Tomorrow’s OC Register will have a Reader Rebuttal submission by Nick Berardino, which is provided below.

Believe it or not, my State of the County PowerPoint presentation has 94 slides.  It is available at http://www.ocgov.com/portal/site/ocgov/menuitem.4981dc715fc6e27bdadd603d10000...; just click where it says “2012 State of the County address.”   Only 14 slides directly or indirectly address pension reform (slides 73-86).  Six of the 14 deal with the legal concerns that revolve around the reform proposed (slides 78-83).  There are legal minds that differ on the proposed reform, but most serious scholars who have analyzed the growing pension debt problem will tell you that changes with the current employees is the appropriate route to pursue.  I decided to broach the subject to begin a dialogue.  Here is where some of the discussion should go:

1.       What are the legal considerations and are they surmountable?  If they are surmountable, can we work together to accomplish the goals of (a) providing a satisfactory defined benefit plan; (b) reducing the County’s unfunded liability; and (c) consider salary increases to County employees as a portion of the total compensation package?

2.       My research shows that returning prospectively to the previous pension formulas will generate a large reduction in the County’s unfunded actuarial accrued liability (UAAL).  Actuarial studies confirm this.  If we disagree on the reduction, can we ask the actuaries to do further analysis?

3.       Reducing the UAAL will do two things.  It will lower the employer contribution rates.  And it should lower what is known as the reverse pickup.  The reverse pickup is what employees have withheld from their paychecks to pay for the UAAL that resulted from the pension formula enhancement approved in August of 2004.  Only existing employees incur this cost.  Employees who retire escape this expense.  Therefore, current employees are paying for their UAAL, as well as paying the UAAL for those who retired after August, 2004.  A reduction in the reverse pickup should provide an increase in the net paychecks of the County’s impacted employees.

4.       The County made significant pension reforms in the last negotiating cycle and I acknowledged that in my presentation and remarks (see slides 6-8).  The County is also working legislatively on its hybrid plan, which I addressed in slide 74.

Now to some of the ad hominem arguments.  The direction the negotiations go, I will go.  If managers have to pay for their employee contributions, County Supervisors should too.  Speaking for myself, the pension vote of August, 2004 was a financial disaster.  I would personally rather rescind this benefit, be reimbursed for my past reverse pickup contributions (which does not go into the pension system—it’s just an offset for the County’s pension contribution), and stay with the formula that I started with when I came to the County.  I believe this is the course of action every employee should take.  I believe it is the honorable approach to take.  I also believe it will prevent the County from more layoffs.  It should allow the County to provide for pay increases, something that I do not see under the current scenario as happening for years, if ever.  The three bargaining units have to make choices on which road to choose.  Will they adamantly cling to a pension formula that may cause the pension system to implode?  Or will they return to a formula that is fiscally manageable and may provide for increases in current take-home compensation?  That’s the discussion I believe we should engage in at the bargaining table.

Having said that, let me share what I have in slides 55-59.  The Orange County Employees Retirement System (OCERS) Board of Directors voted to raise contribution rates by 1.77% of payroll because retirees are living longer than anticipated, and 0.61% because pay increases have exceeded projections (most likely due to early retirements and the resulting internal promotions).  With a billion-dollar payroll, 2.38% is about $24 million per year in additional costs to the County.  The OCERS Board will consider lowering the investment earnings assumption later this year.  The current rate is 7.75% and the proposed rate is 7.5%.  This reduction will increase the system’s UAAL by $750 million and the annual contribution by 2.94% (about $25 million per year).  Even if the state and Federal programs picked up 80% of this cost, the County would be hard pressed to find another $10 million in its General Fund Budget.

To make things more interesting, OCERS had net earnings of about 0.75% for the calendar year 2011.  That means it fell 7% below its investment return assumption.  If OCERS were fully funded, and we said that it should have about $12 billion in assets under management.  Earning 7% on this portfolio means a return of $840 million.  Trying to replace the lost earnings over 30 years will cost the taxpayers some $70 million per year (assuming a 7.75% investment return assumption).

The interest-rate environment is at an historical low.  The last time the nation saw a low interest rate turn around with increasing rates was in 1994.  If interest rates rise, then bond values decline.  If the rates double during this calendar year, then the OCERS fixed income holdings may decline in value by half.  The international and domestic fixed income holdings represent about 24.7% of the portfolio.  A 12.25% loss on in a $12 billion portfolio is about $1.5 billion.  All to say, the defined benefit pension plan for the County is a really, really big deal.  Consequently, an honest debate on what is best for the employees, the employers, and the stakeholders (taxpayers) is the least we can do.  I believe both Nick Berardino and I would agree that the bargaining table is the best place to engage such a discussion and I hope that we can.

Reader Rebuttal (Nick Berardino): County pensions

Reader Rebuttal by Orange County Employees Association General Manager Nick Berardino

It's not surprising that Supervisor John Moorlach spent the vast majority of his inaugural State of the County speech Tuesday beating his tattered anti-pension drum ["Pension battle ahead," Editorial, Jan. 25].

It is deeply troubling, though, that the so-called "pension reform" proposal he unveiled for Orange County Employees Association members during his presentation makes absolutely no sense: It's illegal, would have no impact on the county's fiscal health or unfunded liabilities, and would do nothing toward what taxpayers have been demanding when it comes to pension reform – that everyone pays their fair share.

As the new chairman of the Orange County Board of Supervisors, Moorlach would like to reduce pension benefits for current OCEA employees to pre-2004 levels. This is not a constructive approach, and it will do nothing to help the county's financial position for two reasons:

1. The cost to the county under Moorlach's plan would be exactly the same as it is today for OCEA-represented employees. That's because OCEA-represented employees are already paying the entire employee contribution toward their pensions. Plus, they pay the county's share of the cost for the benefit enhancement they received in 2004. Reverting back to the old plan would have no impact on the county's fiscal health.

2. Courts have ruled time and again that pensions are legally protected property and that government has a contractual obligation to keep the promises they've made to employees, promises that employees rely on when planning for a responsible and secure retirement.

In contrast, Orange County recently achieved significant pension reforms that go beyond rhetoric and actually address retirement costs for current employees.

Under the recently negotiated hybrid pension plan, current employees will be able to choose a lower pension formula – which includes a 401(k)-type component – reducing pension costs for the county and for employees, some who divert 18 percent of their paychecks to pay for retirement benefits.

The OCEA is working closely with Rep. Loretta Sanchez and county Supervisor Bill Campbell to resolve an issue with the U.S. Department of Treasury so that this option will be available to employees as soon as possible.

And even with all of this progress, I agree that there is more work to be done. But there's a very simple place Chairman Moorlach can look to find a good place to start: The mirror.

See, while rank-and-file employees pay the full share of their pension costs, the county's executives, managers and elected officials, play by a different set of rules, just like the executives at private sector banks and corporations across this country protect their profits at the expense of their employees and the public.

In Orange County, elected officials and executives allow taxpayers to pay both the employee and employer pension contributions. On top of that, they receive a fully taxpayer-funded 401(k) plan. It's time for that to change.

Unfortunately, Chairman Moorlach failed to discuss this, or propose any other ideas that have the potential to turn into the type of creative, groundbreaking initiatives that we've already proven we can achieve if we work together.

Instead, he chose to drum up political support by promoting ideas that he knows won't save the county money and are not legal. The last time Supervisor Moorlach took this approach and challenged sheriff's deputy pensions, the county had to pay deputies $1.3 million to cover their legal bills.

There is a better, smarter way, and I'm hopeful we can work together to get there.

FIVE-YEAR LOOK BACKS

January 29

2007

Rick Reiff had fun with a topic that continues to today in his “OC Insider” column in the Orange County Business Journal.  The title was “Bush, Sanchez Tango; Moorlach to Iraq? Birth Announcements.”

Los Miserables: Supe John Moorlach’s idea of merging the small but independent-minded north-coastal communities of Seal Beach, Los Alamitos, Sunset Beach and Rossmoor elicited this e-mail from Los Al’s Jody Shloss: “A lofty goal. After you pull that off you could next govern Iraq.”

The OC Register’s “The Buzz” column had the title “Playing politics—who’d have thunk it?”  Peggy Lowe, Norberto Santana, Jr., and Julie Gallego were contributors to the column.

Did you see the full-page advertisement in the Register Sunday? It had a picture of a sad little boy and a widow wearing Jackie O. sunglasses, both standing behind a casket. The ad read: "Playing politics with funerals?"

Although the ad didn't say so, it's the work of Mark Bucher, a longtime member of the Orange County GOP who is best known for the unsuccessful 1993 school voucher initiative. Seems he's now delving into the issue of "paycheck protection," code for "Let's reduce the unions' power." His new group is called Veritas Public Policy Center, a project of the California Foundation for Campaign Reform.

The ad plays on a recent dust-up between Supervisor John Moorlach and the Association of Orange County Deputy Sheriffs. The fight became bitter when Moorlach demanded an audit of the union's health fund and called the union's leaders "thugs." The union countered by mailing letters to the Board of Supervisors asking that Moorlach be barred from attending the funerals of anyone killed in the line of duty. Union bosses also threatened "job actions," code for a strike or a work slowdown.

A Veritas press release said the group was founded "to expose the union bosses' efforts to distort truth and mislead their members and the taxpaying public."

Bob MacLeod, the union's general manager, said he's glad to see the ad, because it will clarify the issue.

"Anyone who wants to know what's behind this issue should know now," he said. "It's politics, and it's nothing more."

MacLeod, who resigned last week for a new job in Santa Barbara, said he will continue to negotiate the union's contract in good faith until it's settled, which he hopes happens in the next couple months.

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My morning was spent at the bimonthly meeting of the Commission to End Homelessness.  At this week’s Board of Supervisors meeting we voted to approve the final Ten-Year Plan to End Homelessness and the Commission to End Homelessness Bylaws (agenda item #31).  We also heard the quarterly report from Executive Director Steve Kight and approved Policy Recommendations for Year-Round Emergency Shelter and directed OC Community Resources staff to develop a Funding Allocation Policy and Process (FAPP) for the Year-Round Emergency Shelter.  It was the discussion on the emergency shelter potential location that was addressed in the MOORLACH UPDATE -- New Chair -- January 25, 2012.

The Commission to End Homelessness is designed to work with the County, the cities, public safety representatives, the nonprofits, and the business community to work together on this issue.  It is to break down the silos and provide communication and mutual focus on a shared goal.  Yet, many come to the meetings under the assumption that we should be doing their specific projects or spending money on certain urgent homeless needs.  Others get it and bring ideas to benefit the whole.  Today someone recommended one agency buying bus tickets for everyone to obtain a larger discount.  Brilliant.  But, misconceptions can happen.  We’re all passionate and we’re all under a sense of urgency.  Accordingly, we have met all of our first-year milestones.  Do I wish we could do more?  Absolutely!

The Voice of OC provides a piece below that tries to expand on the topic, but seems to prove my point.  Therefore, let me provide a little help.

1)      It was never the “Commission to End Homelessness by 2020,” but was the “Ending Homelessness 2020 Board.”  The name was recently changed to the Commission to End Homelessness for branding purposes in order to be consistent with efforts across the County to end homelessness. 

2)      The article asserts that the County is backing away from its previously stated goal to end homelessness by 2020 by changing its name.  This assertion is incorrect.  A name change is not a policy change, and the time-frame is still in the mission and vision statements. 

3)      The assertion that the County isn’t putting money behind the effort, other than a one-time $75,000 contribution towards the salary of the executive director is also incorrect.  This overlooks the millions of dollars obtained annually by the County on behalf of the homeless and other related programs.  As is stated in the Ten-Year Plan (which is an inch thick and hardly lacking in specifics), in 2010/11 County agencies allocated approximately $67 million in funding for programs assisting homeless individuals and families.

4)      Getting an all-inclusive and accurate point in time count of the homeless on an annual basis has not been feasible due to the lack of resources.  That neighboring counties are doing this is great, but the OC is doing what it can afford to do at this time.   Efforts have been focused in Orange County on improving participation in the Homeless Management Information System, which overtime, with more participation, will result in a better method to accurately identify unduplicated numbers of homeless.

O.C. Homeless Plan Still Lacks Specifics

TRACY WOOD

The Orange County Board of Supervisors this week received the long-anticipated Final Plan to End Homelessness, a document that homeless advocates applauded, despite describing it as long on generalities and short on specifics.

More than four years after the George W. Bush administration officially made ending homelessness a national priority, the local plan is simply "overarching goals and strategies," said Kelly Lupro, manager of Homeless Prevention for the county's Community Services Department.

For example, even though the plan's conclusion states "Orange County has made a commitment to end homelessness over the course of the next decade," the county isn't putting money behind the effort, other than a one-time $75,000 contribution toward the salary of Steve Kight, the project's first executive director.

Furthermore, the county will not try to count all of the homeless people within its borders and is backing away from its previously stated goal to end homelessness by 2020. The former Commission to End Homelessness by 2020 now is just the Commission to End Homelessness.

The county is required to devise a plan for ending homelessness or risk losing U.S. Department of Housing and Urban Development funds that for Orange county totaled $111 million between 1996 and 2009.

Paul Leon, director of the Illumination Foundation, one of the county's most high-profile nonprofits dedicated to homelessness issues, said until very recently the county's plan was "just talk."

But starting last year, he said, he's sensed "a little bit more momentum," including efforts to cooperate with cities.

"If we [charities and government] could work together, I could see something happening in the next three to four years," he said.

When asked about the plan submitted to the Board of Supervisors this week, Leon said there is "quite a bit of fluff in there." But he said he's encouraged that the county is considering potential sites for a year-round shelter.

"At least they're doing something," said Leon. "They're trying to quantify the gravest needs. Yeah, it could have been done five years ago, but at least it's happening."

Board of Supervisors Chairman John Moorlach said part of the delay came from the time it took to recruit an executive director. He said there also were legal issues to settle before enabling the OC Partnership to spearhead the effort.

Since Kight, who heads the OC Partnership, was named executive director in August, they've "been working like crazy," Moorlach said.

The commission recommended that year-round shelters be located at sites throughout the county and should include daytime services. To do that, Kight and the OC Partnership must win support of the communities where the shelters would be located and raise money to create them.

If the county creates year-round shelters, it also must provide services for individuals with mental health and addiction problems, the report said.

In order to supply those services, officials must know how many people need them. Getting an accurate count of homeless people is tough for any jurisdiction and, it seems, particularly tough for Orange County.

In January 2011, the county participated in the nationwide point-in-time count of homeless people. However, county officials took several months longer to release the information than their counterparts in other Southern California counties. And when officials did make the totals public, they were immediately challenged by local advocates.

The tally showed that even with the poor economy and high unemployment, Orange County homelessness dropped 16.73 percent between 2009 and 2011 to about 7,000. It was the largest decrease of any county in Southern California.

"It's bullshit," Dwight Smith, director of the Catholic Worker shelter in Santa Ana, said at the time.

Orange County tries to count all of its homeless only every two years, the minimum required by HUD. This year, HUD began requiring an annual, one-night count of men, women and children housed in shelters. Orange County will conduct that count Jan. 27.

But most homeless people don't live in shelters. They sleep on the streets, in parks, in cars or anywhere they can find a reasonably safe space. Even if the 2011 count is accurate, shelters reported caring for less than 40 percent of the total homeless people in Orange County. The rest presumably were on the street.

This week, other California counties, including San Diego and Ventura, are again doing their own street count. But Orange County is not.

When asked the reason, Moorlach said, "Just because Johnnie does it …"

Lupro said the county is moving toward an annual street count.

This year's partial count comes when homelessness and one of its major causes, mental illness, have been in the spotlight for months.

Kelly Thomas, a homeless man suffering from severe schizophrenia, was beaten to death July 5 by Fullerton police officers. One officer involved in the beating is facing murder charges and another manslaughter charges.

This month, Iraq War veteran Itzcoatl "Izzy" Ocampo, 23, of Yorba Linda, was arrested on suspicion that he is the serial killer who stabbed to death four homeless men in North Orange County. Ocampo, whose father is homeless, reportedly suffers from psychological problems.

Brian Sullivan, spokesman for HUD, said learning how many people live on the streets and the reasons is critical to ending homelessness. Without knowing how many people lack a permanent place to live and what kinds of aid are needed, it's impossible to marshal the right resources in a financially sensible way, he said.

Reducing homelessness and correcting its causes, he said, saves local, state and federal funds that are spent for emergency room care, jails, prisons and other services.

"You can't solve homelessness without understanding it," said Sullivan.

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracyVOC.

FIVE-YEAR LOOK BACKS

January 21

2002

It’s not too often that I disagree with the OC Register’s editorial staff, but on the recapture matter, I did.  So I submitted an editorial response, which was titled “Appeal in court only way to settle tax overcharge issue – Otherwise, all tax agencies under Prop. 13 will be kept in dark.”  It was the guest column in the Sunday Commentary section.

I agree with the Orange County Register on, what I affectionately call, the recent “Pool Case” decision affecting the calculation of real property taxes (“Tax ruling makes county course clear”).  Why shouldn’t I?  I share the Register’s libertarian bent.  But, the Register’s editorial staff may have rushed too quickly to its decision on the non-necessity of an appeal. 

As a steward of everyone’s hard earned tax dollars, I strongly believe the County should appeal Judge Watson’s decision for the sake of clarity and absolute resolution.

As an elected official I believe that there are three areas for me to concentrate on:

1.       Lower taxes.  If there is anyway to either avoid raising taxes or, better yet, to reduce them, then do it.

2.       Cut wasteful spending.  What better way to reduce the tax burden than to reduce unnecessary and wasteful spending?

3.       Be consistent.  This is a Certified Public Accountant’s credo.  Report your activities in a consistent manner.

In the “Pool Case,” Judge John Watson determined that a “recapture” of a county Assessor’s earlier unilateral, or successfully contested, reduction in a real property’s base for assessment purposes is not to exceed 2 percent per year.  That is, there will be no recapture. 

There is no “demon” here.  Our assessor has acted in a uniform manner with the rest of the state.  This method was also concurred with by the Howard Jarvis Association, which gave birth to Proposition 13 in 1978.  In fact, our current Assessor and his predecessor followed the spirit of Propositions 13 and 8 and unilaterally, in a pro-active manner, reduced assessed values of numerous property owners in the county.  This in spite of the fact that such actions are not mandated by Proposition 8.  In an overall review of this department, I believe our Assessor has gone above and beyond the call of duty.

Judge Watson’s decision would lower property taxes for those that received either a unilateral or successfully contested reduction in their real property’s base.  This could impact about half of our County’s property owners.  This may be great for these taxpayers, if Judge Watson is correct.

However, the overall fiscal impact may be devastating.  Published reports indicate that the refunds may be in the area of $285 million.  If the County’s share is only 7 percent, it will cost this cash-strapped municipality $20 million.  The rest will be borne by your cities, school districts, special districts, and the State of California. 

Two school districts in the County utilize “basic aid” and rely on real property taxes for their funding.  We may see Newport-Mesa and Laguna Beach Unified School Districts devastated by this financial catastrophe.  The bargaining agreements that these 2 districts have with their teachers requires lay-off notification for next year by March 15.  They must act very quickly in making significant financial decisions that will impact the lives of thousands of people. 

Judge Watson’s decision may also severely impact a number of newer cities, as they have not yet had time to build adequate reserves for emergencies.

It will also cost my department, the County Treasurer-Tax Collector, and the Auditor-Controller and Assessor departments some $5 million to accurately and promptly issue the refunds.  This brings the impact to the County to $25 million.

Now we have opportunists who may pursue “class action” lawsuits or “statewide ballot measures” for their own financial gain to make this apply to the entire county and state.  Accordingly, the 57 other counties can also anticipate similar lawsuits. 

Let’s assume for the moment that we have an opposing decision in another county.  Now we have inconsistent law, or a tiered taxing system.  Or let’s assume that a county appeals the decision in the Court of Appeals, or even the State Supreme Court, and wins.  Then our County’s abiding with Judge Watson’s decision will have cost more than $300 million in taxpayer dollars.  What are the chances of recouping these refunds?  Nil.  Now we have government waste on a grand scale.  And we know that Sacramento isn’t going to feel sorry for our decisions and provide funding.  The 1994 bankruptcy filing taught us that lesson.

This inconsistency and uncertainty needs to be resolved.  It is unfortunate that the Orange County Board of Supervisors did not take the initiative to lead in this regard at their meeting of January 8.  No wonder the Los Angeles Times reporter opened her article with the sentence “Orange County supervisors Tuesday ducked what could become a far-reaching legal battle by voting not to challenge a recent court ruling that found a key method for assessing property unconstitutional.” 

Although it is the Supervisors’ role to adjudicate financial responsibility for agencies within their jurisdiction, they relegated this duty to the elected assessor.  Filing for an appeal is not the assessor’s job.  His role is to assess.  The Board waived the right to appeal by their default. 

On the way to this decision the board implied that the assessor, and by inference myself and the auditor-controller, were crooks with the rationale that “because you’re a burglar and that’s how you support your family doesn’t make it lawful.”  Some support.

An appeal should settle this legal uncertainty once and for all.  That’s why the Supervisors were counseled to file for a writ with the Court of Appeals. 

It would make them statewide heroes, if Judge Watson’s decision was correct, to the impacted taxpayers.  Of course, if Orange County represents 9 percent of the state’s real property taxes, then there is another liability of more than $3 billion staring in the face of our fiscally challenged Governor.  If a tax hike is implemented as his response, then those who are not impacted by Judge Watson’s decision will be paying for it and many of those who are impacted may see a zero-net sum game.

Now the spotlight is on Orange County Assessor Webster Guillory.  Will he take into account the big picture?  Or will he only focus on March 5?  Now is a time to not reveal your insecurities.  Now is a time to lead and codify this decision so that it is administered consistently throughout the state without a significant waste of taxpayer dollars and local municipality disruption.

The Orange County Register should take a more global view and support an appeal. 

A strident libertarian “knee-jerk” would be destructive, when the Register’s overall goal should be that of a constructive statesman.

2007

Long-time Daily Pilot columnist Steve Smith made me the subject of his weekly submission in “On the Town:  Keen eyes supervise county money.”  For perspective, the County’s retirement system earned less than 1 percent on its assets last year.

During a recent interview with newly minted county Supervisor John Moorlach, a light bulb went off over my head, and I finally realized why, even with some disagreements on key issues, I appreciate his role in county government.

More than any public official with whom I have ever communicated, Moorlach has his eyes (not one, but two) on our money. Whether it's investing to make more of it or finding and plugging the bottomless pits standard in bureaucracies, Moorlach is all over this money thing.

The reason for my call was to find out how Moorlach was adjusting to his new role. I started off the conversation by reminding him that not so long ago, if I called him late in the day at his office, he would answer the phone himself. Those days are over.

"The days blow by," Moorlach said. "My staff does a good job of prepping, but I am still a little anal on certain things."

Moorlach called it "anal," but with these left-brainers, it is more a matter of being detailed — of being interested in the things that are important but invisible to us.

One of Moorlach's challenges is scheduling — of meeting the demands of all those who want a piece of him.

"Today, for example," he said, "I was invited to a dinner, but I looked at my schedule that week and found 35 hours of other events I had committed to, and I called back to say there's no room."

I asked Moorlach how the county is doing.

"The biggest issue facing the county is our pension plan liability," he said. "The second is the retiree medical fund."

Minus all the administrative language that confuses things, the county has made promises that are costing us enough money to unions and retirees to be very concerned — again — about the county's fiscal health.

For years no one disputed any of the additional benefits for, say, law enforcement because the idea was that nothing was too much for people who put their lives on the line for us.

Unfortunately, those who are pushing back on the questions he is raising have painted him as uncaring and unappreciative of their work. Nothing could be further from the truth.

Moorlach only wants to know how much is enough: How much do we extend ourselves before we start to affect the county's bond ratings and its ability to conduct all of its other business?

"The pension is the tail that wags the dog," said Moorlach. "We are keeping the wolf at bay by earning 13%, but that won't last forever."

As a taxpayer, you should be very concerned. The county's last fiscal year gave $225 million to pension spending, which was more than half of the increase from recent higher tax assessments.

As of August last year, the county owed about $3.7 billion to the pension and retiree medical funds. To give you some perspective, the county declared just $1.7 billion in debts when it filed for bankruptcy in 1994.

If there are some ruffled feathers along the way and some pushback, Moorlach can handle it. He knows that he volunteered for this job and approaches each day with progress in mind.

"I remember my mom telling me, 'Don't sit there — ask me what you can do next.' But that's how my mom raised me. So now, I figure out what I'm going to do first, second, third and fourth."

You should be satisfied that Moorlach is asking these tough questions — questions that are supposed to grow and protect the hard-earned money you generously give to the government each year.

And if anyone tells you he doesn't care about people, you can respond as a taxpayer that he does.

The LA Times addressed another hiccup at the Orange County Transportation Authority in “O.C. transit officials rethink contract for troubled Access paratransit program – Veolia Transportation has problems getting to riders on time and getting them to their destinations.”  The piece was by David Reyes and it concerned Veolia’s inability to meet its performance benchmarks.  Veolia had made an aggressive sales pitch to take the contract away from Laidlaw.   Here are the opening paragraphs plus one:

Dorothy Miller was getting blood drawn and a prescription filled when the white Access bus rolled up to Kaiser Permanente in Garden Grove to take her home.

Miller, 86, who doesn't drive and uses a walker, is among thousands in Orange County who rely on the Access paratransit program, paying just $5 for round-trip transportation.

"The Access bus has been a blessing to me," she said after van driver Maria Moser helped her to her seat. "I use it to go shopping, exercise and the doctors."

But seven months after Oak Brook, Il.-based Veolia Transportation, one of the nation's largest transportation companies, took over a $30-million-a-year contract to provide paratransit services in Orange County, Veolia is in trouble.

Drivers have been late with pickups and hazy on destinations, sometimes getting there an hour late or longer, prompting numerous complaints from disabled riders who have missed appointments or been left waiting at hospitals, medical centers and shopping plazas.

The Orange County Transportation Authority has fined Veolia $300,000 for failing to meet contract standards.

"The single biggest issue has been buses being excessively late, in addition to problems due to difficulties with scheduling the buses, and drivers having trouble getting to the pickup points," said Erin Rogers, OCTA manager of transportation services.

Supervisor John M.W. Moorlach, who is on the OCTA board, said the program needed evaluation and suggested the board might consider a hybrid program, such as also having a fleet of taxis and exploring the use of existing dispatch services for buses and taxis.

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It was an honor to start the year as the Chair for the Orange County Board of Supervisors.  I also had this privilege in 2008.  It is customary for the Chair to provide a State of the County address, so I started yesterday’s meeting with my presentation.  It should be available on my website at http://www.ocgov.com/ocgov/Government/Elected%20Officials/Chairman%20John%20M.W.%20Moorlach%20-%20Supervisor,%20Second%20District.  If this link does not work, then try http://www.ocgov.com/vgnfiles/ocgov/BOS2/doc/State_of_the_County_2012.pdf.

The theme was “Taking Stock/Reality Check,” and as such I covered topics such as where were we, what have we accomplished, where are we, and where are we going?

Using the County’s June 30, 2010, Comprehensive Annual Financial Report (CAFR), I gave a summary of the basic financial statements by providing a quick analysis of the Unrestricted Net Assets (UNA) for governmental activities.  Dropping the last three zeroes (thousand), it looks like this:

The County of Orange has a net deficit.  How does it compare to other counties and what metric can we use?  I decided to utilize the approach the OC Register reporters Tony Saavedra and Jon Cassidy did in their review of Orange County city CAFRs back in August (see MOORLACH UPDATE -- Voice of OC -- October 10, 2011).  They utilized a per capita comparison approach.  In Orange County, with more than 3 million residents, it is a $3 deficit per person.  If the County were a city, it would have ranked 32^nd out of 35.

So how did the recently released CAFR for June 30, 2011 look for UNA?  Unfortunately, the per capita deficit grew and is now $25 per person.  Here is the recent five-year trend:

This recession has been depleting our reserves.  And, due to current guidance from the Government Accounting Standards Board, the County’s CAFR does not reflect $4.1 billion in unfunded liabilities in its balance sheet!

I don’t want to dump the whole speech on you today, so I’ll provide more in future updates.  The County is, in the words of Moody’s Investors Service, showing “modest signs of improvement within one of the state’s largest economies” but “fiscal position remains very weak for the rating, but stable; operations still slightly unbalanced.”  This point was reiterated during the presentation of the County’s annual Strategic Financial Plan.  Stating that the County is “in pretty good shape” does not square with the sobering analysis presented by our Chief Finance Officer and Chief Budget Director.  Moreover, such a position ignores the very real economic impacts on the County’s retirement system.  I concluded my remarks with proposed solutions to address the pension liabilities in this slide:

The best solution is to rescind the pension plan enhancements of 2001 and 2004

Would dramatically reduce the County’s UAAL

Would nearly eliminate the reverse pickup

May provide a total or near total reimbursement of prior reverse pickup contributions

Would provide for lower employer pension plan contributions

The point is that we should be able to negotiate with the public employee unions to address our growing deficits.  With our flat projected revenue stream, and our growing pension costs (and health care costs), there will be no room for pay increases.  Let’s discuss the choice:  pay raises or an overly attractive pension plan.

The OC Register provides its perspective in their second editorial today.  It is the first piece below.  Converting from a defined benefit pension plan to a defined contribution plan is easier said than done, but I appreciate their position.

A major priority of the Commission to End Homelessness is finding a year-round emergency shelter, versus utilizing armories only during the winter months.  As I’m typing this Update and looking out my Fifth Floor window, there is a large homeless population to the north of the Ross Street parking lot.  To the south of this parking lot is an empty bus station with adequate open space and a roof to shelter people from the rain in the winter and the sun in the summer.  It happens to be for sale.  This should be a fun exercise during the first few months of this year.  The Voice of OC covers it in the second piece below.

The resignation of Public Administrator John Williams was to have been effective on Monday, January 23.  The County is attempting to keep him at his word.  This drama is covered by the Voice of OC in the third and final piece below.

Editorial: O.C. pension battle ahead

Supervisor Moorlach: County ‘financial viability’ at stake.

John Moorlach, incoming chairman of the Orange County Board of Supervisors, in his State of the County address Tuesday, outlined a plan to "preserve the financial viability of the county" by reining in skyrocketing pension costs facing the county.

Mr. Moorlach advocates reasonable and modest savings in the formulas for calculating the pensions of county employees. He and his board colleagues face an intense battle to do so.

Nick Berardino, general manager of the Orange County Employees Association, listened to Mr. Moorlach. "The bleak picture he painted was way overstated. From our research the county is in pretty good shape."

As for reducing pensions for current employees, Mr. Berardino was emphatic: "We can't forfeit members' rights legally. That's not even an option."

As we have noted for years, the county of Orange faces huge unfunded retirement liabilities that can no longer be ignored without major consequences. Mr. Moorlach said in his remarks that the county faces nearly $4 billion in unfunded pension and retiree health care obligations.

Some county supervisors have been outspoken about reforming employee compensation and pension. Mr. Moorlach has built his reputation on the issues, and Supervisor Shawn Nelson has made them a priority since taking office in 2010. Mr. Moorlach, in no uncertain terms, emphasized pension reform this year in particular because of looming contract negotiations with three of the county's most powerful bargaining units: the OCEA, the Association of Orange County Deputy Sheriffs and the Orange County Managers Association.

To say the stakes are high would be an understatement.

Mr. Moorlach outlined a few solutions which, from our perspective, are sensible and reasonable, though, ideally, could go farther. Most notably, he called for no new pay increases and "negotiated pension reform." For Mr. Moorlach, the way to pension solvency is by "working with employee associations" to "return entire bargaining units to prior formulas" by rescinding the pension benefit enhancements awarded employees in 2001 and 2004. This is easier said than done.

One of the crowning achievements for employee unions has been those pension enhancements. In 2001, sheriff's deputies received a retroactive pension increase (going from 2 percent of salary for each year of service, beginning as soon as age 50, to 3 percent at 50). In 2004, pensions for other county workers were bumped from 1.62 percent of salary for each year of service, beginning as soon as age 60, to 2.7 percent at 55.

We would have preferred the supervisors start from a stronger negotiating position: salary cuts for all bargaining units and radically changing the pension systems by shifting from defined-benefit plans, which promise a certain payment, to defined-contribution plans, much like private-sector 401(k) accounts. But, as it is said, politics is the art of the possible, and the political will perhaps does not yet exist the make such bold changes.

Still, the reforms proposed by Mr. Moorlach should be the bare minimum.

Moorlach Challenges Santa Ana on His Plan Against Homelessness

John Moorlach didn't waste any time Tuesday in making waves as the new chairman of the Orange County Board of Supervisors.

Moorlach told those assembled at the supervisors' regular meeting that it is "a real honor to serve on this board." He then went on the offensive, challenging officials from Santa Ana over his plans to use a defunct bus station in downtown Santa Ana to feed and potentially house homeless people.

Just before the board adopted their plan, Supervisor Janet Nguyen read into the record Santa Ana's official "strong opposition" to the bus terminal proposal.

"Great," Moorlach quipped, "so the homeless should be across the street and not there," referring to the large encampment of homeless people that practically live on the lawn of the Orange County Civic Center.

Moorlach has been pushing a plan to use the empty Orange County Transportation Authority building across the street for homeless services.

That's the kind of action called for in the county's 10-year plan to end homelessness, which has several phases.

Steve Kight, who oversees the OC Partnership established to deal with homelessness, unveiled a plan — ultimately approved by supervisors — with four phases covering moe than 10 years with more than 50 strategies.

Last year, the group focused on organizational challenges, such as finding an executive director. This year is the year of measurement.

Kight told supervisors it's important to establish measures that can "tell us how many come into the system, how long they stay and where they exit."

The biggest challenge comes next year, Kight said. The county must then address how to replace its cold-weather shelters with more permanent shelters. "It's a big issue for the county," Kight told supervisors.

Given the reaction in Santa Ana, it won't be easy.

The next biggest challenge, Kight said, is strengthening transitional housing, which he called "the backbone" of getting people with problems back on their feet and into stable living conditions.

Kight spoke last week before the Voice of OC Community Editorial Board, delivering a similar message.

Supervisor Pat Bates wants Kight to bring more information to the board about how other communities have successfully implemented strategies for tackling homelessness.

Meanwhile, Supervisor Shawn Nelson noted that given situations like the serial killings of homeless people in Anaheim and the Fullerton police beating death of a homeless man, his office is working to help organize a homelessness summit in North Orange County.

— NORBERTO SANTANA JR.

Orange County's Public Administrator Won't Leave

NORBERTO SANTANA JR.

Last March, Orange County's besieged public administrator, John Williams, avoided political execution by agreeing with the Board of Supervisors to retire on Monday.

But despite that agreement — and an order to change the locks on his office door — Williams showed up for work anyway.

On Tuesday, he was officially told not to come back.

"The Board of Supervisors accepted your resignation as Public Administrator of Orange County effective January 23, 2012, upon receipt of your letter of March 9, 2011," wrote County Counsel Nicholas Chrisos in a letter to Williams.

Williams' attorney and spokesman, Phil Greer, couldn't be reached for comment.

Williams has been a controversial figure in county government since 2009 when two scathing grand jury reports criticized his management of the offices of public administrator and public guardian, which oversee the complex estates of deceased people without heirs and those of indigent people.

The spotlight on Williams became intense in late 2010 when high-ranking Assistant District Attorney Todd Spitzer was fired by Orange County District Attorney Tony Rackauckas after investigating allegations that Williams was mishandling a case involving a domestic violence victim.

The controversy was fueled by the fact that Rackauckas' fiancee, Peggy Buff, was Williams' second in command.

The Spitzer affair also drew a heightened focus on how Williams ran his office. An investigation determined that the county faced potential legal liability over mismanaged estates.

In the wake of the investigation, Buff was quietly moved into a six-figure job at the county despite a hiring freeze because of her relationship with Rackauckas.

Meanwhile, county supervisors like John Moorlach, who were one-time political mentors to Williams as a fellow Republican, quickly turned on him. They stripped him of his public guardian role and appointed an executive manager to manage operations of public administrator.

It was the third crisis between county supervisors and a countywide elected official in recent years.

In 2008, supervisors had to devise a way to force then-Sheriff Mike Carona to step down. By 2009, they decided to oust then-Treasurer Tax Collector Chriss Street. And by 2010, Williams was under pressure to leave.

County supervisors have no authority to remove an independently elected office holder like Williams. Despite a federal indictment of Carona or bankruptcy-related lawsuits against Street or Williams, these countywide elected officials can't be forced to resign. They can only be recalled.

That was the road that Williams was on back in March until his attorney, Phil Greer, was able to broker his resignation.

Under the terms of that deal, as described by Chrisos in his Jan. 24 letter to Williams, he was able to stay in office with his full salary of $153, 206 even though all his official duties were handled by others appointed by county officials.

For example, Lucille Lyon was appointed Public Guardian in July.

Supervisors also placed an initiative on the June ballot that would transform the Public Administrator back into an appointed position.

On Tuesday, Moorlach said Williams - whom he once supported - had become a poster child for the campaign to turn the post back into an appointed slot.

Yet Chrisos' letter also noted that county supervisors had previously agreed to keep a lid on Williams' mismanagement of his agency by not releasing the results of their independent investigation to the public.

They even gave authority to CEO Tom Mauk to retain Williams as a private consultant during the transition, according to Chrisos letter.

Yesterday, supervisors apparently ran out of patience.

"The Board has fulfilled its portion of the obligation," Chrisos wrote. "Therefore, the purported oral notice to the CEO and to me via your counsel that you desire to rescind your nine-month old resignation, is not effective."

"Your final salary check and any leave payout will be mailed to you at your address on file. The CEO will separately determine the need to retain your services as a consultant."

Please contact Norberto Santana, Jr. directly at nsantana@voiceofoc.org and follow him on Twitter: twitter.com/norbertosanana.

FIVE-YEAR LOOK BACKS

January 22

1997

The joys of filing for Chapter 9 bankruptcy include the professional fees that must be paid.  The LA Times covered the joy in a piece by Shelby Grad, titled “Bankruptcy-Related Fees Still Mounting – Recovery:  More than $42 million has been paid to lawyers and consultants.  County will take over some of the work.”  The amounts paid by the county should give any municipality pause when it considers this route of action.  As the new Treasurer, once my investment staff started to manage a portion of the money, we found that we were more competitive in acquiring investment products and were achieving a yield 5 basis points or more higher than the paid

The Office of the Performance Audit Director issued its most recent report, titled “Performance Audit of CEO/Risk Management,” and it will be discussed at Tuesday’s Board meeting.  It can be accessed at http://www.ocgov.com/vgnfiles/ocgov/Performance%20Audit/Docs/RM%20Final%20Rep....  To see how thoroughly the County is willing to analyze its various operations, a quick look at this 137-page document will provide the evidence.  This Board of Supervisors is focused on reviewing and improving the functions and departments of the county.  Many areas are running fine and many are in need of improvement.  The highlights in the cover page of the report provide information on why the audit was conducted, what key strengths and weaknesses the audit found, and recommendations to strengthen Risk Management’s operations.

The report is extremely impressive in the amount of transparency regarding the financial activities of the Risk Management Department over the last twelve-year period.  The data will provide for better management in the future.  Like we all like to remind ourselves, if you can’t measure it, you can’t manage it.  One area that I tried to address when I first took office five years ago is the need for an Office of Independent Review (OIR) to reduce the claims incurred by the Sheriff’s Department.  This was prompted by the inmate on inmate death of John Derek Chamberlain.  On page 35 of the report, the data confirmed my concerns.  The agency with the most claims (43.6% of the total) is the Sheriff-Coroner.  It also had the most number of claims with payments (48.6%) and the highest paid costs, totaling $48,025,839 (46.6%).  When you review the chart on page 37, you will find that excessive force by a deputy in the field is the second highest general liability for paid claims (9.3%).  The chart on page 39 shows that the second highest average claim cost is from inmates assaulted by an inmate.  Fortunately, since the formation of the OIR, you will see on page 36 that the number of claims incurred in the Sheriff’s Department has dropped from a traditional average of more than 400 per year, to less than 300 in the last fiscal year.  This is very good news.  I told you that my mother would always tell me that you had to spend a dime to make a quarter.  Well, the cost of the OIR is paying off dividends in multiples of the costs to support this initiative.

Something else pops out when you review the report.  The chart on page 40 shows that over the twelve year period reviewed, only 1 claim payout size exceeded $5 million.  We get more details in pages 30 and 31:  “Liability claims costs have increased substantially over time (265.8%, an average of 22.3% per year), with the largest increase occurring between FY 08/09 and FY 09/10 (134.9% increase) due to the Fogarty-Hardwick civil rights violation case at the Social Services Agency (incurred in FY 99/00), which as of June 30, 2011, has cost the County $10.6 million.  This case is the single largest Liability claim payout in County history and the only payout that exceeded the $5 million self-insured limit.”  On page 33 you find that the Fogarty-Hardwick claim was filed in FY 99/00, more than eleven years ago.  The Board of Supervisors that voted to contest this matter and not take the original settlement offer would have been the Smith, Silva, Spitzer, Coad, and Wilson Board (the same Board that approved the retroactive 3% at 50 public safety pension enhancement).  By the time it came to this Board, with the interest already accrued, the additional costs to pursue an appeal were not a significant portion of the total costs incurred.

The newest OC Register reporter to be covering the OC Hall of Administration provides his perspectives on the Performance Audit Department’s report below.  I may have a difference of opinion on when the costs were incurred, as compounding had already been taking place by the time this matter was brought before this Board.

Lawsuit costs county $10.6 million

Andrew Galvin Register Writer

The total cost to Orange County of a case in which a jury found that two social workers lied to take away a woman's daughters is $10.6 million, according to a new audit.

The U.S. Supreme Court last year declined to hear the county's challenge to a 2007 jury award of $4.9 million to the Seal Beach woman, Deanna Fogarty-Hardwick. With interest on that amount plus her attorney fees, the total payout by the county was $9.6 million. In addition, the county incurred another $1 million of its own legal costs in the case.

The figures come from a first-ever performance audit of the county's risk-management operation, which processes lawsuits and workers' compensation claims against the county. The audit, performed by the county's Office of the Performance Audit Director, comes before the Board of Supervisors at next Tuesday's meeting.

The Fogarty-Hardwick case is the most expensive liability claim paid by the county and the only one to exceed the county's $5 million self-insurance limit. It contributed to a precipitous increase in the county's liability claims costs over the past couple of years, as payouts for personal damages leapt from $1 million in fiscal 2009 to $14 million in fiscal 2011.

The cost of the Fogarty-Hardwick case grew in the four years after the initial $4.9 million in damages were awarded by an Orange County jury in 2007. Interest and attorney fees steadily accrued as the county pursued appeals all the way to the highest court in the land.

“It was pretty amazing – they succeed in taking a $5 million award and doubling it for us,” said Shawn McMillan, Fogarty-Hardwick's attorney. “In my view, the taxpayers in Orange County should be pissed. This never should have gone this far.”

Throughout the case and afterward, the county's Social Services Agency maintained that its social workers did nothing wrong.

“I am certain and I stand by my social workers that they did not fabricate, they did not suppress any information and they did not perjure themselves,” Michael Riley, the agency's director, told the Watchdog last year.

But ultimately it was the Board of Supervisors who decided to plow ahead with the appeals.

“We were in one of those situations where we say, ‘Do we cut or we keep moving forward,' and we were being advised by our legal counsel to keep moving forward,” said Supervisor John Moorlach.

“You have your department head trying to be as persuasive as possible, (saying) ‘This is not the character or quality of the work of these individuals, it's being mischaracterized, we need you to support us,'” Moorlach added.

FIVE-YEAR LOOK BACKS

January 21

2007

The OC Register’s Sunday Commentary had this column by Steven Greenhut, titled “The fight in the First.”  Five years ago the First District enjoyed a special election.  It included a candidate that had a home that was not in the district, making it appear that he was shopping for a seat, instead of running for one where he had actually owned a home for many years.  The column provides these details and the fun I had with this candidate when I ran for County Treasurer in 1994, some thirteen years prior.

Invariably, after any major public policy disaster takes place, those officials who were responsible for it typically evade blame by employing one of these age-old dodges: "I made my decision based on the best information at the time." "Hindsight is 20/20, so it's unfair to pin this on me." My favorite one is the old "mistakes were made" admission, which really isn't an admission, given that it's made in the passive voice.

We see such dissembling every night on the TV news as various members of the Bush administration try to explain why their latest war plan has gone awry. Despite their protestations, however, it is important to assess blame so that we can decide whether the same people who crafted the bad past policies should be trusted on present and future policies.

Here in Orange County, where residents of the 1st Supervisorial District have a vacancy to fill since Supervisor Lou Correa, an Anaheim Democrat, won a razor-thin victory over Republican Lynn Daucher for an open state Senate seat, the issue of past decision-making should be at the forefront of the campaign.

A key issue will surround the behavior of the front-runner, former Assemblyman Tom Umberg, during the 1994 county bankruptcy – and what it means for how he might behave on the board as the county faces a new fiscal mess caused by excessive employee pension promises.

The Feb. 6 special election for supervisor will be a wild, winner-takes-all affair. There are eight candidates (but 10 names will appear on the ballot; two candidates – Lupe Moreno and Kermit Marsh – dropped out of the race after it was too late to change the ballot).

Democrat Umberg is a former assemblyman and Clinton administration official. His top challenger is Santa Ana Councilman Carlos Bustamante, a county government manager who has locked up most of the big GOP endorsements. But as decent and capable as Bustamante seems to be, the race centers on Umberg, who has the best name identification, the widest range of political experience and the most interesting and well-publicized personal and political scandals.

As the Register reported after Umberg won election to the Assembly in 2004, "When asking for votes or raising money, his campaign rarely missed an opportunity to cite Umberg's assignment as an Army Reserve colonel helping prosecute terrorism suspects at [Guantanamo Bay, Cuba]." But he only spent about 16 days of his four-month tour of duty at the base and spent most of his time in Washington, where he "attended dinners with politicians, watched baseball games, ran a 10-mile footrace and carried out an extramarital affair with a former Assembly staffer."

Then there is controversy over his actual residency. Umberg lists his residence as a condo in Santa Ana, but by all appearances he really lives in a villa in Villa Park, which is in Supervisor Bill Campbell's district. The law requires candidates to reside in the supervisorial district where they run, and residence is defined as a "domicile," which is the place the candidate calls home. That's nebulous terminology, so Umberg will no doubt get a pass on this – but it rubs a number of people the wrong way to have a supervisor who won't live among the people he wants to represent.

It's probably not all that shocking these days – and perhaps not all that damaging politically – that a politician might fudge his military resume, shop around for a district where he doesn't live, or even carry on an affair with an aide. Still, all of this pales in comparison to Umberg's potential behavior with regard to the county's finances. The 1994 bankruptcy was the result of poor leadership and foolish decisions, and county taxpayers are still paying the price for them today. The true quality of a politician is exhibited in the decisions they make when they really matter, not after-the-fact explanations.

Back in 1994, now-Supervisor John Moorlach was a candidate for treasurer when he detailed to county officials the coming financial crash because of Treasurer Bob Citron's risky investment schemes. He was roundly ignored, and, of course, later vindicated.

What about Tom Umberg?

In a letter to the Los Angeles Times on May 29, 1994, a few months before the bankruptcy, then-Assemblyman Umberg made it clear what side he was on:

"Bob Citron has successfully managed the county's taxpayer dollars for over 24 years. He has repeatedly been honored for returning more earnings on Orange County's investment dollars than any other local government treasurer in California. ... I am confident that the voters of Orange County will overwhelmingly reelect Bob Citron to his seventh successful term. The investment of our hard-earned taxpayer dollars is too important to trust to 'partisan political hacks' like ... John Moorlach."

Shortly after the bankruptcy, the Times rehashed its causes in a Dec. 10, 1994, article. Then-Assemblyman Umberg, it reported, had carried legislation that enabled Citron to invest as he did. Supported by Citron and Merrill Lynch, "[t]he measure permits county treasurers to invest in derivatives based on mortgage interest rates, among others. ... 'I'm not a bond expert,' Umberg said. 'I was assured these were safe instruments. All it did was provide them with a broader range of investments.'" In the article, then-state Sen. Marian Bergeson chimed in with another excuse: "Hindsight is always great. I'm sure anyone could look 10 years back and find that in solving one problem they've created another problem." Umberg claimed that the bill was noncontroversial, and, indeed, it was widely supported by members of both parties who didn't want to rock Citron's boat.

Yes, hindsight is great. And so are these excuses. Now that Umberg wants a promotion, though, voters would do well to wonder what type of judgment he will use in future decisions, especially ones that are surprisingly relevant to the events of 1994.

These days, Supervisor Moorlach is warning about another looming financial crisis – billions of dollars in unfunded liabilities caused by excessive spending on public-employee pensions. County employees can retire after 30 years with 81 percent of their final pay guaranteed, at age 55, and public safety employees can retire with 100 percent of their final pay at age 53 (90 percent at age 50). This cannot be sustained, and taxpayers – most of whom will rely on far less generous retirement plans such as 401-k's and Social Security – are going to feel the impact at some point.

A new report by the Howard Jarvis Taxpayers Association and the Center for Government Analysis found that taxpayer payouts to California public employees doubled from 1997-98 to 2003-04. The numbers keep escalating, and unless governments impose some fiscal discipline, taxes will soar, and services will be cut. Currently, the Board of Supervisors is involved in bitter negotiations with the sheriff's deputies' union, which not only refuses any minor trims in its health care benefits, but refuses even to allow an independent audit of its taxpayer-funded health care plan.

Where will Umberg be on this financial issue? It's not hard to guess. The deputies union and other unions that pulled out all the stops to try to defeat Moorlach last year are pulling out all the stops to elect Umberg this year.

Don't say you weren't forewarned or that hindsight's 20/20.

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

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In preparation for the role of Chairman of the Board, I’ve been doing a considerable amount of research the past few months.  I’ve compiled this research into a PowerPoint presentation and will be sharing it at the beginning of next Tuesday’s Board of Supervisors meeting.  For those wishing to watch it on their computers over the internet, you can link to it at http://www.ocgov.granicus.com/ViewPublisher.php?view_id=6.  The meeting starts at 9:30 a.m.  The main theme will be that of taking stock and doing a reality check of where the County finds itself.  This information, hopefully, will provide a starting point for leadership opportunities.  The Board agenda also states that I will be providing the Chairman’s goals for 2012, but this portion will be continued for two weeks.  The “State of the County” will provide the framework for many of the Board’s goals and objectives for 2012.   I will make this presentation, titled “The Board’s Goals for 2012,” on February 7^th, 2012.  The OC Register’s lead editorial provides one of the more important topics that I will address.  It is the first piece below.  It does have one major error.  The address is scheduled for Tuesday, not Thursday.

I started a new tradition with the Cypress Chamber of Commerce last year that continues for the second year.  I provided a “State of the County” address that focused on the cities in the Second District.  I will  be doing it again on February 9^th, 2012.  The Seal Beach Sun announces it today in the second piece below.  This presentation will have a similar theme as next Tuesday’s “State of the County” address, as the County and its cities work together to address decisions made in Sacramento.  This is especially true as it relates to the latest California Supreme Court ruling on dissolving redevelopment agencies.

2012 the year of the contract in O.C.

County heading into negotiations with three powerful employee unions.

John Moorlach, incoming chairman of the Orange County Board of Supervisors, is scheduled Thursday to deliver the State of the County address, laying out the year's challenges and policy objectives. Undoubtedly, the biggest responsibility for supervisors this year will be contract negotiations with three of the county's largest and most powerful public employee unions: the Orange County Employees Association, the Association of Orange County Deputy Sheriffs and the Orange County Managers Association.

In their negotiations, supervisors should especially target three areas for reform: employee pension benefits, special-pay bonuses and compensation levels.

County Supervisor John Moorlach is shown during a board meeting.

In a phone interview, we were encouraged by Mr. Moorlach's commitment to reform. While he did not provide details of his speech, he emphasized a recurring theme of his. "It's going to take collaboration," he said. "The economy is down on us, and this is the year that something has to be done."

It's encouraging, and an indication of the stakes involved, that the supervisors are considering hiring a professional firm to handle the negotiation process. Historically, all too many municipalities fail to seek the assistance of independent negotiators even though unions often hire outside professionals, who often negotiate similar contract language with municipality after municipality. The county's leading candidate, according to Mr. Moorlach, is Liebert, Cassidy & Whitmore, the same firm recently hired by Newport Beach for labor talks.

Mr. Moorlach suggested that pension reform would be part of the discussion. If it does not happen at the local level, it may not happen at all. "I don't think [Gov.] Jerry [Brown] is going to do it, and I don't see the Legislature producing pension reform," he said. Mr. Moorlach doubted that pension reform would succeed as a ballot proposition this year either because "unions would go with a shotgun campaign against everything on the ballot."

Supervisor Moorlach said the basic question going into negotiations is: "What's the best way to work through this financial quagmire and make Orange County the model for solving these types of problems?" It all comes down to the negotiating table.

We would prefer the supervisors seek to move all county employee pensions from a defined-benefit system to a defined-contribution system and cease all special/premium pay and automatic bonus programs for county employees. The county should also lower pay scales.

We all will see Thursday what the supervisors think.

Supervisor to speak at Old Ranch Country Club Staff Report   

·        

Supervisor John Moorlach

Orange County Supervisor John Moorlach, who represents the Second District, will be the featured speaker at the second annual State of the County Luncheon at 11:30 a.m., Thursday, Feb. 9, at Old Ranch Country Club. The Second District includes Seal Beach, Los Alamitos, Costa Mesa, Cypress, Huntington Beach, La Palma, Newport Beach, Stanton, Buena Park and Fountain Valley, as well as unincorporated communities such as Rossmoor. 

Moorlach, who now serves as chairman of the Orange County Board of Supervisors and chairman of the OC Local Agency Formation Commission, will focus his remarks on the Second District. 

Moorlach has been a controversial figure locally because of his role in the annexation of Sunset Beach by Huntington Beach, his efforts to move Rossmoor into Los Alamitos and his proposal that those two communities be merged with Seal Beach to create a larger city. 

The luncheon is open to the public. The 11-11:45 a.m. V.I.P. reception precedes the luncheon, which is set for noon.  Tickets for the luncheon are $30 with tables of eight at $240.  Reservations as well as sponsorship opportunities are available through the Cypress Chamber of Commerce office at (714) 827-2430. 

Old Ranch Country Club is located at 3901 Lampson Ave., in Seal Beach.

FIVE-YEAR LOOK BACKS

January 19

1997

Len Hall of the LA Times did a feature on Tom Fuentes.  Tom has been valiantly fighting cancer.  Regretfully, the cancer is winning.  As he related to me in a recent e-mail:  “These days, my morphine and oxygen line keeps me going, day by day.”  All to say, please keep Tom and his wife and children in your prayers during this most difficult time.  One mutual friend recommended to me today that mailing a brief note, some 20 words, would be of great encouragement to Tom.  If you need his mailing address, please let me know.

Tom and Assemblyman Mickey Conroy approached me at a convention in the fall of 1993 with the question, “Why don’t you run for County Treasurer?”  As the Administrative Partner of a local C.P.A. firm, anytime I was invited to serve on a Board, it was always as Treasurer.  I did not react well to the challenge.  But, after giving it much thought, the rest is history.  To say that Tom Fuentes changed the course of my life would be an understatement.  Thank you, Tom, for an incredible journey of service to the residents of Orange County that I have enjoyed these many years.

The article was titled “GOP's Fuentes Favored to Win 7th Term Chairing O.C. Party – Politics: Vote is unlikely to be unanimous. Some criticize his style and conservatism, but others praise his effectiveness as a leader.”   Here is an edited version.  Please note that I had served two two-year terms as the Party’s Assistant Treasurer, but due to my new role, did not plan on rerunning as the “assistant” treasurer.  Although I recall being interviewed, all that was mentioned was the decision not to rerun for the executive board.

Thomas A. Fuentes, a descendant of Mexican immigrants, will be the overwhelming favorite to win an unprecedented seventh consecutive term as chairman of the county Republican Party Monday night at the Westin South Coast Plaza.

The gregarious Fuentes, 48, a former radio show host, county supervisor's aide and seminary student, has won national acclaim for building the local GOP into perhaps the strongest Republican Party organization in the country.

But unlike most years, this vote is not likely to be unanimous.

Fuentes, an unabashed hard-line conservative, has made some ardent enemies who don't like his hardball tactics. That, coupled with the good showing made by President Clinton and the Democrats in Orange County last November, has some Republican officials claiming Fuentes has overstayed his welcome.

"We have got to discourage Fuentes' machine-type politics in Orange County," said Gil Ferguson, a former state assemblyman from Newport Beach who last year won a seat on the county's GOP central committee. "That's the kind of thing that is starting to turn off the voters."

Fuentes, a Lake Forest resident who was ill with the flu last week, could not be reached for comment. But many local party officials dismiss Ferguson and Dougherty as malcontents.

Doy Henley, the chairman of the powerful Lincoln Club of Orange County, a conservative political organization, said the entire leadership of the party is backing Fuentes. Fuentes, who took over from eight-year chairwoman Lois Lundberg in 1985, has been a standout, Henley said.

"Nobody has ever come close to doing the job of county chair as Tom Fuentes has done," Henley said. "He has certainly marshaled the troops, raised the money and done the best we can in all areas . . . It's an awesome job, a very difficult one."

Fuentes was also lauded for his ability to continue to get Republicans elected to nearly every partisan county office and for building the GOP's vast advantage in registered voters in Orange County. There are 656,000 registered Republicans in the county, compared to 418,000 registered Democrats.

"I support Tom wholeheartedly for the simple reason that he does such an outstanding job," said Jo Ellen Allen of Corona del Mar, the party's first vice chairwoman. "I don't know of any county party in the state, and probably few across the country, that is as well organized, as well funded and that functions as well as ours.

"It certainly is not one person who does it all, but things rise and fall on leadership, and the leadership that Tom has provided is to a large extent what has made our party what it is."

Central committee member Jacob F. "Jim" Rems of Irvine, a representative of the 70th Assembly District, is expected to be nominated to oppose Fuentes, but few people expect him to mount a serious challenge.

The party, which meets at 7 p.m., also will elect its other officers. Due to time constraints, John M.W. Moorlach, Orange County's treasurer-tax collector, is not expected to run again for party treasurer.

Because of the Clinton inauguration, the county Democratic Party postponed its new organizational meeting until Monday, Jan. 27.

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

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

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

The County is facing two unique issues as we start the new year.  The first is the surprise resignation of elected Auditor-Controller David Sundstrom.  After serving in this position since being elected to it in 1998, David Sundstrom is assuming retiring Sonoma County Auditor-Controller/Treasurer-Tax Collector Rod Dole’s position.  Why elected officials retire mid-term is always a mystery to me.  It appears, in Rod Dole’s case, that he felt comfortable in getting reelected and transferring the job over to his assistant.  With an open recruitment, David Sundstrom, who hails from Sonoma County, applied.  It appears that Rod Dole is shocked that his heir apparent did not get the job, and David Sundstrom is shocked because he did.  Now the County of Orange has to go through the same formalities that Sonoma County just concluded in appointing a new Auditor-Controller.

What makes the selection of David Sundstrom’s successor even more critical is the ongoing conversion of the Property Tax Management System (PTMS).  The County’s Assessment Tax System (ATS) was written more than 20 years ago and the programming language is no longer being serviced by the industry.  The Assessor independently pursued an upgrade of ATS and the Auditor-Controller, Treasurer-Tax Collector, and Clerk of the Board were tasked with developing the PTMS program, which was to integrate with ATS after both were completed.  The reason for two separate programs is the Assessor’s necessity to be fully in control of its data, with the other related departments having an ability to look at selected portions of the data to perform their duties.  I would compare it to a tunnel being bored from both sides of the mountain, with the teams hoping to meet in the middle.

Pursuing industry best practices, the design of PTMS was completed and now needs to be written.  After an aggressive marketing campaign, Tata was selected.  It now appears that Tata overpromised and is under-delivering.  This will leave a unique management priority to David Sundstrom’s successor.  This matter is very crucial for two reasons.  The first is that collecting property taxes is a critical component of what the County does.  The second is that the County does not have room in its budget for cost overruns.  Fortunately, the County’s CIO is Mahesh Patel who served as my IT Manager in the early years of my service as Treasurer-Tax Collector and then he became the IT Manager for David Sundstrom.  As a result, Mahesh Patel has a thorough working knowledge of what PTMS is designed to do and how to work with the impacted parties to see it through to a successful conclusion.  I communicated my confidence in our CIO, but this does not appear to have made the cut in the Voice of OC piece below. 

David Sundstrom will be leaving the County at the end of January.  The LOOK BACKS below provide an adventure that he and I enjoyed working on together ten years ago.  I want to thank David for his years of service to the County, for being an excellent partner in the Assessor/Tax Collector/Auditor troika, and for doing a great job as an elected department head.  I also want to wish him many years of success in his home county of Sonoma.

Auditor-Controller Leaving Unfinished Computer Work

With Orange County Auditor-Controller David Sundstrom leaving at the end of this month to take an elective post in Sonoma County, supervisors here are worried that a costly software upgrade to the county's property tax system - already over budget and behind schedule - could go off the tracks.

In recent years, county supervisors have expressed numerous concerns over delays in implementation of the new system, which is budgeted at more than $25 million.

Just last month, Sundstrom told supervisors that the upgrades wouldn't be ready for this year's tax roll because an India-based subcontractor named the Tata Group had fallen behind, which would mean another year delay.

Sundstrom also told supervisors he would closely monitor implementation of the process.

Yet with Sundstrom's departure, and the retirement of Board of Supervisors Clerk Darlene Bloom, relative newcomer Shari Freidenrich - who was elected Treasurer-Tax Collector in November 2010 - is now the most senior official overseeing the software upgrade, called PTMS.

"I think everybody, the board, myself as CEO and CEO IT, is very concerned about the PTMS hand off," said County CEO Tom Mauk.

"Now that we're going to change leaders, the question is what should the leadership model look like. Should we leave it the way it is, bring in an outside manager, or let CEO IT do it, Mauk said.

Under the county charter, supervisors do not have the authority to hold a special election to fill the remainder of Sundstrom's term. Instead, they will appoint an official to fill out the term, similar to the 2008 appointment of Sheriff Sandra Hutchens.

County supervisors, however, won't use a recruiting firm as they did with the Sheriff's position opting instead for a regular recruitment.

According to Mauk, it's likely that a panel of interviews will be set up for candidates.

Supervisor Pat Bates said this month she wants some specialists in IT on the panels to make sure the next candidate can handle the PTMS issue.

"I think we need a discussion on that panel," Bates said.

However, Supervisor Bill Campbell warned Bates that because of the unique nature of the PTMS software upgrade, "we're not going to find many people out there that have implemented a PTMS program in the world."

That prompted Bates to fire back: "Let’s talk about Tata...we've been to India and back...we better get somebody in here who really knows."

That has prompted Supervisors' Chairman John Moorlach to advise that the county may want its own CEO for IT to figure more prominently in the PTMS upgrade.

Moorlach added that supervisors felt burned by the outsourced work of its Indian contractor noting that "we were told Tata was really great."

And now with the county losing its main internal history on the program, Moorlach notes, "that does create a quandary."

-- NORBERTO SANTANA JR.

FIVE-YEAR LOOK BACKS

January 13

2002

When reflecting back on the editorial submissions that I’ve written, the one below was probably the toughest one to do.  The incident that occurred found one Newport-Mesa Unified School District Trustee to ask another Trustee to resign (as the District had a zero-tolerance policy for students found with  alcohol).  This generated a maelstrom of letters to the editor.  There are times when you want to step in and say, “enough is enough, already.”  Especially when you have personal, perhaps private, insights to the bigger picture.  I received permission from the impacted parties before I submitted it to the Daily Pilot.  The Daily Pilot gave the piece the title of “Leece conveyed honest and well-intentioned message.” 

I've known the honorable Jim Ferryman for a long time and can say with confidence that he is a "BPOC," a "big person on [the] campus" of Costa Mesa and Newport Beach. He has sacrificially given of himself in numerous leadership roles to the betterment of our community.

If his purported 0.19 blood alcohol level, resulting from his traffic accident and related DUI conviction, is correct, that would be a significant amount of recreational drinking for a man of his size. It certainly makes one wonder. It would definitely make someone who cares for Jim, and his family, stand up and exercise some tough love.

In steps the honorable Wendy Leece. I have also known Wendy for many, many years. I served as her campaign treasurer in her failed 1989 attempt at unseating the Newport-Mesa Unified School District incumbent. I was one of the few who predicted in the fall of 1994 (in between my Orange County bankruptcy prediction and it actually occurring) that Leece would be successful in her second attempt that November.

Wendy's husband, John, had his business next door to my accounting practice. John was a successful architect, supported his devoted wife's political interests, raised five beautiful children and was involved in the community. There was one big problem. John was an alcoholic. I can still remember the night his car was towed into the parking lot, damaged from an accident. This accident didn't kill John, but a few years later the alcohol did. Wendy lost a husband. Five young people lost a father. I lost a friend.

When the story of Newport-Mesa Unified School District trustee Jim Ferryman's incident hit the papers, Wendy probably said to herself the following: "I lost my spouse to alcohol, I don't want it to happen to another family that I care about too!"

No one said anything about not being a great citizen in our community.  But someone, who has endured a tragic personal experience with alcohol, did say, "shape up." Do it for your spouse. Do it for your children. Do it for those who you are also responsible for. And, that someone did it out of genuine concern and Christian love for you. Yes, it may have been harsh and strong and a little too public. But it was not political, it was not grandstanding, nor was it vindictive. It was a sincere response.

Life is very complex. We need to be careful when attacking a messenger, especially if we have not walked a mile in their moccasins.  Wendy Leece's message was honest, pure and properly intentioned. In fact, it came from a sensitive, patient, forbearing and broken heart.

Putting this incident in a more proper context should get us away from a personality sideshow and back to properly addressing the consequences of one's actions. It should make us all aware of our frailties and strive every day to pursue excellence. As our nation is in a reflective mood, perhaps we should all be more aware of our actions and reactions.

January 14

2007

The Sunday edition of the OC Register had another letter to the editor on the topic of the day:

The deputies won’t be put under the microscope or held accountable in Supervisor John Moorlach’s proposed audit of the Orange County deputy sheriff’s union retiree health plan.  The union and the individual officer of the union who is charged with the fiduciary responsibility for the account will be.  The audit protects the deputies and their investments and protects deputies from errors in judgment, calculation or management or from crooked union leaders.

G. L. Smith

Irvine

January 17

2002

The emerging story, of what would be called “the recapture case,” was provided by Jean O. Pasco of the LA Times, in “Schools Hit Hard in Prop. 13 Ruling – Taxes:  Capistrano Unified would lose $15.6 million, county auditor finds.  County and fire authority also face blow.”  The piece provides the impacts of Judge Watson’s ill-advised ruling.  As pro-taxpayer as the ruling may have looked, it was not a proper interpretation of the law.  Auditor-Controller David Sundstrom will be leaving the County of Orange at the end of this month to serve as the Auditor-Controller/Treasurer-Tax Collector of Sonoma County, returning him back to his home county.  One of the highlights he cited on January 10^th, 2012, at the Board of Supervisors’ meeting, was his and my efforts to contest this incorrect ruling.  There were two infuriating concerns that were disturbing to the Assessor, the Auditor-Controller and myself.  The first is that County Counsel clearly advised the Board of Supervisors that the ruling would be overturned.  Instead of doing the proper thing, it was turned into a political grandstanding opportunity and punted to three countywide elected officials (who did the appropriate deed).  The second was mentioned in David Sundstrom’s farewell remarks earlier this month.  David would recall his disappointment at being referred to as a burglar.  The piece below provides the details of a topic that you will see throughout this year’s LOOK BACKS.  For more details, also see MOORLACH UPDATE -- Happy New Year! -- December 31, 2011.

Orange County's general fund would have to repay $18.6 million in excessive taxes to property owners if a December court ruling is upheld, according to an analysis released this week by Auditor-Controller David Sundstrom.

Also hard hit would be the Capistrano Unified School District and the Orange County Fire Authority. Capistrano Unified could be forced to refund as much as $15.6 million to property owners, while the fire authority could have to repay as much as $12.1 million.

Sundstrom's analysis represents the first accounting of the court ruling's possible effect on nearly 300 tax-collecting agencies in Orange County. Some 49 cities, schools, special districts and redevelopment agencies potentially would have to refund at least $1 million each.

The auditor previously estimated that about $285 million could be refunded under the ruling by Superior Court Judge John M. Watson. An additional $147 million in future revenue would be lost in the first year of new assessments, he said.

"Please note that the schedule excludes interest that must be paid with the refunds," Sundstrom wrote in a letter distributed Tuesday to each agency. "If the assessor decides not to appeal the decision, the taxing authorities would have little choice other than to reduce their revenue projections."

Watson found that some Orange County property assessments violated Proposition 13, the landmark tax reform measure passed by California voters in 1978. The judge ruled that the assessor--following a practice used by his colleagues statewide--illegally raised the assessed value of a Seal Beach home more than the 2%-a-year limit found in Proposition 13.

County attorneys defended the practice, used after properties have dropped in value and their assessments lowered. When the values rebound, the new assessments routinely exceed the 2% limit--a method called recapturing.

Last week, the Orange County Board of Supervisors voted 4 to 1 against appealing Watson's ruling. Supervisors said it was up to Assessor Webster Guillory to defend his assessment practices, and approved his hiring of private attorneys for an appeal.

Guillory said he is still considering an appeal.

Supervisor Chuck Smith, the lone vote on the board in favor of appealing, said supervisors should reconsider their decision in light of Sundstrom's new numbers. County attorneys believe Watson's ruling would be overturned by state justices.

"Now you see why we really need to get a reading from the court," Smith said. "We don't want to put these taxing agencies under these dire straits. We need to get a good solid ruling on this and not depend on one judge."

But Supervisor Todd Spitzer, who led the board's backing of Watson's ruling, said he believes that the "recapturing" method of taxing property is unconstitutional. Smith's argument, he said, is the same as pleading for a burglar to continue his crimes because the money is needed to feed his family.

Attorney Rob Pool, who owns the Seal Beach home and filed the lawsuit, has asked Watson to expand the ruling to all taxpayers whose property assessments increased more than 2% for each of the last four years. Watson will consider the request Tuesday.

If Watson expands his ruling, it would affect every taxing agency in Orange County. Though schools would be among the hardest hit, the state guarantees a minimum level of funding under a separate statewide measure, Proposition 98, passed in 1988.

If the decision is appealed and ultimately upheld by a higher court, it could apply statewide. Sundstrom has estimated that refunds statewide could top $4 billion.

The Board of Supervisors last week also directed the assessor, Tax Collector John M.W. Moorlach and Sundstrom to notify those whose properties were assessed under the recapturing method during the last four years that they might have overpaid their taxes. State law allows taxpayers up to four years to seek refunds.

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

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

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

The informal policy of the Board of Supervisors is to rotate the chairmanship.  Last year I served as Vice Chair and today my colleagues voted for me to serve as Chair in 2012.  It will be another fiscally demanding year (as if the last five years haven’t seen enough economic turmoil).  The Voice of OC addresses just one critical aspect of what will make 2012 an interesting year.

On another front, the city of Costa Mesa has concluded its background check, clearing the way for my Chief of Staff, Rick Francis, to transition to their city.  Rick’s last day with my office will be January 20^th.  I want to thank Rick for being an advisor, partner, and friend.  It was an honor to work together in this amazing opportunity to serve the residents of Orange County.  I know that the city of Costa Mesa will be greatly benefited by his managerial, organizational and leadership skills.  I wish him all the best in his future endeavors.

Ian Rudge will be Rick’s replacement.  Ian returns to the 2^nd District Office after nearly four years working with the County Performance Audit Director to improve the efficiency and effectiveness of County operations.  As the Director’s first hire, he was instrumental in building this critical function and in improving the transparency and accountability in County government.  Prior to going to work for Performance Audit, Ian worked for me as a Fiscal Policy Advisor, helping to assess the County’s pension problems and covering a variety of general government functions.  I originally hired Ian from Deloitte Consulting, where he was part of their state and local government team.  Ian Rudge has a Bachelor’s degree from Claremont McKenna College in Philosophy, Politics, and Economics, as well as a Master’s degree in Public Affairs from the Lyndon Baines Johnson School at the University of Texas.  While at the LBJ School, Ian conducted his Master’s thesis on the topic of State and Local Employee Retirement Systems.   In other related experience, Ian Rudge was the Student Manager for the Rose Institute of State and Local Government, as well as a researcher with the Congressional Budget Office, in their State and Local Unit.  Ian has also worked as a research consultant for the State of Texas Employees Retirement System.

Moorlach Ready for Super Bowl of Labor Negotiations

NORBERTO SANTANA JR

As Orange County government prepares for the Super Bowl of labor negotiations - with contracts for the three major employee unions up for renewal in 2012 -- John Moorlach, arguably the county's highest-profile union opponent, is set to take over the chairmanship of the Orange County Board of Supervisors.

And while that might prompt many observers to predict a bloodbath, Moorlach instead seems focused on getting a deal.

"It's about collaboration," Moorlach said during an interview Monday. "This is going to take all of us, knowing full well how difficult our circumstances are right now."

"There are unions that will grumble about me, there are those that grumble about public employee unions. But in the end, we have to get along," he said.

That kind of message - coming from a man who called deputy union leaders "thugs" after his 2006 election victory - triggered a quick positive response from the county's major labor groups.

"This is a rare occasion where I agree with Supervisor Moorlach," said Nick Berardino, general manager for the Orange County Employees Association. "It's going to take cooperation and collaboration. Hey, it's a two-way street and we're entering it with a positive attitude."

Tom Dominguez, president of the Association of Orange County Deputy Sheriffs, said "I'm happy that Supervisor Moorlach is saying these things, about wanting to work collaboratively. That makes me feel like if we maintain this momentum, there's some amazing things we can do."

"We've got thick skin over here," he said of the pension lawsuit that ended last year with the county paying several million dollars to the union for attorney fees. "There's no doubt that negotiations will be difficult but we will proceed in a very professional manner."

"I live in reality and I'm a taxpayer in this county," said Dominguez. "We want the same thing. We want a county and sheriff's department that is fiscally prudent."

Yet Moorlach said he is prepared to challenge public labor groups over the spiraling costs of pensions warning that the issue has to get resolved.

"It's the elephant in the room," he said. "It has to be addressed in some fashion and the labor unions have to pick the direction on how to address it....that will be the biggest portion of our negotiations."

However, Moorlach acknowledged, the labor contacts are far from the only fiscal issue the supervisors will have to deal with in a year that very likely could be just as difficult as the past few.

"It's dealing with a real estate market that still hasn't seen an uptick, a state government that took our vehicle license fees, a state Supreme Court that says maybe the Retired Employees Association of Orange County has a point (on costly retiree medical benefits), redevelopment agencies that have been taken away, AB 109 (prisoner realignment), and you have a state budget that is still not balanced."

Facing such challenges, Moorlach underscored the importance of the leaders on the County Administration Building's fifth floor working as a unit.

"It's five of us working together with a negotiator and the union heads," he said.

"You're already seeing that kind of group think from the board, given we are not done with the managers association, referring to the refusal of supervisors to adopt a contract with managers that included bonuses in exchange for heightened pension contributions.

Supervisor Shawn Nelson, who is expected to take over as the vice chairman, says supervisors may be in a bad position on negotiations because "we may not be able to get them to pay more" toward pensions. He notes that under state law, Orange County cannot impose changes on pensions like they can on wages.

So, if there is no progress on the pension issue, "then it will just come out of wages," Nelson said.

"My overall sense is there has to be fairness," Nelson said. "And I'm not going to let anybody else define fair. All these pension spikes were sold on the auspices that it wouldn't cost.

"So now we know the costs...and I think it's reasonable to ask at some point: either change formulas going forward, or what choice do we have as representatives of the taxpayers to push for an offset somewhere, either on wages, or having employees paying more... there's no free lunch."

Please contact Norberto Santana, Jr. directly at nsantana@voiceofoc.org and follow him on Twitter: twitter.com/norbertosantana.

FIVE-YEAR LOOK BACKS

January 8

1997

The Winter 1997 edition of Leader to Leader Journal, the Nancy R. McPherson Professor of Business Administration at the Harvard Business School and noted author, Regina Herzlinger, penned an article that was titled “Full Disclosure:  A Strategy for Performance.”  The entire article can still be seen at http://www.pfdf.org/knowledgecenter/journal.aspx?ArticleID=141.  I even have one of Professor Herzlinger’s books in my personal library, “Financial Accounting and Managerial Control for Nonprofit Organizations.”  The final section in today’s LOOK BACK will show you, ten years later, that I’ve been rather consistent on the topic of transparency.  Here is the segment where I am mentioned:

Dissemination. When John Moorlach, the treasurer who is guiding the financial turnaround of bankrupt Orange County, ran against the former incumbent, he told voters the prosperous county was on the brink of bankruptcy -- and people thought he was nuts. Why? They never saw the financial statements. Now, every month, Moorlach produces a public statement that resembles a monthly money market report. He lists the investments by type of investment, indicating inflows and outflows, rates of return, monthly balances. Anyone who wanted to spend 30 minutes reviewing such a report would know whether the county was in trouble.

Furthermore, if you're a taxpayer in Orange County and you call Moorlach with a question, he'll respond personally. You cannot legislate that kind of personal responsiveness. But if you mandate the disclosure of comprehensive information, it forces a whole agency to be more accessible.

2007

The Orange County Business Journal had three pieces of interest.  The first found Rick Reiff providing a humorous “Predictions 2007” piece.  I’ll let this one item from the column explain itself.

WITH TONGUE IN CHEEK, I OFFER SOME STORIES YOU MIGHT READ in the coming year:

• UCI geneticists engineer the perfect Orange County politician—Loretta Nguyen Moorlach.

The second OCBJ piece, Rick Reiff’s OC Insider column, had an interesting title with “Moorlach v. Umberg: Who’s the Hack?; Bren on Borrowing.”  Here is the referenced segment:

Republican Second District Supe John Moorlach isn’t just opposed to Democrat (and arguable favorite) Tom Umberg’s bid for the open First District supe seat, he’s really opposed: “Don’t we already have a supervisor who lives in Villa Park?” (Bill Campbell, Third District.) Moorlach is still bristling at being called a “political hack” by Umberg during Moorlach’s unsuccessful challenge to treasurer “Bankruptcy” Bob Citron in 1994. “I’ve only run for two paid elected positions. How many has he run for? Which one of us is the ‘hack?’” Moorlach added that “with all the fun I’m having” with the sheriff deputies union over pension and benefit issues (see Viewpoint, page 43), “isn’t it great to know that they’ve endorsed him?” Umberg responded like a front-runner: “I look forward to building consensus with John on the board for the benefit of all of the residents of Orange County.” But Umberg also noted, “He’s not going to invite me to dinner, apparently” ...

The third OCBJ piece was a “Viewpoint” submission by me, titled “My First Month as County Supervisor.”

The other night a close friend and neighbor asked if anything had surprised me in my first few days in my new office.

Let me share with you one, which deals with union negotiations that I jumped into.

The Association of Orange County Deputy Sheriffs, the union representing the sheriff’s department and a handful of other public safety officers in the district attorney’s office, had prolonged its contract negotiations long past their October deadline.

Accordingly, it spilled over into my term of office. I didn’t ask for anything new that had not already been placed on the bargaining table.

The first request was better disclosure from their medical insurance trust. The second concerned the sheriffs association’s reluctance to participate in the retiree medical plan changes. I felt the association had to step up to the plate and accept both of these simple conditions.

Immediately the union reacted with vitriol.

“He was on the board four hours before he took a shot at us,” association General Manager Bob Macleod said in an Orange County Register article.

Let’s put this into context.

As your county treasurer-tax collector, I underwent numerous audits of my department. My quarterly statement of assets was closely scrutinized by the county’s internal audit department. We have our annual countywide audit, performed by an independent certified public accounting firm. We have quarterly audits by another independent CPA firm to verify that our investments are in compliance with our investment policy statement. And we have every investment trade monitored by two rating agencies, Moody’s and Fitch.

Never once did I ever suggest that any of these auditors should get out of my building, that the county and its citizens should just trust me, or that I was insulted by someone even requesting that my books should be audited. Just the opposite, I welcomed any and all who wanted to review my investment activities. In fact, every trade is posted on the treasurer’s Web site and available for full scrutiny by anyone who wishes to take the time to do so.

The sheriffs association is unwilling to provide back financial statements. I would presume that since the inception of the trust some 18 years ago these reports never were prepared, even though their bargaining unit agreement with the county specifically requires that they be prepared and provided. The reports I have seen include the June 30, 2004, review report, which is not an audited financial statement. We have received an audited financial statement for June 30, 2005. But the June 30, 2006, audited report restates it because significant information had not been properly reflected or stated in the June 30, 2005, audited statement. And, if the restated audit is correct, then the 2004 and 2005 financials are not useful.

The association is the only bargaining unit that has its own trust. And it charges expenses to the trust to cover overhead (which surely must involve far more than administration of the trust) to the tune of $25,000 per month in the last financial report. But there is no disclosure as to how this cost was determined. Is it rent? Utilities? What? We have merely asked the union, “Help us out here.”

Macleod’s response? “We will either succumb to the county’s unprofessional, unethical bullying, or we will do whatever is necessary to overcome it.”

Say what? Whose money is it, anyway?

Look, if you can’t tell your parents what you’re doing with their car, then maybe it’s time to take the keys away.

The association is the only bargaining unit that has not agreed to the recent modifications to the county’s retiree medical plan, one of the most progressive in the nation to deal with the ever increasing burden of unfunded liabilities in this area. Everyone has to adjust their expectations: the county, which is contributing more toward the balance due; the employees, who have new thresholds to deal with depending on what age they retire at; and the retirees, whose benefits are cut in half once they are eligible for Medicare at age 65.

The cooperation from the other unions has cut our unfunded liability on retiree medical benefits from $1.4 billion down to some $600 million. That’s an incredible effort to deal with this dilemma.

Macleod’s response? “Your security, and that of your family is being attacked.”

Really? How about the families of the automakers, airlines and steel factories? Most of us are having to adjust to new fiscal realities, or we will face serious financial repercussions. One bargaining unit should not be treated better or worse.

Moreover, the rhetoric of the past does not match the reality of the present. This is not an argument over how county employees are being treated, but whether all county employees should be treated the same, or whether the spokesmen for some county employees—whose duty it is to enforce the law—consider themselves above the law.

The surprise is that the association thinks that I’m the power person orchestrating all of these, in their eyes, difficult requests.

Macleod’s perspective? “He’s using the power of his elective office to retaliate against individuals that did not support him.”

What? I never asked Macleod for his support in my efforts to run for supervisor. I came to fix the fiscal problems he created, and I’ve taken a severe pay cut and left a position that was not subject to term limits.

The county’s bankruptcy occurred during the last month of then Board of Supervisors chairman Tom Riley’s term of office. At his last board meeting he quoted the governor who appointed him to the position, President Ronald Reagan, who said, “trust, but verify.”

A lot of us have not forgotten that sage advice. Full disclosure should be the norm for every taxpayer dollar and team play is necessary for the overall county family’s health. I look forward to concluding our negotiations in a collaborative manner. It is critical county taxpayers are treated properly and that our deputy sheriffs are paid fairly: no better, no worse.

January 9

1997

Richard Richtmyer of The Bond Buyer provided an investment pool alternative update in “MBIA-MISC Helps Two California Cities Start Investment Pool.”

Orange County Treasurer John Moorlach said that when the discord created by the bankruptcy dies down, the pool will once again be made available to cities.  He also welcomed the idea of having an MBIA-run pool in the state because it will provide another benchmark upon which to compare investment performance.

“I think it’s very positive that MBIA is providing a pool,” Moorlach said yesterday.  “I believe in competitiveness so I’m encouraged.  I’m surprised that it’s taken so long for MBIA to finally get a couple of cities interested.”

2007

Bob Fauteux of the Foothill Sentry opined on the story of the day in “The Sheriff’s union owes taxpayers some transparency.” 

Getting a lot of press during 2006 was the ongoing saga of the Orange County Deputy Sheriff’s union complaining about having to show where they are spending $16 million of taxpayer dollars given to their health care Medical Trust.  The Trust administers the medical benefits provided to both active and retired deputies and the “administrators” are all union officials or their appointees.

Ex-County Treasurer and now Supervisor John Moorlach, who took office on Dec. 5, 2006, is the focal point for their wrath.  The union spent heavily to defeat Moorlach in the Second District Supervisor election, which he won by a 75 percent to 25 percent landslide.  He has consistently maintained, before and after he took office, that the union should provide a complete annual audit to the Board of Supervisors for where the Trust money is going.  Moorlach, who is a CPA, never claimed that money is being misspent, only that taxpayers should see how their money is being spent.

Moorlach is being barraged with union claims he wants to take away some of the sheriff’s medical benefits.  Supervisors Chris Norby and past Supervisor Chuck Smith voted against the 2003 sheriff’s labor contract because it omitted an accounting for the Medical Trust.  An annual financial report was agreed upon in the 2004 labor contract.  Since then, the financial reports provided to the County have not had adequate details about where the money is being spent.

County taxpayers pay for sheriff services and their accountability for properly spending public funds should have no exceptions.  It’s time to be assured that taxpayer money is being well spent by getting a completely open review of the sheriff’s Medical Trust books.  Any audit will be conducted using guidelines no more (and no less) demanding than the County’s other spending areas undergo. 

What have the sheriff’s union leaders got to hide?

January 10

2007

Peggy Lowe of the OC Register continued the topic with “Union asks to bar Moorlach – Delivery of 870 signed letters reflects tussle between union and new supervisor over contract.”  It was also picked up by the Associated Press.  Here it is the OC Register’s account in full:

The deputy sheriffs' union delivered 870 signed letters to county officials today asking that new Supervisor John Moorlach be barred from attending any law-enforcement functions.

The letters are the latest volley in the war between Moorlach and the union in a tussle over the deputy sheriffs' employment contract with the county.

The letters, handed over by several of the elected officials of the Association of Orange County Deputy Sheriffs, ask the Board of Supervisors' vice chair to keep Moorlach from attending any functions, including any memorials for public safety employees who die in the line of duty. About 50 union members were also present for the board's regularly scheduled weekly meeting.

The beef goes back to the union's endorsement and financial support of Moorlach's opponent in his race for supervisors. After the election, Moorlach called union leaders "thugs."

Now Moorlach wants a formal audit of a multimillion-dollar health-insurance fund, which is administered by union leaders and paid for with public tax dollars. And Moorlach wants the sheriff's deputies to accept the same cuts to retiree medical benefits that were imposed on all other employees this year.

"It is demoralizing and we feel irresponsible for a member of the board of supervisors to repeatedly refer to deputy sheriffs and district attorney investigators as 'thugs,' " said Wayne Quint, the union's president.

Moorlach didn't comment on the letters.

But Chris Norby, elected chair of the board, said today that he has no authority to bar Moorlach – or anyone else – from a public event.

"Any request of me to do that is something beyond my control," Norby said.

Bob MacLeod, another union leader, asked the board to continue to negotiate in good faith so a contract could be forged.

"We need to put aside our bruised feelings and quit attacking each other," he said.

Also today, Pat Bates was sworn in as the new supervisor for the Fifth District, which covers south county. Bates beat Cassie DeYoung, who spent $3.7 million of her own personal wealth, in the most expensive county race in history.

"It was a campaign of the people," Bates said.

Thankfully, some stories die down over time.  However, the next one, also by Peggy Lowe, with the assistance of Scott Martindale, has continued to be a theme throughout the last five years.  The OC Register article was titled “Merging of towns proposed – Supervisor sees Los Alamitos, Seal Beach, Rossmoor and Sunset Beach as one ‘supercity.’”   Here it is in full:

It's worked with sodas and fast food, so why not geography? Call it supersizing, city style.

New Orange County Supervisor John Moorlach is proposing that four communities in his northwestern Orange County district become one "supercity."

Moorlach is thinking of combining two cities – Los Alamitos and Seal Beach – with the nearby unincorporated communities of Rossmoor and Sunset Beach. The supercity would have a population of nearly 50,000.

Moorlach's proposal was met with cries that it would be a political nightmare and suffocate the towns' individual identities.

"Bad idea," Seal Beach Mayor John Larson said. "The cities have diverse interests. Seal Beach certainly doesn't want to be combined with another city."

Moorlach says he expected the initial negative reaction, adding that communities may like his plan better when they learn they could get better services, have more local control and save the county money.

"It's a different idea, and I know it's going to shake some people up," Moorlach said. "But this might turn out to be very beneficial to the taxpayers. I think it needs some public dialogue. If we have too many incoming missiles, we'll find out. But I want to take the risk."

Moorlach and some Rossmoor officials hope to get some much-needed time to explore the proposal by requesting a delay on a decision expected today at a meeting of the Orange County Local Agency Formation Commission. The commission is set to vote on a recommendation to place Rossmoor in the planning boundaries of Los Alamitos.

The commission, operating under a state law that says it must look at "sphere of influence" issues every five years, has been studying Rossmoor since 2002, said Joyce Crosthwaite, the commission's executive officer. If an unincorporated area is added to a city's sphere of influence, it is essentially placed in the larger town's planned geographical boundaries and gets served by its providers.

Rossmoor residents have said they would like better police protection and that the Orange County Sheriff's Department responds too slowly.

The commission believes Rossmoor should be in Los Alamitos' boundaries because it is surrounded on three sides by the city; the two communities share water and sewer providers; and they have common roadways, she said.

But even if the commission approves moving Rossmoor into Los Alamitos' jurisdiction, Rossmoor can reject the plan.

Eric Christensen, president of the Rossmoor Homeowners Association, said the community wants to pursue the possibility of incorporation, based on responses from a residents' poll last year.

"We believe we would be successful as a small, independent city," Christensen said. "We have a walled city with very homogenous neighborhoods, low crime, low costs of services. We can outsource services to gain efficiencies."

Los Alamitos is neutral on the issue, Mayor Catherine Driscoll said. But, she added, "Los Alamitos should be in control of its own destiny."

The autonomy that cities and to a lesser degree unincorporated areas wield are significant obstacles for county officials trying to merge municipalities. For instance, the commission in 2005 recommended that Villa Park and its water district be dissolved, but residents fought back, collecting 1,300 signatures. The commission dropped its recommendation.

Moorlach, who hopes to be appointed to the commission, said he likes the supercity idea because it works as an economy of scale.

"Some of the residents will blow up," he said. "Then that will calm down, and people will say, 'We could save money and get better police service.' Then people may say, 'Why not?' "

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

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It all started with a simple meeting and a request by Councilman Rosansky of Newport Beach earlier last year:  “John, I’m finishing my last term as a city councilman and there are a few things that I would like to do in these last few months.  One of them is building a bridge at 19^th Street over the Santa Ana River, which would relieve a highly congested Pacific Coast Highway.”

I proceeded to give Councilman Rosansky the reasons why that would not be a good idea.  Besides, you need the approval of three other cities, the County, and the Orange County Transportation Authority (OCTA).  And, it would be helpful to work with the Orange County Sanitation District (OCSD), as any proposed bridge would go through their property.

My first and only visit to the County’s Board hearing room before running for Treasurer-Tax Collector was over 18 years ago.  I took time out of my workday to oppose the implementation of two bridges over the Santa Ana River.  Two decades later, I was sure that opposition to the bridges had not subsided.  However, the two bridges are still on the County’s Master Plan of Arterial Highways (MPAH).

Life is complex, but your parents usually tell you that the three options you have for certain decisions and goals, and they are yes, no, or wait.  Obviously, no one has been successful in obtaining a “no” strong enough to remove the 19^th Street Bridge from the MPAH.   

One of the joys of serving as a county supervisor is the great working relationships that I’ve built with the city councils and city managers within my district.  I organized a joint meeting with representatives of all six parties to gauge the current sentiment on this topic. 

The meeting went as I expected, with one major exception.  Shortly after assuming this office, I met with the city manager of Huntington Beach at the time.  She was very explicit on the matter by saying, “My city council has told me that that dog will not hunt.”  I expected the process to conclude with a majority of the cities expressing no interest in moving forward.  That was not the case.  Although Don Hansen of Huntington Beach expressed strong resistance, the group wanted more information on the process, including timelines, budgets, renderings, funding sources and permit and approval acquisition requirements.

To move forward on such a project is a formidable and daunting task.  There are numerous hurdles.  It will take the approval of three city councils (maybe four if Fountain Valley is included), the Board of Supervisors (OC Public Works), the OCSD, and the OCTA.  Not an easy task.  The cost would be significant, as mitigating wetland preservation concerns is expensive (an initiative that OCTA has a proven track record on).  Then, there would be the requirement of a feasibility study.  This would have to be followed by the preparation of an Environmental Impact Report.  In addition, because the proposed location is within the Coastal Zone, a permit from the California Coastal Commission would be required (this formidable task alone would add five to ten years to the process).  And, last but certainly not least, where would the necessary funding come from? 

The last time that a public debate on this topic was engaged was some ten years ago.  Has public sentiment changed in the last decade?  Would the majority of our constituents prefer to address an arguably severe commute problem in this manner?  The city of Huntington Beach, the party most reluctant to move forward on this idea, volunteered to find out.  Not only that, Mayor Don Hansen volunteered to host it in the neighborhood that would be impacted the most.

Thursday evening Mayor Hansen provided the information that we have amassed and, with the help of OCTA staff, acquired as much input from those in attendance as they could.  One credo I live by is: “When I get mad, I get motivated.”  It moved me to run for County Treasurer.  It also moved more residents to attend than the facility could accommodate.  They were motivated.

With public participation, we could assess whether it would be worth the difficult and arduous process of considering a bridge.  Everyone agrees that, with smooth sailing, it will probably take a minimum of ten years to complete.  We’re not talking about a bridge in the next few months.  We’re also not talking about an attachment to the proposed Banning Ranch project (there is no connection).

Thursday evening had six of the seven Huntington Beach councilmembers in attendance.  It had one councilmember from Costa Mesa, one from Fountain Valley, and two from Newport Beach, including Councilman Rosansky.  It would be an understatement to predict that the Huntington Beach Council will vote to once again to oppose the bridge.  That ends this topic.  I don’t mean to throw Councilman Rosansky under the bus, but he strongly encouraged the process and I’m thankful that he attended and observed the entire meeting.  In fact, I’m quite impressed that he did.

I want to thank the six parties involved for demonstrating leadership and for their willingness to facilitate a good and healthy discussion on this matter.  We knew it would be a difficult meeting.  It takes courage to pursue such an initiative.  We know that we represent the public.  We also know that this is a difficult topic for some.  We are listening and we certainly received valuable input at this public meeting.

That gets me back to the yes, no and wait alternatives.  The majority sentiment was to remove the bridge from the MPAH.  Time will tell if this will be pursued or if, ten years from now, a term-limited councilmember will once again wonders why the bridge is a dotted line on a map.

The Daily Pilot and the OC Register, via MSNBC, covered the evening in their pieces below.

Attendees cry foul to 19th Street Bridge proposal

Thursday's meeting had a hostile crowd of hundreds from the start against the Costa Mesa-Huntington connector.

By Joseph Serna

So how did 19th Street Bridge proponent and Newport Beach City Councilman Steve Rosansky sum up a meeting where 600 fervent opponents showed up in no mood to hear alternatives?

"Not my idea" were the three words that the termed-out councilman uttered with a laugh to describe Thursday night's meeting, which could only be viewed as a 90-minute act of futility if its goal was to change people's minds about the proposed Costa Mesa-Huntington Beach connector.

"I don't think this group is a fair representation of the residents of all three cities," Rosansky said. He was also alluding to many of his own Newport Beach constituency, who could conceivably benefit from another bridge linking the two sides of the Santa Ana River in addition to Coast Highway in Newport, and Victoria Street and Adams Avenue in Costa Mesa.

"I think if you stopped traffic on Coast Highway and asked them how they felt about it, I think there's a lot of people for it," he added.

But Thursday's meeting didn't take place on Coast Highway. It happened at Eader Elementary School in Huntington Beach, about a half-mile from where the proposed bridge would spit westbound drivers out onto Brookhurst Street where the road abuts blocks of homes.

To approve the bridge, all three cities would have to agree to the plan, along with various federal agencies. Early estimates put the cost at between $140 million and $150 million. Conversely, to get the bridge eliminated from the county's master plan — which has included the bridge since 1957 — all three cities would have to agree to its removal.

Newport Beach appears to be the only holdout, as its official position is to support the bridge.

Orange County Supervisor John Moorlach called Thursday's setting "ground zero" for the bridge issue and said he was hopeful people would be open to ideas.

They weren't.

From the outset the crowd was hostile, even to the home team. Bridge opponents were handing out red "No Bridge" signs at the door, and 400 or so inside overflowed to hundreds more outside who couldn't hear the proceedings.

Huntington Beach Mayor Don Hansen was roundly jeered as he went through most of the three proposals for the 19th Street Bridge.

Option No. 1: Do nothing, don't build a bridge. (Thunderous applause.)

Option No. 2: Build a bridge, but close off Banning Avenue in Huntington and turn it into a pocket park or cul-de-sac, so westbound residents crossing the river would have to go north or south on Brookhurst. (Hansen was booed before he could even finish the presentation.)

Option No. 3: Build a bridge, put a triangle median in the middle of the intersection to force westbound cars to go north or south on Brookhurst, and force eastbound cars on Banning to do the same. (Hansen couldn't even finish explaining the idea, which was vehemently rejected.)

Politicians in attendance got the message loud and clear.

Hansen told the crowd that at the Jan. 17 Huntington Beach City Council meeting, the council would reaffirm its stance against a bridge.

Costa Mesa City Councilwoman Wendy Leece said she opposes the bridge, too. Costa Mesa Councilman Steve Mensinger, a developer by profession, said he watched the proceedings from a computer.

"If we don't build the bridge, 20 years from today we're going to have to figure out where that traffic is going to go," Mensinger said.

But, he said, this may be one can to kick down the road.

"I will not support a bridge if the community does not want a bridge," he said. "We will reaffirm our position [against the bridge] Tuesday."

Rosansky remained unfazed by the stiff opposition.

"The problem with government is a failure in leadership," he said at the end of the meeting. "If their decision is based on tonight's input, I think they're short-changing their residents."

Hundreds oppose bridge linking H.B., Costa Mesa

By SEAN GREENE   

The Orange County Register

Hundreds crammed inside the auditorium of Eader Elementary School to overwhelmingly voice their opposition to the idea of another bridge uniting Huntington Beach and Costa Mesa.

Orange County Supervisor John Moorlach and Surf City Mayor Don Hansen held a meeting Thursday night to seek residents' feedback on the controversial 19th Street Bridge, which would connect 19th Street in Costa Mesa and Banning Avenue in Huntington Beach over the Santa Ana River.

Homemade signs, stickers and public comments made it clear the crowd at Eader Elementary was stacked against the idea of the bridge. A choir of boos often rang out from the audience, including "No bridge!" and "Save 19th Street!" which would likely be widened to accommodate bridge traffic.

Bridge supporters have said the linkage would play a role in revitalizing Costa Mesa's west side, as well as relieve traffic issues in Newport Beach.

The idea has been formally opposed by both Huntington Beach and Costa Mesa for decades. Newport Beach, by policy, supports the idea, which has remained on the county's master plan of highways for 60 years.

At an estimated cost of $150 million, the project would require the unanimous approval of the Huntington Beach, Costa Mesa and Newport Beach city councils to either build it or forever strike the idea from the master plan.

Elected representatives present at the meeting also made their opinions clear.

"Huntington Beach opposes this and will continue to oppose this," Hansen told the audience. "This meeting is not going to change that ... (but) leadership sometimes requires us to take up those issues."

Talks of the 19th Street Bridge have emerged about every 10 years since the idea was placed on the county's master plan of highways in 1957.

Eighteen years ago, Moorlach, a Costa Mesa resident, made his first appearance before the Orange County Board of Supervisors to oppose both the 19th Street Bridge and the Gisler/Garfield connection, which has since been removed from the master plan.

But late last year, Moorlach revived the talks, first involving council representatives and city managers, at the request of Newport Beach Councilman Steve Rosansky, who wanted to bring the issue back before he was termed out, Moorlach said between talking to residents, many of whom thanked him for his support in opposing the bridge.

"Has the public sentiment changed? Yes or no?" Moorlach said of the meeting's goal. "And I may be thinking the answer is no."

During the public comment section of the meeting, a number of arguments surfaced against the bridge. Residents of southeast Huntington Beach said a bridge would destroy the quiet character of their neighborhood and increase traffic on Banning Avenue at the risk of the Eader Elementary students. Many also brought up noise and pollution from bridge construction.

"You might think we're all saying 'not in my backyard,'" said Kathleen Mooney of Huntington Beach. "This is a matter of quality of life and considering options. ... Maybe all of us can come up with another way."

Homeowners on West 19th in Costa Mesa have mobilized in a grassroots campaign to oppose both the bridge and the Newport Banning Ranch development. Residents said they believe if either are built, their homes would be taken using eminent domain to expand the two-lane street to accommodate more traffic flow.

Steve Ray, executive director of the Banning Ranch Conservancy, said the building of the 19th Street bridge would facilitate the Newport Banning Ranch development's construction. That means a loss of the opportunity to create a regional park out of the Banning Ranch open space, Talbert Nature Preserve and Fairview Park, he said.

"That land is supposed to be preserved forever," Ray said. "This is not a standalone issue."

Many supported the notion of removing the bridge, marked by a dotted line on a map, from the Orange County Master Plan of Arterial Highways, which would forever kill the idea.

But doing so is not so simple. First, alternative measures to mitigate traffic without the bridge would have to be taken, Moorlach said.

"How do we move people around? Because Westside Costa Mesa is not easy to navigate," he said.

A number of city officials were present at the meeting.

Six out of seven Huntington Beach City Council members were present, excluding Councilman Keith Bohr, who Mayor Hansen said had a prior commitment.

The Huntington Beach City Council will vote whether to reaffirm its status quo, "no" stance on the 19th Street Bridge at its Jan. 17 meeting.

Costa Mesa Councilwoman Wendy Leece was also present, along with a handful of City Hall executives, to report back to her council. Leece said she stands by her city's 1993 resolution opposing the bridge.

Costa Mesa Councilman Steve Mensinger, who said he watched the meeting on television, noted the opposition, but would not publicly say if he thought the bridge was right or wrong.

"If the public doesn't want it, we're not going to have it," Mensinger said. "I'm not going to support a bridge that they don't want. ... (But) we have to deal with traffic."

From Newport Beach, Councilwoman Leslie Daigle said she was there to listen and report back to her council.

FIVE-YEAR LOOK BACKS

January 1

2007

The Daily Pilot provided a piece on “New Year’s Resolutions.”  They started it with a portion of my submission, which they would print in full a few days later.  One correction:  there are some 1,100 California State Historical Landmarks, of which I was about 63 shy of photographing them all five years ago.

Orange County Supervisor John Moorlach plans to be a very busy man in 2007. And this comes on the heels of a year he calls "perhaps the busiest of my life."

"With fundraising, running a campaign, assisting a successor, transitioning out of one job and into another, hiring a new staff, being sworn in and hitting the ground running, this year has been packed," he said.

When asked for his New Year's resolutions, the newly elected supervisor offered up a whopping 11. Much of them are professional ones as he commits to his new responsibilities, but he also wants to make time for personal goals, like his hobby of collecting photographs of all of the 63 California State Historical Landmarks.

January 3

1997

Michael Granberry of the LA Times, with the assistance of Shelby Grad, provided this bankruptcy update:  “Citron Seeking to Avoid Jail, Manual Labor – Sentence:  He hopes to do something of a ‘clerical’ nature in the county’s work program.”  The article also included an update on a milestone that I had just experienced as the new Treasurer.  Here are portions of the piece:

            Former Orange County Treasurer-Tax Collector Robert L. Citron is seeking to avoid both jail time and any grueling manual labor that might be offered as an alternative, a member of his defense team said Thursday.

Nancy Clark, an independent contractor who worked as a sentencing consultant for Citron, said the ousted public official is still recovering from the shock of being denied an opportunity to serve his sentence at home through an electronic monitoring program.

Los Angeles County Superior Court Judge J. Stephen Czuleger quashed that idea in a written court order handed down Dec. 18. Czuleger said, however, that Citron, 72, could apply for the Orange County sheriff's community work program, which allows a defendant to work during the day but sleep at home.

However, because of his age and a variety of medical problems--which have included skin cancer, prostate problems, lower spinal separations, bursitis and ringing in the ears--Clark said Citron might be unable to handle manual labor.

But Lt. Tom Garner, spokesman for the Orange County Sheriff's Department, said Thursday that any method of sentencing for Citron is "still very much up in the air. . . . I wouldn't have a clue. The decision will be made by the sheriff [Brad Gates] and high-ranking people within the department."

Meanwhile on Thursday, Citron's successor, John M.W. Moorlach, took full responsibility for the county's investment pool. The milestone marks the first time since 1994 that county officials alone have controlled investment decisions.

After the bankruptcy, the county hired Salomon Bros. to manage the portfolio. The Board of Supervisors also adopted strict investment guidelines that forbid the use of derivatives, a risky form of investing that played a role in the county's financial crisis.

Moorlach began investing a small portion of the $2.5-billion pool in May. He took on larger portions in recent months.

"I'm really happy we are finally to this point," he said.

Moorlach, whom the board appointed to replace Citron, said he and his staff have modernized the treasurer's office and have their decisions evaluated by two citizen review panels.

The pool now earns a yield of about 5.4%. Using risky securities, Citron earned yields of 8% or more.

"We are not leveraging. We are not making yields significantly higher than the marketplace," Moorlach said. "We are trying to invest the taxpayers' money in the most efficient way."

January 4

2007

The Daily Pilot and the Huntington Beach Independent printed my entire list of “My Resolutions for 2007” (see January 1 above).  It was rather specific, as I am very task oriented.  But, here is one general resolution that will never change:

                ·  Continue to enjoy the best wife and three kids that any man could ever wish to have as my closest friends.

January 6

2002

On this Sunday, I was the submitter of the Guest Column for the OC Register’s Commentary section.  My submission was titled “Will county leave itself in unchartered waters? – It’s difficult to find any benefits for O.C. if voters make it a charter county.”  The County was pursuing a Charter Amendment, Measure V, on the upcoming ballot for one reason:  to ask the voters to select new County Supervisors when there is a vacancy, instead of having the Governor make the appointment.  I was opposed.  It would make the County of Orange a Charter County, versus a General Law County for only one reason, thus following General Law except for filling Board vacancies.  This was done at the behest of then-Supervisor Todd Spitzer as he had plans to run for the State Assembly, but did not want to have then-Governor Gray Davis appoint the Supervisor to succeed him.   Ironically, six years later I would ask my Board colleagues to put a charter amendment on the ballot to require voter approval for bargaining unit agreements allowing for retirement enhancements.  To this day, however, the County of Orange still does not have an official Charter, and is reliant on General Law.  Consequently, this may be a project for me to take on and complete in the near future.  Due to space today, I’m not including the piece.

January 7

1997

Leslie Berkman of The Bond Buyer covered some inside baseball on the County’s efforts to refund its Pension Obligation Bonds in “Orange County Supervisors to Mull $136 Million Refinancing.”  Lisa Hughes performed valiantly on the Public Finance Advisory Commission (PFAC) in 1997, along with Chuck Simons.  When my appointee to PFAC was elected to the position of Orange County Treasurer-Tax Collector in 2010, Shari Freidenrich had to move from my appointment to the slot provided for the elected official holding the office.  Consequently, I recently appointed Lisa Hughes back onto the Commission.  One lesson that I learned, that this article brings back to mind and with the benefit of hindsight, is the case of lowering defined benefit pension plan contributions.  When investment performance is very favorable, as it was during this unique period of time, it does not mean that the employer should reduce the amount budgeted for the annual pension contribution.  The employer should set aside the savings from lower contribution rates and plan on tapping them in the future when investment returns are not as favorable.

                The refunding plan, which is endorsed by county chief executive officer Janice Mittermeier, is meant to help the county eliminate an approaching spike in the annual cost of servicing the bonds.

                [Incoming board chairman William] Steiner said he planned to meet yesterday with Lisa Hughes, a certified public accountant and lawyer who argues against having the county take on additional debt.

                Hughes, who sits on the county’s Public Finance Advisory Commission, which was set up after the county’s 1994 bankruptcy filing, was one of two commission members to oppose the refunding plan.

                Hughes contends that the county staff’s calculations that the refunding will have “net present value of zero or less” are “clearly wrong.”

                She said she will show the board other sources of cash the county can use to restructure its debt, including $120 million held in an account overseen by the bankruptcy court which may release it if the county proves it’s credit is now good enough so it may issue notes.

                Also yesterday, Orange County Treasurer John Moorlach said that, at Hughes request, he was searching for alternative debt funding sources.  He said the pension investment system may hold a key.

                “Because the equity markets have performed so well over the last two years, the pension plan may be close to being fully funded,” Moorlach said.  “Therefore, the county’s future employer contributions may be lower than projected.”

2002

Steven Greenhut had a column in this week’s Commentary section of the OC Register that was titled “The year ahead:  Here’s to the watchdogs, this year and every year.”  He would push for three reforms.  I’m proud to say that we have accomplished the first, with the County’s Office of Independent Review.  The second was resolved with a

Happy New Year!

The Daily Pilot published their annual DP 103 list today.  It’s the first piece below and I’m still on it. 

On Thursday the Daily Pilot provided a staffing update.  It’s the second piece below.  The city of Costa Mesa has not concluded its background check of my Chief of Staff, Rick Francis.  Consequently, I’ve been in limbo on moving forward with his replacement.  It looks like Rick will start with Costa Mesa in mid-January or later. 

The Fountain Valley Patch provided one of its top stories of 2011.  It’s the third piece below.

By the Daily Pilot staff

1.) Jim Righeimer. Costa Mesa's mayor pro tem led an unapologetic charge to restructure the city with layoffs, pension reform and the creation of a proposed city charter, making him the target of organized labor and a hero of reform-minded conservatives who argue that the city's finances are unsustainable.

2.) Nick Berardino. The general manager of the Orange County Employees Assn. led an equally unapologetic fight to keep public employees on the payroll, where he blitzed the city in an effort to stop some 200 planned layoffs and won an appointment to the Orange County Fair Board along the way.

3.) Katrina Foley. This independent-minded Newport-Mesa Unified school trustee championed schools, youth sports, charitable work and public employees, and also served as a counterpoint to the tradition-bound school board.

4.) Tom Hatch. Costa Mesa's new city CEO found himself in the unenviable position of having to lead during what has arguably been the most difficult chapter in city history.

5.) Dave Kiff. Costa Mesa got most of the attention, but the Newport Beach city manager, aided by the City Council, made quiet but meaningful financial reforms that few would call painless.

6.) Nancy Gardner. Newport Beach's new mayor, a pragmatic environmentalist and consensus-builder, goes her own way, but manages to do so with little conflict.

7.) Jeffrey Hubbard. The Newport-Mesa Unified School District superintendent pleaded not guilty to a third felony charge of misappropriation of public funds related to his old job as the Beverly Hills schools chief and will go to trial in January.

8.) Kimberly Claytor. The teachers' union president voiced support for cutting money from the administration instead of the classroom and led a teachers union no-confidence vote in the superintendent.

9.) Leslie Daigle. The Newport Beach councilwoman and state Assembly candidate can rightfully claim partial credit for efforts to dredge the bay and improve water quality.

10.) Sandy Segerstrom Daniels. The Festival of Children Foundation celebrated its 10th anniversary this year, and its founder has become a powerful voice for the voiceless.

11.) Helen Nenadal. Though not one to seek the spotlight, the head of the Costa Mesa City Employees Assn. fought the reforms at City Hall and put her name on the lawsuit seeking to stop the layoffs.

12.) Steve Mensinger. The Costa Mesa councilman teamed with Righeimer in an attempt to restructure the government and put infrastructure improvements back on the front burner.

13.) Steve Beazley. The president and chief executive of the OC Fair & Event Center survived the proposed sale of the fairgrounds and had a fair this year that broke attendance records.

14.) Jeff Teller. The Orange County Market Place operator managed to convince a Fair Board hell bent on removing his operation from the fairgrounds to change its mind.

15.) Walt Davenport. The immediate past Newport-Mesa Unified school board president stood steadfastly alongside the embattled superintendent, earning an A for loyalty but lower marks from the teachers union.

16.) Allan Roeder. Costa Mesa's well-liked city manager retired after 36 years at City Hall.

17.) Henry T. Segerstrom. The Orange County Performing Arts Center was recently renamed the Segerstrom Center for the Arts due to the patronage of the managing co-partner of C.J. Segerstrom & Sons (South Coast Plaza).

18.) Mike Henn. The Newport Beach councilman spearheaded an ambitious effort to revitalize struggling retail areas, but had to recuse himself from Lido Village discussions after some questioned his professional ties to one of the business owners in the area.

19.) Donald Bren. The Irvine Co., which Bren chairs, announced plans to build PIMCO's new headquarters at Newport Center, new homes and apartments in Irvine, and a makeover for Fashion Island.

20.) The Irvine 11. Ten of the 11 college students at the misdemeanor trial were convicted for interrupting a speech by the Israeli ambassador at UC Irvine.

21.) Steve Staveley. Costa Mesa's interim police chief quit in a huff, calling the City Council majority and its proposed cuts to city employees "unethical" and "immoral."

22.) Keith Curry. The Newport Beach councilman riled Democrats and those against political art on public grounds when he led the effort to commission a statue honoring President Ronald Reagan.

23.) Gary Monahan. The mayor of Costa Mesa took it on the chin after deciding to keep working at his Irish bar on St. Patrick's Day after a city employee committed suicide at City Hall. He later apologized, explaining that it was the busiest day of the year for his business.

24.) Wendy Leece. It's never easy to stand alone, but the Costa Mesa councilwoman voted against the layoffs and held her ground.

25.) Paul Reed. The Newport-Mesa Unified assistant superintendent and chief business official stepped in when Supt. Jeffrey Hubbard went on leave to lead the district.

26.) Scott Baugh. Chairman of the Orange County Republican Party.

27.) Tom Gazsi. Costa Mesa's new police chief.

28.) Jay Johnson. Newport Beach's police chief.

29.) Rick Francis. Costa Mesa assistant city CEO.

30.) Dana Smith. Newport Beach assistant city manager.

31.) Tod Ridgeway. Developer and former Newport councilman.

32.) Bill Lobdell. Costa Mesa city spokesman and a former Daily Pilot columnist.

33.) Tara Finnigan. Newport Beach city spokeswoman.

34.) David Hunt. Former Newport Beach city attorney.

35.) Tom Pollack. Newport Harbor Nautical Museum's board chairman.

36.) Courtney Brown. Corona del Mar junior who led the "save the Fun Zone" demonstration.

37.) Tim Starn. Commander of the now-disbanded AirBorne Law Enforcement.

38.) Evelyn Hart. Senior citizen advocate and former Newport mayor.

39.) Roger Carlson. Davidson Field press box namesake and former Pilot sports editor.

40.) Chris Miller. Newport Beach harbor resources manager in charge of the Rhine Channel cleanup.

41.) Dave Ellis. Orange County Fair Board member.

42.) George Argyros. Newport Beach real estate developer.

43.) Geoff West. A Bubbling Cauldron editor.

44.) Barbara Venezia. Orange County Register columnist.

45.) Amy Senk. Corona del Mar Today editor.

46.) Roger Bloom. Newport Beach Independent editor.

47.) Norberto Santana Jr. Voice of O.C. editor.

48.) Greg Ridge. Repair Costa Mesa and Save the Fair activist.

49.) Sandy Genis. Save the Fair and Repair Costa Mesa activist.

50.) Jim Mosher. Newport Beach council critic.

51.) Perry Valantine. Costa Mesa council critic.

52.) Tom and Eleanor Egan. Costa Mesa council critics.

53.) Richard Afable. President and CEO of Hoag Hospital.

54.) Mike Whitehead. Voice of the Newport Beach Christmas Boat Parade and Independent columnist.

55.) Martha Fluor. Newport-Mesa Unified school board member.

56.) Christine Anderson. Sonora Elementary School principal.

57.) Ed Selich. Newport Beach councilman.

58.) Rush Hill. Newport Beach councilman.

59.) Geoff Ianniello and Pam Williams. Newport-Mesa Unified's nutrition services operations manager and nutritionist.

60.) Steve Rosansky. Newport Beach councilman.

61.) Anton Segerstrom. South Coast Plaza executive and philanthropist.

62.) Jim Fitzpatrick. Costa Mesa planning commissioner and water district board member.

63.) Colin McCarthy. Costa Mesa planning commissioner and head of the Costa Mesa Taxpayers Assn.

64.) Mary Hornbuckle. Coast Community College District trustee, preschool leader.

65.) Tim Vasin. Costa Mesa Fire Department union head.

66.) Jason Chamness. Costa Mesa Police Department union head.

67.) Aaron Harp. Newport Beach city attorney.

68.) Tom Duarte. Costa Mesa city attorney.

69.) Jennifer Muir. Orange County Employees Assn. spokeswoman.

70.) Billy Folsom. Costa Mesa city mechanic, employee advocate and face of Stop the Layoffs.

71.) Dennis Harkins. Orange Coast College president.

72.) Michael V. Drake. UC Irvine president.

73.). Mike Carey. OCC sustainability director.

74.) Gordon Bowley. Mesa United president.

75.) Jim and Linda Jordan. Former "Snoopy House" owners.

76.) Richard Luehrs. Newport Beach Chamber of Commerce president and chief executive.

77.) Larry Weichman. Costa Mesa Chamber of Commerce president.

78.) Tom Johnson. Newport Beach Chamber of Commerce's Citizen of the Year/former Pilot publisher.

79.) Ed Fawcett. Costa Mesa Chamber of Commerce CEO.

80.) John Moorlach. County supervisor.

81.) William H. Gross. PIMCO founder.

82.) Mike Thornton. OCC's 500-win women's basketball coach.

83.) Mike Bargas. Estancia football coach.

84.) Scott Meyer. CdM football coach.

85.) Robert Murtha. Estancia football's award-winning tailback.

86.) Phil D'Agostino. Costa Mesa High School principal.

87.) Kirk Bauermeister. Estancia High School principal.

88.) Tim Bryan. CdM High School principal.

89.) Michael Vossen. Newport Harbor High School principal.

90.) Deborah Davis. Back Bay and Monte Vista high schools principal.

91.) Eliza Rubenstein. OCC choral director.

92.) Larry Haynes. Executive director of the Mercy House.

93.) Maria Elena Avila. Owner of Avila's El Ranchito, Costa Mesa, and community advocate.

94.) Carl St.Clair. Pacific Symphony director.

95.) Louise Fundenberg. Balboa Peninsula advocate.

96.) Father Kerry Beaulieu. Pastor, Our Lady Queen of Angels Catholic Church.

97.) Kenton Beyshore. Mariners Church pastor.

98.) Mark S. Miller. Temple Bat Yahm rabbi.

99.) Marc Rubenstein. Temple Isaiah rabbi.

100.) Sayed Moustafa Al-Qazwini. Islamic Educational Center of Orange County imam.

101.) Fred Bockmiller. Mesa Consolidated Water District board president.

102.) Kate Winnett, Judi Gorski and Richard S. Robinson Jr. The respective commodores of the Bahia Corinthian, Balboa and Newport Harbor yacht clubs.

103.) Carousel pony. The famed Fun Zone merry-go-round galloped into history along with 2011.

Council to vote on new city position

Peter Naghavi would become economic development director if position is approved Jan. 3.

By Joseph Serna

Peter Naghavi could take over the city's newly created economic development director position if the City Council approves the move next week.

Using $50,000 already set aside for economic development this year and shifting $70,000 from Ernesto Munoz's old position as senior engineer, Naghavi would be paid $120,000 for the second half of the fiscal year with council approval.

Munoz is the city's interim head of public services, a position Naghavi left to become the interim assistant CEO.

Approving the economic development director position would create a new level of management at City Hall. Naghavi would be able to supervise public services and development services, and coordinate between the two. Both departments play important roles in the city's push for capital improvements, according to the city staff report.

As director, Naghavi would be expected to analyze and react to market and demographic data, and strengthen ties between the city and business community, of which Costa Mesa's financial outlook is closely tied.

Roughly 60% of Costa Mesa's revenue comes from sales tax — a stream of dollars particularly vulnerable to the ebb and flow of the national, state and local economies.

The council is looking to appoint Naghavi to the role in its first meeting next year, on Jan. 3. He would be tasked with developing an economic strategy for Costa Mesa and act as a liaison with the Chamber of Commerce and South Coast Metro Alliance.

City officials have announced that starting in 2012, Rick Francis, Orange County Supervisor John Moorlach's chief of staff, will take over as assistant city CEO.

Munoz will remain as interim head of public services, leaving the senior engineering position vacant.