MOORLACH UPDATE — OC Register — April 29, 2013

Today’s OC Register has an editorial regarding the Santa Ana Unified School District (SAUSD). As difficult as it has been on all of the employees of the County of Orange, maintaining level salaries has helped the County preserve its reserves during this most difficult of recessions. The same cannot be said for the SAUSD, which continues to fly at the 10,000 foot level while heading straight toward the Sierras. Fitch Ratings made their concerns public, and between the time I was interviewed for the first piece below and today, the SAUSD Superintendent, Thelma Melendez de SanTana, has announced her retirement after only two years on the job.

The second piece was in yesterday’s OC Register. County employees that park under the Hall of Administration can only enter and exit with a key card, a device that you wave across an electronic pad that then raises the arm to permit one vehicle to enter or exit. This is a transaction that is recorded by the software that operates the entry and exit gates. This data is subject to the California Public Records Act. After reviewing who used their key cards to enter and exit, the data reveals some interesting patterns and trends. Of course, it is not as simple as it looks. Some employees carpool and would never appear to be coming in or going out. Many attend offsite events and meetings, thus reducing the time that their cars are in the parking structure.

Ian Rudge, my Chief of Staff, was on my original team back in January of 2006. He was recruited away by Steve Danley, the founding Director of Performance Audit, when that department was formed. I recruited Ian back to my office at the beginning of last year, as I needed an experienced and knowledgeable Chief of Staff during my year as Chair of the Board and through the remainder of my term. We had a long list of objectives for last year, including the Super Bowl of negotiations with our major bargaining units, as Ian has a strong educational background in public employee compensation and benefits. As you know, if you were a subscriber during 2012, there were plenty of other activities that kept everyone in my office hopping. Consequently, Ian and the rest of my staff puts in long hours. I do give Ian vacation time, he frequently brings work home, and he does attend a variety of functions outside of the office, so the weekly average of true working time is much higher. With that, Ian, accept my congratulations for working the most hours on the Fifth Floor!

I’m having fun in trying to formulate the answer to the most frequent question that I get, “What are you doing next?” I honestly did not think that I would be running for another office within the District after next year. Consequently, I’m not doing a number of functions that some of my colleagues are, such as health fairs, to keep up their visibility in their districts. The Lestonnac Free Clinic occasionally offers a free, and very successful, Saturday clinic in my District without having to put my name on a banner or have my staff participate. I’ve focused my time, as has my staff, on other District and countywide priorities, which require a lot of in-office hours, in addition to my offsite responsibilities. One of the top priorities is to be well-versed on issues coming before the many boards, commissions and committees on which I serve. Consequently, I’ve hired my staff for their analytical skills and brain power. Four of them have Master’s Degrees. And they, and their cars, are doing a great job of serving and protecting the taxpayers of my District.

SAUSD gets wakeup call from ratings firm

School district sees credit rating downgraded on some of its bonds.

Tough economic times usually mandate cutbacks in spending – for families, businesses and governments. Unfortunately, not enough of that happened at the Santa Ana Unified School District when the Great Recession hit in 2007-09.

As a result, earlier this month, Fitch Ratings downgraded the district’s general obligation bonds two notches, to A+, their fourth-highest of 20 rankings, from AA, their second-highest. It’s a slip to "High Credit Quality" from "Very High Credit Quality."

It’s not too late to turn the situation around, but it deserves prompt attention.

Although the credit rating still is considered "strong," the A+ rating includes the proviso: "This capacity may, nevertheless, be more vulnerable to adverse business or economic decisions than is the case for higher ratings."

"There’s a management issue there. [The district] made a decision just to rip through their reserves instead of making cuts," we were told by John Moorlach, the Orange County supervisor and former county treasurer.

The downgrade affects only future general-obligation bonds for the district. Previous bonds are not affected, Mr. Moorlach said. But for future general-obligation bonds, "It could drag down the rating," meaning the district would have to pay higher interest rates. That would translate into less money for the schools, or higher taxes to make up the difference.

General-obligation bonds also are separate from construction bonds, such as the $200 million bonds Santa Ana voters authorized in 2008 with Measure G.

The Register reported, "A negative outlook means that the ratings agency is reviewing the district in the next year for another possible rating downgrade, Fitch Director Scott Monroe said. "It is unusual for Fitch to downgrade an agency by two grades at once," Monroe said.

Deidra Powell, an SAUSD spokeswoman, said, "Our No. 1 priority has been maintaining the 180-day year for our student population. While the state has inadequately funded education, we utilized reserves to maintain our academic programs while other districts reduced their school year calendar," according to the Register news report.

While maintaining the 180-day school year is praiseworthy, for any enterprise – especially a publicly financed school – sound finances must come first.

After being blamed during the 2008 economic meltdown for being too optimistic in their ratings, Fitch, Moody’s and Standard & Poor’s, the major ratings firms, have become more realistic in their assessments. Fitch was brutal in its assessment of Santa Ana Unified: "The Rating Outlook has been revised to Negative from Stable. … The downgrade reflects the district’s delayed implementation of planned expenditure reductions, resulting in a very large operating deficit that is expected to lower the district’s fiscal year end 2014 financial cushion to the legally required minimum of 2 percent from 18 percent in fiscal 2011."

"Fitch is concerned that the district did not pursue significant concessions from labor as previously planned, that it proposes to make expenditure reductions only to the extent legally required, and that it intends to violate its former 7 percent to 9 percent financial cushion comfort zone. The comfort zone was an informal policy and was not adopted by the board."

The district has made its goal to keep its school year intact but it also must address its credit rating and thus restore its reserve fund. Both will require a concerted effort to engage the district’s employee unions for help in finding solutions.

Supervisor’s aide clocked in just 13 hours a week

By TONY SAAVEDRA and KEEGAN KYLE

Supervisor Janet Nguyen’s highest ranking aide collected $105,420 a year while spending an average of just 13 hours a week at the county office – far fewer than the other 36 executive assistants working for the county’s supervisors, public records show.

Nguyen’s deputy chief of staff, Tam "Nick" Lecong, showed up at the county hall an average of three days a week and spent only a few hours there on each of those days, according to an analysis of access cards for the county garage between February 2012 and February 2013. The card data, showing both entrances and exits, was obtained through the California Public Records Act.

Supervisor Janet Nguyen’s deputy chief of staff, Tam "Nick" Lecong, showed up at the county Hall of Administration an average of three days a week and spent only a few hours there on each of those days, according to an analysis of access cards for the county garage between February 2012 and February 2013.

JEBB HARRIS, THE ORANGE COUNTY REGISTER

So elusive is Lecong that the Watchdog was unable to locate him for comment. We popped in twice to the supervisor’s Santa Ana office. We visited a Westminster community services center known to locals as "Janet Nguyen’s district office." We went to a speech that Nguyen gave at the SheratonGarden Grove. We even went to Lecong’s home. Never found him.

Emails and phone calls to Lecong went unanswered.

Nguyen said she has asked Lecong – and the rest of her staff – not to speak to the media.

Lecong was generally absent most Fridays during the review period, including all Fridays in August, September and October. After that, he spent the least amount of time in the office on Mondays.

Nguyen said she was not surprised that Lecong was rarely seen at county offices.

"I’ve instructed him to spend his time out in the district. He’s out helping my constituents. He understands the needs of the community and works every day to solve their problems," said Nguyen, who represents Garden Grove, Westminster, Santa Ana, unincorporated Midway City and part of Fountain Valley. Much of her constituency is Vietnamese and Hispanic.

Executive assistants are salaried employees who are not required by any law or regulation to work a 40-hour week. They work at the behest of their supervisor, advising, analyzing issues, preparing briefs for board meetings and interacting with the community.

According to the records, Ian Rudge, chief of staff for Supervisor John Moorlach, worked the most office hours, at 39 a week. Rudge earned $121,508 during the review period.

Mark Lopez, an assistant to Shawn Nelson, chair of the board of supervisors, tied for second best worker bee with Sabrina Noah, an assistant to Supervisor Pat Bates, both at 36 hours per week. Lopez earned $52,222 and Noah earned $50,300.

After Lecong, the fewest office hours were loggedby Hong "Diane" Nguyen, an assistant to Supervisor Nguyen (and Janet’s sister, according toNguyen’s office) and Stephen Spernak, a field representative for Nelson. Both worked 22 hours a week. Diane Nguyen earned $73,700, while Spernak earned $64,168.

As a Garden Grove councilwoman, Nguyen appointed Lecong to the city planning commission. She was elected to the board of supervisors in 2007 and brought Lecong with her.

Nguyen said Lecong is not a political operative or a fundraiser for her campaign, but someone with close ties to the Vietnamese community.

"I need my staff out in the community, not sitting behind a desk," said Nguyen. However, she did not know how to quantify Lecong’s time.

"Do I have complaints that people aren’t being serviced? No," she said. "The election is where I get my seal of approval."

Nguyen won re-election in June 2012 against perennial candidate Steve Rocco, a former Orange school trustee who did not campaign. A notorious recluse, Rocco was once convicted of stealing a bottle of ketchup.

Other county supervisors assign field work to their assistants as well, but they still require them to report regularly to the county office, especially those at the top of the office hierarchy.

"Everybody deals with constituents, but you still come to work," said Nelson. "When you’re not actually at something, you have to come back. You still have to check in."

Lecong’s counterparts at the top of the "executive assistant" pay scale spend many more hours in the office. Don Hughes, chief of staff for Supervisor Pat Bates, spends an average 33 hours a week in the office and Denis Bilodeau, chief of staff for Nelson, spends an average of 23 hours.

Despite Nguyen’s argument that her staff spend most of their time in the field, the data shows that – aside from Lecong and Diane Nguyen – Janet Nguyen’s executive assistants are mostly in the office, ranging from an average 27 hours weekly to 31 hours.

Moorlach said he requires his top assistant to be in the office five days a week. But Moorlach also acknowledged that Nguyen and her staff attend more community festivals and fairs than he does.

Nguyen announced this month that she will run for the state Senate seat being vacated by termed-out Lou Correa, D-Anaheim.

"I’m not as worried about building name I.D.," Moorlach said.

Contact the writer: tsaavedra

FIVE-YEAR LOOK BACKS

April 28

2008

The Orange County Business Journal gave me an Honorable Mention in its annual “Profiles of Orange County’s Most Influential Businesspeople for 2008.” By the last year that government and institutional leaders were included in this annual compilation, 2011, I would move into the big leagues and make the top 50.

Frank Mickadeit, columnist for the OC Register, would recount a fun weekend excursion that we both enjoyed the previous weekend, an annual event that I was unable to enjoy this past weekend. The piece was titled “Vagueness is Fullerton’s Yacht Club – Who needed Ensenada?” However, I did enjoy my wife’s great dinner last evening with my son, Daniel, and special guests Ken and Tyler Wayman, to commemorate the five-year anniversary of this most memorable weekend (and lost in Cribbage to Ken, again).

TWO HARBORS, Catalina Island — One year at the Newport-Ensenada race, some Fullerton sailors were about a mile out and realized they were way behind with no chance of catching up. They said the hell with it: Let’s just go over to Catalina instead. Twenty-six miles away, not 126.

With that, the Fullerton Yacht Club’s primary annual event – the Ensenada Alternative – was born. Or at least that’s how charter member Charlie Honsberger remembered it as we knocked ’em back on the deck of Sen. Dick Ackerman’s boat Friday afternoon, moored 50 yards off Catalina.

Was that ’84, ’85, maybe? Who knows for sure? I could probably look it up in our archives, but why? There is kind of this whole purposeful vagueness about the Fullerton Yacht Club, which is its beauty. In fact, were I to buy a boat – and I think I would do so only so I could belong to the FYC and fly its red-and-white burgee – I think I would name it The Vagueness.

The notion that a landlocked city 20 miles from the ocean would have a yacht club in the first place is pretty rich in its own right. Ackerman, a Fullerton city politician when he co-founded the club, is a passionate and skilled sailor. But many of the other members are not. In fact, based on my informal survey of the 25 or so guys who showed up this weekend, most are not.

Honsberger was named the club’s Yachtsman of the Year once because he lost his boat. He improperly set his anchor one night, went ashore for dinner and when he returned, the boat was gone. It took club members hours to find it.

This was just the kind of mistake I wanted to avoid, which is why I decided that this weekend I wouldn’t be touching any piece of equipment more complicated than the flush handle on the commode. And I even managed to screw that up, the penalty for which was having to help the skipper of my ride, The Venezia, get elbow-deep with a coat hanger in the lovely plumbing between the head and the bilge.

Ackerman is the club’s permanent commodore. For formal events – like the annual sampling of sautéed cattle testicles at the Saturday evening cocktail party on a fouled sliver of rock and sand known as Dog (expletive) Beach – he’ll wear a ratty old navy-blue officer’s coat with gold brocade over his shorts and top-siders. (Although, if you look at the coat closely, it doesn’t look like any naval officer’s coat I’ve ever seen. It either dates from the Napoleonic era or was a costume in a Busby Berkeley musical.)

You’ll find this hard to believe, but it’s looking more and more like I’ll never serve in the state Senate with Ackerman, but I can imagine that as Senate minority leader he brought a measure of fun to what can be a dull and stuffy chamber. I’ve seen Ackerman take issues seriously, but I don’t recall him taking himself too seriously.

On Saturday morning, he arranged a tour of the hyperbaric chamber, where divers who get the bends are taken to be properly reacclimated. Then we looked around the adjacent USC environmental science center, which has a new little compound of attached apartments for conference attendees. A beautiful, architecturally tasteful, oh-too-perfect compound, with each unit’s stucco exterior a different color from the Martha Stewart Living palate. “It’s Ladera Ranch!” cried John Moorlach. Then Tyler, a very mellow college student who was on the trip with his dad, said to me, “Dude, a gated community on Catalina. Unreal.”

Yes, it was, and these people being mostly Fullertonians either by actual residence or by outlook (that is, pretty normal), I sensed this whole South County vibe was starting to freak them out. Time to get back to the boats and do what we came to.

I did some sketchy sketching in my sketch book, spat sunflower seeds and saw shooting stars. I smoked a few cigars and sampled a few new drinks – most notably, a Two Harbors original called a Buffalo Milk: a frothy concoction of vodka, Kahlua and probably some chick-mixers and liquors I’d rather not cop to. I read nothing weightier than the latest Velocity.

But the best part, by far, was getting to witness my friends having the same good time. And just guy talk. Sitting on the top deck of The Venezia late Saturday night, I think I gave young Daniel Moorlach some advice he’ll never forget about the pleasures of cleaning out a stinking commode and sailing the tough emotional waters ahead in college, and implying there’s some connection between the two. If he takes me as seriously as his dad does, he’ll do fine.

April 29

2008

The Catalina weekend provided plenty of material for the OC Register’s Frank Mickadeit. He and I would spend a long time chatting about the Sheriff selection process on the Cherry Cove beach. His next column was titled “The old ‘open’ way failed us last time.”

At the Register building on Grand Avenue, the newsroom where I work is on the third floor. The editorial and commentary department, where Steven Greenhutworks, is on the fifth. On the fourth floor is a patio balcony where he and I sometimes look out toward the Saddleback ridge and share a cigar (no, not the same cigar,) as we debate county issues.

When I pick up Greenhut’s column, I make it a goal to stay with him to at least the third mention of John Lockebefore I go to the crossword puzzle on the back of Arts. This past Sunday, he offered his take on the hiring of our next sheriff, mentioned the Hoover Institution only once, and I stuck with him to the end. Metaphorically, there was another fourth-floor coming-together moment, so today I’m going to piggyback on that.

Greenhut emphasizes the need for openness in selecting a sheriff and in the department itself. Who is going to argue against that, especially at this point? But the execution of selecting a sheriff can be done in more than one way, and I’ve heard some consternation from those who think the Board of Supervisors should have called an election.

Here’s why an election doesn’t necessarily mean a more open process than the appointment route that was taken: because it didn’t work with the last two sheriffs.

Brad Gateswas initially appointed, but after that was a creature of his own considerable imperiousness and the old-boy network that allowed him to win re-election after re-election. Finally, the old boys decided they’d had enough and that Mike Caronawas the guy.

There was no vetting process that involved 48 nationwide candidates, as we have now. Basically, they were fed up with Gates, looked around locally at who was willing to take on the Big Guy, and decided it was the Little Guy. Send your checks to Mike Carona for Sheriff.

That is exactly how Carona was elected. He had some good ideas (mostly never realized) and a winning personality, but as much as anything he had the money and unqualified support of the Lincoln Club and the mainstream Republican establishment. They have to own that and, in conversations with me, some do.

But do you think that if there were a special election for sheriff and they got yet another chance to essentially anoint the next sheriff, they’d pass that up? Could they resist that? No way. Who could? And were this Establishment with its great political machine to create a groundswell behind one person, that person would have the best chance to win a special election.

So now, thematter goes before an electorate of exactly five. They – unlike most of the establishment GOP – are answerable to the general electorate. And they know this will be perhaps the most closely watched decision they’ll ever make.

You could call Pat Batesand Bill Campbellestablishment Republicans; they came up through the ranks. John Moorlach is in pretty good with the establishment, but he’s got a record of independence. Chris Norby– he’s a conservative by principle, but he does any crazy damn thing he wants. And Janet Nguyen– well, I don’t have to make much of a case as to just how far out of the old-boy network she is.

We have a better chance of getting the best candidate for the job through this imperfect representative form of government and its interview process than we do by opening the door to an election in which the candidates with the most money will certainly be the front-runners.

Moorlach and afew others pointed out that my earlier suggestion – the sheriff always be appointed by the Board of Supervisors – would require a change to the state Constitution. That’ll never happen.

So in the absence of a permanent appointment system, you could say O.C. is getting a break.

As I said yesterday, the heaviest reading I did all weekend was the O.C.-based car-collector magazine Velocity.

Through which, I should note, I learned Art Astoris putting up his monster collection of mid-century American autos on the auction block.

When I wrote about him a few months ago, the radio-station mini-mogul was still deciding what he was going to do with the collection. Velocity reports that both Astor’s cars, housed in Anaheim, and another major collection – that of late auto dealer Joe MacPherson– go on the block in June. See www.rmauctions.com.

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