MOORLACH UPDATE — Letters to the Editor — January 20, 2011

Sometimes you wonder, “Has anyone read my editorial submission?”  Yes.  And the OC Register printed two letters, one today (the first below) and one yesterday (the second).

Mr. Engh did not get the editorial.  Let’s hope he’s not a public school teacher.  Please.

Mr. Beacom doesn’t get it either.  We took a pay cut for eighteen months.  It was not the non-acceptance of a raise.  The John Moorlach residence took a $10,000 hit.  Mr. Beacom repeats the union mantra of attacking management.   

Now let’s see, the unions have run up our pension plan contribution from around $50 million per year, when I arrived at the County, to some $400 million per year today.  Making minimal cuts to management compensation is supposed to fix this fiscal hemorrhaging?  This leader opposed the pension enhancement and warned that it would be a fiscal wipeout.  So I’m supposed to pay for that vote?  Well, I will.  I’m more than happy to go back to the old pension plan formula if the employees do.  We’re a team.

Education: Address realistic teacher concerns

California teachers contribute 8 percent of their salary to their retirement fund. The state is required by federal law to match that amount the same as any employer matches all employee Social Security contributions. All of this is in lieu of Social Security for which teachers have no entitlement. This arrangement was agreed upon when Social Security was enacted in the 1930s.

Supervisor John Moorlach seems to suggest that California should reduce or discontinue these matching contributions [“Budget ax skips schools, pensions,” Orange Grove, Jan. 16]. He knows that is not possible. Not legal. Is the supervisor flailing at windmills? Real suggestions. Real leadership. Please.

Gordon Engh

MISSION VIEJO

O.C. Prudence Please

Orange County Supervisor John Moorlach advocates cuts to schools and public employee pensions. He wants “everyone to share the pain” [“Budget ax skips schools, pensions,” Guest Column, Jan. 16]. Why, then, are there no cuts at the upper levels of county executives and management?

The recent 5 percent “cut” that O.C. executives and management took was just not accepting a pay raise. They continue to get generous car, expense and retirement accounts. Jerry Brown leads by example in his personal and staff spending. This was symbolized by his drastically downsized inauguration ceremony.

Until county and school line staff see substantial cuts by their leaders, they will not be behind cuts that will directly and dramatically affect their families and well-being.

Warren Beacom

COSTA MESA

FIVE-YEAR LOOK BACKS

January 20

2001

The County received its interest payment on the July 18 Edison International medium term note.  A few hours after I announced the formation of the Ad Hoc Committee, Edison International issued a press release:  “The recent suspension of certain payments by Southern California Edison only applies to the utility company.  It does not extend to the parent corporation, Edison International or its other business units.  Edison International expects to be able to meet its financial obligations as they come due.”  The payment of their interest obligation proved it.

The OC Register’s Heather Lourie continued the prior day’s theme with “County guards Edison funds—Money:  Treasurer forms a group of unsecured creditors of the troubled utility.”  The County was not the only municipality holding utility-related bonds.  I did not reveal any others to the media and took most of the brunt of this topic.  This article did reveal one nearby holder.  Here are selected paragraphs:

                “I can sit and wait, or I can lead,” Moorlach said.  “If we can organize as one voice, then we can work directly with Edison.”

                Moorlach said other unsecured Edison creditors have contacted him and will be on the committee, although he declined to identify them or say how many they number.  The group, he said, includes money managers of “well-known funds and individual investors,” both national and international.

                In a related development, Riverside County Treasurer Paul McDonnell said Friday that he invested $39.7 million of his county’s money in similar offerings of Pacific Gas & Electric, the other major state utility near bankruptcy.

David Reyes of the LA Times also covered the topic in “O.C. Acts on Edison Notes.”  Here are selected paragraphs:

                “We believe this step is critically important in order to protect the rights of each and every unsecured creditor,” said John M. W. Moorlach, the county’s treasurer and tax collector.

                While encouraged by the payment, Moorlach said the critical moment will arrive Jan. 31, when the short-term note matures and the utility must make payment.

The story was still a big one and the LA Times did another analytical piece on the subject.  James F. Peltz covered it in “Utility issues:  Albatross or Opportunity?  Strategy:  As Edison and PG&E bonds and stocks crumble in value, big investors debate: buy, hold or sell?”  For a strong issuer like Edison International, this was a definite “buy” opportunity.

Some of the institutions that own the companies’ debt are starting to organize as the bankruptcy threat increases.  An ad hoc committee of Edison’s unsecured creditors—those owning debt securities or that have other claims that aren’t backed by collateral—has been formed in Orange County, county Treasurer John Moorlach said Friday.

                Moorlach, who disclosed recently that the county invested $40 million of public school funds in Edison notes, said formation of the committee “is critically important in order to protect the rights of each and every unsecured creditor.”

                After Edison warned of bankruptcy in December, the county tried to sell its Edison notes but was unable to find any takers at the price it sought, Moorlach has said.  So, rather than suffer the loss, he decided to wait for the state to intervene in the crisis.

In the middle of all this fun, Daily Pilot columnist Steve Smith wrote a piece that had a little humor in it that included me.  The column was titled “Silence on the screening issue speaks volumes.”  I was included in his opening two paragraphs.

                This was supposed to be a funny column.  I was going to try to make you smile by declaring that the screening debate in Costa Mesa should not be about checking people for their citizenship status but about giving IQ tests to future candidates for office.

                I was going to suggest we screen candidates for financial skills by requiring them to play Monopoly with county Treasurer John Moorlach.  Beat him and you can run for office.

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