MOORLACH UPDATE — Conditions of Children — October 24, 2013

The 19th Annual Conditions of Children Report was presented to the Board of Supervisors during Tuesday’s meeting. This is an excellent demographic publication that provides a thorough review of numerous metrics in Orange County. With this much history at your fingertips, you can also do trend analysis, as the chart below demonstrates. Although the 2013 report is not online yet, you can see the prior years’ reports at http://ochealthinfo.com/phs/about/family/occp/report. The OC Register provides its perspective of the presentation in the article below.

QUASQUICENTENNIAL BONUS: Can I give you a challenge? Would you please provide me with the 25 top icons of the Second District. Would it include the Huntington Beach Pier? The Newport Beach, Balboa and Seal Beach Piers? The Los Alamitos Joint Task Force Base? The OC Fairgrounds? South Coast Plaza? Fashion Island? A favorite restaurant? A mom and pop diner that you love? Write down what comes to mind while you’re going through the day or driving around the District and let me know. If you’re not a resident of the Second, what are your recommendations for the other four Districts? Little Saigon for the First? The Tustin Blimp Hangars for the Third? Disneyland for the Fourth? And the San Juan Capistrano Mission for the Fifth? Nest year the County of Orange turns 125 years old. With five Supervisorial Districts, we would like to accumulate the top 25 places, events or people, as we assemble the top 125 for next year’s Quasquicentennial! Please send your recommendations to David Mansdoerfer at david.mansdoerfer.

County report: More children, families getting public assistance

Increased poverty, especially since 2007, leads rising numbers into welfare programs.

MIKE REICHER

The Great Recession took its toll on Orange County children and families, but the government safety net caught some from falling further, a new report issued by the county details.

The report, “Conditions of Children in Orange County,” paints a picture of increasing poverty and more reliance on social welfare.

County supervisors said they plan to use the information to tailor policies and spend funds more wisely, although many of the issues are out of their control. The report also raised the broader question of how much government should assist residents.

“If we don’t give them choices, they’re either going to end up dying or costing us millions and millions more,” Supervisor Janet Nguyen said at Tuesday’s board meeting. “We have to help these children and families.”

One of the most direct indicators of poverty, the percentage of children receiving free or reduced-priced lunches at public schools, increased to 46.4 percent in the 2011-12 school year, up from 38.7 percent in 2002-03. Also, the number of children receiving financial assistance through CalWorks, the state welfare program, increased 17.8 percent during that time, with much of the growth since 2008.

“Both of these indicators are reflective of the recession and the economy, and the impact it has had on our families,” said Mike Ryan, chief deputy director of the Social Services Agency.

The study also found more children have signed up for Medicaid and a state sponsored low-cost insurance program for children, teens and pregnant mothers. Over the past 10 years, enrollment in those programs has increased 22.6 percent, with most of the growth between 2007 and 2011.

Ryan characterized that as good news, which bothered Supervisor John ‍Moorlach.

“That means more public assistance,” ‍Moorlach said. “I’m just trying to figure out how that’s good news.”

It indicates more families are getting health care they need, although it also shows more families can’t afford to buy it on their own, Ryan said.

Besides finances and health care, the report analyzed education and public safety.

Progress was noted in some areas, such as a 26 percent decrease in dropout rates over the 10 years, but challenges seen in others, such as a 14.2 percent rise in known gang members (but gang numbers have fallen since 2008).

This report, the 19th annual, was sponsored by the Children & Families Commission of Orange County. Tobacco sales tax funds support the commission.

CONTACT THE WRITER: mreicher

FIVE-YEAR LOOK BACKS

October 23

1998

David Evans of Bloomberg News addressed a nuance in the litigation efforts with “Orange County’s Repos Weren’t Illegal, Judge Rules.” The term “ultra vires” means “beyond one’s legal power or authority. David Evans continues an amazing journalism career with his latest piece titled “How Investors Lose 89 Percent of Gains from Futures Funds” (see http://www.bloomberg.com/news/2013-10-07/how-investors-lose-89-percent-of-gains-from-futures-funds.html). Here are selected portions of the piece.

A legal argument used by Orange County, California, to help extract more than $600 million in settlements from Wall Street firms, including Merrill Lynch & Co., was dismissed by a federal judge handling the county’s case against Fuji Securities.

The county claimed repos it entered into with Fuji, Merrill and other firms violated California state “ultra vires” laws restricting municipal debt.

“There was authority to act,” said U.S. District Court Judge Gary Taylor in his ruling. “Errors in the exercise of that authority, even grave errors, are not ultra vires.”

By the time of the bankruptcy, the county had borrowed more than $13 billion.

“Although that may have been unwise, speculative, or unduly risky, the reverse repurchase transactions made by the Orange County Treasurer in this case were not, under the theories presented here, ultra vires,” ruled Taylor.

Orange County’s current treasurer, John Moorlach, said he had a “difficult time” accepting the decision.

2003

Heather Lourie of the OC Register provided an update on one of the personalities that appeared in our 1999 and 2000 LOOK BACKS, with “Hausdorfer gets role he sought – Ex-councilman once tried to buy 91 Lanes. Now, he heads operator.” I was one of the biggest critics of the 91 Express Lane sale to a nonprofit organization back in 1999, and my reasons were not politically motivated. It was an interesting chapter during my tenure in public life. Gary Hausdorfer is still in this position and appears to be thriving in it, which is all good. Here are selected paragraphs from the piece.

Gary Hausdorfer – whose 1999 attempt to buy the 91 Express Lanes ended in controversy – has been named chief executive of the tollway’s operator, Cofiroute Global Mobility.

Hausdorfer at the helm of the Express Lanes operation likely will be transparent to drivers, said county Treasurer John Moorlach, who called the appointment “déjà vu all over again.”

In 1999, Hausdorfer was head of a private, nonprofit company hoping to buy the 91 Express Lanes from California Private Transportation Corp. The plan ultimately blew up under criticism about potential conflicts of interest. At the time, documents showed there was no independent appraisal of the 10-mile road. Also, CPTC helped create the nonprofit and loaned it $1 million.

Last year, the Orange County Transportation Authority bought the road from CPTC for $207.5 million and hired Cofiroute to run it.

Hausdorfer defended his role in the 1999 deal.

“It’s water under the bridge,” he said. “We did absolutely nothing wrong. There was no conflict of interest of any kind, and I have the documents to prove it. It fell apart for political reasons, not financial reasons.”

2008

Reuters provided a realistic title with “CalPERS mulls raising rates if it posts loss.” The year of 2008 will be known for its liquidity crisis and massive stock market drop, so of course rate raises to a defined benefit pension plan should be considered. But, that was just the tip of the iceberg, as other fiscal calamities were and would be facing municipalities in the state of California. The piece, written by Jim Christie and edited by Leslie Gevirtz, now looks very prescient. Here it is in full:

The largest U.S. public pension fund may need to tap California’s public employers for more money if it does not reverse its steep investment losses of recent months, a fund spokesman said on Thursday.

The California Public Employees’ Retirement System, best known as Calpers, has seen its assets decline by more than 20 percent, or around $50 billion, from the beginning of this fiscal year through Oct. 10 to stand at $190 billion.

If returns do not improve, Calpers may require its employer contributors to increase payments to the fund by an estimated 2 percent to 4 percent of payroll.

Such an increase could take effect in July 2010 for about two-thirds of the fund’s state-employer members, and for the remaining one-third in July 2011.

Any decision on contributor rates will be made after Calpers posts returns for its current fiscal year.

"It would be prudent certainly for them to get ready if the market continues to stay in the dumps," Calpers spokesman Clark McKinley said.

Some local government officials expect Calpers’ contributor rates will rise because it will post a loss this year, adding costs to already strained local budgets.

Local governments across California are cutting services and freezing payrolls, and some are even considering public safety cuts as the housing crisis and Wall Street’s turmoil reduce their revenues from property and sales taxes.

Sales-tax collections are down as consumers rein in spending and property-tax collections are faltering as the state’s housing slump has worsened.

Meanwhile, local officials fear the state may ask them to help close an estimated $3 billion state budget gap.

Local governments can not spare cash for the state in the near term and at the same time prepare for increased contributions to Calpers, said John Moorlach, chairman of the Orange County, California board of supervisors.

"We’ve been looking at major cuts and having to pay higher pension costs could jeopardize the financial viability of some municipalities," Moorlach said. "Having the pension plan potentially increase its costs would just be piling on."

In a Calpers’ statement, chief actuary Ron Seeling said the fund’s double-digit gains in the four years leading up to the 2007-2008 fiscal year will help blunt the impact of the current losses.

"We had saved 14 percent of the fund for cushioning the blow of a future market downturn, and our smoothing policy is working as it should," he said.

Calpers, which provides retirement and health benefits to 1.6 million active employees, said it had an overall funding ratio of 92 percent, as measured by assets divided by liabilities. But continued declines of 20 percent or more would reduce that ratio.

Calpers is also searching to replace its chief executive and chief investment officers who stepped down earlier this year.

The appointment by the Board of Supervisors of Tom Flanigan to the Orange County Employees Retirement System (OCERS) Board of Directors garnered some interesting media attention. Norberto Santana, Jr. of the OC Register covered the topic in “County retirement system lands on hot seat – Appointments, investment returns, heightened security dominate discussions.” The piece brings the pension story closer to home, as the County is a member of OCERS, not CalPERS. Here is the top half of the story:

Amid the toughest investment market in the nation’s history, county officials are sending mixed signals regarding the stability of the county’s $8 billion retirement system that administers pensions for nearly 20,000 public workers.

There are investment losses, swirling lawsuits, ballot measures, bids to abandon the local system and even calls for armed deputies at retirement board meetings.

Orange County’s retirement system keeps generating headlines because of a combination of investment losses and generous benefit increases given out by county supervisors to public safety workers in 2001 and general workers in 2004. The key for taxpayers is that as the systems’ liabilities expand, so do annual payments. And that creates pressure on the county’s general fund because there’s ultimately less money for key public services.

As budgets and options tighten, tempers flare.

On Tuesday, a day after the district attorney announced a review of a controversial proposed board appointment to oversee the Orange County Employees Retirement System (OCERS), and despite intense opposition from labor groups, supervisors moved to appoint Thomas Flanigan on a 3-2 vote. Supervisors Pat Bates and Janet Nguyen opposed the board majority.

Flanigan’s appointment was opposed by labor groups because of his ties to an investment firm called Ryan Labs. State law prohibits pension board members from working with firms that sell pension products. Flanigan said he doesn’t work there but statements by company officials left doubt about whether he was connected to the firm. After a long debate, supervisors approved the appointment on a tight vote.

The tenuous nature of the vote was evidenced when Supervisor Chris Norby, a key swing vote, told his colleagues to get Flanigan off the dais because he was tired of hearing him speak about his financial theories.

"Quit while you’re ahead," Norby told Flanigan, who Supervisors’ Chairman John Moorlach termed an icon in the pension world. "If he speaks anymore, I might change my mind."

Supervisors then approved hiring a Sheriff’s deputy to patrol OCERS board meetings because board members are worried about violence during disability hearings. That was followed by a union request calling on the county to consider abandoning OCERS and joining the state’s retirement system, CALPERS.

Diana Britton of the Money Management Letter also covered the topic of Tom Flanigan in “OC Appoints Board Member Amid Controversy.” Here is the bottom two-thirds of the piece:

Flanigan has been a close friend of Ryan Labs’ former president, Ron Ryan, and an avidsupporter of liability-driven investment strategies, something the firm specializes in, for a long time. John Moorlach, chairman of the board of supervisors, said the complaint was based on the fact that when someone called Ryan Labs and asked for Flanigan, the receptionist said he wasn’t in that day. Flanigan was also listed as a senior advisor to Ryan Labs at a conference recently, but Flanigan told Orange County it was a misprint, Moorlach said.

The motion to appoint Flanigan to the board passed three votes to two. At a board of supervisors meeting Oct. 21, Flanigan denied having any contract with the firm. Flanigan replaces George Jeffries, who was recently appointed to the county Treasurer’s oversight committee.

It was a busy day. Christian Berthelsen of the LA Times provided on OT update in “O.C. Sheriff’s Dept.’s lack of policy blamed for skyrocketing overtime – Overtime totaled nearly $48 million in the last fiscal year, more than double its level eight years ago, the report by the county’s performance audit director found.” The new Performance Audit Department provided an audit report on the matter and here is the article in full:

Overtime pay in the Orange County Sheriff’s Department has skyrocketed in recent years because the department lacks a comprehensive policy or effective controls on the extra pay, according to an audit released Wednesday.

Overtime in the department totaled nearly $48 million in the last fiscal year, more than double its level eight years ago, the report by the county’s performance audit director found.

The department spent more on overtime than it had budgeted for the expense in seven of the last eight years.

Though most of the overtime was paid to cover vacant shifts because of staff shortages, particularly in the county jails, the audit also found several practices that were needlessly driving up costs.

Those practices — which included employees working on days when they had scheduled time off, and working more than the allowable hours of overtime during a pay period — were particularly common among a small group of employees who were augmenting their base salaries with overtime by at least 50%.

The report recommended several policy changes that could save the county at least $3 million a year, but potentially much more if certain practices were adopted.

A lack of "formal direction" — including inconsistent approaches to overtime management in different divisions, a lack of accountability and excessive overtime work by some employees — caused many of the problems, the report found.

Overall, the audit found using overtime to cover vacant shifts was slightly cheaper than hiring additional employees, but recommended that county supervisors and department leaders pursue further policy discussions about whether the savings are worth it, considering the risk created by a fatigued staff.

The audit was requested by county supervisors after a Times report earlier this year that found two-thirds of the department’s sworn deputies make more than $100,000 a year, including 27 deputies who collected more than $75,000 in overtime pay and four who earned more than $100,000 on top of their base salaries.

County Board of Supervisors Chairman John Moorlach, who asked the county’s performance auditor to conduct the review in response to the report, said the report had found several ways to fix the problem.

"I got the sense that it was just not being monitored or measured properly," Moorlach said Wednesday. "I see here that there’s a real opportunity for improvement in how we’re measuring and monitoring employees."

In a written response to the audit’s findings, Orange County Sheriff Sandra Hutchens said a lack of qualified candidates and funding shortages made it difficult for the department to fill vacant positions, requiring use of overtime.

Those problems came at a time when the department’s responsibilities were expanding, with new jail facilities and a demand for more patrol services from the cities the department serves.

"The department did not intentionally keep a high vacancy rate with the intention of using overtime to generate cost savings," Hutchens wrote.

She added that the department is already making some efforts to reduce overtime, including more aggressive tracking of employees’ extra shifts.

Wait there’s more. Doug Irving of the OC Register provided another fun topic that was address with “OC health officials propose color-coded restaurant-inspection seals – The proposed seals would work like a traffic light: Green means a restaurant is safe, yellow means take caution, red means the place is shut down.” My research found that Sacramento County had implemented this strategy, which made the most sense to me. Here is the piece in full:

Orange County restaurants would have to post color-coded inspection seals on their windows to give customers more information about the cleanliness of their kitchens under a plan being put forward by health officials.

The proposed seals would use the same colors as a traffic signal and would replace existing placards that merely say whether a restaurant passed its latest health inspection.

A green card would mean health inspectors consider the restaurant safe; yellow would mean they found some problems; and red would mean they shut the place down.

The county’s Board of Supervisors will likely vote next month on whether to adopt the new system. Color-coded inspection seals could begin appearing on restaurant windows as early as July 1.

"It seems to be practical," said John Moorlach, the board’s chairman. He cautioned that he was still looking into the proposal, but added: "I’m really intrigued by the idea."

An Orange County Register investigation earlier this year found more than 20,000 major food-safety violations in 2007 in Orange County restaurants, supermarkets, convenience stores and other food venues. The investigation found that even restaurants with major health problems could continue to operate without public scrutiny because the existing, posted inspection seals give too little information.

Those seals say only whether an eatery is in "substantial compliance" with food-safety standards or awaiting a re-inspection. The county’s grand jury found in a report this year that the dining public is "almost universally unaware" of those placards.

The grand jury concluded that the county could better protect people from food poisoning and other food-borne illnesses by requiring restaurants to post letter grades based on their health inspections. That kind of A-B-C grading system has been in place in Los Angeles County for a decade.

But, in a report given to county supervisors this month, the Orange County Health Care Agency warned that it would cost more than $500,000 to implement a grading system. Instead, the agency suggested the less-expensive color-coded seals, which would be "easily recognized" and, like restaurant grades, would give diners a way to quickly assess the cleanliness of a restaurant.

The color-coded system would put the focus more on major violations that pose the most health risk, according to the Health Agency’s report. In a grading system, a restaurant can lose points and grades based on both major and minor violations, the report added.

Most restaurants would likely earn a green card under the proposed system, said Richard Sanchez, the director of environmental health for the Health Care Agency. A yellow card would show that inspectors found at least two major health violations – such as improperly stored food or vermin – that were fixed but still required a re-inspection.

The red cards would show that an eatery had so many major violations that health inspectors shut it down on the spot. For now, the county requires closed restaurants to post no warning to their customers; they can even put a sign in their windows that says they’re closed because the owners are on vacation.

The proposed yellow and red cards would have space for inspectors to write in the violations they found.

The Orange County Restaurant Association has not yet taken a position on the plan, but president Pamela Waitt said there’s some concern among its members. In particular, she said, they worry about the long-lasting impact of a "scarlet letter on the door."

A restaurant can get hit with a major health violation for having an improper level of sanitizer in its cleaning water, or for keeping food at the wrong temperature. But Waitt worried that customers who saw a yellow or red card in a restaurant’s window would always assume the worst.

"Once that damage is done, it’s really hard to undo," she said. "We all know that if people aren’t seeing green, they’re not going. And if they see red, they’re done; they’re not coming back."

It was a big news day, as the OC Register also provided an editorial on the DNA labs with “Imperfect solution for O.C. DNA lab turf war – Shared responsibility less attractive than an independent medical examiner.” It endorses an approach that may be worth looking at again.

Few advances in the world of law enforcement have been more significant than increased use of DNA evidence. DNA enables police to capture more criminals and, even more significant, it can be used to exonerate the wrongly convicted. Unfortunately, Orange County’s efforts to safeguard the public and protect the innocent have been caught up in an ugly turf war between the District Attorney’s Office and the Sheriff’s Department, with both departments seemingly more interested in their bureaucratic prerogatives than the public’s safety.

At issue is the development of a new $5 million high-volume DNA lab that would collect and analyze DNA taken from those accused of petty crimes, under the theory that most petty criminals end up committing a vast array of more serious crimes. The current lab is run by the Sheriff’s Department, and it has been plagued by inefficiency and controversy, according to the D.A.’s office.

As the Register reported, "A sheriff’s deputy is alleged to have falsified documents in a nationally funded DNA project, resulting in his arrest" and the head of the lab "is alleged to have sabotaged another federally funded DNA project because [D.A. Tony] Rackauckas refused to use the sheriff’s lab." Here’s a case where the Sheriff’s Department apparently has slowed DNA examinations to protect its turf, which is a shameful situation that bolsters the D.A.’s case for controlling the lab.

But officials at the Innocence Project, which uses DNA evidence to free the wrongly convicted, rightly told the newspaper that it’s a conflict of interest for district attorneys to control DNA and other forms of evidence. "Just like we wouldn’t want a defense attorney to call the shots in a lab, we wouldn’t want a prosecutor," said one Innocence Project spokesman.

That’s exactly right. Prosecutors are interested parties in legal proceedings. They are seeking convictions, so it would be unwise to let any D.A. control such important evidence. In fact, as the Register also reported, "A senior [Orange County] prosecutor is alleged to have pressured a sheriff’s analyst to change her conclusion in a carjacking case that kept an innocent man imprisoned for 16 months." That’s chilling.

In reality, neither department is worthy of running such a lab. So the Board of Supervisors has come up with a compromise plan that’s better than the current arrangement but still falls short of the ideal. The new lab would be merged with the existing lab, and an executive committee comprised of the sheriff, the D.A. and the county executive officer would oversee its operations. The current lab director would continue in the top position. So, basically, the same people who have made a mess of the current situation will still run the DNA lab, although both sides in the dispute – along with the county CEO – would have a management role. That would at least provide a means to hammer out some of the more egregious problems, but it’s a far cry from a permanent solution.

DNA evidence is too crucial to leave in the hands of prosecutors or a sheriff’s department that has allegedly dragged its feet to protect its turf. The right answer is the one originally offered by Board Chairman John Moorlach: the establishment of an independent medical examiner’s office. We’d urge the board to take a more serious look at that fair-minded solution.

Wait. There was an election going on at this time as well. Christian Berthelsen of the LA Times covered my ballot measure in “Orange County’s Measure J foes not even bothering – The proposal to require voter approval of any future increases in county worker pensions is considered certain to pass.” Here is the piece in full:

Orange County’s Measure J may be the closest thing to a sure bet on next month’s ballot. Voters appear to so strongly favor the idea of requiring their approval of any future increases in county employees’ pensions that unions for government workers aren’t even campaigning against it.

The bigger question is whether Measure J will make much of a difference in pension costs.

If approved, the measure would amend Orange County’s charter to require that retirement benefit increases for county government workers — awarded through bargaining agreements with the county Board of Supervisors — be approved by a majority of voters before they could take effect. A study of the benefits’ cost would be published in voter pamphlets before such an election.

The measure was placed on the ballot by the Orange County Board of Supervisors in July as part of a larger ongoing battle between the board and the county’s unions to rein in the cost of government workers’ retirements.

Those costs have been growing in part because of generous deals made with the unions earlier this decade that have left the county’s pension fund with far less money than it needs to pay benefits in the coming years.

Ironically, the idea of putting such benefit hikes to a vote has its roots in one of the most labor-friendly cities in the West. San Francisco has had such a rule on the books for more than a century, and as a result it has more money than it needs to cover worker retirement costs.

By contrast, other local government pension funds in California had on average 88% of the money they need, according to an annual survey of the state’s public retirement systems released last month by the state controller’s office. Orange County’s plan is just 71.5% funded.

Voters "should be able to say up or down whether they agree with accepting a new liability and whether that should be borne by themselves and their kids," said John Moorlach, the chairman of the Board of Supervisors who has led the county’s charge on public worker pensions. "When we create a debt like that we should involve the voters, just as we do with bond measures."

But having already secured such lucrative agreements in recent years, the county’s public employee union leaders say they aren’t likely to seek additional pension enhancements for a long time. Though union and county leaders regularly meet to hammer out multi-year contracts, pension enhancements have been part of the final deal only a handful of times in recent decades.

"This is really a nonissue," said Nick Berardino, general manager of the county’s largest public employee union, the Orange County Employees Assn. "There’s not going to be any future increases in the retirement formula. It’s as good as we’re going to get, and it’s as good as we’re going to try to get, in the next several decades."

Still, union leaders are opposed to the measure, saying it would interfere with the negotiating process and pass responsibility to voters for a job that politicians are elected to do.

In 2001 and 2004, county supervisors — an entirely different board than the members who currently serve — cut handsome deals with employee unions on retirement benefits with the expectation that the pension fund’s investment returns would pay for the additional cost.

For example: The deals allow, after 30 years of service, sworn law enforcement personnel to retire at age 50 with 90% of their pay and general government workers to retire at age 55 with about 80% of their pay.

But as investment returns have decreased — and employees’ expected life spans have increased — those deals have left the county’s pension fund with $2.7 billion less than it will need over the next 30 years to cover its costs, below what experts consider a safe level. Critics fear that the ever-increasing costs will ultimately force the government to either raise taxes or cut deeply into services to cover the shortfall.

Measure J is just one piece in a broader war between the supervisors and unions over pensions. Supervisors also voted to file a lawsuit seeking to overturn a portion of their labor agreement with the Assn. of Orange County Deputy Sheriffs, and have sought to replace board members of the Orange County Employee Retirement System who were viewed as too sympathetic to labor. Unions have also renewed their request to have management of their pension plan taken over by the statewide CalPERS system, though it was rejected by the supervisors earlier this week.

Both supporters and opponents of Measure J say their internal polling shows it will probably pass.

Supporters, including the Orange County Taxpayers Assn., have raised about $100,000 for a campaign that includes lawn signs around the county. Unions, by contrast, concluded early on that the measure showed such strong signs of passage that they chose not to spend money to fight it.

October 24

2008

Norberto Santana, Jr., of the OC Register provided another campaign update with “Do you want to OK county pensions? – Measure J would give local voters final say on pension enhancements.”

When then Treasurer/Tax Collector John Moorlach stood in the audience before the county Board of Supervisors back in 2004, he begged them publicly to avoid enhancing pensions for general government workers. After losing the vote, he fumed for months and later swore that if he was ever elected as a supervisor, he’d tackle the pension issue head on.

That’s exactly what Measure J – the only county measure on the Nov. 4 ballot — seeks to do.

The measure is a public rebuke of the stewardship that county supervisors have given the pension system, which is now only 73 percent funded and runs a $3 billion unfunded liability.

If voters approve the measure, any future labor contract negotiated by county supervisors that would increase the retirement benefits of any public employee or elected official would have to then be approved at the ballot. While the county could negotiate such increases, none could take effect until approved by voters.

Unlike the two pension spikes approved in 2001 and 2004, Measure J would force county officials to present voters with an actuarial study detailing the full cost of pension enhancements as well as its impact on the county’s unfunded liability. General cost of living adjustments are exempted.

Moorlach – who was elected as a supervisor in 2006 and now sits as chairman of the board – is the main sponsor of the measure, which also was supported unanimously by all county supervisors.

He sees the measure as a backstop – and firewall — to the backdoor negotiations that produced large pension enhancements in 2001 and 2004.

Orange County supervisors in 2001 granted public safety employees – deputy sheriffs and firefighters – a radically enhanced retirement benefit that allows many to retire at age 50 with a significant portion of their paycheck guaranteed for life. In 2004, supervisors again granted general government employees a similar benefit that allows them to retire at age 55.

While the general employees contribute toward their benefit, public safety worker do not with taxpayers footing the entire bill.

Since both benefits were enacted, the county’s pension system has seen a $3 billion unfunded liability continue to balloon.

Moorlach calls Measure J "an insurance policy for the taxpayer," because it would hamper the kinds of private labor negotiations that produced the large pension enhancements. While both measures were voted on in public by county supervisors, Moorlach and other opponents of such enhancements criticize the public votes as largely rubber stamps on deals that are already negotiated.

Opponents of Measure J argue that it relieves elected officials of their duties.

"We live in a Republic in which we elect representatives to handle these issues. And we expect them to make decisions," said Nick Berardino, general manager for the Orange County Employees Association

The labor group also argues that Moorlach’s effort is "totally politically motivated" with Berardino noting that "we are not going to be going for formula improvements for decades."

However, Measure J also could have an unintended consequence, wrote County Auditor/Controller David Sundstrom.

While the costs of preparing actuarial studies, or putting items on the ballot, are nominal – adding up to no more than $160,000 – Sundstrom said the measure could have far reaching impacts on the collective bargaining process.

Sundstrom notes that other increases, such as salary hikes, would actually have the result of increasing pension liabilities since those benefits are based on a percentage of pay.

"The county and unions may have an incentive to increase non-pension benefits (e.g. salary) to avoid a vote," Sundstrom wrote in his fiscal impact statement on the measure, which is included in the information sent to voters.

Christian Berthelsen of the LA Times covered the same topic in “Measure J is seen as a sure bet – O.C. unions aren’t even fighting plan to require voter approval of pension increases.” Here are a few selected segments:

Orange County’s Measure J may be the closest thing to a sure bet on next month’s ballot. Voters appear to so strongly favor the idea of requiring their approval of any future increases in county employees’ pensions that unions for government workers aren’t even campaigning against it.

The bigger question is whether Measure J will make much of a difference in pension costs.

San Francisco has had such a rule on the books for more than a century, and as a result, it has more money than it needs to cover worker retirement costs.

By contrast, other local government pension funds in California had on average 88% of the money they need, according to an annual survey of the state’s public retirement systems released last month by the state controller’s office. Orange County’s plan is 71.5% funded.

Voters "should be able to say up or down whether they agree with accepting a new liability and whether that should be borne by themselves and their kids," said John Moorlach, chairman of the Board of Supervisors, who has led the county’s charge on public worker pensions. "When we create a debt like that, we should involve the voters, just as we do with bond measures."

Supporters, including the Orange County Taxpayers Assn., have raised about $100,000 for a campaign that includes lawn signs around the county. Unions, by contrast, concluded early on that the measure showed such strong signs of passage that they chose not to spend money to fight it.

Brianna Bailey of the Daily Pilot wrote the brief piece on my achieving the number 5 spot in the annual Daily Pilot 103 list. I had recently become a World Series of Poker fan prior to the writing of the article, titled “Putting on a poker face – Supervisor is working behind the scenes on what he calls a ‘global solution’ to annexation clashes between Newport and Costa Mesa.”

Board of Supervisors Chairman John Moorlach got hooked on the World Series of Poker on his summer vacation this year when he and his family decided to stop for lunch at the Rio casino in Las Vegas and got to watch some of the games.

Now he’s a loyal devotee, watching famed card players like Phil Hellmuth on ESPN.

“There’s a lot of principles that flow through into life,” Moorlach said. “You have to make decisions based on the information you have.”

Under Moorlach’s supervision, the Board of Supervisors managed to juggle the county’s budget this year with 10% cuts from the state.

He also was the third — and only male vote on the board — to appoint Orange County Sheriff Sandra Hutchens in June.

In the game that is politics, Moorlach knows when to hold and when to fold. Residents of the unincorporated South of Mesa Drive neighborhood withdrew an application in April that would have allowed the neighborhood and nearby Santa Ana Country Club to be annexed by Newport Beach after Moorlach blocked their annexation bid. Moorlach believes Costa Mesa has first dibs on annexing the land.

The supervisor said he is still working behind the scenes on what he calls a “global solution” to annexation clashes between Newport Beach and Costa Mesa, but like a true World Series of Poker star, Moorlach isn’t ready to reveal his hand just yet.

The plan would divide several pieces of contested unincorporated land between the two cities.

“Sometimes you have to bluff,” Moorlach said of his love of poker. “There’s some drama there. I find myself screaming sometimes, ‘How did that card come out.’”

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

This message should appear at the bottom of every e-mail you receive. If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one. If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.

Advertisements