MOORLACH UPDATE — CalPERS and “C” Words — May 26, 2017

Although it seems like I’ve been going nonstop the past two weeks, at least the media has been quiet and given me a break.

The concept of Gov. Brown wanting to prepay CalPERS an additional $6 billion, by temporarily borrowing money from cash reserves, is still creating quite a buzz (see MOORLACH UPDATE — State-Run Retirement Plan — May 19, 2017 may 19, 2017 john moorlach and MOORLACH UPDATE — Obtain Prepayment Sizzle — May 17, 2017 may 17, 2017 john moorlach andMOORLACH UPDATE — SB 671/Prepayment — May 14, 2017 may 14, 2017 john moorlach).

The calls to exercise "caution" and "concern," and to "cook" this idea a little more – the traditional "C" words used around the "Capitol" – are being bantered about.

What isn’t being considered is that CalPERS is a mature system that is paying out billions of dollars every year in retirement benefits. Instead of liquidating investments and incurring transaction fees, it could use some liquid cash to better manage its outflows. Let’s just hope that CalPERS makes this an interesting proposition by adding some sizzle to the deal. This should be done at a minimum as this concept is cooking quickly; and time is money.

CalMatters provides the latest in the piece below.

P.S. Next week the Senate will be in Session every day, Tuesday thru Friday, to move some 250 bills over to the other house. The Budget Conference Committee will also be convening between both houses. This morning I was notified that this Committee will be expanded and I may be the new Republican installed to this critical working group. Let’s see if the Senate Rules Committee is comfortable with my appointment.

Lawmakers may wait on Gov. Brown’s ambitious pension plan – one he wants now

By Ben Christopher

As Sacramento kicks off its yearly scramble to pass a state budget, lawmakers have yet to agree whether one controversial provision will make the cut: an untested $6 billion scheme that the governor says could save the state billions more but that some analysts warn has received too little scrutiny.

As part of his revised budget proposal issued earlier this month, Gov. Jerry Brown introduced a novel plan to make an early, super-sized payment on the state’s public pension obligations by borrowing from a little-known government account. State and local agencies currently face a $359 billion shortfall on pension and health benefits for public retirees, and this one-time payment would effectively double Sacramento’s scheduled contribution.

But the nonpartisan Legislative Analyst’s Office, which advises lawmakers on fiscal matters, says the administration has not provided enough evidence or analysis to back up its claims that the proposal will generate $11 billion in taxpayer savings. Moreover, the LAO said in a report last week, by introducing the proposal mere weeks before the drop-dead budget deadline of June 15, the governor “puts the Legislature in a difficult position,” with little time to vet the plan or weigh the potential consequences.

With such large sums involved, acting too quickly may mean signing on to a deal that, if its assumptions are wrong, could leave the state strapped for cash.

Last week, the Senate budget subcommittee evaluating the proposal decided to pause and give the plan a longer look.

Sen. Nancy Skinner, a Berkeley Democrat who chairs that subcommittee, stressed at a hearing that the decision to hold off was “not an expression that we are opposed to investing in bringing down debt, by no means, but rather that we may want to see some additional analysis.”

Meanwhile, the Assembly’s full budget committee is considering the proposal. If approved, the plan’s place in the state spending blueprint may not be decided until the two legislative bodies meet in conference committee in coming weeks.

It is unclear whether lawmakers will want more time then to give the complex plan further consideration, as the LAO suggested.

“Our point is not that this won’t work,” said Ann Hollingshead, one of the analysts who wrote the report and predicts the state is likely to come out ahead with the plan. “Our point is that we need to think about all of these things before we do it.”

Brown’s bid, backed by state Treasurer and gubernatorial candidate John Chiang, is based on a sound financial principle: If you have extra money sitting around, don’t park it all in your checking account. Make it work for you.

In this case, the state’s “checking account” is the Pooled Money Investment Account (PMIA), a fund that holds surplus cash for hundreds of state agencies. Because the cash is supposed to be available on demand, it is invested in only the safest, and thus lowest-yielding, assets. Currently, the fund is growing at an anemic 0.88 percent.

But the fund is flush. According to Chiang’s office, the average balance of the state’s portion hovers at a historically high $50 billion.

By taking $6 billion from the stash and investing it with CalPERS, the state’s largest public pension fund, the administration hopes to earn a 7 percent return over 20 years. The state would pay back the loan over the next decade, mostly by drawing on money reserved for debt reduction, at what it projects as a lower rate tied to the federal government’s short-term borrowing costs. The proposal assumes this rate will increase over the next few years and then plateau around 3.5 percent.

If it works as announced, the move could reduce future state contributions by $12 billion, while increasing costs by only $1 billion in interest charges. That logic has won over a broad group of supporters, including the advocacy organization Californians for Retirement Security, a coalition of public employee unions and Republican state Sen. John Moorlach of Costa Mesa.

Moorlach said the Legislature should do its due diligence, then act as soon as possible to get the most value from taxpayer dollars. “I’m not an immediate ‘No.’ I’m a ‘Yes—but,’” he said. “Let’s get the details and see if it makes sense.”

There are plenty of details to consider. For starters, though the PMIA account is flush at the moment, what if an agency were to suddenly find itself strapped and need cash — say, to pay employees? Would it have to cut services, raise fees, borrow? How much would that cost?

There are also questions about how much the investment would earn and how much the loan would cost. There’s plenty of wiggle room between the state’s 7 percent earnings projection and the 3.5 percent it expects to pay. But if interest rates spiked, would the state be forced to divert money from other debt-reduction plans? How big a market meltdown would have to occur for the state to lose money on this deal?

And there are legal issues to iron out. Never has so much money been borrowed from the cash account over such a long period. Would that violate the state’s constitutional debt limit? Might this loan encourage lawmakers to raid the fund for day-to-day expenditures in the future?

“We got into trouble as a state doing that under past administrations,” noted Chris Hoene, director of the California Policy & Budget Center, who generally supports the governor’s proposal.

The LAO says the plan, for all its ambiguity, would probably put the state’s finances on a better footing in the long run. But it urges the Legislature to take its time, pore over the numbers, consult lawyers and actuaries and then make a more informed decision.

“Pensions’ unfunded liabilities are addressed over a span of decades, so there is no reason we need to decide this over the next two weeks,” said Hollingshead.


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MOORLACH UPDATE — State-Run Retirement Plan — May 19, 2017

I continue to maintain the position that the Secure Choice initiative, quarterbacked by the Senate’s President pro Tem, is an inappropriate task for an already bloated and inefficient bureaucracy like the state of California to assume (MOORLACH UPDATE — Secure Choice in Jeopardy — April 2, 2017 april 2, 2017 john moorlach).

Now that the United States Congress duly voted on a measure to reverse the pension law waiver, created by fiat by the last Administration, to accommodate this proposed strategy, the pro Tem is insisting that the state move forward on this endeavor, anyway. You have to admire his defiance on this initiative (he persists!) and all the others he has pursued this year. But, defiance and temper tantrums are fine when you’re risking your own personal funds. It is not fine when you’re risking other people’s money and wasting taxpayer dollars.

It seems as if the monopoly party in Sacramento has become imperial in nature. They will do what they want to do, regardless of whether it is fiscally proper or prudent. Take these examples for making my case:

* University of California President Janet Napolitano’s arrogance of secretly stashing away some $38 to $175 million, while increasing student tuition rates.

* Governor Brown insisting on the continued building of a high-speed train, even when the funding has dried up and the math to calculate a return on investment to make this project pay for itself finds that future ticket prices will be exorbitant. Consequently, should it actually be built, Californians will be subsidizing every passenger in perpetuity. And this endeavor is still expected to cost an additional $50 billion or more.

* The continued staffing of more than 3,300 unnecessary architects and engineers at Caltrans, costing taxpayers nearly $500 million per year, with the insistence that union dues paying employees will not be repositioned or released.

* Forcing taxpayers to fund the legal expenses of undocumented residents, should they be contacted by federal immigration officials, in order to provide them with due process.

And I could go on. Sacramento is saying, "we will do what we want to do because we are smarter than everyone else." Give me a break. What was that someone said about pride?

The defiance is provided in the LA Times, by the Associated Press (although my quote was truncated and appears to be a little abrupt), and the Capitol Public Radio (which somewhat explains my reference to the private sector), respectively, in the three pieces below. It’s an honor to be the closer.

To those in the media who interviewed me, I recommended that the state would be providing its residents a better service if it gave every taxpayer a copy of George Clason’s book, "The Richest Man in Babylon" (for a brief overview of this long time classic, see A recommendation that I made to you last year (see MOORLACH UPDATE — New Government Program? — September 16, 2016 september 16, 2016 john moorlach).

State officials contend California private-sector retirement plan on firm legal ground

By Laurence Darmiento

California officials vowed Thursday to implement a state-run retirement program that could benefit nearly 7 million private-sector workers despite recent congressional action that seeks to block it.

Senate leader Kevin de León and state Treasurer John Chiang said at a Sacramento news conference that the California Secure Choice program is on solid legal footing even though President Trump on Wednesday signed a House joint resolution that withdrew a federal regulation giving states explicit legal authority to have the programs.

“I am here to tell you that we are not backing down,” said De León (D-Los Angeles), who attributed the federal action to lobbying by a “handful of big banks” seeking to protect profits derived from managing private-sector retirement plans.

The program, which the Legislature enacted last year, is aimed at workers who are not offered a pension or 401(k) through work — an estimated 6.8 million in California and 39 million nationally. It is structured similarly to an individual retirement account without any employer contributions.

However, in an effort to maximize the number of workers who sign up for the program, it would allow workers to be automatically enrolled once they sign a form acknowledging they understand the program. Those who do not want to participate would have to “opt out.”

That provision was seen by some employer groups as potentially making the programs subject to the Employee Retirement Income Security Act, a 1974 law that regulates retirement plans and makes employers liable for prudently managing those plans.

De León and Chiang said that, as a courtesy to the California Chamber of Commerce and the California Manufacturers and Technology Assn., they lobbied for a regulation issued by the U.S. Department of Labor last year that excluded Secure Choice and similar plans being developed in other states from being subject to ERISA oversight.

“We did this as a favor to them,” Chiang said.

It was that Obama-era regulation that the House resolution nullified, but the two leaders contended that they thought Secure Choice could operate without the 2016 Labor Department rule.

“That was always our perspective from Day One,” De León said.

In support of their contention, the leaders released a legal opinion on the matter they sought from law firm K&L Gates. It concluded that guidance offered by the Department of Labor provided prior to 2016 offered employers legal “safe harbor” even if employees had to opt out of the program.

However, the opinion assumes that the bill establishing Secure Choice will be amended to exclude any reference to the 2016 Labor Department rule.

The California chamber later issued a statement saying that the retirement plan now appears to be “inconsistent with the existing statute which provides protection for employers from the threat of litigation.” The business group said it plans to seek an independent legal analysis on the matter.

State Sen. John Moorlach, (R-Costa Mesa), a member of the Standing Committee on Public Employment and Retirement, called the program a “noble effort” but urged that it be scrapped.

“Requiring employers to withhold contributions from their workers’ paychecks and send the funds to Sacramento to be invested on their behalf is highly inadvisable. In money management, there is rarely a scheme that has minimal costs and limited risk,” he said in a statement issued Thursday.

Calif. leaders stand by state-run retirement plan


Associated Press

SACRAMENTO – California’s treasurer and top Senate leader said Thursday they’re going forward with a plan to automatically enroll private-sector workers in retirement savings accounts even after President Donald Trump signed legislation revoking a legal safe haven for the program.

Senate President Pro Tem Kevin de Leon and Treasurer John Chiang said they believe the program can withstand lawsuits even without the blessing of the U.S. Department of Labor.

But continuing without the federal guidance will require legislative approval.

"I am convinced that while Congress has dealt us a setback, it is not enough to push our coalition off the moral and legal high ground that we hold firmly," Chiang said during a news conference at the state Capitol.

De Leon wrote legislation signed into law last year creating the state-run "Secure Choice" retirement program to automatically enroll most of the nearly 7 million California workers without access to an employer-sponsored savings program. Unless they opt out, a fixed percentage of each paycheck would be deducted and invested through an account similar to a private Individual Retirement Account.

The program was to be administered by a board under the state treasurer’s department.

Several other states have enacted similar legislation, including Connecticut, New Jersey, Maryland, Oregon and Washington.

Many employers have warned that state-run plans could subject them to onerous federal employment regulations and expose them to lawsuits. Former President Barack Obama’s administration issued guidance in October saying that wasn’t the case.

The financial services industry has said the program would be costly for workers who participate and may create political pressure for the state to backfill any investment losses.

De Leon and Chiang acknowledged that going forward with their plans could very well lead to lawsuits against the state but pointed to a memo written by New York attorney David Morse of the law firm K&L Gates. He concluded that prior court cases and a safe harbor established in 1975 by the U.S. Labor Department suggest California’s program could withstand legal challenges.

However, that safe harbor requires that enrollment be voluntary, raising questions about whether automatic enrollment with an option to opt out is truly voluntary.

State officials always believed the program met that test, Chiang said, but they decided to seek the Obama administration’s waiver as a favor for business interests nervous about liability.

Trump on Wednesday signed legislation to overturn the Obama administration rule under the Congressional Review Act, a law that allows a simple majority in the House and Senate to overturn executive-branch regulations that lawmakers consider onerous or burdensome. Trump and congressional Republicans have overturned more than a dozen Obama-era regulations.

Congressional Republicans said the state programs discourage small businesses from offering private retirement plans and have inadequate safeguards. The state plans would be exempt from federal protections that apply to private plans and would have a competitive advantage, Republicans said.

"That’s not a core function of government," said California state Sen. John Moorlach, R-Costa Mesa, who voted against the program and supported Congress’ action. "We’re not here to solve all the problems of the world. The private sector does that."

Calif. Dems Move Forward With Private-Worker Retirement Program

  • Sally Schilling
  • California’s Democratic leaders are moving forward with a retirement program for private sector workers in spite of a resolution signed Thursday by President Trump.

    Secure Choice will offer IRA’s to workers whose employers don’t provide them.

    Trump reversed an Obama-era rule that made it easier for states to set up the retirement programs.

    Yvonne Walker is President of Service Employees International Union Local 1000.

    She says Trump’s action is a setback for workers.

    "I, for one, am not comfortable with someone who has worked all of their life, to then have to retire in poverty," says Walker.

    But Republican State Senator John Moorlach says workers can set up retirement accounts at banks.

    "It’s a choice, it’s a discipline. You know, it’s something you have to do yourself. But to step in with government doing that, I think we’re overstepping our bounds."

    California lawmakers approved Secure Choice back in September.


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MOORLACH UPDATE — More Taxes With SB 567 — May 18, 2017

Yesterday’s Senate Governance and Finance Committee heard a tax bill that treated those making taxable income of one million dollars or more as villains. Yet, 17 percent of California’s taxpayers contribute 87 percent of the personal income taxes!

The state of Connecticut is learning what happens when you increase taxes on the rich. Their top 100 taxpayers reduced their taxes by 50 percent in 2016 over 2015. The monopoly party will realize that millionaires are mobile and can move. But, by then, it will be too late. And the tax revenues will not increase, they will decrease. The detailed tax analysis is provided by Bloomberg in the first piece below (also see

As a side note, it’s not always a good idea to oppose a bill authored by the Chairman of Appropriations. Let’s see what my discussion and vote will generate. Let’s hope that the bill’s author, who is also the Chair of Approps, will vote affirmatively on my bills, currently on the suspense file, based on their merits.

I’m honored to be one of eight immigrants in the California Legislature (see MOORLACH UPDATE — Budget Reserve Cap — May 5, 2017 may 5, 2017 john moorlach). So, the idea of the proposed May Revise Budget including funding for defending and protecting undocumented individuals is very difficult for me to stomach. The Hill, out of Washington, D.C., records my concerns in the second piece below.

The third piece is from the OC Register. Phil Greer and Chriss Street were very close. Now it looks like they are two Bettas, put in the same fish bowl, likely to fight to the death. For a classic UPDATE on this matter, see MOORLACH UPDATE — Term Limits — February 5, 2012 february 6, 2012 john moorlach. For more, see

California Bill Won’t Target Tax Rules for Multinationals

By Laura Mahoney

A California senator has dropped plans to change the state’s tax treatment of multinational companies with foreign affiliates, but is pushing a bill to end three other tax provisions he calls loopholes for the wealthy.

S.B. 567, by Sen. Ricardo Lara (D), passed the Senate Governance and Finance Committee 5-2 on May 17 after Lara deleted provisions to end California’s water’s edge election. The election, in place for 30 years, allows multinational companies to exclude their affiliates that are beyond the “water’s edge” of the U.S. from the reported income tax base upon which California may levy the corporation tax.

Opposition to the provisions “was just insurmountable,” Lara told Bloomberg BNA after the committee hearing. “We will revisit it in the future.”

Lara proposed to phase out the water’s edge method as the seven-year election expires for corporations using it. Those corporations would have shifted to the worldwide combined reporting method, which is what corporations that don’t elect to use the water’s edge method now use.

The election is California’s most expensive corporate income tax expenditure and its phaseout would have increased state revenue by $1.5 billion a year by the 2019-20 fiscal year, according to the Franchise Tax Board. About 15,000 corporate returns used the water’s-edge method in 2013, the most recent year for which return data is available, according to the California Department of Finance.

The water’s edge method is the required or default method in 25 of 29 states that require combined corporate income reporting, according to Bloomberg BNA data.

Executive Pay

Without the water’s edge election provisions, Lara is pushing for:

  •  elimination of a provision that allows people who earn more than $1 million a year and inherit California property to set the basis in the property at the fair market value at the time of a decedent’s death, allowing heirs to avoid tax on the property’s gain in value, for a state revenue gain of about $8 million a year;
  •   an increase to 40 percent from 10 percent the amount of assets that must remain in a charitable remainder trust and ultimately transfer to a charitable purpose to qualify for a tax exemption, with a state revenue impact the hasn’t been determined by the FTB yet; and
  •  elimination of the ability of corporations to deduct executive compensation of more than $1 million, for a state revenue gain of about $100 million a year.

The three provisions would make California inconsistent with federal law.

Sen. John Moorlach (R) voted against the bill, saying he doesn’t want California to stray further from conformity with federal law. He also took issue with Lara calling the provisions “loopholes,” and cautioned against targeting wealthy people who provide about one third of the state’s income tax revenue.

“I’m nervous about the rule of unintended consequences,” Moorlach said.

Lara said tax proposals from President Donald Trump’s administration and Republicans in Congress that largely benefit the wealthy are a signal that California should break from conformity with federal tax policy.

“How do we allow our lower and middle income families to be able to compete against the 1 percenters who are using these shelters?” Lara said. “Ivanka Trump and Barron Trump are going to be okay. This is what we need to do now to protect ourselves.”

The California Tax Reform Association, the California Reinvestment Coalition and the Service Employees International Union support the bill. Dozens of business groups, including the Computing Technology Industry Association (CompTIA), the California Chamber of Commerce, and the Family Business Association of California, oppose it.

Chris Micheli, a lobbyist representing CompTIA, said the association wants Lara to eliminate the provision related to executive compensation, which has been part of the federal tax code since 1993.

“We are not aware of people abusing it, and we are deeply troubled by characterizing it as a loophole,” Micheli said.

The bill will be heard next in the Senate Appropriations Committee.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at LMahoney

To contact the editor responsible for this story: Ryan C. Tuck atrtuck

For More Information

Text of S.B. 567 is at

California proposes budget increase to fight Trump



SACRAMENTO, Calif. — California will add a gaggle of new lawyers and bolster a defense fund for undocumented immigrants in the face of a raft of legal battles with the Trump administration, under a new budget proposal offered by Gov. Jerry Brown (D).

The new proposal, the result of months of negotiation with Democratic legislative leaders, comes after Attorney General Xavier Becerra (D) requested additional funding for his office. It would add $6.5 million to Becerra’s budget, and another $15 million to provide legal defense services to immigrants fighting deportation orders.

The money is a drop in the bucket in California’s $120 billion-plus annual budget. But it reflects a Democratic legislative majority that sees itself as the tip of the resistance spear, and an attorney general who shows little hesitance in challenging the federal government.

In his first several months in office, Becerra has challenged the Trump administration over its order blocking immigrants and refugees from six Muslim-majority nations; a threat to block Justice Department law enforcement grants to cities and states that act as sanctuaries for undocumented immigrants; and a delay of energy efficiency rules.

"We need to have the talent in place, the personnel," Becerra said in an interview in his office Tuesday, overlooking the California State Capitol a few blocks away. "It’s a little disturbing, more than surprising, to see how rapidly the Trump administration is trying to abandon or undo what is constitutionally not only required, but in some cases permitted."

Becerra said he had reached out to Attorney General Jeff Sessions and to Homeland Security Secretary John Kelly to discuss the immigration-related orders specifically. He was sharply critical of President Trump and his allies, who he said have pursued unconstitutional policies.

"Donald Trump is not just a dangerous and unprepared occupant in the White House. What’s more dangerous is the people who are serving as accomplices and should know better, but are standing by as he does these crazy things," Becerra said. "So much of what the Trump administration started doing turned out to be unconstitutional."

Republicans in California’s legislature say Democrats are going too far to prove themselves as members of the resistance, to the potential detriment of the relationship between state and federal levels of government. Sen. John Moorlach (R), the ranking Republican on the state Senate Judiciary Committee, said the new proposals were a "misappropriation of funds."

"Being antagonistic towards the federal government is counterproductive," said Moorlach, whose family immigrated to the United States from the Netherlands. "There are a lot of immigrants, like myself, that are not amused, in fact offended, that undocumented immigrants are getting subsidized legal assistance."

But Republicans are in the minority in California’s legislature and cannot block legislation, leaving it to Democrats to negotiate with Brown over budget levels.

And the liberal Democratic majority in California’s legislature is eager to take on Trump, on as many fronts as possible. The legislature took the unusual step earlier this year of hiring former Attorney General Eric Holder as their own legal counsel.

"We’re going to use every tool in the tool box to protect our citizens. That means we’re going to take a page out of Texas’s playbook," state Sen. Mike McGuire (D) said in an interview. "The threat [from the Trump administration] to our livelihood, to our economy, to the state budget are very real."

Becerra said he was disappointed and disturbed by new federal sentencing guidelines, laid out by Sessions last week, that instruct prosecutors to seek the harshest possible punishments for drug offenders. Those guidelines stand juxtaposed to bipartisan efforts on Capitol Hill to overhaul the criminal justice system, a program backed by big donors including liberal George Soros and the conservative-libertarian Koch brothers.

The guidelines are especially troubling in California, one of eight states where voters have legalized marijuana for recreational use.

"This is the 21st century. We should not be talking about criminalizing marijuana. We should be talking about regulating marijuana," Becerra said. "I think it’s just a shame that we would think the best way to address serious violent crime would be to start going after folks for small quantities of marijuana."

Former county treasurer awarded $10 million in malpractice suit against Newport Beach lawyer


A jury awarded former Orange County Treasurer-Tax Collector Chriss Street $10 million last week in a malpractice lawsuit against his former Newport Beach lawyer and City Council candidate Phillip Greer.

The lawsuit, filed in 2011, said Greer skipped meetings and breached his fiduciary duty while representing Street in a fraud case a year before.

In 2010, Street had been ordered to pay more than $7 million in damages for mismanaging a trust. He was the court-appointed trustee for End of the Road Trust, which was the successor to the bankrupt Fruehauf Trailer Corp. Street was in that role from 1998-2005, when he was forced out by creditors.

Street was accused of wasting money on failed business ventures instead of protecting the assets of the trust he was hired to liquidate. Court records show he used the trust to pay for resort stays, Botox treatments, a traffic citation for his Ferrari and for a $750 dinner at Spago.

The Orange County Superior Court jury sided with Street on Thursday, May 11, awarding him $7.5 million for professional negligence and another $2.4 million for fraudulent representation.

“I do feel he’s been completely vindicated,” said Street’s attorney Russel Myrick.

Greer’s Costa Mesa-based attorney, Steve Young, said his client plans to file an appeal, saying Street never proved he would have won the first case if not for Greer.

“Mr. Street never demonstrated that he didn’t do the things that he was found liable for … which to me is the first step before you ever point your finger at someone else,” Young said.

Greer’s biggest blunder was missing a pretrial conference that resulted in the judge accepting the facts put forward by the plaintiff and failing to produce documents or witnesses during the trial, Myrick said.

“Therefore before the trial even began, the court accepted the opponent of Mr. Street’s version of events,” Myrick said. “The trial was over before it began. This was a complete failure to provide a defense. It was blatantly obvious that it was malpractice.”

Young contends Greer’s absence at the pretrial hearing made no difference since Street testified in a bankruptcy court that the facts were true. His client provided a solid defense, Young said, adding that attorneys facing accusations of malpractice are in serious trouble regardless of the merits.

“Jurors unload on attorneys because they blame them for having interrupted their lives with a juror’s summons,” he said. “Juries absolve doctors in medical malpractice cases because they have to go to doctors. They cream lawyers because they never see themselves needing a lawyer.”

State Sen. John Moorlach, R- Costa Mesa, who was Street’s predecessor in the Orange County treasurer job and endorsed him in 2006, called for his resignation. The verdict effectively ended Street’s re-election bid that year.

Street was unsuccessful in two appeals.

“The case requires that Street prove but for Phil Greer, he would have had a different result,” Young said. “He never did that.”

Greer, a 19-year resident of Newport Beach, ran against Will O’ Neill and Fred Ameri for outgoing former Councilman Keith Curry’s seat in District 7 last year. O’Neill won with 49.9 percent of the vote. Greer came in second with 26.6 percent.


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MOORLACH UPDATE — Obtain Prepayment Sizzle — May 17, 2017

The Governor’s proposal to borrow funds from a surplus account to prepay CalPERS is garnering plenty of reactions (also see MOORLACH UPDATE — SB 671/Prepayment — May 14, 2017 may 14, 2017 john moorlach). The first piece below is mine, at the behest of Fox & Hounds, which also appears in the Record Searchlight out of Redding. The second piece, from the California Policy Center, would be a good counter.

The initial analyses of the Governor’s proposal all express a healthy skepticism of this being done right. The Legislative Analyst’s Office put out a report on the Governor’s proposal and suggests that the Legislature give their due process and not rush to pass this with the budget package on June 15. This is consistent with my encouragement of the Governor to negotiate a solid deal with CalPERS and that the Legislature should be a part of the discussion. I want to fix pensions. And on this issue, I prefer a “Yes, but” approach to simply saying “No.”

I have found it awkward when colleagues on the other side of the aisle speak ill of President Ronald Reagan whenever he is honored in a Senate Resolution. Consequently, I stayed politely quiet when President Barack Obama was honored and I even voted for the bill. My votes usually are not called out, but the Pasadena Star-News did in the third piece below.

In the fourth and final piece, the Daily Pilot hints at a potential third run for Costa Mesa City Council, this time for a newly created Mayor’s seat, by someone who has already dedicated sixteen years of his life to this community. It caught me by surprise, as no one, including the former Mayor, discussed the possibility with me. The fun life continues.

Prepaying on CalPERS Massive Unfunded Liabilities

John Moorlach

By John MoorlachState Senator representing the 37th Senate District

Governor Brown wants to prepay the California Public Employees Retirement System (CalPERS) with $6 billion beyond what most had expected.

The source of the funds is the Surplus Money Investment Fund. Don’t ask me why a state with a $169 billion unrestricted net deficit has some $50 billion in a low interest bearing account with such an odd title. Perhaps the University of California Chancellor can explain how her system and the state can better pull these things off?

Also, don’t ask me why the timing is so odd. The Legislature just approved an annual $5.2 billion gas and auto tax increase, and now the Governor has $6 billion for non-road repair expenditures?

Despite these concerns and anxieties, I like the proposal. It’s about time that the Governor got serious about the state’s spiraling unfunded defined benefit liabilities, but, I would postulate that this proposal needs a little more sizzle to make it an even more interesting opportunity.

Let’s address the cash flow components of this idea. The state currently has funds that are earning less than 1 percent per year. Paying down a 7.5 percent loan would provide a bigger bang for the buck. The spread of more than 6.5 percent will provide significant savings to the state’s general fund.

It’s true that whatever is deposited into a defined benefit pension plan by a plan sponsor is irretrievable. That is, it’s not a loan to CalPERS, it’s a payment. Once it goes in, the state cannot ask for it back. But, this will be a prepayment. Consequently, should the state have a cash flow emergency, it could simply stop making the regularly scheduled payments into CalPERS and slowly accumulate back this advancement.

The upside? The state gets to pay down its liabilities sooner, which will have the potential of reducing the annual required contributions in future years. The state obtains the 6.5 percent spread in savings. CalPERS can allocate the funding to meet its own cash flow needs and reduce transaction costs by doing it in bulk. The state wins. The taxpayers will win. And CalPERS wins.

What could go wrong? For the answer to this question, you should ask former New Jersey Governor Christine Todd Whitman. In 1997, she issued $3.4 billion in pension obligation bonds. This is a risky technique that converts a soft debt to the pension system into a hard debt to bondholders.

The idea is similar to Governor Brown’s proposal, in that the cost of the money is cheaper than the current 7.5 percent investment assumption rate of the plan. In the late 1990s, this may have been a brilliant move. But, when the “” boom turned to bust, pension plans lost a significant amount of plan funds invested in the internet-related industries.

The big risk the Governor will have to face is the possibility that the investment markets may tank after making the contribution prepayment. Remember, if you lose 50 percent on your investments this year, you have to earn 100 percent next year just to break even on your principal. Will Rogers put it best, “I am not so much concerned with the return on capital as I am with the return of capital.”

It’s not a good idea to time the market. It’s better to dollar-cost average, which means investing the same amount at regular intervals over time.

We cannot see the future. It’s obvious that CalPERS cannot, based on their recent repositioning out of certain equity markets last September, which has cost it more than $900 million in lost appreciation. It makes one wonder if they were concerned about Hillary Clinton winning the November election. Had they assumed that Donald Trump was going to win, and held firm, they would have earned nearly 17 percent on equities since the Presidential Election.

Had Governor Brown recommended this prepayment move last year, he would be a hero right now. So, he has to determine how serious he is about claiming a recession is around the corner.

To make the proposal more interesting, Governor Brown should ask the Board of CalPERS what type of incentive they will give the state for the prepayment. CalPERS will benefit from the large influx and should provide at least a 3.75 percent reduction on the actuarially calculated required contribution. This would provide a $225 million savings to the state, using the $6 billion figure, thus providing some sizzle.

Investing is not difficult, but it is also not for the faint of heart. You have to live with your decisions. Trust me, I managed a $7 billion portfolio and sat on the Board of one of the nation’s largest public employee pension systems.

While serving as the Treasurer of Orange County, I assisted in constructing a prepayment vehicle for the pension system. Instead of 26 regular payments during the year on biweekly pay days, the County paid the full amount up front, less the negotiated incentive. The County borrowed the funds, at an interest rate lower than the investment assumption rate of the retirement system and has realized some $100 million in net present value savings over the last 11 years.

How did the County do with its investments over this time period, with the change in the regular payment intervals? It actually out-performed what would have occurred under the normal protocol.

We should always remember that past performance is not an assurance that future performance will be the same or better. But, prepaying CalPERS’s massive obligations is something that should be strongly encouraged. Pension plan debt is an expensive liability in the current low-interest rate environment. Consequently, public employee retirement stakeholders should enter into a good debate on this proposal.

I see nearly $400 million in opportunity savings by taking low to no earning funds and paying down a 7.5 percent loan. I see the plan more efficiently investing the $6 billion. And I see lower plan contributions as the unfunded actuarial accrued liability is reduced. Those are strong arguments.

I would encourage the Governor to move forward with his proposal. But, I would also tell him to get more sizzle to the deal by negotiating with the CalPERS Board before writing the check. And, if he is concerned about market volatility, he may want to encourage the Board to consider allocating the funds towards fixed income investments that provide income commensurate with the investment assumption rate.

If the Governor is really serious about the state’s pension plan liabilities, he would figure out how to increase the annual contributions to CalPERS by $6 billion every year, even if it has to come out of the general fund. Doing anything else is only deluding everyone about the seriousness of this rapidly growing and all-consuming obligation.

Thanks for thinking outside the box, Governor. Now, take it to the next level.

Forget fiscal responsibility: Jerry Brown embraces pension shell game

Steven Greenhut

The Jerry Brown administration last week released its revised May budget and, lo and behold, it has finally decided to (kind of, sort of) tackle the state’s massive and growing level of unfunded liabilities – i.e., the hundreds of billions of dollars in taxpayer-backed debt to fund retirement promises made to the state’s government employees.

It’s best to curb our enthusiasm, however. The governor didn’t have much of a choice. This was the first state budget that is compliant with new accounting standards established by the Governmental Accounting Standards Board that requires states to more properly account for retiree medical and benefits beyond pensions.

Because of those new standards and low investment returns, the state’s unfunded liabilities (including the University of California retirement system) soared by an astounding 22 percent since last year. But even this new estimate of $279 billion in liabilities is on the optimistic side. Some credible estimates pin California state and local governments’ pension liabilities at nearly $1 trillion, based on more realistic rate-of-return predictions.

The pension system invites eyes-glazing-over debates about the size of the liability. That’s because debts are calculated on guesswork about future investment earnings. The California Public Employees’ Retirement System (CalPERS) recently voted to lower its predicted rates from 7.5 percent a year to 7 percent. The lower the predicted rate, the higher the liabilities, which is why CalPERS and the state’s unions are so bullish on Wall Street.

CalPERS’ latest investment returns were below 1 percent, but the agency insists there’s nothing to worry about and no need to do the unthinkable (reduce future benefit accruals for current employees). That’s the same CalPERS, of course, that in 1999 assured the Legislature that a 50-percent retroactive pension increase wouldn’t cost taxpayers a dime. I suppose CalPERS was right. It didn’t cost a dime, although it did cost many billions of dollars. Their returns were then yielding 13.5 percent a year, and CalPERS figured the heyday would go on forever.

The other reason to be skeptical of the Brown administration’s commitment to solving the problem can be found in the May revise itself. The budget “includes a one‑time $6 billion supplemental payment” to CalPERS, according to the Finance Department. “This action effectively doubles the state’s annual payment and will mitigate the impact of increasing pension contributions due to the state’s large unfunded liabilities.”

Where is the extra $6 billion coming from in a budget that supposedly is so pinched that the governor recently signed a law raising annual transportation taxes by $5.2 billion?

Simple. The state is borrowing the money to pre-pay some of its debt. “The additional $6 billion pension payment will be funded through a loan from the Surplus Money Investment Fund,” according to the budget summary. “Although the loan will incur interest costs (approximately $1 billion over the life of the loan), actuarial calculations indicate that the additional pension payment will yield net savings of $11 billion over the next 20 years.”

In other words, the state will be borrowing the money at fairly low interest rates and then investing the money and earning, it hopes, higher rates. The difference will help pay down some of those retirement debts. Even the well-known pension reformer, Sen. John Moorlach, R-Costa Mesa, lauded the administration for embracing that idea.

But it’s something of a shell game. It should work out well, provided the markets do as well as the state expects. In doing this, however, the state is taking out new debt that will need to be repaid. There’s no free money here. A number of localities have embraced a similar strategy with pension-obligation bonds, which are a form of arbitrage, in which the government is borrowing money and betting on future market returns.

This gimmick is similar to the one people will embrace in their personal lives. Are those credit-card debts crushing the family budget? Then borrow money from the home-equity line of credit at 5 percent and use it to pay down the 10-percent credit card loans. It makes sense, but it doesn’t deal with the real problem of excessive consumer spending.

“This is the Band-Aid,” said Dan Pellissier, a former aide to Gov. Arnold Schwarzenegger and well-known state pension reformer. “The surgery everyone is trying to avoid is on the California Rule – changing the benefits public employees receive in the future.”

When it comes to pensions, everything comes back to that “rule,” which isn’t a rule but a series of court precedents going back to the 1950s. In the private sector, companies may reduce pension benefits for their employees in the future. An employee can be told that, starting tomorrow, she will accrue pension benefits at a lower rate. The California Rule mandates that public employees, by contrast, can never have their benefit levels reduced.

That limits options for reform. In 2012, Gov. Brown signed into a law the Public Employees’ Pension Reform Act (PEPRA), which promised to address the pension-debt problem by primarily reducing benefits for newly hired employees. A reform that affects new hires will reduce contribution rates but won’t make an enormous difference until they start retiring.

“Gov. Jerry Brown’s attempt at pension reform has failed,” opined Dan Borenstein, in a recent East Bay Times column. The reason: the rapidly growing pension debt. “The shortfall for California’s three statewide retirement systems has increased about 36 percent. Add in local pension systems and the total debt has reached at least $374 billion. That works out to about $29,000 per household.”

CalPERS rebutted Borenstein by arguing that he “greatly oversimplifies and needlessly discounts the real impact that Governor Brown’s pension reform has had since it took effect in January 2013.” The pension fund insists, “PEPRA already is bending the pension cost curve – and will keep doing so with greater impact every year going forward.”

Yet the growing liabilities and the administration’s latest budget plan suggest that whatever minimal cost savings PEPRA is achieving aren’t nearly enough. Of course, union-controlled CalPERS’ goal isn’t protecting taxpayers or the state general fund – it is to enhance the benefits of the state workers whose pensions it manages.

As Calpensions explained, that $6 billion of borrowed money doubles the amount of general-fund dollars that the state is paying to deal with pension obligations. Meanwhile, as the state borrows money to pay that tab, it raises taxes to fund transportation. If Brown and the Legislature had trimmed pension costs, it would not have needed to raise gas taxes and the vehicle license fee. And the problem reverberates for local governments, too.

The May revise also showcased the same old issue with the administration’s priorities. Los Angeles Times columnist George Skelton noted that “Brown’s entertaining rhetoric itself made him sound, as usual, like a skinflint, a penny-pinching scold. But the introductory document could have been written by Bernie Sanders, if not Depression-era Socialist Upton Sinclair, the losing 1934 Democratic candidate for governor who ran on the slogan ‘End Poverty in California.’”

The budget championed myriad big-spending programs, including higher pay for public employees. So the state has been spending like crazy, but can’t manage to deal with its pension problem – at least not without borrowing money to temporarily paper over its growing debt.

All these games are about avoiding dealing with the obvious fact that California’s public-employee pensions are absurdly generous, filled with costly and anger-inducing features (spiking, double-dipping, liberal disability retirements, etc.) and unsustainable.

In 2011, the state’s official watchdog agency, the Little Hoover Commission, argued to the governor that “Public agencies must have the flexibility and authority to freeze accrued pension benefits for current workers, and make changes to pension formulas going forward to protect state and local public employees and the public good.” Six years later, the governor is still just chipping away at the edges by embracing gimmicks.

Steven Greenhut is a contributing editor to the California Policy Center. He is Western region director for the R Street Institute. Write to him at sgreenhut.

Stretch of 134 Freeway in Eagle Rock could soon be renamed ‘Barack Obama Freeway’ after state Senate vote

By Steve Scauzillo, San Gabriel Valley Tribune

A resolution authored by state Sen. Anthony Portantino to name a segment of the 134 Freeway between Eagle Rock and Pasadena after President Barack Obama advanced one step closer to becoming official this week.

The state Senate approved the resolution on Monday by a vote of 35-1. Previously, it had been adopted by the Senate Transportation Committee and the Senate Appropriations Committee.

The resolution moves to the Assembly for approval, Portantino said. If approved by the Assembly, it would go to the governor’s desk for his signature.

“I am very pleased this freeway naming is gaining such support in the Senate,” said Portantino, D-La Cañada Flintridge. “President Obama deserves recognition for his years of traveling this freeway and his years of dedication to our state and to all Americans as a popular and successful president.”

The resolution passed with bipartisan support, picking up votes from a handful of Republican senators — Patricia Bates, R-Laguna Hills; Tom Berryhill, R-Fresno; Anthony Cannella, R-Merced; Ted Gaines, R-Granite Bay; John Moorlach, R-Costa Mesa; Janet Nguyen, R-Garden Grove; Jim Nielsen, R-Yuba City and Jeff Stone, R-Indio.

The lone “no” vote was cast by Sen. Joel Anderson R-El Cajon.

The resolution would require Caltrans to erect a sign between the 2 Freeway and the 210 Freeway declaring that segment the “President Barack H. Obama Freeway.”

The portion of the 134 Freeway lies just north of Occidental College in Eagle Rock, the small, private, liberal arts college Barack “Barry” Obama attended from 1979 to 1981. Obama lived in the dorms as a freshman and then in an apartment at 253 E. Glenarm St., in Pasadena as a sophomore.

Meeting a `Soprano,’ hitting the Press Club dinner, talking to Monahan about his run

By Barbara Venezia

Gary Monahan weighs mayoral run

And speaking of Costa Mesa, former Councilman Gary Monahan raised a few eyebrows Sunday when he posted on his Facebook page he was planning to run for mayor in 2018.

“OK I have Steve Mensinger, Jim Righeimer, Jim Fitzpatrick, Jim Fisler, Lee Ramos, Dana Rohrabacher, John Moorlach and a heck of a lot others behind me,” he wrote, “… Let’s do this. ”

When I emailed him Tuesday about his plans he wrote: “Nothing is final”.

Yes, the 2018 elections are going to be interesting, and not just locally.


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MOORLACH UPDATE — SB 671/Prepayment — May 14, 2017

Governor Brown’s proposal this past week, to use funds earning less than one percent to pay down a debt that is accruing currently at 7.5 percent, is the talk of the town. The LA Times has a regular Sunday column that covers the Capitol and the topic dominated the first piece below. It even included a reference to SB 671 (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach).

I’ve been challenged to submit the reasons for my support of this $6 billion prepayment in an editorial, so expect to see it in the next few days.

Sometimes I receive media calls on random topics where I may be of assistance. I told the San Francisco Chronicle reporter that the individual featured in the second piece below should have been promoted to management, then there would not have been an overtime concern. This was not mentioned. But, you’ll love how Oakland’s sloppy management team tries to rationalize what occurred. You won’t believe how absurd the subject matter is, so I had to inject some reality into the discussion.

Political Road Map: Here’s how (and why) the state is making a $12-billion pension payment next year

By John Myers,amp.html

If you’re a homeowner, you’ve likely had someone suggest that the easiest way to lower your long-term debt is to make an extra mortgage payment. Thanks to the miracle of compound interest, your total costs in the long run go down.

Last week, Gov. Jerry Brown essentially decided that it was worth applying the same principle to the state government’s debt for the pensions of its employees.

To do so, the governor’s newly revised state budget includes an almost $12- billion payment in the coming fiscal year to the California Public Employees’ Retirement System (CalPERS). Part of that amount is mandatory: a $5.8- billion payment required by law to cover retirement promises that were made to workers, in some cases, decades ago.

The mandatory portion is about 75% more than what the state was paying just five years ago. And for all of the complexity involved with pensions, there’s a simplicity to the math. There are only three pots of money from which to pay pension commitments: employee contributions; employer contributions (which is the state government and, thus, means taxpayer money); and investment returns on CalPERS’ $320-billion portfolio.

Those pension investments have failed to live up to expectations. Last fall, CalPERS directors officially lowered the fund’s profit predictions, which triggered a bigger invoice being sent to Brown and lawmakers. Smaller, but still serious challenges exist for the California State Teachers Retirement System (CalSTRS).

Brown’s budget team said last week that a $12-billion infusion of cash now will result in a savings to taxpayers of $11 billion over the next 20 years. A similar prepayment idea to improve the bottom line for county retirement systems has been introduced in the Legislature by state Sen. John Moorlach (R-Costa Mesa).

Though it may be fiscally prudent to do so, making an extra payment amounts to a lot of money — in this case, equal to almost 10% of total general fund revenues in the coming year, and close to double the state’s combined contribution to the University of California and Cal State University systems.

CalPERS trims its investment expectations, raising costs to taxpayers »

So where does the extra money come from? It’s a loan from an obscure surplus cash account, and not from current government services and programs. In all, $6 billion will be borrowed from the Surplus Money Investment Fund for a supersized pension payment.

“It doesn’t take from child care, it doesn’t take from any other programs,” Brown told reporters last week.

The surplus fund is managed by state Treasurer John Chiang, and is essentially money waiting to be spent by various state agencies. Now totaling $50 billion, it’s larger than ever before. The loan gets paid back through the money earmarked for debt payments under Proposition 2, the ballot measure approved by voters in 2014 that also strengthened California’s rainy-day fund.

"It reduces the burden of unfunded pension liabilities that would otherwise be passed along to future generations of Californians," Chiang, who is running for governor, said in a statement.

To the outside observer, all of this may seem an overly complicated way of just shuffling around what — at the end of the day — are still all public funds. That’s true, though it likely earns bonus points for trying to creatively use cash that otherwise can’t be commingled.

But lawmakers probably shouldn’t celebrate their cleverness too long. Even with this extra cash, California’s pension funds face an enormous challenge over the next two decades. The proposal is unlikely to face any opposition. If anything, given how it highlights the benefit of compound interest, someone will likely start to wonder what other sources of cash could eventually be tapped to ease the state’s future pension pressures.


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Oakland backlog cited in engineer’s record overtime

By Kimberly Veklerov

The time cards Oakland city worker Kenny Lau turned in last year paint a stunning, if not improbable, picture of one man’s work ethic.

Lau, a civil engineer, often started his days at 10 a.m. and clocked out at 4 a.m., only to get back to work at 10 a.m. for another marathon day. He never took a sick day. He worked every weekend and took no vacation days.

He worked every holiday, including the most popular ones that shut down much of the nation’s businesses: 12 hours on Thanksgiving and eight hours on Christmas.

In fact, his time cards show he worked all 366 days of the leap year, at times putting in 90-plus-hour workweeks. He worked so much that he quadrupled his salary. His regular compensation and overtime pay — including benefits, $485,275 — made him the city’s highest-paid worker and the fourth-highest overtime earner of California public employees in 2016.

And, as incredible as it sounds, his bosses say he really did work all those days and hours. They describe Lau as a highly respected and dedicated worker in his field whose services are often demanded by developers looking to take advantage of Oakland’s booming economy and need for housing.

“Overtime is not required of any staff,” Gary Lim, Lau’s supervisor, said in an email. “It is Ken’s choice to work these hours.”

Lau and half a dozen other civil engineers work in the city’s Building Permit Center, where they scrutinize sheaves of plans for private developments ranging from the construction of high-rise luxury condos to the redevelopment of historic buildings. They check for compliance with local and state building codes and review surveys, site plans, grading plans, shoring plans, site improvements, historical features and energy compliance, Lim said.

Lim signed off on most of the time cards and approved Lau’s overtime in advance, according to the records. He did so apparently with little worry about the extra costs. The reason is simple: the Building Permit Center has an immense backlog of work — so much that developers who want their plans expedited can do so by paying the city engineer’s overtime. Thus, the city is compensated for those overtime costs.

Still, even developers’ requests for overtime jobs are backlogged.

Work efficiency experts say that round-the-clock tasks — like those seen in this case — raise troubling questions of oversight, workplace efficiency and resource allocation. And government accountability watchdogs say an auditor ought to examine cases of excessive overtime. One lawmaker told The Chronicle such high overtime pay to public employees erodes the public’s trust in their government.

“It’s important that the public have confidence in their public institutions and the use of their tax dollars. So when you have cases like this, whether it’s in Oakland or BART, it erodes the public confidence that’s so important to these institutions,” said state Sen. Steve Glazer, D-Orinda. “In this case, I don’t blame the employee as long as he’s correctly counting his hours. I do blame the supervisors and governing board for what appears to be an abuse of taxpayer dollars.”

The department’s workload is well known to top city officials. Assistant City Administrator Claudia Cappio said that Oakland hired three more plan-check engineers in recent months but that the demand for building permits outpaces what employees can approve on a weekly basis.

Cappio declined to discuss Lau’s overtime, instead releasing a statement, which read in part that city management “recognizes the heavy workload faced by our exceptional staff.”

“The reality is, Oakland has a multitude of development projects we need to get done,” said Councilman Noel Gallo. “And we’re understaffed in the development building.”

State Treasurer John Chiang, a gubernatorial candidate who created an online database of government employee salaries when he served as state controller, said that besides efficiency, cases of lengthy overtime raise questions for managers about the health of their workers.

Indeed, Lau’s co-workers agreed that stress is high in the department because of the work backlog.

At the second-floor office of the Building Permit Center at 250 Frank Ogawa Plaza, workers said they have been requesting a larger staff to handle the backlog for years.

Lau, who began working for Oakland in 1975, was in his office when The Chronicle showed up Friday afternoon but declined to speak with a reporter. He also did not respond to previous requests for interviews. His co-workers, who asked for anonymity, lauded Lau for his expertise, saying he knows the building codes backward and forward and can quote entire sections. He helps less senior engineers when they have questions, and is known to stay in the office until midnight, they said.

The Chronicle examined Lau’s 2016 time cards after Transparent California, a conservative think tank, spotlighted Lau in a recent report.

Although city officials and a representative for Lau’s union point to the work backlog in that office to defend the high overtime pay, his workload doesn’t appear to be anomalous or solely a product of the current building boom. He was regularly a top overtime earner as far back as 2002.

Robert Pozen, author of the book “Extreme Productivity,” said his research shows that in most organizations, the median hours worked per week is 45. But 10 to 15 percent of a typical workforce spends more than 65 hours at the office.

“Some of them are control freaks. They can’t delegate anything,” said Pozen, a senior lecturer at the Massachusetts Institute of Technology Sloan School of Management. “There are some people who take great pride in the hours they work and it’s a great part of their identity. And some people don’t want to go home.”

Pozen said his most important finding is that people clocking hours at the highest end of the spectrum tend to have ineffective and unproductive habits. Workers will “burn out if they have no chance to come up for breath,” he said.

At least one developer, John Protopappas, president of Madison Park Financial Corp., said that trend doesn’t seem to be the case with Lau.

“You can tell he’s working day and night because we’ll get emails from him at 3, 4 in the morning on weekends,” said Protopappas, who has been building in Oakland for four decades and regularly asks for his firm’s plans to be reviewed by Lau. “He’s got an incredible work ethic, and I hope he doesn’t retire.”

Even under the expedited process, in which developers pay for city plan checkers like Lau to work overtime, Protopappas said, it can take 16 months to get a permit. The city needs to hire more people to speed up the process, he said.

“Everyone wonders, ‘Why do we have a housing crisis?’ Part of it is because it takes so long to get a building permit,” Protopappas said. “Everyone’s trying to get their project done before the market cools off or there’s a recession or funding dries up.”

The Bay Area’s two largest cities have starkly different practices when it comes to building permit approvals and overtime — it either doesn’t exist or it’s rare.

Cheryl Wessling, spokeswoman for San Jose’s Department of Planning, Building and Code Enforcement, said no one doing building plan reviews can work overtime because they are all on salary. Bill Strawn, spokesman for San Francisco’s Department of Building Inspection, said overtime for people in those roles is rarely allowed because of the way the contract with the union was negotiated. In the few instances it’s authorized, the employees take compensatory time off instead of extra pay, he said.

State Sen. John Moorlach, a certified public accountant and former treasurer-tax collector for Orange County, questioned why Oakland doesn’t hire more workers.

“Managing manpower is not a difficult thing to do,” said Moorlach, R-Costa Mesa. “You look at the work and quantify it. If it well exceeds 40 hours per week per person, you have to hire someone else. Why would I pay someone at the top scale at time and a half when I can get an entry-level person to do the same work?

“This guy doesn’t have time to shower or shave or sleep,” he added. “The sad part of this is he’s had no time to enjoy the money. He’s got to have a monster bank account and no R&R.”

City budgeting sometimes makes it easier or less costly to allow overtime than to add staff, said Sylvia Allegretto of the UC Berkeley Institute for Research on Labor and Employment. The idea that government employees are overpaid compared with their private sector counterparts is a misconception, she added.

“When the population is growing and public sector workers are a smaller share of a larger population, you’re going to have some demand problems,” Allegretto said. “It’s really easy for people to think that public sector workers are the problem.”

Many areas of the public sector remain understaffed and underfunded compared with prerecession levels, she said.

There are still, however, concerns about the wisdom of working so much.

“I appreciate the dedication of our staff, but for anyone, regardless of your department, it’s not healthy to work so many hours,” said Councilman Abel Guillén. “After that amount of time, you can make mistakes and get hurt.”

Kimberly Veklerov is a San Francisco Chronicle staff writer. Email: kveklerovTwitter: @kveklerov


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MOORLACH UPDATE — District Events — May 13, 2017

Yesterday morning I had the privilege of participating in the Lake Forest Civic Center ground breaking. My thanks go to the City Council for holding it on a Friday, the weekday that I am in the District. The OC Register’s website provides this historic occasion in the first piece below.

From there I had the privilege of speaking to those at the South County Senior Summit, a Fifth Supervisorial District tradition, in Laguna Woods. The OC Register’s website also covers this tenth annual event in the second piece below.

I did receive a kind e-mail:

I really enjoyed hearing what you had to say at Senior Summit, I am a fan.

Joey of Laguna Woods

Finally, the Orange County Breeze provides our press release in response to the Governor’s May Revise, for your reading pleasure, in the third piece below.

Officials break ground on Lake Forest’s ‘100-year home’

Senator John Moorlach speaks during the ground breaking ceremony for the Lake Forest Civic Center project on Friday, May 12, 2017. (Photo by Drew A. Kelley, Contributing Photographer)

Lake Forest Mayor, Scott Voigts, center, and fellow dignitaries turn soil during the ground breaking ceremony for the Civic Center project on Friday, May 12, 2017. (Photo by Drew A. Kelley, Contributing Photographer)

Lake Forest Mayor, Scott Voigts, center, and fellow dignitaries turn soil during the ground breaking ceremony for the Civic Center project on Friday, May 12, 2017. (Photo by Drew A. Kelley, Contributing Photographer)


Judith Rosario stood on a dirt field with her 8-month old grandson, Sage Munoz, in his stroller and pondered the possibilities of what the new Civic Center campus will bring to the city.

The $72 million, four-building campus — scheduled to open in May 2019 — will have a senior center, community center, City Council chamber that doubles as a performing arts center and a city hall building. A two-story parking structure will be built on the north side.

After months spent on designs and finances, officials held a groundbreaking ceremony Friday, May 12 on Biscayne Bay Drive south of Commercentre Drive, to signal the start of construction on the Craftsman-style project.

“We have hope for our future generations,” Rosario, a 10-year Lake Forest resident said as she looked at her grandson. “From my age to his…this center is going to bring a lot for the community. I can’t wait to see what it looks like.”

More than 100 people came to the ceremony, including a group of senior residents, like Rosario, who helped shape the senior center by participating in workshops and taking surveys.

Rosario said she is looking forward to playing bingo in the new 23,000-square-foot senior center.

Conrad and Evelyn Bullard, 39-year residents of Lake Forest, said the center has provided a lot of excitement.

“This is the pulse we need for our identity,” Evelyn Bullard said. “It will be nice to have a place to congregate for people of all ages.”

City officials have dubbed the Civic Center project as Lake Forest’s “100-year home.” They said they believe the 9-acre center will become a destination for all residents.

Currently, the city leases office space for its City Hall at 25550 Commercentre Drive, just west of the Civic Center project location.

Along with city staff and all five City Council members, others speakers at the ceremony included state Sen. John Moorlach, state Assemblyman and former Irvine mayor Steven Choi and Linda Zubiate, project manager with Carrier Johnson, who has worked with the city through the design phases of the project.

The project is slated to cost $72.7 million. The city currently has roughly $40 million saved up through developer fees, and the remaining total will come from fees associated with new residential developments, officials said. Maintenance costs at the new Civic Center are anticipated to be covered by funds in the budget that are currently being used for lease payments at the existing City Hall facility, officials said.

“All this is made possible without paying taxes,” Mayor Scott Voigts said. “By the end of this project, the Civic Center will be debt-free. No future taxes.”

Voigts thanked the community for providing feedback through a series of workshops and surveys that led to the design concepts by Carrier Johnson, which were presented to the City Council in September and March.

“The Civic Center was inspired by the vision and feedback of our community,” he said.

The Civic Center will have a Craftsman style and the interior of each building will present different color schemes and textures. Pine meadow, oak chaparral and riparian landscaping will be utilized throughout the project to complement the buildings.

Rough grading of the site is scheduled to be completed in August. At that time, utilities and Civic Center Drive (now Indian Ocean Drive) street improvements will take place and crews will begin constructing the parking garage, which is scheduled to be completed in February 2018. The campus buildings are scheduled to be completed in May 2019, according to the timeline on the city’s website.

The city has also set a Lake Forest Civic Center Construction Camera at the top of a business building at the end of Indian Ocean Drive. The camera takes still images of the site every 15 minutes, allowing residents to see a time-lapsed visual timeline of the project.

A number of new amenities will be offered throughout the campus, including a community and conference center, community policing center, emergency operations center and connections to the Serrano Creek Trail.

The City Council chamber will double as a 200-seat performing arts theater with 710 square feet of performance space and a seven-seat dais.

“It’s been a long time coming and we’re blessed to be able to bring a new Civic Center to our community,” Voigts said. “It will be a welcome place where people can live, work and play. It will be our future home, where memories will be made.”

10th annual South County Senior Summit draws nearly 1,000 to Laguna Woods


Finances, frauds and scams took center stage at this year’s South County Senior Summit on Friday, May 12 in Laguna Woods.

Nearly 1,000 people attended the 10th annual conference at the Laguna Woods Village Performing Arts Center, with 5th District Orange County Supervisor Lisa Bartlett hosting. There were six keynote speakers, including Nakia Thierry, manager of the Office on Aging, state Sen. John Moorlach and David Little, certified financial planner at Eclectic Associated Inc.

“We have a number of keynote speakers talking about financial planning for seniors,” Bartlett said. “To be able to give (seniors) some good information and tips for their financial future is really satisfying.”

Little gave tips on how to pick a financial planner, going over the details such as a fiduciary versus a salesperson, fees, commissions or conflicts of interest when doing business, and hiring a professional beneficiary to a trust.

A professional beneficiary is a fiduciary who is licensed and bonded, hired to serve as a successor trustee, he said.

“(Professional beneficiaries) can avoid family conflicts for you, because anytime you get money involved the most loving family can turn into vipers to each other,” Little said.

Speaker and CEO of Age Well Senior Services Marilyn Ditty said this year’s topics and information were more critical for seniors than ever.

“We’re living in a society where the cybercrime has hit all the elderly,” Ditty said. “What started out three or four years ago was identity theft, and now everybody getting their bank accounts hacked, the ‘IRS’ calling them. It’s just awful.”

Ditty said her office receives calls daily about people being victimized by frauds or scams, not knowing where to turn.

Senior Deputy District Attorney Elizabeth Henderson spoke about how to avoid frauds and scams, in addition to sharing stories of fraud cases countywide.

“Unfortunately, Orange County is the fraud capital of, probably, the country and one of the reasons for that is seniors have a lot of money,” she said. “Crooks like people with a lot of money, so you may not think you personally have a lot of money, but you’ll be targeted by people who want to take advantage of you.”

Henderson said older adults lose an estimated $36.5 billion per year in elder abuse, fraud or scam cases. However, she believes it may be double that because many cases go unreported.

One case Henderson shared was about an elderly woman’s caregiver’s son, who convinced the woman to write her “life story” for $50,000 and later convinced her to give him power of attorney for her estate. Fortunately, he was caught and is serving a seven-year prison sentence.

Attendee Nellie Smith, 72, of Rancho Santa Margarita said that the information Henderson provided about frauds was the most useful of the presentations.

“The (scam) telephone calls are really bad, especially when they are targeting the seniors,” Smith said. “I just don’t answer my phone anymore. I have the answering machine pick it up.”

Also, she added, the presentations by Moorlach about state policy and its effect on seniors with Social Security, along with Social Security Administration Public Affairs Specialist Jeffrey Rodriguez were useful.

“I think it’s really important for seniors to know that they are supported,” Smith said. “As much as we can see or be informed, how the government is helping us.”

Senator John Moorlach’s response to May Budget Revision

After passionately opposing the Democratic majority’s largest transportation tax increase in the state’s history and watching our personal income tax revenues sputter this year, I am not confident that Californians are going to be happy with the majority of the increased spending proposals that continue to cascade out of the State Capitol.

Just yesterday, State Controller Betty Yee issued a release saying “we may be inching toward an economic downturn, and we must tailor our spending accordingly.” And yet, Democrats continue to advocate for single-payer health care, an expanded cap and trade system that will hike energy and food prices, and more resources for those that refuse to obey our immigration laws.

The Governor is warning about future cuts, but not setting aside additional funds now to address a potential economic downturn.

California’s unrestricted net deficit, according to the state’s Comprehensive Annual Financial Report, remains at $169 billion. That’s $4,374 per person. This marks almost no improvement from the previous year. And that doesn’t consider all of our other unfunded liabilities which easily bring the state’s debt to a quarter trillion dollars! The University of California has an unrestricted net deficit that has grown to more than $11 billion, and the California State University system is upside down by $3 billion!

When will Sacramento stop the hemorrhaging? When will the elected leaders in California acknowledge that this state needs reform?

The time has come for state leaders to establish a 10-year financial workout plan to get our fiscal house in order — one that establishes a common set of goals and a framework by which all legislative and executive actions can be measured. Only then can we truly leverage our state’s resources to solve both our short and long-term fiscal problems.

I appreciate the Governor’s recommendation to prepay CalPERS by $6 billion. This is done by borrowing funds that are earning less than 7.5%. My bill, SB 671, encourages this technique, and I am excited that the Governor has proposed a technique for the State that has saved the County of Orange some $100 million over the last eleven years.

This article was released by the Office of Senator John Moorlach.


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MOORLACH UPDATE — Governor Brown’s Surprises — May 12, 2017

The Governor released his May Revise for the 2017-18 Budget yesterday morning and there was one big surprise: a prepayment to CalPERS of $6 billion. It made me wonder, "Governor, What took you so long?" If he would have done it last year, CalPERS could have benefited from the Trump Bump in the equities market.

The first piece, from Fox & Hounds, covers the subject of the state budget in great detail. I think it’s odd that the Governor is warning about big cuts in the future, but not preparing for them now. He shows charts of long red bars showing tough years, but the blue bars that are above the zero line are almost nonexistent. The state refuses to set funds aside, unless it is forced to by a ballot measure.

The second piece is from the Voice of OC and deals with today’s visit of the Governor into my District. I was not invited to join in on the tour. I did attend the reception, but skipped the press conference. It had the flavor of a Democrat Governor campaigning for a Democrat Assemblywoman who is now vulnerable because she voted for SB 1, the massive gas tax increase. I was not amused with using Veterans as pawns the first time he visited the El Toro Base back in 2014. I’m not sure about the sincerity this time (also see MOORLACH UPDATE — Political Stunts — October 11, 2014 october 11, 2014 john moorlach).

My folks were rescued from Nazi-occupied Netherlands, thanks to Veterans. My late father-in-law received his Purple Heart in France during World War II. We need to make promises that can be kept when it comes to those who served our nation. Let’s hope this photo op is more than a photo op. If you want to mess around in my District, you had better produce. I look forward to making sure those promises are kept and holding the promise makers accountable if they are not.

May Revise: Tax Increases Have Consequences

John Seiler

By John SeilerFormer Editorial Writer at the Orange County Register

This is the 30th California state budget I’ve written about after I drove out here in 1987 to write editorials for the Orange County Register. Looking over the years, my theme has been the same: The state’s taxpayers can only bear so high a burden of taxing and spending. When that burden gets too large, the economy as a whole suffers, the tax base erodes – and massive deficits ensue.

So it’s not surprising that in Gov. Jerry Brown’s May Revise to his budget for fiscal year 2017-18, which begins on July 1, revenue expectations are dampened. That is despite the national Trump Boom for the economy which in April produced a surprise $182 billion surplus in federal revenues, instead of the deficit economists expected.

As Brown pointed out in his press conference revenues are up by $2.5 billion from his January budget proposal – but $3.3 billion less than what he projected a year ago. Of that extra $2.5 billion, about $1.1 billion will go to schools (following the Proposition 98 formula that around 40% of new income must go to schools). The rest will go to restore some funding, such as to child care, that had been cut in January.

The general fund total will be $124 billion. By contrast, that first budget I wrote about three decades ago was just $33 billion. And the state was better run.

Brown cautioned of the economic recovery, “Moreover, by the time the budget is enacted in June, the economy will have finished its eighth year of expansion – just two years short of the longest recovery since World War II.”

“Make no doubt about it,” he said, “cuts are coming in the next few years, and they’re going to be big. It would be imprudent not to prepare for it.” He also fingered potential cuts in Obamacare and other federal spending, depending on what is done by President Trump and Congress.

Strangely, he also ridiculed Trump’s tax-cut plan to boost the sluggish economic growth of recent years by cutting the top income tax rate to 35% from the current 39.6%. There would be two other tax brackets, 10% and 25%. The corporate tax rate would be cut to 15% from 35%. And the mind-bogglingly complex Alternative Minimum Tax would be axed.

Although not a “flat” tax plan, which would levy one rate for all types of income, the Trump plan would be flatter than the current system, and much simpler.

“The idea we’ll have a massive tax cut and spend $1 trillion on infrastructure doesn’t make sense,” Brown said. “You need real money to do real things.” Actually, Trump’s infrastructure plan reportedly “is expected to be more about regulatory reform and alternative financing than a federal spending spree.”

And in his own 1992 run for president, Brown crafted an even bolder tax-cut plan, a flat tax of just 13% for everything, calling it “a silver bullet solution for the economy. With one stroke, the major source of venality and graft will be eliminated and the Byzantine strictures of the Internal Revenue Code made so simple that even a sixth-grader will understand them.”

His 1992 plan was designed by famed economist Arthur Laffer, who helped design the 1978 Proposition 13 tax cuts in California that undergird state growth since then, Ronald Reagan’s 1981 tax cuts that boomed the 1980s economy – and Trump’s new plan.

Indeed, the current national economic boom is an anticipation of the Trump tax cuts – albeit the final numbers aren’t yet in place.

So, why is California lagging the federal boom? The reason is simple: California keeps heaping higher costs – taxes and regulations – on its citizens and businesses, discouraging the higher production that broadens the tax base. Consider just the tax increases since November:

  • The Proposition 55 extension of the Proposition 30 “temporary” income tax increase. Even Brown conceded in his press conference, “We already are taxing at 13.3%. Nevada is 0%. So you have to be careful.” Apparently there’s still some of the 1992 Jerry Brown around who knows taxes can get too high.
  • The Proposition 56 tobacco tax increase of $2 a pack, which especially will hit poor people; the wealthy now seldom smoke.
  • The Proposition 67 plastic bag tax of $300 million a year.
  • The gas tax of $5.2 billion a year. Brown said it just restores the equivalent purchasing power of the gas tax as it existed under the Deukmejian administration in the 1980s. The proportion had been eroded by inflation. But what about the money going to “mass transit”? How do we know the gas tax won’t be siphoned off to the general fund during a recession, as have past gas-tax increases? And how about an equivalent cut in other taxes to balance the new slam on taxpayers?

State Controller Betty Yee’s revenue estimates a day earlier, on May 10, were close to Brown’s. “April personal income tax (PIT) receipts of $12.76 billion lagged by $707.6 million, or 5.3%,” she estimated. But the big blow came from sales taxes, “April retail sales and use tax receipts of $696.7 million fell short of projections in the governor’s proposed 2017-18 budget by $106.7 million, or 13.3%. For the fiscal year to date, sales tax receipts of $18.99 billion are $453.5 million below the revised estimates released in January.”

More study will be needed. But I think what’s happening is Californians are reacting to the massive new tax increases listed above – and are anticipating getting hit with yet more new tax increases from the revenue-deluded Legislature, with its 2/3 supermajority. So they’re spending 13.3% less.

Although I’m not a smoker – except for a stogie every four months – friends of mine are. A pack a day means $2 less a day, or $730 less a year – after income taxes. That means they have to cut down in other areas of spending, and are. Less spending means less sales tax revenue. Just for that tax.

Said state Sen. John Moorlach, D-Costa Mesa, of the May Revise, “California’s unrestricted net deficit, according to the state’s Comprehensive Annual Financial Report, remains at $169 billion. That’s $4,374 per person. This marks almost no improvement from the previous year.”

On the positive side, the governor adopted Moorlach’s proposal to prepay CalPERS by $6 billion. As the May Revise document explained, “The additional $6 billion pension payment will be funded through a loan from the Surplus Money Investment Fund. Although the loan will incur interest (approximately $1 billion over the life of the loan), actuarial calculations indicate that the additional pension payment will yield net savings of $11 billion over the next 20 years.”

And the Rainy Day fund will increase to $8.5 billion, or 66% of the funding mandated by Proposition 2.

In other areas, in the journalists’ conference call later with Budget Director Michael Cohen, I asked how much the governor was willing to contract out for engineers for the new infrastructure projects. A report by the Legislative Analyst’s Office found 3,500 featherbedding jobs at Caltrans.

Cohen said there would be such contracts with private firms, but only in the short term. Because these are long-term spending projects, Caltrans will do the construction. “We scheduled 240 positions to be downsized, but now will keep them for the time being,” he said.

On the University of California and California State University spending controversies, Cohen said, “At UC, we hold $50 million from them until they implement” reforms in the recent auditor’s report that criticized them, and in an agreement with the governor. And on the recent UC tuition increase, he said more money will be given to Cal Grants.

Brown himself, in his earlier press conference announcing his budget, had attacked “university salaries that are way too high, particularly for their administrators.” But essentially, nothing is going to change in systems where, for UC, the high-paid administrators have doubled their numbers the past two decades and now outnumber professors. It’s like an army with more generals than privates.

If Republicans want to have some fun, they should take up my recommendation to put on the ballot an initiative that a) cuts tuition and b) pays for it by cutting the number of UC and USC (sic) administrators in half.

In sum, as Jerry Brown’s penultimate budget, the May Revise pushes the state’s out-of-whack finances into the future of whatever governor succeeds him. Although Brown has been more frugal than spendthrift predecessors Gray Davis and Arnold Schwarzenegger, who left office with massive deficits hanging over the heads of Californians, he has not solved the state’s endemic fiscal problems, but once again has kicked the can down the road.

He likely was the last governor with the experience, savvy and clout to advance both needed pension reform and comprehensive state tax reform, such Laffer’s proposed flat tax of about 6.5% for California. Instead, Brown can say with Louis XIV, “Après moi le deluge.”

John Seiler wrote editorials for the Orange County Register from 1987 to 2016. He now writes freelance. His email: mailto:writejohnseiler

Coda. Just a little more. In his press conference on the budget, Brown derided Lafferesque supply-side tax cuts as “voodoo economics” and “what Bob Dole called the plan of a ‘riverboat gambler.’” But what does the history show? The “voodoo economics” crack came from George H.W. Bush against Reagan’s economic plan during the 1980 campaign. The voters picked Reagan over Bush in the 1980 GOP primaries, then Bush became vice president. Reagan cut taxes. The economy boomed.

Bush became president in 1988 because he solemly pledged, “Read my lips! No new taxes!” But as soon as he got a chance, he repudiated both his pledge and Reagan’s “voodoo economics” tax cuts by increasing taxes in 1990. The economy tanked; the deficits got worse, not better. Bill Clinton was elected in 1993 on a pledge of a “middle class tax cut.”

In 1993, Bill Clinton broke his pledge and increased taxes, which Democrats now still wrongly maintain was behind the 1990s economic growth. But as Paul Harvey would say, here’s the rest of the story. After Clinton lost both houses to Congress to Republicans in 1994, he flipped. In 1995 he cooperated with Republican House Speaker Newt Gingrich on massive capital gains tax cuts that boosted the economy – and derided Dole as “the tax collector of the welfare state.”

In Clinton’s ’96 campaign, he ran a great ad touting his tax cuts while deriding Dole’s $900 billion in tax increases. Voters re-elected Clinton. Then Clinton and Gingrich passed more tax cuts, which boosted the economy so much the federal deficit ran a surplus for a couple of years, the only time that has happened the past 50 years.

It’s too bad, but except for Silicon Valley billionaires, Californians are going to miss the Trump Boom.

Gov. Brown to Tour Possible OC Veterans Cemetery Sites Friday

By Spencer Custodio

Gov. Jerry Brown is scheduled to be in Irvine Friday for a tour of two sites for a proposed state veteran’s cemetery, but not all City Council members were invited and it’s not clear who he is talking to.

At issue is which of two sites may win his backing to become Orange County’s veterans cemetery. One site, the former El Toro Marine Corps Air Station, holds strong emotional meaning for veterans, dating back to World War II.

The other site near the interchange of the 5 and 405 freeways at Bake Parkway, was on the fringe of the El Toro base but currently is used for agriculture.

Brown is scheduled to privately tour the sites from noon to 2 p.m., followed by an invitation-only reception and will conclude with a press conference at 2:30 p.m. at the Great Park Gallery.

Assemblywoman Sharon Quirk Silva (D-Fullerton), who helped secure the Great Park site through the Legislature in 2014, will be on the tour with Brown, along with Assembly Speaker Anthony Rendon and representatives from FivePoint, owner of the freeway site, said Michael Henning, a spokesman for Quirk-Silva.

“It’s not to be politically charged … Republicans are involved as well,” Henning said. “We want to get this done so the veterans get the cemetery they deserve.”

Henning said while Quirk-Silva’s office helped set up the reception and the press conference, he doesn’t know who else will be touring the sites with Brown.

However, Irvine City Councilwoman Christina Shea, who favors the freeway site, said the tour will be led by FivePoint Vice President of Special Operations Bill Hammarle, a former Marine Colonel who was stationed on the El Toro Marine Air Base.

Brown’s sister, Kathleen Brown, a former California Treasurer and current partner in the Manatt, Phelps & Phillips law firm, also sits on the board of directors of developer FivePoint. It’s unknown if she has taken an active role in deciding which site becomes the cemetery.

FivePoint, a commercial and housing developer, has proposed swapping the freeway land for the El Toro site. Irvine was unable this week to provide comparable values for the two sites if one or the other ultimately is used for commercial or residential development.

Asian Irvine residents near the El Toro site, which now is part of Irvine’s Great Park, have opposed putting the cemetery there, saying it is bad feng shui.

If FivePoint obtains the El Toro land as part of a swap for its freeway site, it would need to tear down former hangers and other buildings and remove runways to build houses or other projects.

“We’re always considering what the future looks like, but we don’t have any specific plans for that site at this moment,” FivePoint Chief Communications Officer Steve Churm previously told Voice of OC.

Leaders of several county veterans groups contacted by Voice of OC declined to return calls saying which site they preferred.

Currently, the closest veterans cemeteries are in Los Angeles, San Diego and Riverside Counties. Sources who have spoken with some veterans about the issue said several leaders are worried they might jeopardize Orange County getting a cemetery at all if they say they prefer the El Toro site. The sources said they did not want to be named because it could help identify the veterans who confided in them.

At its April 4 meeting, the City Council, in a split vote, decided to put $38 million toward the expected $80 million price tag for a cemetery on the El Toro/Great Park site. But the council also directed city staff to look into a potential land swap with FivePoint.

Councilwoman Melissa Fox said Thursday only Mayor Don Wagner and Councilman Jeff Lalloway will be part of the governor’s tour. Lalloway, along with Councilwoman Lynn Schott, is a strong supporter of the El Toro site.

“It left the ladies out, which is interesting because it was (Councilwoman) Christina (Shea’s) memo that got this back on the table.”

Shea, in an email, said those invited to the reception included, Rep. Mimi Walters (R-Irvine), Rep. Lou Correa (D-Santa Ana) state Sen. John Moorlach (R-Costa Mesa), and Assemblymen Steven Choi (R-Irvine), Tom Daly (D-Anaheim), Matthew Harper (R-Huntington Beach) and Bill Brough (R-Dana Point).

While all five Irvine City Council members are invited to the reception, Fox said, “Frankly, I think the entirety of the council should be involved on (the tour).”

Fox is on the board of the Orange County Veterans Memorial Park Foundation,a small organization originally established to bring a veterans cemetery to the El Toro site, but whose leader, Bill Cook, now says he favors the freeway land because there is less work involved in cleaning it up and its freeway location makes access easier.

“I was not invited to it (tour or reception),” Cook said. “Nor is any representative of the committee. Why, I don’t know. I’m not even speculating.”

However, in an email, Cook said his lack of invitations apparently was a mistake and Quirk Silva late Thursday afternoon invited foundation leaders to the reception.

“We like the visibility of (the freeway) site very very much. That’s going to be a show place.” Cook said. “There’s no pollutants…there’s no surprises, no unexploded ordnance.”

“What we’re trying to do right now is get the State Veterans cemetery done as soon as possible,” Cook said. “I know people who have passed since we started this process and their loved ones are holding onto their remains to bury them in this cemetery.”

If the El Toro site is selected, it could get an additional $10 million in federal funds but still would need about $30 million from the state.

FivePoint sent its land swap proposal to the city two weeks ago.

According to a letter from FivePoint Chairman Emile Haddad, each site contains about 125 acres and no substantial zoning, traffic or environmental issues affect the freeway cemetery land. To read the proposal, click here.

FivePoint’s plan includes an offer to finance the first phase of the freeway site cemetery construction.

Spencer Custodio is a Voice of OC intern. He can be reached at spencercustodio.


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MOORLACH UPDATE — Fiscal Frogality — May 11, 2017

Being an active participant on the Senate Governance and Finance Committee has prevented me from participating in the Capitol’s annual frog jumping contest, sponsored by Senator Tom Berryhill. This year, the Committee concluded before 11:30 a.m. and my frog, “Fiscal Frogality,” placed second! This is big news and the My Mother Lode provides it in the first piece below.

The OC Register‘s lead editorial gives a shout out to SB 590 and our efforts to address the school district reserve cap. It also appears in sister publications, like the LA Daily News. This morning the Governor released his May Revise Budget and commented on how it was important that locally elected school boards ran their budgets. Well, Governor, it doesn’t help when Sacramento dictates that there be caps. The editorial does an excellent job of providing the history and is the second piece below (also see MOORLACH UPDATE — Snubbing — May 10, 2017 may 10, 2017 john moorlach).

I try my best to stay out of the OC WEEKLY, he said in jest. But I made it to the lead article, which details the recent activities of young Republicans at Orange Coast College and the University of California Irvine. It mentions my recent bill, SB 677, and provides its perspectives (also see MOORLACH UPDATE — Whistleblower Protection Prevented — April 26, 2017 april 26, 2017 john moorlach and MOORLACH UPDATE — Senate Bill 677 — April 6, 2017 april 6, 2017 john moorlach). The lengthy history is provided in the third piece below.

SB 764 and SB 671 made it to this morning’s Session Floor agenda, but due to a technical problem with CalChannel’s broadcasting, the Session was cut short. This provided me with a few minutes to meet with members of the media to discuss the Governor’s May Revise. More on that tomorrow.

Capitol Frog Jump Heightens Anticipation Of A Hopping Good Calaveras County Fair

Tori James, MML News Reporter

Sacramento, CA — While none of the Sac Town frog jockeys came close to breaking Rosie the Ribiter’s legendary 21 feet, five and three-quarters inches jump, the 43rd annual Capitol Frog Jump provided a hopping good time under sunny skies.

Hosted earlier today by Mother Lode lawmaker Senator Tom Berryhill at the State Capitol grounds, the event continues to serve as a humorous, unofficial herald to the Calaveras County Fair and Jumping Frog Jubilee, which this year runs from May 18 to the 21 at Frogtown in Angels Camp.

Assemblymember Frank Bigelow served as the master of ceremonies for the event, whose nonamphibious participants included a mix of elected officials, legislative staffers and members of the public.

This year’s winner of the Longest Jump trophy went to Assemblyman Kevin Kiley and his frog “Frog the Bounty Hunter,” which managed a 12-foot, one inch jump. The Shortest Jump was awarded to Assemblyman Jim Frazier and his frog “Leroy Green,” whose jump measured two feet, nine-and-a-half inches.

To view a video clip of the festivities provided by Sen. Berryhill’s office, click here.

Below are a few other highlighted results:

Frank Bigelow
Big Hat Bullfrog

Kevin de Leon
River Rover

Sharon Quirk-Silva

Vince Fong
Vince the Prince

John Moorlach

Fiscal Frogality

Bill Brough

Rocky Chavez
Amphibian Olympian

Steven Choi
Mad Hopper

James Gallagher
Drain the Swamp

Mikel Shybut
Senate Transportation & Housing Committee
Frog Speed Rail

Jill Rice
Educational Testing
Hop Quiz

Vanessa Wiseman
Caltrans external affairs
Roadie Roundabout

Written by Tori James

Untie school districts’ hands on reserves

By The Editorial Board, LA Daily News

By now it should be self-evident that teachers unions in California operate in the interests of the unions, not the children their teachers are responsible for educating.

A union-backed rule that severely limits school reserves is a perfect example of this.

In 2014, a provision was slipped into a budget trailer bill, Senate Bill 858, that would limit school reserves if the state makes a deposit — even a very small one — into the state school reserve fund created by the Proposition 2 rainy-day fund, approved later that year by voters. What, you might ask, would be the purpose of tying school districts’ fiscal hands, putting them at greater risk during economic downturns, reducing their credit ratings, driving up borrowing costs and encouraging greater use of expensive bond financing?

It makes perfect sense to the teachers unions, who stand to be in a much stronger position to negotiate compensation increases if school districts are forced by the cap to spend down their reserves or allocate less money to emergency repairs, infrastructure improvements, instructional programs and the like.

As Sacramento Bee columnist Dan Walters described it in a December 2014 column, the move was “clearly a sop to the powerful California Teachers Association and other unions which might have otherwise opposed Proposition 2, which was to be the focal point of Brown’s re-election campaign.”

A January 2015 Legislative Analyst’s Office recommended eliminating the reserve cap, and noted that the median reserve for midsize school districts in the state was 21 percent of expenditures, yet, under SB 858, their reserves would be capped at just 6 percent. Furthermore, the caps were smaller than the reserve levels of more than 90 percent of public schools in the state.

State Sen. John Moorlach, R-Costa Mesa, introduced Senate Bill 590, which would have eliminated the cap altogether, but it was defeated in the Senate Education Committee two weeks ago. During the committee hearing, Moorlach, a certified public accountant, asserted that the cap “defies fiscal stewardship logic,” and that the low level of the cap is “too precarious.”

But it is not just fiscal conservatives who are pushing for reform. Democratic Sens. Jerry Hill of San Mateo and Steve Glazer of Orinda have introduced a bill, SB 715, which would increase the cap from 6 percent to 17 percent and exempt small and basic aid school districts from the requirements. In a positive sign, SB 715 passed the Senate on a unanimous 38-0 vote on Monday, and now heads to the Assembly.

In addition, Democratic State Superintendent of Public Instruction Tom Torlakson noted during a budget hearing earlier this year that he opposed the cap, and in June 2015, 26 Democratic members of the Assembly and Senate sent a letter to legislative leaders to express support for modifying the cap in the interest of fiscal soundness.

Yet, even in the face of such significant bipartisan support, the teachers unions have thus far been able to exert their influence to scuttle multiple reform efforts. Let us hope that the Legislature and Gov. Jerry Brown will finally put the fiscal and educational interests of students, school districts and taxpayers ahead of the special interests of the teachers unions by eliminating, or at least significantly increasing, the school reserve cap.

Illustration by Luke McGarry | Design by Dustin Ames

After a Generation in Decline, OC’s College Republicans Are Back and Stronger Than Ever

By Denise De La Cruz

“We support free speech; let teachers teach!” chanted at least a hundred Orange Coast College (OCC) students at the school’s free-speech zone in December 2016. They stood with signs in support of Olga Perez Stable Cox, a human-sexuality professor who was in hiding at the time because of death threats. They came from around the world starting the day after the presidential election, when she stated in her class that voting for Donald Trump was “an act of terrorism.”

On the other side of the grassy quad stood freshman Caleb O’Neil. Blond and fit, with a strong jaw and a helmet of hair that gave him the look of a Kennedy cousin, he held his own sign: “Be Careful What You Wish For, Olga! We’re Standing Up!” He had secretly recorded Cox on his cellphone, then shared the video with OCC’s College Republicans chapter. The club put it up on YouTube, and it quickly went viral—and led to the school suspending O’Neil. Right-wingers rallied around him nationwide; locally, young conservatives sprung into action.

More than 20 fellow College Republicans joined O’Neil for the protest. Standing with them were older men in suits, including Republican Assemblyman Matthew Harper (R-Huntington Beach) and Shawn Steel, the former chairman of the California Republican Party and husband to Orange County Supervisor Michelle Steel.

“I don’t think the students [Cox supporters] understand the difference between academic freedom and free speech,” remarked College Republicans founder Joshua Recalde-Martinez as he looked on. The issue was personal to him: A petition circulating around campus asked OCC to remove the sophomore as club president for his “partisan” and “out of line” behavior, which included appearing on FOX News to slam Cox and the school. (He’d later voluntarily step down to become treasurer.)

Nothing eventful happened on either side during the rally. But in just showing up to protest, OC’s various conservative student groups, from College Republicans to Young Americans for Freedom and more, can claim victory. In retreat for nearly 20 years as OC became more liberal and the California GOP cratered, the rise of Trump has inspired millennial conservatives to come out on campus.

Their actions get national coverage, thanks to smart social media and an alt-right press who claim a liberal conspiracy in higher education and are thrilled undergrads are standing up to it. College Republicans were there during the March 25 #MAGAMarch at Bolsa Chica State Beach, and graduates jeered during Cal State Fullerton’s commencement, when Univision anchor María Elena Salinas spoke in Spanish and trashed Trump. Last September, Young Americans for Freedom members caught Saddleback College history professor Margot Lovett removing “9/11 Never Forget” posters with images of the Twin Towers from a wall. Former Breitbart News senior editor Milo Yiannopoulos spoke at UC Irvine last June and October, which led to protests against him, sanctions against the College Republicans that the university eventually had to walk back, and a permanent ban on Yiannopoulos speaking there. And in February, a “No Ban, No Wall” protest against Trump’s immigration policies at Cal State Fullerton ended in a physical altercation between anthropology professor Eric Canin and a CSUF Republicans member, for which the instructor was suspended.

“I’m probably the most hated person on campus. . . . I love it,” says Ariana Rowlands, a UCI senior who’s already a GOP force at just 20 years old. The president of UCI’s College Republicans has more than 31,000 followers on Twitter, on which she does everything from wittily debate tweeters to post pictures of herself in a star-spangled bikini. She’s a contributor to Breitbart and Red Alert Politics, a youth website sponsored by billionaire Philip Anschutz. Last year, the David Horowitz Freedom Center invited her to speak, introducing her as “the future of conservative activism.”

“[UCI student government leaders] bring up me or the College Republicans . . . ‘Oh those bigots! We should force them to do this; we should force them to do that,'” Rowlands says in a mocking tone. “Every time they do that, it just makes us stronger and gives us another opportunity to say, ‘Hey, this is why the Left is bad.'”

But as Rowlands and her fellow travelers become rising stars in their movement, their progressive peers express concern. “It’s just like [College Republicans] can intimidate, and they can troll, and they’re going to do whatever they want until something very bad happens,” says an anonymous OCC student who feels college administrators haven’t done enough to protect students from conservatives on campus.

“It makes me really nervous because it’s not just isolated, it’s not just going on here,” says another OCC student with a concerned look on her face. “I don’t trust them.”

* * * * *

During the OC GOP’s golden era, its youth wing had a consistent presence on all county campuses. During the 1980s, College Republicans at Santa Ana College (then known as Rancho Santiago College) hosted Nicaraguan exiles opposed to the Sandinistas; the Chapman University branch welcomed Oliver North when he spoke there in 1993. The movement continually brought new blood to the local GOP, and many became elected officials themselves. Longtime OC GOP head Tom Fuentes was a College Republican at Chapman; other GOP bigwigs such as Scott Baugh and Van Tran were involved in Young Americans for Freedom.

The trend continued somewhat into the 2000s, such as when UCI’s College Republicans held a bake sale in 2004 mocking affirmative action, or when the same chapter displayed controversial cartoons featuring the Prophet Muhammad in 2006; both actions made national news. But after Barack Obama was elected president in 2008, College Republicans clubs across the county mostly faded away as millennials turned to the Left.

That started to change thanks largely to Rowlands, a Ladera Ranch native and child of immigrants (a father from Wales, and a Mexican mother). UCI’s College Republicans are the merry pranksters of the local college political scene, relishing any opportunity to troll liberals. They passed out baby pacifiers to protesters before Yiannopoulos’ speech to give them a “safe space” and wore T-shirts that read, “Can We Take a Joke?” while inviting people on campus to write on their “free speech board.”

Campus progressives fear them so much that, earlier this year, a rumor spread that the College Republicans were going to build a fake border wall on campus. Faculty and activists planned protests, even though Rowlands said they weren’t actually planning on doing something like that.

But Rowlands is unapologetic about the “loud and out-there activism” of her club. The College Republicans represent a silent minority of students who are “very appreciative that there’s somebody out there voicing their beliefs and not really caring about the Leftists that call them names or try to shut them down,” she says.

“In the past year, we’ve managed to definitely influence the temperature on this campus a lot,” she continues. “We’re just trying to show other young people that there is another way of thinking, that it makes a lot of sense and that we’re actually more tolerant of other ideas. [We’re not] saying, ‘You have to be this one way, or you’re a horrible person,’ like the Left is. That’s what the Left has become—they’ve somehow masqueraded intolerance as tolerance.”

The former business major, now political science major hopes to continue to dismantle the “liberal monopoly on academia” in her current run for state chair of the California College Republicans (CCR). She has even assembled a team called Rebuild CCR because she thinks the current organization is too focused on national politics instead of changing campus culture. On her slate is current OCC College Republicans president Vincent Wetzel, a self-proclaimed gay Hispanic Republican.

With support from the Republican Party of Orange County, the California Federation of Republican Women and the Lincoln Club of Orange County, Rowlands boasts that Rebuild CCR is “going to try to change the state so that all the College Republican chapters can be like the ones in Orange County.”

* * * * *

Chris Boyle says Cal State Fullerton’s chapter of College Republicans, CSUF Republicans, has grown to about 40 members since he restarted the chapter last semester after transferring from Orange Coast College, where he was a member. “At times, we’ve been able to work with groups like the College Dems to co-host debate-watch parties and other bipartisan events,” he says. “But we also had an incident where a professor physically assaulted one of our students during a demonstration.”

The fracas made national news, but some Cal State Fullerton students maintain it was all a setup. Boyle scoffs at the notion. “When I go out here, it isn’t to sensationalize; it’s to recruit conservatives and get them involved,” the College Republicans president says. “Crying wolf would be counterproductive. . . . It would make us look unprofessional and unreliable, and that’s not something that I would be willing to [do to] lessen my [organization’s] standing.”

CSUF Republicans have since challenged university president Mildred Garcia for not personally and publicly addressing the altercation. “I think [the school’s] communications director came out and said they affirm all free speech, but she said it on Twitter,” Boyle says. That’s a stark contrast to how Garcia responded to President Trump’s victory and immigration policies, he adds: “The president of our university issued emails that went into the personal email boxes of every student on campus, showing them, you know, that they’d be protected against Trump and all this stuff.”

Last month, CSUF Republicans were upset again when their resolution to create a free-speech education campaign on campus was denied by the student government. According to a press release from the group, it was the fault of the liberal-leaning Students for Quality Education (SQE), who successfully argued against the resolution, claiming “time constraints, unforeseeable ramifications and lack of free speech violations on campus as reasons for voting against the bill.”

Boyle says the California Faculty Association and SQE have became “very antagonistic” toward them since the Canin incident. But conservative Titans have fought back. A fake “Real SQE” Instagram profile recently surfaced and posted a parody flyer promoting a “Students for Quesadillas and Enchiladas” Cinco de Mayo fundraising event at an on-campus Baja Fresh. The flyer also stated that any time someone proclaimed Trump’s infamous quote, “I love the Hispanics,” 10 percent of the purchase would go to “Real SQE.”

Cal State Fullerton’s Academic Senate quickly passed a resolution condemning the flyer as “clearly designed for the racial mockery of Latinx students and groups.” Boyle—who says that CSUF Republicans members run the “Real SQE” account but that it isn’t a club-sanctioned effort—pushed back. “It would be absurd for [CSUF Republicans] to be a racist organization,” he told the university’s student newspaper Daily Titan. “Half of my executive board is Latino.”

Like Rowlands, Boyle says established local conservatives such as longtime Cal State Fullerton donor and alumnus Steve Mihaylo (after whom the university’s Mihaylo College of Business and Economics is named) have expressed their support for CSUF Republicans. Mihaylo recently drew heat after he trashed a Cal State Fullerton student on Twitter by asking him if he “ever considered getting a job” to pay off his student debt; the student replied by saying he already works two jobs on campus.

“[Mihaylo is] a great friend of the club: He’s come to speak to us; he’s actually invited us onto his boat a couple times—he’s a really great guy,” Boyle says. “If I worked for him as a PR guy, I probably wouldn’t have recommended him doing what he did. But he’s a really good guy, and he comes from a good place, and he’s done a lot to help this organization.”

* * * * *

“I’ve heard from people that whenever Trump is brought up, people drop [their] poli-sci classes,” says an OCC student who asked for anonymity. “I’ve had people say they’re not going back to OCC because of what happened.”

College Republicans insist they’re the oppressed minority on college campuses across Orange County and that progressives make student life intolerable for conservatives. But a different story emerges from progressive students and faculty, who’ve been caught off-guard by the resurgent Right.

At OCC, students from organizations such as the Feminist, Pride and Planned Parenthood clubs received unsolicited visits to their meetings by College Republicans in February. When club leaders and advisers asked them to leave, the GOPers refused. They cited California public forum rights and said they were merely trying to foster healthier relationships between opposing clubs on campus. Liberal club members believe such unannounced drop-ins were petty tactics to antagonize, intimidate and distract them. In one meeting the Weeklyattended, Wetzel showed up, then left and walked away with an older man in a suit. (A club leader told the Weekly two students left a meeting crying because they were upset by the College Republicans’ refusal to leave.)

“Milo Yiannopoulos wrote an article on his blog in support of the Republican Club here, and that really scares me because they’re connected to people who are known to put private, sensitive information out there for people to get doxed,” says an OCC student who asked to remain anonymous for fear of retaliation from College Republicans.

“There’s a degree to which both sides have misbehaved,” adds an anonymous OCC faculty member. “There’s this weird group dynamic going on in the College Republicans, and they’ve been emboldened for whatever reason and want to antagonize people. For me, it’s even simpler than sort of intersectional feminism and identity politics; it’s just, ‘Didn’t you learn not to behave like that in the fifth grade?'”

This faculty member also questions whether freedom of association rights are still applicable on public college campuses when GOPers employ such tactics. “The definition of a club in the club handbook is that you are like-minded individuals, right? And thus [you] can exclude non-believers. I’ve put that question out to both administration and a legal group, and I haven’t yet heard a response.”

The unannounced visits began in February, according to OCC progressives, while O’Neil celebrated his victorious appeal against the Coast Community College District Board of Trustees. They had originally decided to punish him with a two-semester suspension and force him to issue a personal apology to Cox and write a three-page essay about his actions. He defended his motives in a previous press conference. “I pulled my phone out because I was honestly scared that I would have repercussions with my grades because she knew I was a Trump supporter,” says O’Neil, who ended up getting an A in Cox’s course.

“You can have someone . . . like Caleb, who says he’s afraid of people using words because words can be violent and words can be unsafe, and at the same time be at a rally two months back and yell at younger people than him that ‘Feminism is cancer’—[to] people who are probably really scared to be in that crowd right now,” says another anonymous OCC student, referring to a video taken last year at a Trump rally at the Orange County Fairgrounds across the street from OCC that was publically posted on Instagram. The school’s student newspaper, The Coast Report, reported that the young man wearing a MAGA hat in the video was O’Neil. “He doesn’t care about freedom of speech; he just cares about being able to say what he wants to say and telling people to shut up when he wants them to.”

In the weeks after the OCC College Republicans released the video, a student says faculty members with “ethnic-sounding” last names received threatening emails that warned them to stop supporting a “white genocide.” That led to a student writing to OCC president Dennis Harkins, begging for support.

“Without a firm action taken to prevent racism, homophobia and xenophobia [manifesting in actions, language and ideas] by campus administration, these attacks lay in your hands,” read an email. “Any silence on this matter will not be interpreted as neutrality; silence is allowance, it is compliance.”

Harkins didn’t reply.

“[OCC’s College Republicans] have such wealthy lawyers they have the Republican Party funding them,” says yet another anonymous faculty member. “They’re being groomed and coached, and what they’re doing is waiting for someone to kick them out. They’re testing the college’s policies so they can sue the college for being biased toward conservative students.

“Basically,” the faculty member concluded, “the college got sucker-punched by them.”

* * * * *

Adult OC conservatives have looked on with pride at their young wards and have offered to help when needed. KABC-AM 790 morning host John Phillips wrote for the Orange County Register‘s opinion pages that “OCC doesn’t deserve the support or confidence of the taxpayers who fund its indoctrination camp.” Recalde-Martinez has worked for Harper and Supervisor Andrew Do, and now works for Michelle Steele as an executive aide. Last December, California OC GOP royalty such as chairman Fred Whitaker and nine California elected leaders, including state senators Janet Nguyen and John Moorlach, sent a letter to Harkins discouraging disciplinary action against O’Neil.

“The College Republicans need support in their effort to ensure that conservative students receive equal treatment on campus and have the ability to report discrimination they experience,” Whitaker later said in an April 3 press release. “As a former California College Republican state chair, I know personally what it’s like to defend free speech on campus and protect the rights of conservative students.”

Later that month, Moorlach introduced a bill that aimed to provide whistleblower safeguards to college students. The proposed legislation sought to allow students to record in a community college classroom without an instructor’s permission if the students “reasonably believed” they were capturing a violation of local, state or federal laws. The legislation died in the committee because of a lack of support in the super-majority Democratic California Senate. Unions representing teachers and faculty claimed the bill would allow students to record as a weapon against teachers they simply don’t like or agree with.

The climate at OCC remains fraught. Signs reading, “Video and/or Audio Recording Without Instructor Permission IS PROHIBITED” are now posted in every classroom. Recalde-Martinez submitted several public-records requests looking for any mention of the “Orange Coast College Republican Club” to uncover any possible administrative biases; soon after, on-campus graffiti saying, “Doxx Joshua Martinez OCC Young Republicans = Fascists” and, “Support your local antifa” stickers were found on five buildings, along with a knife laying on the grass. In March, OCC student Robert McDougal was arrested on vandalism and hate-crime charges for carving a swastika and “f— the n

—–” on the hood of a campus-safety vehicle. And a “Black Lives Matter” art installation was mysteriously removed from the Arts Center building around that time.

The OCC Republicans condemned the latter two events on its Facebook page. But then Cox was given a Faculty of the Year award in March by the Orange Coast College Professional Development Committee, which consists of faculty members, classified staff and past recipients of the award. The college GOP soon posted a meme on its Facebook page with a photo of Cox that read, “CALLS TRUMP’S ELECTION AN ACT OF TERROR/WINS TEACHER OF THE YEAR.” That led to a contentious April 5 Coast Community College District (CCCD) Board of Trustees meeting, at which Recalde-Martinez, Rowlands and others demanded that Cox’s award be rescinded.

If the December rally were heated but civil, the CCCD meeting showed how much worse relations had become between progressives and conservatives at OCC. Students who supported Cox were now in the minority. Several audience members in patriotic garb, long past their college days, held signs reading, “REVOKE OLGA’S AWARD.”

A facilitator at the Board of Trustees meeting had to remind audience members to compose themselves and refrain from interrupting speakers. When any speaker voiced opposition to the College Republicans, jeers burst from the crowd. But when the College Republicans spoke, none was interrupted by the audience.

“The faculty has decided to make Olga Perez ‘un’ Stable Cox Faculty Member of the Year; this is completely inexcusable,” said Wetzel. He then called out Rob Schneiderman, president of the Coast Federation of Educators and consistent Cox supporter, for showing his “disreputable face here today” and warned his club will do everything to stop him from beating Congresswoman Mimi Walters in 2018.

Student Elias Altamirano voiced his support of Cox. “Despite the threats to her life, the constant mockery and insults posted in the [College Republicans] club’s Facebook page by people who have no idea who she is,” he began, “Professor Cox had the admirable courage to not let a few students ruin her commitment to this institution, her dedication to continue teaching and her passion for helping hundreds of students like she has done for over 30 years.”

He then triggered conservatives when he said, “Ignorance is the root of all evil, and the fact that there are many here today attacking a person they have never met is extremely tragic.”

“We met her on the video!” interrupted a woman, which sparked laughs and applause by College Republicans supporters in the audience.

“You may not do that again,” the facilitator snapped to the woman. “If you do you’ll have to leave.”

Altamirano continued, “I love this school, and the faculty has been nothing but a great support to me. I won’t let someone’s [craving] for attention and a political platform ruin this institution I consider home.”

This time, the conservatives in the crowd remained silent.

Denise De La Cruz is a writer and the Clubs Editor for OC Weekly. When she’s not listening to music, she’s on the hunt for cool clothes, sappy films and Xxtra Flamin’ Hot Cheetos.



This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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MOORLACH UPDATE — Snubbing — May 10, 2017

Monday afternoon, Senator Jerry Hill (D – San Mateo) presented SB 751 on the Senate Floor. I followed with the request that the Senate consider my submitted amendments, that would have made SB 751 identical to my version (SB 590) on the topic of addressing school reserve caps (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). As expected, a motion was made to table the amendments, which passed along party lines.

Debate on SB 751 ensued. My Republican colleagues were well spoken and provided the following comments: "SB 751 is OK, but SB 590 is what should be considered." After a healthy Floor discussion, SB 751 received votes from all the Senators present (38). The narrative of one television news station, KERO Channel 23 in Bakersfield, covers the story in the first piece below.

Monday evening, following Session, SB 371 and SB 671 were heard in the Senate Public Employment and Retirement Committee (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). SB 371 lost with a 2 to 3 vote, along Party lines. But, SB 671 received unanimous support, making it my first bill to get out of this committee.

Tuesday morning found SB 59 being overwhelmingly approved in the Senate Governmental Organization Committee (also see MOORLACH UPDATE — Repealing the Cap — May 7, 2017 may 7, 2017 john moorlach). It now moves to Senate Appropriations Committee.

Tuesday afternoon found me Chairing the Senate Judiciary Committee while the Chair presented her bills. Courthouse News Service covers one of those bills that impacted the services performed and provided by the State Bar in the second piece below.

In the third piece, the OC Register provides a column discussing Secure Choice and affirms my opposition to the creation of this new government bureaucracy (also see MOORLACH UPDATE — Secure Choice in Jeopardy — April 2, 2017 april 2, 2017 john moorlach). I provided the online photo to point out that half of the Republicans that attended the bill signing ceremony did not return to Sacramento this Session. And the piece announces the good news, the U.S. Congress voted to reverse the ERISA changes that made SB 1234 possible.

The fourth and final piece is from R Street and covers my bill, SB 247, which tried to inform the Legislature that some perceived good practices are really barriers to the poor in entering certain industries (also see MOORLACH UPDATE — There Ought Not Be A Law — April 23, 2017 april 23, 2017 john moorlach and MOORLACH UPDATE — PACE and HERO — April 30, 2017 april 30, 2017 john moorlach). Two validations in one day is encouraging up here in Sacramento.

KERO 5/8/2017 6:11:54 PM: …districts ill- prepared if disaster strikes.

Currently — california school districts can only set aside 6-percent of their annual expenditures. Lawmakers say that only amounts to a few weeks of cash-flow in terms of a payroll crunch.

Senator John Moorlach of Orange County is proposing a new amendment that will permanently remove the rainy day fund cap. He says the cap is unfair and a selfish move by the teachers unions.

"It just tells you how dominant the public employees unions are in Sacramento and they would rather spend the money paying their members than being concerned about how well a school district is being run."

Senator Moorlach says Governor Jerry Brown should never have agreed to the cap. Similar attempts to remove the cap by Republican lawmakers have failed three other times.

Committee Approves Overhaul of California State Bar

Maria Denzio

A bill to allow the California State Bar to collect membership dues next year sailed out of the Senate Judiciary committee Tuesday, but it also contains a caveat: the agency must divide its disciplinary and trade association functions.

The bill, sponsored by state Sen. Hannah Beth Jackson D-Santa Barbara, will enact a host of changes to how the state bar operates, including winnowing its current 19-member board of trustees to 13 and cutting six attorney members from that number. Board members will now be expected to serve four-year terms instead of three. Members of the bar’s executive board must also include one member appointed by the governor, state Supreme Court and the Legislature.

It will also rename the positions of president and vice president as chair and vice chair, to be appointed by the state Supreme Court rather than elected by the board.

“This has been a very carefully thought-out effort. There’s a lot going on in this bill. We want to make sure we get this right,” Jackson said Tuesday. “This has not been easy and this has not been fun, but it’s my hope we will pass this and that the bar will once again do what it should be doing to protect the public and serve lawyers and the people of California.”

Jackson’s bill will authorize the bar to collect dues of $390 for 2018 and 2019, but disallows the bar from blocking the Legislature’s reduction of membership dues in the future.

Chief among the bill’s changes to the bar is its requirement that the agency allow its 16 specialty law groups to split off and form their own nonprofit corporation, to be called the California Bar Sections Association.

The “sections,” as the state bar calls them, are specialty organizations currently affiliated with the bar that focus on various areas of legal practice, from family and labor law to intellectual property and antitrust law. It also includes the California Association of Young Lawyers.

They provide low-cost continuing education for its attorney members, which the state bar requires. They also work with legislators to interpret, amend and propose legislation. While lawyers are required to be dues-paying members of the bar to practice law in California, section membership is voluntary and members pay separate dues of roughly $95 a year.

The sections began considering a split from the bar last year, spurred by a combination of factors including new restrictions imposed by bar executives to reconcile the bar’s regulatory and trade association functions.

Among these was a ban on spending on alcohol at events and contracting with resort-style meeting venues. The sections had argued that these regulations prevented them from attracting and keeping members.

Jackson’s bill is the culmination of talks within the state bar and with the state Supreme Court and lawmakers, who were concerned about how the agency spends its money and whether it has been sufficiently diligent in disciplining wayward attorneys.

After the Legislature ended its session last fall without passing a yearly dues bill, the state Supreme Court stepped in and allowed the bar to collect dues for 2017 – but only to support its disciplinary functions.

At Tuesday’s hearing, State Bar President James Fox called the bill a perfect solution.

“We are strongly in support of this bill. You all know how contentious it was last year. This, I think, is a perfect solution,” he said.

“So you’re agreeing to the terms of your surrender,” joked state Sen. John Moorlach, R-Orange County.

“My white flag,” Fox laughed.

The committee passed the bill unanimously, 6-0.


Get government out of

retirement planning

AP Photo/Rich Pedroncelli
Gov. Jerry Brown signs legislation that will automatically enroll millions of private-sector workers in retirement saving accounts, as lawmakers and supporters look on, at the Capitol Thursday, Sept. 29, 2016, in Sacramento, Calif.

By asummers

Increasingly, the government is taking control of the financial decisions that will determine the quality of life we lead during our golden years — and that should concern everyone.

First, there was the failure of Social Security, which has always been more of a Ponzi scheme than a retirement program. Social Security’s old-age trust fund will be exhausted in 2035, at which point it will only be able to pay out 77 percent of promised benefits, according to the 2016 report from Social Security and Medicare trustees.

Public pension systems face similar financial difficulties, racking up trillions of dollars in unfunded liabilities nationwide. Yet, California and a handful of other states, as well as some cities, are looking to compound this error by establishing government-administered retirement plans for private-sector workers. California’s version, known as the Secure Choice program, would require employers with as few as five employees to either offer retirement plans to their workers or deduct 3 percent of their paychecks — with “automatic escalation” of up to 8 percent of salary thereafter — for investment directed by the government.

Like other government-run “auto-IRA” programs, Secure Choice was made possible by a Labor Department regulation passed during the waning days of the Obama administration that exempts such state or local government programs from the federal reporting, fiduciary duty and other protections under the Employee Retirement Income Security Act of 1974.

But Congress recently threw a monkey wrench into the plans for Secure Choice by invoking the Congressional Review Act to nullify the DOL rule for state governments, with a 50-49 vote in the Senate last week that followed a 231-193 House vote in February. President Donald Trump has promised to sign it, just as he signed a similar measure covering the local government versions last month.

This is a victory for taxpayers and true choice, for, as state Sen. John Moorlach, R-Costa Mesa, has often said, the Secure Choice program “is neither ‘secure’ nor a ‘choice.’” It is certainly not a choice for employers, who are forced to deduct employees’ pay or set up retirement programs that they may not be able to afford. Additional costs will be passed on in the form of reduced hiring or hours for workers, diminished investment in the business and/or higher prices. Secure Choice could also crowd out existing private-sector retirement plans, prompting some employers to dump their plans since employees could always join the state-sponsored system. The mammoth government investments would also create unfair competition for private-sector investment management services.

Then there is the issue of whether the state would be pressured to provide a backstop (i.e., a taxpayer bailout) if the investments do not perform well. California’s experience with its own pension plans does not inspire a lot of confidence. And, as I noted in last week’s column, the pension funds have often discarded fiduciary duty in favor of ideologically motivated investing, costing taxpayers billions of dollars. Secure Choice could be subject to the same political motivations.

“Today, 55 million working Americans do not have a way to save for retirement out of their regular paycheck,” AARP board member David Walker argued in a March USA Today column in support of the DOL rule. But this argument is highly disingenuous. The 55 million figure refers to those whose employers do not offer their own retirement plans, but this is quite different from “not hav[ing] a way to save for retirement out of their regular paycheck.” Anyone with access to a telephone or an internet connection can sign up for an IRA or an annuity and contribute a portion of their paychecks to those investments on their own. They do not need the government to hold their hand — or force them to do so.

Besides, some people, particularly those living paycheck to paycheck, rationally determine that that extra 3 percent or 8 percent of income today is preferable to future invested funds because they need to pay bills or put food on the table. In any case, shouldn’t individuals have the right to make those “money today vs. money tomorrow” decisions?

As we have seen in so many other areas, ceding more responsibility — and more control over one’s life — to the government is a dangerous prospect. We should be able to determine our own futures, and plan for them accordingly — without government interference.

Adam B. Summers is a columnist with the Southern California News Group.

Democrats snub working poor, killing licensing reform



California Democrats prattle endlessly about helping the working poor, but their latest vote against a bill that would tangibly help financially struggling people shows that Democratic leaders are more interested in serving their real constituencies: state bureaucracies, unions and other interest groups that want to keep out the competition.

The latest example involves occupational-licensing reform. It’s one of those rare issues that should have widespread bipartisan support. Think tanks on the left and right agree that burdensome and costly rules for getting a license to perform certain jobs (barbers, makeup artists, locksmiths, speech pathologists, funeral directors, etc.) make it inordinately difficult to enter the job market, especially for people of modest means.

The stated purpose of the rules, which often require hundreds of hours of training and thousands of dollars in coursework, is to promote public health and safety. But the rules often have little relevance to the job at hand, and they typically are promoted by unions and trade associations (and the politicians they support), who want to use the political system to increase prices and profits artificially. There’s no evidence such barriers enhance safety.

One of the most notorious examples involves African-style hair-braiding, which is a natural process that doesn’t involve the use of dyes or chemicals and doesn’t even involve hair cutting. Yet in more than half of all states, these hair-braiders are required to get a cosmetology license to learn about things that are unrelated to braiding. As a result, many braiders are pushed into the underground economy.

In 1999, a federal court ruled that California’s licensing requirements for hair-braiders were unconstitutional, because of that disconnect between the required training and the actual braiding process. The Legislature responded by exempting hair-braiders from licensing laws. “It was forced into it by a federal lawsuit, but California has kept its regulatory mitts off of hair-braiders,” said Paul Avelar, a senior attorney with the Institute for Justice, which had filed that lawsuit.

As these braiders have flourished in the ensuing 18 years, there have been no rash of health or safety problems. It’s allowed people to offer their services publicly without worrying about sting operations, fines and arrests. It’s been an unquestionably good thing for this one field – but what about the dozens of other fields still encumbered by Byzantine rules?

An IJ study from 2010 found that California had the seventh-most burdensome licensing regulations in the nation. Our state requires licenses for 62 low- to moderate-income professions. Only a handful of those were the target of Senate Bill 247.

Introduced by Sen. John Moorlach, R-Costa Mesa, and sponsored by the Pacific Legal Foundation, the bill would have repealed “the requirements for an individual to obtain a license to perform the following activities: fitting or selling hearing aids, locksmithing, barbering or the application of makeup, disposing of cremated human remains, and performing custom upholstery services,” according to the Senate bill analysis. It would also have modified “the regulation of certain landscapers, tree service contractors and private investigators.”

Pacific Legal Foundation made the obvious case:

Occupational licensing laws exist, in theory, to protect the public by requiring certain professions obtain a government license before legally working in California. However, many current licensing laws do little to protect the public and are an artificial barrier for middle class jobs. By lowering and repealing the barriers to entry for these professions, more Californians can earn a living doing what they want to do without government interference that does little to serve the public.

Opponents came from – you guessed it – a prominent union and trade groups that represent people who work in some of the fields affected by the reforms. The Hearing Healthcare Providers of California, for instance, defended current licensing requirements because “the proper fitting of a hearing aid requires close examinations of the ear into the canal, and that these devices can be extremely costly, consumers need the assurance that it is a licensed and qualified professional who is treating their hearing loss.”

Seriously, we need a state licensing bureaucracy because fitting hearing aids involves examining the ear canal? There are plenty of ways to get trained for these jobs, and it’s clear that much of the licensing process has little to do with proper training. The bill also was opposed by the California Nurses Association, which represents some public-sector nurses.

Nevertheless, the Senate committee rejected the bill on a 6-2 party-line vote, with only the two Republicans favoring it. The bill will still be considered by another committee, but is dead on arrival. The staff felt the bill was unnecessary because of the annual “sunset review” of the Department of Consumer Affairs, which functions to see if any regulations should be changed. Never mind that the review process is pro forma and rarely results in any regulatory rollbacks.

Apparently missing the whole point of the measure, the committee report opined: “It is unclear at this point why this bill seeks to eliminate occupational licensing laws that promote and protect the public.” Well, the staff who wrote that sentence could have read the legislation or some of the reports its author cited for a clear rationale.

California has the nation’s highest poverty rates, according to a new U.S. Census Bureau standard that includes cost-of-living factors. A good starting place to address that problem is to chip away at unnecessary barriers to work. Trade groups, however, recognize that the best way to inflate their members’ pay is to raise the cost of entry for others – and the more fields regulated this way, the more it keeps poor people in the welfare lines.

“One out of every five Californians must receive permission from the government to work,” explained a 2016 report from the state’s official watchdog agency, the Little Hoover Commission. “What once was a tool for consumer protection, particularly in the healing arts professions, is now a vehicle to promote a multitude of other goals. These include professionalism of occupations, standardization of services, a guarantee of quality and a means of limiting competition among practitioners, among others.”

Consider the freedom issue there too. We need to ask the government for permission to work?

The Little Hoover study found that the laws succeeded mainly in keeping “Californians from working, particularly harder-to-employ groups such as former offenders and those trained or educated outside of California, including veterans, military spouses and foreign-trained workers.” The problem is particularly acute for ex-offenders who often are barred from entering a variety of fairly low-skill professions by licensing rules that forbid them from entering the market.

Such concerns prompted even the Democratic Obama administration to call for far-reaching licensing reforms, yet California’s Democrats don’t even seem to understand the point of such efforts. Or maybe they just won’t let themselves understand the argument, given their political alliances. At any rate, they should at least stop pretending to care about the poor if they can’t embrace simple, cost-free policies that get poor Californians working.


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MOORLACH UPDATE — Repealing the Cap — May 7, 2017

The Orange County Breeze provides a hint at the potential fun I may have this coming week on the Senate Floor with a revised version of my SB 590 (also see MOORLACH UPDATE — Budget Reserve Cap — May 5, 2017 may 5, 2017 john moorlach). This exercise could occur on Monday or Thursday. And this should also provide more of an insider’s look regarding today’s LA Times coverage (see

On Monday afternoon, at the Senate Public Employment and Retirement Committee, two of my bills will be heard. SB 371 will attempt to put something very obvious into the state code, as the Meyers-Milias-Brown Act does not prohibit conflicts of interest in bargaining unit negotiations. Consequently, someone on the staff of a municipality who would benefit directly or indirectly from the negotiations is able to represent the entity and its governing board.

I’ve seen first-hand how egregious this can be. The County’s management was not vociferously arguing against granting "2% at 50" or "2.7% at 55," because they would receive the very same benefit improvements. Awkward. But, not prohibited. The public employee unions have already lined up to oppose this bill.

The second bill is SB 671, which is designed to clarify the State Code as it relates to prepaying pension plan system contributions. A financial arrangement that I helped design and implement was the ability to borrow the amount of the annual contribution and deposit the entire amount into the Orange County Employees’ Retirement System (OCERS) at the beginning of the fiscal year.

Instead of making twenty-six deposits, one every two weeks, those payments were redirected to paying down the note. The incentive to do this resulted from OCERS providing a generous discount that exceeded the interest costs of the borrowing. In fact, the first year this was done, the County of Orange saved more than $4 million in net present value savings (so I can assure you that I earned my salary, and then some) (also see MOORLACH UPDATE — Pension Efforts — January 28, 2011 january 28, 2011 john moorlach).

On Tuesday, I will again present SB 59, as amended, to the Senate Governmental Operations Committee (also see MOORLACH UPDATE — Budget Reserve Cap — May 5, 2017 may 5, 2017 john moorlach). The presentation last week to the Senate Governance and Finance Committee, which was a very positive and surreal experience, can be seen at

SB 665 is also on the Senate Floor Agenda and can be brought up on Monday or Thursday (see MOORLACH UPDATE — There Ought Not Be A Law — April 23, 2017 april 23, 2017 john moorlach). This bill springs out of an awkward occurrence with the Registrar of Voters and two parties wishing to provide opposition arguments for a ballot measure. For the Orange Unified School District, the coin toss last November created a very odd result.

To help avoid similar instances in the future, SB 665 "requires an organization or association submitting a statewide, county, city, or school district ballot measure argument to also submit additional information to the elections official to enable the official to determine if it qualifies as a bona fide association of citizens."

I’m glad to have the support of the California State Association of Counties, of whose Executive Board I served for many years on behalf of the County of Orange, the Urban Counties of California, of which I Chaired for one year in the same role, and the Howard Jarvis Taxpayers Association.

It should be another fun week in Sacramento.

Senator Moorlach seeks to protect students during budget shortfalls

Since 2014, there have been several attempts to repeal a cap that prohibits school districts from saving for a rainy day. Senate Bill 590, introduced by Senator John Moorlach (R-Costa Mesa), aimed once again to repeal the burdensome cap. Sacramento Democrats killed SB 590 in the Senate Education Committee last week.

Senator Moorlach will continue his efforts to repeal the cap by introducing a classroom protection amendment to SB 751 that gives locally elected school boards more discretion over their budgets so they can save for a rainy day.

This is a bipartisan issue. Sacramento Democrats and Republicans have agreed that capping reserves limits options for schools.

In a letter dated June 2015 addressed to then-Assembly Speaker Toni Atkins and Senate President pro Tem Kevin de León, 26 Sacramento Democrats – including Chair of the Senate Education Committee, Senator Ben Allen – agreed that “the current cap on school district reserves has potential for several negative impacts, including school districts paying higher interest…” Further, the letter stated that “higher interest rates result in taxpayers paying more and schools having less money.”

The letter went on to state that “the cap leaves school districts more vulnerable to insolvency during economic downturns by forcing them to maintain inadequate reserves.”

Earlier this year Democrat State Superintendent of Public Instruction Tom Torlakson weighed in on this issue in a budget hearing stating his opposition to the cap on school district reserves.

Read the full June 2015 letter here.

This article was released by the Office of Senator John Moorlach.

The video showing Senator Moorlach presenting SB 590 is below.


This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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