Over the weekend Supervisor John Moorlach fired off a preemptive Op-Ed in the Orange County Register attacking public employees and blaming their pension benefits for budget shortfalls and what the headline to his commentary describes as a “Formula for disaster.”
“How do you downsize? How do you tell your employees that revenues are not enough to cover expenses? These sound like rhetorical questions, but some four years into this Great Recession many of us are still dealing with these two questions.”
“The Orange County Board of Supervisors on Tuesday will review its annual Strategic Financial Plan. Our county has been doing 10-year fiscal projections since our embarrassing bankruptcy protection filing in 1994. It is an excellent management tool. However, this year it tells us that the County of Orange is going to hit a wall. Why? Because our defined benefit pension plan is demanding ever higher annual contributions.”
Moorlach goes on with this misleading argument against defined benefit retirement plans. “In the private sector, unsustainable traditional defined-benefit pension plans (employer guarantees benefits) have been frozen and converted to defined-contribution pension plans (the employee contributes and reaps the compounding benefits). Municipalities in California may not have this management tool at their disposal and cannot impose changes to existing pension plans.”
What Moorlach leaves out is that the change from defined benefit to defined contribution plans in the private sector is due to the fact that most of the industries that offered defined benefit plans, such as manufacturing, have been moved out of the country, where the profits are greater, and responsibilities to their workforce less. The drop in prevelance of defined benefit plans is not due to their sustainability, it is due to corporate greed. Pensions that have failed have done so primarily because the corporations managed to raid their plans of their value.
Moorlach continues to fail to mention, in all of his arguments, that the increases in county benefit formula for general county workers is being paid for 100% by those workers. There is no ballooning liability for the vast majority of plan participants. But Moorlach won’t tell you that. While there is a definite problem with the funding of the public safety benefit, these problems have started to be addressed with recent contracts with the deputy sheriffs, and more movement in that area needs to be made so that all county employees are paying into their pensions equitably. But the argument that there is a looming pension debt which is coming due in the form of a multi-billion dollar balloon payment is a fairy tale.
The Strategic Financial Plan Moorlach mentioned in his editorial seems to have his finger prints all over it. In a nut shell, the plan coughs up the recycled hair-ball that Moorlach has been cramming down our throats for years; that defined benefit pension plans are bad and thatÂ our future budget situation isÂ bad because of public employee pensions. The plan tosses into the mix the flawed notion that Orange CountyÂ public employees are over paid, and should endure even more reductions in salaries and benefits so that these wizards of financial failure can dole out performance bonuses to contractors that historically fail to meet expectations.
Nick Berardino General manager of the Orange County Employees Association (OCEA), which representsÂ more than 14,000 County of Orange public employees,Â is having nothing of this crap. Berardino sent an email to union membersWednesdayÂ alerting them to the short-sighted and hostile attitude thatÂ some members of the Board of Supervisors, and County CEO Tom Mauk,Â have towards public employees demonstrated in their 5 year Strategic Financial Plan.Â
“The plan” Berardino writes,Â “includes salary reductions, limiting step increases, a hiring freeze, limiting annual leave payouts, and proposed changes to your pension benefits. The County acknowledges that many of these proposals would require labor negotiations and legislative changes, and that could incite legal challenges.”
The following slides show the salary and benefit cost reduction measures that County Supervisors adopted yesterday as part of their five-year strategic plan.
At Tuesday’s Board of Supervisor’s meeting Berardino complainedÂ about being blind-sided by the proposals incorporated into the plan. “No one talked with us,” Berardino said. “some of these things are outright illegal. Why are we wasting our time talking about things that aren’t legal, that can’t happen without legislation or initiative.”
Berardino pointed out that the plan imposes cuts that will hit the lesser compensated general county workers, who have already born the bulk of cuts and made the greatest contribution to finding cost savings that have reduced projected shortfalls for the past several years. Among those concessions were the changes to the retiree medical plan, changes in the defined benefit pension plan that provided for a hybrid defined benefit – defined compensation plan which is a model for pension reform in California and nationally. “These proposals are distracting and not practical,” Berardino told the Board.
In talking to my coworkers the last couple of days I have heard a common concern expressed over and over; “Why are they going after us? We’ve given up raises, paid more for our pensions, endured layoffs, and furloughs, while contractors get bonuses for doing what they are contracted to do.” The fact of the matter is that we are making less now than we were two years ago because of inflation, no raises in the current contract, and increases in our pension contribution rates.Â One comment in response to Moorlach’s editorial was particularly enlightening; “Merry effing Christmas to you too Mr. Grinch.”
It seems inevitable that board members like John Moorlach and Shawn Nelson are gunning for county workers. It is likely that their rhetoric will become more and more hostile as they try to take away benefits and reduce already below market salaries from public employees in their quest for their “Precious,”the complete and total privatization of government services. What is also likely, at least based upon what I am hearing from county workers, is that they are in for one hell of a fight.
Berardino has made it clear to the Board that OCEA is ready to work together with them to find reasonable solutions that recognize the importance and value of our county workforce. Together we can find common ground and solutions that provide dignity and financial stability and security for both workers and the taxpayers. Much of the county workforce are also Orange County taxpayers. We have a shared interest in intelligent solutions that meet every-one’s needs.Â Having conversations that generate, fear, anger, mistrust, and confusion does not help resolve the significant challenges we are facing.