MOORLACH UPDATE — PUBLICCEO.com — August 11, 2010

PUBLICCEO.com editor, James Spencer, was kind enough to print the portion of yesterday’s Update that responded to the commentary I was mentioned in.

You can see the rest of this publication at http://www.publicceo.com/.  It caters to those in local government and this website has been on fire since the revelations that have come out of the city of Bell.

While I was county Treasurer we held an annual Treasurer’s Conference for local municipal finance officials.  One of the fun things I did on occasion was to give the “Moorlach Award” for excellence in journalism.  I preferred reporters and columnists that either broke the story, or had a major impact in addressing how government handles its finances.  If I were still doing this annual recognition today, then LA Times reporters Jeff Gottlieb and Ruben Vives would be nominees, if not the recipients.  When you go to the PUBLICCEO.com website, check out “The Story of How the Bell Scandal Broke:  An Account From LA Times Reporter Jeff Gottlieb” at http://www.publicceo.com/index.php/local-governments/151-local-governments-publicceo-exclusive/1843-the-story-of-how-the-bell-scandal-broke-an-account-from-la-times-reporter-jeff-gottlieb.  You’ll see why they should be recognized.

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County Supervisor Responds To Article, ‘Time To Stop Demonizing Public Employees, Their Pay And Pensions’

Written by  Supervisor John M.W. Moorlach, Orange County   

On Tuesday, PublicCEO.com ran a blog from the LiberalOC on the recent OC Weekly article found here.  I enjoy a good debate and this commentary provides for one.

Allow me to make something very clear:  I am an accountant and I am dealing with public employee pension issues that are impacting the fiscal viability of municipalities around this state and nation – I am not demonizing people, I’m just pointing out public sector compensation arrangements that are out of balance and do not "compare" with private sector norms.  

The Orange County Employees Retirement System has been around for more than 60 years.  The recent pension enhancements occurred in 2002 and 2004.  Consequently, we only have the last five to seven years of history to refer to.  However, merging this data with some fifty years of prior data to come up with averages is ludicrous; it’s false data for a thin argument that average retirement benefits are relatively low.

I get the fact that management employees are receiving higher benefits, that is only logical.  Besides, the union representatives convinced this employee sector to support the pension enhancements.  (And I’m sure that the writer cannot now "demonize" management.)  But, it begs the question:  who is distorting the facts?

The piece also uses a distractive argument.  The author receives sick leave and vacation pay that he can cash out – electeds do not.  Consequently, this inequity was corrected many years ago with 401(k), which is a common strategy also used by neighboring counties.

Another small detail is not mentioned in the argument about recovering from previous unfunded actuarially accrued liabilities:  the formulas were not increased by 50 percent in the period from 1970 to 2000, like they were in 2002 and 2004.  Nice history lesson, wrong conclusion.

With all that said, at the conclusion we agree on two matters.  The first is that the pension debt is akin to a mortgage.  Agreed.  That’s the argument we are making in our efforts to rescind retroactive benefits.  The second is that our public employee unions have made concessions and have displayed leadership that provides a model for the rest of the state. 

As we continue down this collaborative road, let’s hope that we can continue making the necessary adjustments to protect the fiscal well being of the County of Orange and its pension system.

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