Norberto Santana has a fascinating story over at the Orange County Register about the controversy surrounding Orange County Board of Supervisor’s Chairman (Emperor) John “Chicken Little” Moorlach’s nominee for the Orange County Retirement System Board, Thomas Flanigan. It looks like the questions regarding Flanigan’s relationship with an Orange County basedÂ asset management company, Ryan Labs, Inc. just won’t go away.
According to Santana’s report:
Supervisors delayed Flanigan’s appointment earlier this month after questions were raised about his connection to Ryan Labs, Inc. â€“ which also advocates the unique accounting approach to public pension systems known as Market Valuation of Liabilities (MVL). Using that accounting approach would likely cause Orange County’s unfunded pension liability to skyrocket, forcing public agencies to hike their annual contributions and create a choking effect on public budgets. Supporters say the accounting approach â€“ used in the private sector â€“ would reveal the true costs of pension benefits and prevent those costs from being pushed on to future generations.
Flanigan and Ryan Labs President Sean McShea both said he has no formal connection or contract with the firm. Moorlach backs Flanigan. However, employees answering the phone at Ryan Labs do indicate that he is affiliated with the company. McShea said Flanigan’s connection is loose, noting he does do “extra credit” work from time to time.
Also, a pension conference brochure refers to Flanigan as a “senior adviser” to Ryan Labs although Moorlach said the brochure reference was a “misprint.”
However, despite the denials of a connection between Flanigan and Ryan Labs, the Orange County Register has confirmed that on August 14, Flanigan and McShea met with senior members of the Orange County Employees Retirement System in Moorlach’s office where a thorough debate on the merits of the MVL accounting system was conducted.
Sorry Chicken Little, I’m not buying it. This appointment stinks more than fish-wrap.
Moorlach’s entire GAME is to artificially inflate the “unfunded liability” of the County pension plan and create a crisis that does not exist.Â This is the same buffoon who thinks that a defined contribution pension plan (401K) is the way to go.
With a 401(k) plan, employees invest assets as individuals. As they near retirement, employees need to construct individual â€œglide pathsâ€ to reduce risk in their 401(k) accounts and to provide some measure of predictable income in retirement.
With pensions, like OCERS, the retirement system invests assets as one large pool and with a longer time horizon than individual employees. They can thus more easily ride out market downturns. In addition, pension plan assets are guaranteed by the sponsoring company and, in a second layer of security, by an agency of the federal government for most benefits.
In addition to the increased cost that individuals pay in management fees, the participants in a 401k type plan risk their entire retirement savings on their individual abilities as investment managers. So how’s that risk working for people today? Not to well I think.
Moorlach has only one goal here and that is to bankrupt the employee retirement system. His scheme is to appoint people, like Flanigan, who share his goal. In this case, he wants to put a former Chief Investment Officer who resigned under fire on the retirement board.
The truth is there for those who wish to see it. The Emperor has no clothes.