1994, Moorlach says many things are the same — relying on the stock market, for example, to fill the retirement investment funds.

But there is also one crucial difference: this so-called crisis came up in plain sight.

"It seems to me that in ’94, everybody just was in a climate of agreement. Everybody was lockstep," he said. "So now you have an environment where people are willing to debate and take on issues. In the long run, that bodes well for a better county."

(714) 796-2221 or plowe@ocregister.com

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