MOORLACH UPDATE — Lanterman-Petris-Short Act — August 17, 2019

It seems like a rare day when a righteous lawsuit prevails. But, it does happen. And more frequently of late in Sacramento. Unfortunately, the taxpayers are left with the legal costs for the inappropriate stances taken by our Governors and their supermajority legislators.

Last year I spoke and voted against AB 1829 in the Senate Budget & Fiscal Review Committee (see MOORLACH UPDATE — Dubious Budget Trailer Bill — September 17, 2018). Redirecting lawsuit proceeds from impacted constituents to Sacramento was unethical and a legislative attempt to legitimize the action was a sad sight to behold. No wonder this bill ended up being held back at the end of last year’s Session.

What do you do when the good guys win? You celebrate with them. The Asian Journal shares the details in the first piece below.

Having been involved with homelessness issues for most of my career, the learning process in this area never stops. This year my staff has taken a deep dive into the Lanterman-Petris-Short Act (see We have concluded that there is room for improvement and maybe even an entire new review of this half-century-old landmark legislative effort.

To share a little about the analysis we have been pursuing, I submitted a piece to Inside Sacramento to stimulate dialogue on the inability to provide better involuntary assistance for mentally ill homeless individuals. Doing so would get them on the proper course and help them mainstream into society. It is the second piece below.

25th Anniversary Look Back

On August 17th, 1994, I wrote Mr. Robert L. “Bob” Citron a letter. Some issues I just can’t seem to leave alone. I also stayed true to my overriding concern about marking to market (see MOORLACH UPDATE — Marking to Market — July 12, 2019). You can also see where my infatuation with Comprehensive Annual Financial Statements started.

Dear Mr. Citron:

Enclosed please find a check for $100 that I would like you to keep on deposit. It is my request that you please provide me with a copy of the Orange County Investment Pool’s Money Max report for each month, beginning with the month ended June 30, 1994, on a monthly basis.

For each month ended June 30, I would like a copy of the mark-to-market report that you have submitted to the outside auditors for their Comprehensive Annual Financial Report fair market value disclosure requirements.

Please notify me of the costs for photocopying, mailing and postage and apply it against this deposit. I will replenish my deposit in the future when the monthly mailings causes the balance to approach zero.

As in the past, I am fully aware of the California Freedom of Information Act’s ten-day period.

Very truly yours,

John M. W. Moorlach


National Asian group celebrates housing settlement victory at California capitol 



National advocacy organizations that sought the return of $331 million to a fund for struggling homeowners attended a victory rally in Sacramento on Wednesday, August 14.

The National Asian American Coalition and the National Diversity Coalition, which led the lawsuit against then-California Governor Jerry Brown and legislative Democrats who diverted the funds for debt repayment, recently won suits to have the money returned to its original intent.

Several members of the Republican State Caucus from the Assembly and the Senate attended the press conference and gave brief remarks, including Assembly Republican Leader Marie Waldron, Assemblymember Tom Lackey, Assemblymember Jim Patterson, AssemblymemberJay Obernolte, and Assemblymember Devon Mathis; and Senate Republican Leader Shannon Grove, Senator John Moorlach, Senator Patricia Bates and Senator Ling Ling Chang.

The California Supreme Court upheld two lower court rulings which directed the State of California to return the funds to their original intent. In July, legislative Republicans delivered a letter to the current governor requesting him to outline a plan to repay the funds.

Current state Governor Gavin Newsom earlier this month announced that he would return the funds to the rightful fund.

As previously reported by the Asian Journal, the State of California received $410 million in a 2012 settlement with the five largest mortgage services in the country: Ally, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo. After the national mortgage crisis, these companies were charged with multiple federal violations and agreed to pay more than $20 billion to affected homeowners.

The companies also made a separate payment of $2.5 billion to states to be used for a mortgage fund as a resource for homeowners and renters, with California receiving $410 million. However, $331 million of what the state received was illegally diverted to pay off state debts.

Led by executive director NAAC/NDC president and CEO Faith Bautista, Robert Gnaizda, NDC General Counsel Steven Sugarman, pastors from different churches, and members of the NAAC/NDC, the organizers called on Newsom to consult with HUD-approved agencies and homeowners regarding the disbursement and distribution of the funds, and to follow through on his promise to assist distressed homeowners in the state.

Officials from the NAAC and NDC were also scheduled to hold meetings with state officials as well as Democrats and Republicans from both the Assembly and the Senate to present their proposals to strategically and effectively use the funds to help distressed homeowners in California.

Bautista said, “I am deeply grateful for the leadership of the Senate Republican Caucus and their advocacy for the past several years. Senate Republicans continue to press both former Governor Brown and Governor Newsom to do the right thing and repay the funds. This is a victory for all Californians.”

“The $331 million was only intended to help homeowners abused by lenders during the mortgage and foreclosure crisis, not to pay down the state debt. Senate Republicans are committed to ensuring the original terms of the mortgage settlement are met and the State of California is in compliance with the court ruling,” said Senate Republican Leader Shannon Grove.


‘Not Humane’



By John M.W. Moorlach


The homelessness problem keeps getting worse.

A survey released June 26 found Sacramento County’s homeless count jumped 19 percent the past two years, to an estimated 5,570. A study released three weeks earlier found Los Angeles County’s homeless population rose 12 percent in the past year, to almost 59,000—despite massive new spending to combat the crisis.

California is home to almost 25 percent of the nation’s homeless population, yet makes up only 12 percent of the total population.

Obviously, California’s homeless need more housing. That’s why in 2018 I co-authored Senate Bill 1206, the No Place Like Home Act, with then-Sen. Kevin de Leon (D-Los Angeles).

The bill resulted in Proposition 2, last November’s successful ballot measure. It provided $2 billion in funding for housing mentally ill homeless people.

But housing is just a part of the answer. Another major problem is mental illness, which drives many homeless people to live on the street. Why are they allowed to stay there?

The problem stems from civil commitment reforms created in the late 1960s that made it too difficult to care for individuals with serious mental illnesses if they refused treatment. As a result, many institutions that involuntarily housed mentally ill people were closed.

Reforms began with the 1967 Lanterman-Petris-Short Act, written as a reaction to abuses occurring at the time. The LPS Act changed our civil commitment process in California. The result? Mentally ill individuals migrated to the streets, then often to county jails. Then and now, the outcome is not humane.

In April, Dr. Drew Pinsky, a noted psychiatrist with many years of clinical practice, explained the situation to me on his radio show.

“Psychiatric symptoms are given privileged positions in the law,” he said. “Not just the pathology, but the actual symptoms themselves are being privileged over the well-being of the individual displaying those symptoms, the safety of that individual, our ability to render care to them and the safety and sanitation of the surrounding community.”

Basically, our society has decided that someone shouting aimlessly on the street and eating out of garbage cans is not cause to treat him or her involuntarily for mental health issues.

I was on Pinsky’s show to advance SB 640, which I authored at the doctor’s suggestion. SB 640 sought to clarify the definition of “gravely disabled” and tie in an individual’s capacity to make informed decisions about his or her personal well-being.

The bill was shelved this year, but these definitional changes would have expanded treatment opportunities for our most vulnerable, put them into conservatorships and housing involuntarily, and helped diminish the inhumane neglect they currently suffer.

My office is putting together research for when the Senate reconsiders SB 640 next year. In January, an audit of the 1967 LPS Act should be finished. Let’s hope the State Auditor provides recommendations to help the Legislature reassess what the state must do.

Cost is another concern. As an accountant, I take money seriously. Currently, under Section 5150 of the state Welfare and Institutions Code, a person can be held involuntarily for up to 72 hours “for assessment, evaluation, and crisis intervention, or placement for evaluation and treatment in a facility designated by the county.”

If that period of holding is extended, hospitals are concerned their costs will rise.

So it’s imperative to locate funding sources. Private charities are crucial. In Orange County, where I was a county supervisor from 2006 to 2014, Mind OC and Be Well OC help find beds for those who need special assistance. And the county is one of the few that has a county-operated health system and is using CalOptima dollars to provide solutions.

Another source could be the Mental Health Services Act, passed by voters in 2004 as Proposition 63, which imposed a 1-percent tax on incomes of $1 million or greater.

While an Orange County supervisor in 2013, I worked with then-State Sen. Darrell Steinberg to pass SB 585. It allowed money from the Mental Health Services Act to fund Laura’s Law, a 2002 state law that created “an assisted outpatient treatment program for any person who is suffering from a mental disorder and meets certain criteria.”

Resources are available, but the problem always returns to the purported civil rights issue—that mentally ill homeless people have a right to refuse all treatment.

As Pinsky said, this is “privileging pathology over wellness.” From his clinical experience, he explained, when people finally get treated for their mental condition, “They’re furious when that happens. They go, ‘People left me in that condition? And look how good I am now? Who did that?’”

We don’t let our seniors with dementia fend for themselves. Why would we do the same with our severely mentally ill?

Homelessness clearly needs a two-pronged solution: first, more involuntary housing; second, reform of the 1967 LPS Act.

I’ll be working to improve the language in SB 640. The public has to understand that stranding people with serious mental illnesses on our streets is crueler than housing and treating them against their will.

As homelessness keeps getting worse, the need for this solution will become more obvious.

Sen. John M.W. Moorlach (R-Costa Mesa) represents the 37th District in the California State Senate. His Sacramento office phone number is (916) 651-4037 and his website is


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MOORLACH UPDATE — Sacramental Seal of Confession — August 16, 2019

Senate Bill 360, a bill that would have required priests and other religious leaders to break the sacramental seal of confession, was withdrawn last month at the request of the author. It was a reaction to ongoing and disturbing current events (see MOORLACH UPDATE — Leap Day Activities — February 29, 2016).

I addressed my position and votes on SB 360 two months ago (see MOORLACH UPDATE — Review of Recent Votes — June 27, 2019) and also covered this bill as it went through the Senate Committee and Floor process (see MOORLACH UPDATE — Committee Season Has Started — April 3, 2019 and MOORLACH UPDATE — Sacred Votes — May 26, 2019).

Had this bill continued and been approved, as amended, by a majority of the members in the State Assembly, it would have come back to the Senate for concurrence and I would have voted against it. But, holding back my opposition was meant to send a signal. Simply, Roman Catholic Church, you brought this on yourself, and I urge continued reform and accountability.

Emil Monda has crafted an excellent column on this bill for the Laguna Beach Independent, and it is the piece below.

25th Anniversary Look Back

The Business section of the OC Register had two interesting clips in their “Finance Notes” column for June 30, 1994.

The first segment showed how the band played on. The recession at the time had hammered real estate values and reduced property tax revenues. Consequently, the additional revenues from a turbo-charged investment pool, which should have been invested in cash equivalents and not in derivatives (let alone borrowing), were helping the County of Orange balance its budget. At the time, it probably and sadly made sense that the then-Board of Supervisors and its Chief Administrative Officer did nothing.

The second segment indicated there was plenty to worry about. The investment pool being down 22.5 percent in value should have set off alarm bells.

For my last Look Back, see MOORLACH UPDATE — AB 392 and Use of Deadly Force — July 30, 2019.

O.C. gets Standard & Poor’s highest grade for its notes

Standard & Poor’s likes Orange County. The New York credit-rating company has given its highest investment grade to $600 million in short-term notes issued by the county.

“The county has maintained a sound financial position, despite losing property taxes due to the state’s shift of monies to schools,” S&P said in its report. It noted that the county will lose $148 million in property taxes to schools in fiscal 1994. The net loss is softened, however, by $137 million in sales taxes as a result of the passage last November of Proposition 172, the half-cent-on-the-dollar sales tax for public safety.

The county is selling adjustable-rate notes linked to the London Interbank Offering Rate, or Libor index. The county’s goal is to earn interest on the notes in excess of its borrowing costs and transfer the earnings to its general fund.

Others can lose it, too: Speaking of county investments, Treasurer Bob Citron took some heat a few months back after taking a large paper loss on county money invested in high-risk derivatives. He was not the only treasurer to get hit.

Florida’s investment portfolio dropped $175 million in value this year, also because of investments in derivatives. The difference: Florida had entrusted $3 billion of its money to professional Wall Street managers in the hopes of doing better than it could on its own.

One money manager hired by the state put half the $400 million he was handling into risky, mortgage-related derivative investments. Through May 31, his portfolio–which had been touted as a low-risk, high-yield investment plan–was down about $90 million.


Common Sense

People of Faith Under Attack


By Emil Monda

This week, I’m writing about the recent attempt by the California State Senate championed by Sen. Gerald (Jerry) Hill (D-San Mateo) to force a priest, minister, rabbi or imam to report crimes against children, especially sex crimes, when shared with these members of the “clergy” in what is known as the priest penitent privilege. This column is limited in space, so a discussion of the privilege isn’t possible. Suffice it to say that the privilege is not recognized in English common law but is a part of the law in all 50 states. Is this just a Catholic thing? No, it’s not.

On July 9, there was a victory when SB 360 was pulled at the last minute because the bill’s author, Sen. Hill, decided to shelve his bill after learning that it did not have enough votes to pass out of committee.

This happened because there was a massive outpouring against the bill, not only by Catholics, but by members of all faiths all across the country.

“On July 8, a statement signed by Muslim, Orthodox, Lutheran, Anglican and Baptist faith leaders as well as representatives from Eastern Catholic rites historic and black churches was delivered to committee members declaring that we are all one with American Roman Catholics in condemning the attack on religious freedom that the current version of California Senate Bill 360 represents.”

Here is the deeper question. What was it that made Sen. Hill and those who voted for this bill believe that it was okay to attack a major religion, and in fact, most religions? No doubt, like many things politicians propose, his intention was to protect children. Intentions are not a substitute for reasoned analysis. The old saw about the road to hell is operative here.

There is no evidence that this change in the privilege would have protected one child. For Catholics, confession may take place face-to-face, but more likely is behind the screen so the priest can never be sure who was confessing and thus the penitent can unburden his soul and seek forgiveness. The Catholic priest hearing a confession is required to maintain secrecy. Should he break that vow, he would be excommunicated and of course no longer be a priest. In the past, Catholic priests have gone to jail rather than break this sacred trust.

I am a Catholic and I am acutely aware of the failings of my church when it comes to crimes involving priests and children. There is no evidence that priests, more precisely child molesters, had confessed this heinous crime to a fellow priest, nor is there any known instance where anyone had made a confession to a priest about molesting a child. (I know it’s secret.)

No, what happened was the bureaucracy of the church lost sight of who the victim was and tried to protect the church by failing to notify authorities when information came to their attention so that a proper police investigation could commence. When bureaucracies protect themselves in the hope of sparing the institution embarrassment, they eventually make things much worse both for the victims and the institution.

If you were to ask Assemblywoman Cottie Petri-Norris (D-Laguna Beach) how she would vote on this measure after hearing from dozens of her constituents, what would she say? I asked, and here’s her answer from her chief of staff: “SB 360 is being held in Assembly Public Safety Committee, and it’s not moving forward this year. Right now it’s a theoretical version of a bill, and could still be amended, so the Assemblywoman will consider it if it comes up for a vote on [a] committee she sits on, or if it comes to the Assembly Floor.”

So, we really don’t know what her position is.

What we do know is that 27 Democrat members of the California Senate voted for it, joined by three Republicans. Only one Democrat voted against it. Republican Sen. John Moorlach, representing the 37th Senate District which includes Laguna Beach, abstained, saying he wanted to send the Catholic Church a message. I hope they received it.

Emil Monda has lived in Laguna Beach for 25 years with his wife, Michèle, and three sons. He is president of the Laguna Beach Republicans and a member of the Laguna Art Museum Board of Trustees.


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MOORLACH UPDATE — CIRM, Completing and Curriculum — August 15, 2019

The California Healthline announced that one of the most brazen California ballot propositions of all time is coming back for more taxpayer money. A lot more. And voters tend to approve bond measures, especially those that tug on emotional heart strings. It’s the first piece below.

As a reminder, I proposed Senate Constitutional Amendment 7 in 2017 to repeal Proposition 71 for all the same reasons that I will oppose any future measure for state subsidized stem cell research. This research is best left to the private sector.

The billions of dollars Californians have poured into CIRM have failed on every promise they made and 15 years later, I see no path where the state offers anything novel or innovative for another $11 billion of spending. And, I don’t know where the funding will come from to pay the bond’s principal and interest payments.

For a recent review of the California Institute for Regenerative Medicine (CIRM), go to MOORLACH UPDATE — SB 1004 and CIRM — September 10, 2018.

Now it’s time for the lightening round up here in Sacramento. These next four weeks will be very busy, as we head for the conclusion of Session with a September 13th deadline.

It is a rare event when an article appears in the OC Register on the status of Orange County’s Sacramento delegation and its legislative efforts. But, it recently did in the second piece below.

Some tips. I rarely do resolutions. They are more for recognizing dates and causes. So mine are few and special. Assemblymembers can submit up to 50 bills per two-year session and Senators can submit up to 40. For an update on my remaining six bills, see MOORLACH UPDATE — Bills to Watch After the Summer Break — July 20, 2019. SB 359 and SB 598 were voted out of the Assembly Appropriations Committee this week and SB 496 passed on the Assembly Floor this morning and will come back to the Senate Floor for concurrence.

In the third piece, the California Globe introduces you to recently introduced educational directives. The Instructional Quality Commission, an advisory committee to the state Board of Education, is receiving the angry reactions it deserves for its proposed new ethnic studies curriculum.

Our state education bureaucracy has been failing our K-12 students in recent and dramatically hypersexualized curriculum changes for comprehensive sexual education. If you have a student in school and have been paying attention, you know what I’m saying.

The Superintendent of Public Instruction even held a press conference Wednesday afternoon to share comments about concerns raised by the Legislative Jewish Caucus.

The piece is rather graphic about what’s in the proposed curriculum. It also provides information from my 2018 report on California’s educational institutions.

I do want to provide one modification to the Globe article. The large increase in the Unrestricted Net Position for 2019 happened with the CSU system ($17 billion), in its June 30, 2018 annual report, not the UC system. UC already included its $19 billion Other Post Employment Benefits in its June 30, 2017 annual audited financial statements (see MOORLACH UPDATE — CSU versus DMV — August 13, 2019).

The piece shows I do more than legislation. I’m trying to wake up Sacramento to the fiscal precariousness almost every city, county, school district and this state is facing. We need more fiscal prudence and oversight in Sacramento. That’s what I’m trying to provide you. Stay tuned.

Short on cures and cash –

California’s stem cell agency to

ask voters for billions more


Californians voted in 2004 to shell out billions of dollars in taxpayer money to fund cutting-edge stem cell treatments.

Proposition 71 could lead to cures for cancer, Alzheimer’s and other devastating diseases, voters were told. Actor Michael J. Fox, who has Parkinson’s disease, said in one campaign ad that the measure “could save the life of someone you love.”

But 15 years later, there are no readily available cures. And the state’s stem cell agency, which administered the bond money, is about to run out of funding.

The California Institute for Regenerative Medicine (CIRM) announced in July that it had stopped taking applications for new research projects, and it will award its final grants for new projects by September, an agency spokesperson later said.

But supporters already plan to go back to voters in November 2020 to ask for even more money than last time: $5.5 billion, plus interest. The previous $3 billion bond measure cost taxpayers about $6 billion, with interest.

“It’s a lot of money, even for the state of California,” said Marcy Darnovsky, executive director of the Berkeley-based Center for Genetics and Society.

Her group supports stem cell research but opposed Proposition 71 partly because of its “extremely exaggerated promises for stem cell cures,” she

If you measure the agency’s success against the campaign promises, “then CIRM has been a flop,” Darnovsky said.

But the agency, and the academics who have received the funding, are pushing back, saying scientific research takes time. Even though the Food and Drug Administration has not yet approved any treatments funded by CIRM, some are under review, researchers say.

CIRM has funded 56 clinical trials of treatments for ailments ranging from cancer, sickle cell disease, HIV and vision loss, said agency spokesman Kevin McCormack.

For instance, scientists say the results from a clinical trial that focused on spinal cord injuries — and was partially funded with a $14.3 million grant from the agency — are promising. One participant, Danville resident Jake Javier, 21, was paralyzed from the chest down in 2016 after a diving accident on his last day of high school. After taking part in the trial, he can now push his own wheelchair because of the motion he regained in his arms and hands. He credits both “natural recovery” and the experimental treatment for his improvement.

“If we’re not here, who funds that?” McCormack said. “The concern is that a lot of promising research might just disappear, because without the money you can’t do the work.”

Stem cells hold great potential for medicine because of their ability to develop into different types of cells in the body, and to repair and renew damaged tissue.

While there are hundreds of clinics across the country that offer unproven and potentially dangerous stem cell treatments, a significant amount of legitimate research is underway — along with some breakthroughs.

When Californians approved Proposition 71 with 59.1 percent of the vote, stem cell research was still in its early stages. Three years earlier, President George W. Bush restricted the use of federal funding for embryonic stem cell research, citing his opposition to the destruction of human embryos. President Barack Obama lifted the Bush-era restrictions in 2009.

In the absence of federal funds, Proposition 71 allowed scientists in California to conduct stem cell research using human embryos — in addition to other types of stem cell research. Conservative groups opposed the measure, delaying the early grants by filing lawsuits.

State Sen. John Moorlach, R-Costa Mesa, opposed the 2004 measure because he said it made unrealistic promises to voters.

“I’m not anti-stem cell, I’m just anti-oversell,” he said.

Proponents of the measure also said the research would result in revenue for California. The state only recently received its first royalty checks related to brain cancer research funded by the agency, totaling about $286,000.

“All it’s produced in revenue for the state just came in the last year or so, and it was spit,” he said.

Moorlach said he’s against a new bond measure.

But Dr. J. Patrick Whelan, an assistant professor of Pediatrics at UCLA’s Geffen School of Medicine, said he thinks there is value in going back to voters and “checking their temperature.”

While some private funding and philanthropy does support stem cell research, this type of work is expensive and requires more than a few wealthy donors, Whelan said.

If funding is not replenished, researchers like Jan Nolta, director of the University of California-Davis Stem Cell Program, fear that many promising projects would fall into “the valley of death.”

“That’s just sad to think about, especially for the patients,” she said.

Alysia Vaccaro’s 6-year-old daughter, Evangelina, was a patient in one of the agency-funded clinical trials. Evie, as she is called, was diagnosed with severe combined immunodeficiency, or “bubble baby” disease, weeks after she was born in 2012. Children with this condition have no immune system and are highly vulnerable to infectious diseases.

As an infant, Evie participated in a UCLA trial in which stem cells were taken from her bone marrow, modified to correct the defect, and then re-transplanted.

She is now considered cured and is about to start the first grade in Corona. She has flown on a plane and has received some childhood vaccines with no side effects — things that would have been ill-advised before this treatment.

“She’s now a fully vaccinated 6-year old with a functioning immune system,” Vaccaro said. Participating in the clinical trial was “like winning the lottery.”

Real estate developer Robert Klein, who was principal author and donor of Proposition 71, is drafting the 2020 proposal. He said the new funding would continue the agency’s work and could help expand the Alpha Stem Cell Clinics Network, which was funded by the previous bond measure, into regions such as the Inland Empire and Central California. The network is made up of five clinics statewide that host FDA-approved clinical trials.

“We want to bring these clinical trials closer to patients — make them more accessible,” he said.

This story was produced by Kaiser Health News (KHN), which publishes California Healthline, an editorially independent service of the California Health Care Foundation. KHN is not affiliated with Kaiser Permanente.

OC state lawmakers churn out legislation

From climate change to roadkill, area representatives busy with measures

By Brooke Staggs

The dozen legislators representing Orange County in Sacramento have had a busy year, introducing 216 bills, 36 resolutions and one amendment that touch on everything from climate change to international adoption to roadkill.

So far, 13 of those bills and 13 resolutions have been signed into law.

As the legislature gets ready to reconvene Monday, Aug. 12, after summer recess, a few dozen more locally sponsored bills are still alive. The Senate and Assembly have until Sept. 13 to make a final decision on all outstanding bills, and Gov. Gavin Newsom has until Oct. 13 to sign or veto anything that comes to his desk.

At an average of 21 bills or resolutions each, the county’s representatives are more productive than the state average of 16 laws per representative. But their success rate is lower than what it could be, given that Orange County reps account for 10 percent of the state legislature but only 7.8 percent of the bills that have been signed into law.

One reason is politics. Orange County is represented by seven Republicans and five Democrats, and since Democrats hold a supermajority, overall, Republican leaders can’t get GOP-favored legislation into law. But Stephanie Hu, spokeswomen for Senator Ling Ling Chang, a Republican, argues that also means any GOP bills that do get through are strong.

“We’re in the superminority,” Hu said. “Bad bills won’t get passed.”

While data is interesting, legislative output is a poor measure of performance in Sacramento, cautions Chris Micheli, a longtime lobbyist who now runs a government relations firm. Some legislators can back several noncontroversial bills that do little for constituents, Micheli said, while others might fight to pass a single bill that has sweeping consequences.

With that in mind here’s a look at what Orange County’s state legislators have been up to this session. (Not sure who your representatives are? Check here:

Assemblyman Phillip Chen, AD-55

Chen, R-Brea, in his second term representing northeast OC, has had more bills signed into law this session than any other local representative.

Three of his 21 bills introduced are pending, and these five were approved:

  • AB 622: Clarifies that subpoenas can be served in residential buildings that have guards in the lobby.
  • AB 716: Lets people filing for fictitious business names verify their identity online.
  • AB 1213: Extends until 2024 a program that lets certified legal document assistants file court documents.
  • AB 1289: Says alarm companies won’t be fined for failing to renew permits unless they’re legally responsible.
  • AB 1429: Lets most businesses file hazardous materials plans once every three years instead of annually.

Assemblywoman Sharon Quirk-Silva, AD-65

Quirk-Silva, D-Fullerton, in her third term representing north central OC, has introduced 24 bills, many focused on the housing crisis.

None of her proposed legislation has been signed into law, though components of two bills were incorporated into the state budget. That includes a bill that would have set aside $450 million for rental assistance and subsidies to help house homeless people, and another that would have required the state to use Fairview Developmental Center in Costa Mesa to house up to 200 homeless people with mental illness through 2025.

Four Quirk-Silva bills related to housing are still alive in the Assembly. Generally, they would lower income thresholds to get a temporary break on property taxes, and boost support for emergency shelters.

“As North Orange County continues to struggle with a growing housing and homelessness crisis, I find it imperative that I draft legislation that would address these evolving concerns,” Quirk-Silva said.

Assemblyman Steven Choi, AD-68

Choi, R-Irvine, in his second term representing central east OC, has introduced 16 bills. None have been signed, though two are still alive.

One is AB 349, which would require the state to consider requiring new garages to have at least two exits. This was written after recent reports of people dying in wildfires because they couldn’t open garage doors due to power outages.

Choi’s second pending bill — and one he considers his signature bill this cycle — would require families who adopt internationally to file for readoption in California. This means a home visit would be required and the state would issue a birth certificate. The goal of AB 677 is to catch potential child traffickers and make sure adopted children can’t be deported.

Assemblyman Tom Daly, AD-69

Daly, D-Anaheim, in his fourth term representing central OC, introduced 18 bills. Three have been signed into law.

  • AB 188: Fixes a loophole that could have caused homeowners to be underpaid by insurance companies if their homes are destroyed in a fire.
  • AB 205: Expands the state’s definition of beer to include drinks fermented with honey, fruit juice and other ingredients.
  • AB 252: Indefinitely extends a rule that says California consents to federal jurisdiction over how responsibilities are divided when it comes to certain transportation projects on state highways.

Daly also passed a resolution that officially designates May 4 as Star Wars Day in California.

Assemblyman Tyler Diep, AD-72

Diep, R-Westminster, in his first term representing north coastal OC, authored 14 bills. None have passed so far. But Diep pointed out he’s also co-authored legislation with colleagues.

“More can be accomplished on behalf of Californians when the main focus is not taking credit but getting the work done,” he said.

Diep is hopeful that his signature legislation will still get passed. AB 956, which was sponsored by Sheriff Don Barnes, would allow public safety agencies to test technology that could would create more precise locations of people calling 911 from cell phones.

Assemblyman Bill Brough, AD-73

Brough, R-Dana Point, in his third term representing south OC, authored 16 bills. None have been approved, but two are active.

One, AB 230, would ensure veteran subcontractors get the correct compensation for their work. The other, AB 551, would update state standards to require drug testing, along with alcohol testing, after most fatal car crashes.

Brough’s signature bill this session was AB 427, which would have exempted military retirement pay from the state income tax for California veterans. But it died in the Assembly Appropriations committee.

Assemblywoman Cottie Petrie-Norris, AD-74

Petrie-Norris, D-Laguna Beach, in her first term representing central coastal OC, introduced 22 bills and recently got her first one signed into law.

AB 608: Exempts people who are leasing space on fairgrounds or other publicly owned lands from paying property taxes if the property is valued at less than $50,000. The bill came about after Petrie-Norris learned it costs counties more to process those cases than they take in, while burdening small businesses.

Petrie-Norris still has 14 bills pending. That includes her signature bill, AB 65, which would prioritize funding for projects that use green or natural infrastructure (such as managed wetlands) to protect coastal communities from impacts of climate change.

State Senator Ling Ling Chang, SD-29

Chang, R-Diamond Bar, in her first term representing northeast OC, has authored 13 bills this cycle. Two have been signed into law:

  • SB 366: Requires the California State University and requests the University of California to give students strategies to prevent cyberbullying during orientation.
  • SB 180: Requires sellers of gene therapy kits, commonly known as “DIY CRISPR kits,” to include warnings that they’re not intended for self-administration.

Chang is also optimistic that she’ll pass her signature bill, SB 35, which would create a statewide task force to gather data and combat human trafficking in California.

State Senator Bob Archuleta, SD-32

Archuleta, D-Pico Rivera, in his first term representing north central OC and LA County, has authored 14 bills this session. None have been approved.

Several of Archuleta’s bills appear to be active, including one that would help active duty military get supplemental Medi-Cal coverage for children with special needs.

One of the most interesting has been dubbed the “roadkill bill,” since it would let people collect and consume certain wildlife killed by cars.

Archuleta did pass a resolution this session naming May as National Military Appreciation Month.

State Senator Thomas Umberg, SD-34

Umberg, D-Santa Ana, in his first term representing north coastal OC, has introduced 22 bills this session. Two have been signed into law.

  • SB 505: Makes minor changes to the filing requirements for presidential candidates seeking to compete in California’s primary election. (This isn’t the one that makes them release their tax returns, but it would call for politicians to have a website and submit other documentation to show they’re a “recognized candidate.”)
  • SB 544: Prohibits staff of the State Bar or members of the examining committee from considering, with few exceptions, a person’s mental health records when reviewing whether an applicant is “of good moral character.”

Umberg is still hoping to pass his signature bill of this cycle, SB 450, which tackles the housing and homelessness problem by easing the conversion of run down motels to supportive or transitional housing.

State Senator Pat Bates, SD-36

Bates, R-Laguna Niguel, in her second term representing south OC, authored 15 bills this session. None have yet been approved.

Key bills still pending include SB 589, which aims to stop deceptive marketing in sober living homes. Bates also hopes to pass SB 465, which provides continued funding for local governments to deal with emergency planning around the San Onofre Nuclear Generating Station. And she’s pushing for SB 541, which mandates lockdown drills in schools at least once a year.

State Senator John Moorlach, SD-37

Moorlach, R-Costa Mesa, in his first full term representing central OC, introduced 19 bills this session. None have been approved.

He still has six active bills. They deal with simplifying the process for residents to overturn city ordinances, modernizing the way local governments report finances, streamlining elections for homeowners associations, letting judges leave the bench early if they defer their pensions, giving authorities more tools to deal with suspected financial abuse of elders, and tracking greenhouse gas emissions from wildfires.

California Education Department Produces Unintelligible Ethnic Studies Gibberish

‘Education leaders’ pushing a 2020 tax increase initiative on the wealthiest Californians for more schools money

By Katy Grimes

More money, no reforms, no school choice expansion equals continued poor achievement by students. ~Lance Izumi

While the California Department of Education has released an unintelligible draft of ethnic studies gibberish, California “education leaders” are pushing a bill for a 2020 initiative that would tax the wealthiest Californians and corporations to raise an additional $11 billion annually for schools. Yet, the 60 percent increase in Kindergarten through 12th grade spending in California’s schools since 2011 hasn’t made a difference in student performance, California Globe recently reported.

The left claims this proposed tax is “building off recent polls showing strong voter support to boost K-12 spending.”

“Sure, they want to raise all that money, but for what?” Lance Izumi said. “To pay for their unfunded pensions? For retiree health benefits? Sixty percent of Los Angeles Unified School District’s budget goes to pensions, benefits and special education.”

“It will be more money down a rat hole with little benefit for kids,” Izumi added. He’s the senior director of the Center for Education at the Pacific Research Institute and author of the new book Choosing Diversity: How Charter Schools Promote Diverse Learning Models and Meet the Diverse Needs of Parents and Children, “Is the CSBA talking about enacting reforms based on the Vergara case (tenure, seniority, dismissal)? Of course not. Are they willing to give kids more school choice? Of course not. More money, no reforms, no school choice expansion equals continued poor achievement by students. And that’s why the teacher unions want to eliminate testing—because test scores almost always show that when they get more money it almost never ends up improving student performance.”

Izumi is right.

Here’s a sample of the draft 2020 Ethnic Studies Model Curriculum, which would replace a semester of geography:

· Chapter 1: Introduction and Overview

Defining Ethnic Studies

At its core, the field of Ethnic Studies is the interdisciplinary study of race, ethnicity, and indigeneity with an emphasis on experiences of people of color in the United States. Further, it is the xdisciplinary, loving, and critical praxis of holistic humanity – as educational and racial justice. It is from communities of color and our intergenerational worldviews, memories, experiences, identities, narratives, and voices. It is the study of intersectional and ancestral roots, coloniality, hegemony, and a dignified world where many worlds fit, for present and future generations.

The field critically grapples with the various power structures and forms of oppression, including, but not limited to, white supremacy, race and racism, sexism, classism, homophobia, islamophobia, transphobia, and xenophobia, that continue to impact the social, emotional, cultural, economic, and political experiences of Native People/s and people of color.

Ethnic Studies is xdisciplinary, in that it variously takes the forms of being interdisciplinary, multidisciplinary, transdisciplinary, undisciplinary, and intradisciplinary. As such, it can grow its original language to serve these needs with purposeful respellings of terms, including history as herstory and women as womxn, connecting with a gender and sexuality lens, along with a socioeconomic class lens at three of its intersections. Terms utilized throughout this document, which may be unfamiliar to new practitioners of the field, are defined in the glossary.

Dan Walters reports the Legislature’s Jewish caucus, all Democrats, took umbrage with the draft’s section on “Islamophobia,” saying, “we cannot support a curriculum that erases the American Jewish experience, fails to discuss anti-semitism, reinforces negative stereotypes about Jews, singles out Israel for criticism and would institutionalize the teaching of anti-semitic stereotypes in our public schools.”

It wasn’t that long ago California “educators” tried to teach “Ebonics” as a legitimate course of study and language. It took only a year to scrap that silly non-education plan.

Even the Los Angeles Times editorial board questioned the sanity of the California educators: “But ethnic studies courses have little chance of succeeding if they don’t stem from a strong curriculum that challenges students to read, listen, gather facts, analyze those facts and think critically about the controversial issues that will naturally arise.”

“It’s hard to wade through all the references to hxrstory and womxn and misogynoir and cisheteropatriarchy.”

California’s Department of Education appears to be focused on anything and everything but education.

Today’s lesson plans are written by Social Justice Warriors and LGBT activists, and enshrined in the California education code, California Globe recently reported. But what is being foisted on children as young as age five, cannot even be uttered on the public airways, because radio stations would receive a violation letter from the Federal Communications Commission:

· Comprehensive sexual health and HIV prevention education in grades kindergarten through grade six;

· gender expression and identity;

· Kindergarten books that introduce 5-year-olds to families with members who identify as lesbian, gay, bisexual, and transgender;

· Lessons which teach third graders that sexual reproductive organs don’t always match a person’s gender;

· Sexual health lessons that must include examples of same-sex sexual activity. Students should not be separated by sex during these lessons to avoid “misgendering” students.

· Gender is not strictly defined by physical anatomy or sex assigned at birth. Rather, students understand that gender refers to attitudes, feelings, characteristics, and behaviors that a given culture associates with being male or female, sometimes labeled “masculine” and “feminine.” Moreover, a person’s gender identity refers to their sense of self, while gender expression refers to their outward gender presentation including physical appearance and behaviors. Understanding individual differences will help students feel accepted and be more accepting.”

Sacramento City Unified School District is teetering on insolvency. Los Angeles Unified School District’s debt could bring the state down with it.

Sen. John Moorlach and his office did a study of the financial health of the state’s 944 school districts. His October 2018 report found:

· About two-thirds of California’s 944 public school districts run negative balance sheets. These statements show the most distressed districts could soon reach a tipping point into insolvency and receivership.

· Of the state’s large school districts, those in severe distress include Los Angeles Unified School District, with a negative $10.9 billion balance sheet; San Diego Unified at negative $1.5 billion; Fresno Unified at negative $849 million; and Santa Ana Unified at negative $485 million, the worst in Orange County.

· Of the state’s 72 community college districts, only one enjoys a positive unrestricted net position (UNP).

· Cal State University’s balance sheet is negative $3.66 billion.

· The University of California’s balance sheet bleeds red ink all over the state, at negative $19.3 billion. Worse, that will double next year, to $38.6 billion, when retiree medical is included.

Additionally, Moorlach has warned about the financial straights the entire state is in. His March 2018 report on the state’s 482 cities found 2/3 of them in the red; of 58 counties, 55 suffered deficits and only three enjoyed positive balance sheets. His May 2018 report on the 50 U.S. states found only nine were financially healthy, with California ranked among the worst, in 42nd place.

Moorlach has been warning of a coming “tipping point into insolvency and receivership,” suggesting that the state is not addressing its most immediate needs, and instead fiddling in frivolous and even preposterous distractions.

Test scores almost always show that when they get more money it almost never ends up improving student performance.


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MOORLACH UPDATE — CSU versus DMV — August 13, 2019

The Joint Legislative Audit Committee, of which I am a member, along with the Assembly Higher Education Committee, the Senate Education Committee, and the Assembly Budget Subcommittee 2 on Education Finance, held a Joint Legislative Oversight Hearing yesterday evening. We reviewed the State Auditor’s Report Number 2018-127, "California State University: It Failed to Fully Disclose Its $1.5 Billion Surplus, And It Has Not Adequately Invested in Alternatives to Costly Parking Facilities" (see

The California State University System issued its financial statements for the fiscal year ended June 30, 2018. The Unrestricted Net Deficit is $17,796,495,000 (see page 30 of This amount was much lower for June 30, 2017, showing a deficit of $3,663,710,000 (see page 33 of ). The reason? The requirement to add the Other Post Employment Benefits (OPEBs) on the liability section of the Balance Sheet. That’s what adding another $13,492,637,000 of debt will do to an institution. The Unrestricted Net Deficit ballooned nearly five-fold!

Consequently, having $1.5 billion, or a portion thereof, in reserve funds is not material in the scheme of the system’s massive obligations. CSU only has roughly $459 million available for mitigating potential economic downturns, only 2.8 percent of the system’s negative Unrestricted Net Position. The Associated Press covered the hearing and provided its story in the first piece below.

The Sacramento Bee continues to cover the premature implementation of the motor voter strategy at the DMV in the second piece below. Only voters can hold an elected department head accountable. An appointed department head is the responsibility of the Governor. Blaming the DMV, however, when it has been focused on implementing the federal Real ID law, is a little difficult to comprehend. Unfortunately, the Joint Legislative Audit Committee has voted twice now to not send in the State Auditor to audit the DMV and its interaction with the Secretary of State. The last time being a couple of months ago and over my objections.

The CSU system took massive state budget cuts during the Great Recession. It has responded with good fiscal management and always provided audited financial statements. The system should be applauded for good stewardship and, in the future, should be encouraged to provide more discussion of their money management goals. This is a minor fix.

It’s quite a comparison to an agency that should have put on the brakes when the software was not fully debugged. Dealing with it now is an expensive and major fix.

University defends reserves

following critical state audit


The chancellor of the country’s largest system of four-year public universities says a state audit that found the school sat on $1.5 billion in reserves while it raised tuition and cut employees’ pay is not untrue, but "profoundly misleading."

California State University Chancellor Timothy White told a panel of state lawmakers on Monday that the more than $1.5 billion in discretionary reserves identified by Auditor Elaine Howle is "anything but discretionary." He said the university had to store the money, which is spread out across the system’s 23 schools, so it could give students advances on financial aid, pay for construction projects and act as a cushion in case of a recession.

But California State Auditor Elaine Howle told lawmakers school officials had no restrictions on how it used the money. She said the school did not tell the Legislature about the money. And the school also did not tell the California State Student Association about the money when it notified them about a tuition increase.

Howle said a 2017 tuition increase brought in $78 million for the school. In the same year, the school’s reserves increased by $65 million. She recommended the school do a better job of disclosing its finances.

White said the university accepts Howle’s recommendations and is already implementing them. But he criticized the audit’s "sensationalized language," saying it "was amplified and distorted in extensive statewide media coverage."

"These inflammatory articles and reports misled and confused the public in such a way that risked unfairly tarnishing Californian State University’s reputation," he said. "To that I have taken and can take great umbrage."

Howle said the audit report’s implication that tuition dollars are being used to disproportionately fund reserves is, "while not untruthful, fundamentally unfair." He said state law governs how the university can spend its money form tuition and state appropriations, and it followed that law.

State lawmakers had tough comments for White and California State University board member Jack McGrory. Assemblywoman Shirley Weber, a Democrat from San Diego, was a professor at San Diego State University during the period the audit covered. She said she and her clerical staff took a 10% pay cut at the time, thinking they were investing in the university’s future.

"This is a shameful moment for California," she said.

But McGrory told lawmakers it was essential for the university to maintain adequate reserves, saying other California local governments that did not do that ended up filing for bankruptcy. Republican state Sen. John Moorlach of Costa Mesa agreed, noting the university’s increasingly expensive pension and health care costs for its workers.

"Having $1.5 billion on hand is probably a good thing right now with the numbers being reflected in their published financial reports," he said.

Six Californians who shouldn’t have been registered voted last year due to ‘DMV errors’


Six California residents who were erroneously added onto the voter rolls voted in last year’s midterms, the Secretary of State’s Office confirmed Friday afternoon following a months-long investigation.

According to Secretary of State Alex Padilla’s office, all six individuals voted in the primary and two of them also cast ballots in the 2018 general election. Their records have since been canceled and they are not being charged with a crime.

After a through review, Padilla concluded they were inadvertently registered through the state’s Motor Voter program “due to DMV errors.” The residents live in Sacramento, San Francisco, Los Angeles and San Diego counties.

Padilla’s office said the six people had no prior voting history but it could not determine whether they met registration eligibility requirements. It noted that none of the people were undocumented immigrants applying for AB 60 licenses.

To register to vote in California, you must be a U.S. citizen, a resident of California and 18 years old or older on Election Day.

“The six individuals were inadvertently registered through the California Motor Voter program due to DMV errors and based on state law are not guilty of fraudulently voting or attempting to vote,” Padilla’s office said in a statement. “All of these voter registrations have been canceled.”

The program launched on April 23, 2018 to automatically register eligible voters when they visit the Department of Motor Vehicles.

Data from the Secretary of State’s Office shows nearly 20 million ballots were cast in the 2018 primary and general election. Six votes would not have been enough to affect the outcome of a single race.

State Sen. John Moorlach, R-Costa Mesa, said the names should be disclosed to county district attorneys for further investigation. “If it’s voter fraud, that’s where the investigation should start.”

“We knew there was going to be the potential for mistakes because the Secretary of State insisted on moving forward prematurely,” Moorlach added. “This confirms what a lot of us were suspicious of. Now, the question is how do we correct it.”

Despite warnings from multiple election officials not to go forward with the program’s launch, Padilla proceeded.

In a 2015 hearing, he told lawmakers, “I don’t assume the incompetence of the DMV.”

In the months following the hasty roll-out, the DMV experienced 105,000 registration errors, including some people being inadvertently registered with the wrong party. A March report from the Department of Finance blamed the DMV for having a “reactive culture” when implementing Motor Voter.

DMV Communications Deputy Director Anita Gore said conditions that led to the problems have been addressed.

“Appropriate safeguards and quality assurance processes have been put into place to prevent such issues in the future,” she said in a statement. ”No recent issues have been identified as we continue to process tens of thousands of voter registrations each day.”


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MOORLACH UPDATE — Who Will Fill the Gap? — August 5, 2019

The OC Register provided a front-page, top-of-the-fold Sunday piece on California’s public employee defined benefit pension plan data from the California Public Employees’ Retirement System (CalPERS). The piece was also published in other newspapers including the San Bernardino Sun, the Los Angeles Daily News and the San Jose Mercury News.

The crowding out of municipality budgets is here and the numbers reflected in my Orange County city rankings exhibit this (see MOORLACH UPDATE — State and OC Cities Finances — August 4, 2019 and see MOORLACH UPDATE — Happy 130th Birthday, Orange County! — August 1, 2019).

I have authored many bills to address the growing pension crisis, to no avail. The piece does mention last year’s effort with SB 1149 (Glazer) (see and MOORLACH UPDATE — Millionaires and Billionaires — July 17, 2018,MOORLACH UPDATE — The Joys of Presenting Bills — April 24, 2018, MOORLACH UPDATE — City CAFR Rankings – Vol. 8 — February 22, 2018, and MOORLACH UPDATE — City CAFR Rankings – Vol. 8 — February 22, 2018).

Again, it is frustrating to see Sacramento flush with cash, while cities, counties and school districts are making severe cuts. At least Sen. Glazer (D – Orinda) made an effort to put forth a bill to address pension costs; one that I was proud to coauthor. It would be nice to see one or more of our colleagues on his side of the aisle try to do the same. I get to hear about existential crises from my Democratic colleagues on a number of issues and the pension crisis is a real one and needs leadership to address it sooner rather than later.

Number of public retirees in $100K Club skyrockets, but they’re just part of the burden on state pension system

Taxpayers on the hook for 26,000 government pensions over $100,000, a 13-fold increase from 2005


Back in 2005 — when Disneyland turned 50, George W. Bush began his second term in the White House and Microsoft released the Xbox 360 — a mere 1,841 people collected pensions exceeding $100,000 a year in the massive California Public Employees Retirement System.

By 2009, when Barack Obama was inaugurated and Chesley Sullenberger landed an airliner on the Hudson River, this so-called $100K Club had more than tripled, to 6,133 retired workers.

In 2013, when Nelson Mandela died and Prince George was born, membership had nearly tripled again, to 16,838.

And in 2018, the number of public retirees collecting pensions of at least $100,000 a year skyrocketed to more than 26,000, according to an analysis of CalPERS data by the Southern California News Group.

Heading the group was a Santa Clara County attorney who received $935,028 in 2018 thanks to lump-sum payouts, CalPERS said.

Some denounce the $100K Club as a distorted lens on public pension challenges: “What makes the $100,000 Club some magic number denoting abuse other than the claims of anti-pension zealots?” the former chair of Californians for Retirement Security, a coalition of 1.6 million public workers and retirees, said a few years ago.

But it can be considered the canary in the coal mine, signaling stresses on the system as a whole.

Such payouts also tend to inspire “pension envy” in private-sector workers who must depend on 401(k)s and Social Security for income in their golden years — and who are ultimately on the hook for ensuring that public retirees get paid if CalPERS investments don’t cover the costs.

The average Social Security benefit is $17,532 this year. Most Americans will never make $100,000 a year in their prime working years, much less in retirement, according to the U.S. Census Bureau.

“The bigger, broader issue here is that we have pension systems moving in the opposite direction to demographics — allowing people to retire earlier, when people are actually living longer,” said Pete Constant, a former San Jose police officer and city councilman who’s now CEO of the Retirement Security Initiative, which seeks to rein in public pensions.

“People’s retirement years are going to be greater than their working years, and that’s not a recipe for stability or success,” Constant said.

Payouts soar

SCNG’s analysis of CalPERS data also found that:

The total number of people getting checks from CalPERS — including survivors and beneficiaries as well as actual retirees — rose 41 percent from 2012 to 2018.

Total payouts rose even more — in excess of 50 percent — from $14.4 billion in 2012 to more than $22 billion in 2018.

While the average pension — which includes comparably low payments to survivors and people with just a few years of service — was $32, 224, workers with at least 20 years of service got $50,333, and those with at least 30 years of service got $66,373.

Public safety pensions for police and firefighters, the most expensive, bestowed an average of $78,104 on retirees with 20 years or more of service.

Big pension payouts are a function of generous retirement formulas approved by city councils, school boards, county boards of supervisors and the state in the halcyon days after 1999, when retirement systems were “super-funded,” governments halted payments, and actuaries said sweetened benefits would cost next to nothing because earnings on investments would essentially pay for them.

State and local officials signed on with abandon — especially in the wake of 9/11, when they were “stepping over each other to bestow wage increases and higher pensions to all first-responders,” as one observer said.

Those number crunchers were very, very wrong.

Is it ‘unsustainable’?

Consider the home of Disneyland.

Anaheim paid $30.5 million to CalPERS to cover worker pensions in 2008. That soared to $50.9 million in 2013, and ballooned to $88.1 million in 2019-20, according to CalPERS valuation reports.

And so it goes for agency after agency throughout California.

In Long Beach, annual pension payments have more than tripled from 2008 to 2020, from $42.3 million to $137.3 million. In San Bernardino, they grew from $12.6 million to $38.7 million. In Riverside, from $23.1 million to $73.5 million.

Former Democratic Assemblyman Joe Nation, now a professor at Stanford University’s Institute for Economic Policy Research, examined 14 public agencies and found that their average annual pension payments grew a stunning 400 percent from 2003 to 2018, while their operating expenditures grew only 46 percent.

That’s a painful squeeze, and it’s far from over. Annual pension contributions will jump another 76 percent from 2018 to 2030, Nation found.

The League of California Cities echoed his conclusions in a 2018 study.

“Rising pension costs will require cities over the next seven years to nearly double the percentage of their general fund dollars they pay to CalPERS,” the league reported. “For many cities, pension costs will dramatically increase to unsustainable levels.”


When pensions swallow up more of the funding pie, that leaves less for other things. This squeeze is called “crowd-out,” and it’s happening right now.

“(P)ublic pension costs are making it harder to provide services that have traditionally been considered part of government’s core mission,” Nation wrote. “As pension funding amounts have increased, governments have reduced social, welfare and educational services, as well as ‘softer’ services, including libraries, recreation, and community services.”

With pension costs outstripping revenue growth, many cites face difficult choices that will be compounded in the next recession, the league study said. Under current law, they have only two choices — increase revenue or reduce services.

“Given that police and fire services comprise a large percentage of city general fund budgets, public safety, including response time, will likely be impacted,” the league said.

Under official, optimistic return assumptions, total public pension debt in California stands at $285 billion, or $21,846 per household. When Nation assumes far lower returns, that debt surges beyond $1 trillion, or $78,334 per household.

Despite higher contributions, double-digit investment returns and the longest economic expansion in American history, CalPERS and other retirement systems are about 70 percent funded (official version) or about 50 percent funded (Nation’s version).

No crisis?

As CalPERS and others push hard to get to 100 percent, a new report suggests that effort may not only be overkill, but harmful as well.

“Public pensions are often viewed as being in a state of crisis, with the threat of default looming — but overall, our results suggest there is no imminent ‘crisis’ for most pension plans,” said a study released in July by Jamie Lenney of the Bank of England, Byron Lutz of the Federal Reserve Board of Governors and Louise Sheiner of the Brookings Institution.

The great increase in contributions from state and local governments comes at a significant “opportunity cost,” they said.

“Despite a long economic expansion, provision of the core public goods provided by these governments remains depressed: real spending on infrastructure stands nearly 30 percent below its previous peak and state and local government employment per capita remains well below its previous peak.

“Notably, much of this relative decline in state and local government employment has occurred in the K-12 and higher education sectors.”

Pension payments have pretty much hit their peak, and will remain there for two decades. After that, reforms will start to kick in, easing the pressure, they said.

Officials from Californians for Retirement Security point to the Brookings report as evidence that a “pension crisis” is malarkey.

“It’s unfortunate that former politician Joe Nation, who lost an election to a pro-union candidate and has been on a jihad against public employees ever since, continues to make projections not based in reality,” said Steve Maviglio, a spokesman for group.

“The sky is not falling. In fact, the sun is shining on our pension systems and will continue to do so for generations.”

‘Foundational changes’ made

Nation agrees that there’s no immediate crisis. “But despite record market gains, most pension systems are no better off than at the start of the great recession,” he said by email. “And when the next recession hits, funding levels will be at 50%. Maybe that’s when the crisis will be official!”

While the S&P 500 has more than doubled since 2009, CalPERS’ funded ratio remains essentially unchanged, Nation said.

CalPERS said it has made “strong foundational changes” to address sustainability, including shortening the time employers have to pay down unfunded liabilities and lowering earnings expectations from 7.5 percent to 7 percent.

“Overall, our next decade is critical as we work on controlling rising pension costs,” spokeswoman Amy Morgan said by email. “This includes giving employers more tools to budget and control their future costs under our new trust fund that provides an option for employers to prefund their required pension contributions.”

Pensions are funded by workers — who contribute up to 15 percent of their paychecks monthly — as well as by public agencies, Morgan said.

In about 20 to 30 years, when workers with more modest retirement formulas replace those with sweetened formulas, cost curves will begin to bend downwards. Those reforms — adopted under Gov. Jerry Brown in 2013 — should save some $29 billion to $38 billion over 30 years.

$100K Club

In an article titled “Pension Puffery,” Girard Miller denounced the half-truths spun out of the $100K Club.

Concentrating on this small subset — fewer than 4 percent of CalPERS’ total payees — leaves the impression that “hordes of public employees are all raking in benefits that make them multimillionaires,” wrote Miller, who recently was chief investment officer for the Orange County Employees Retirement System.

Still, a $100,000 lifetime pension with annual cost-of-living adjustments does make these folks millionaires, Miller said, with lifetime benefits of $1.4 million to $1.8 million, “far more than any private sector or nonprofit association worker can ever possibly accumulate over a 30-year career by saving for themselves. … So these pension benefits are fair game for critics.”

An analysis done by Transparent California, a nonprofit that seeks to rein in public pensions, found that $100K Club members collected 17 percent of CalPERS’ payouts in 2018, even though the group constitutes less than 4 percent of payees.

“The only reason CalPERS matters is because of the cost imposed on taxpayers,” said Robert Fellner, Transparent California’s executive director, by email. “So it’s like if I spent $10,000 a month on a yacht, and then argued it was relatively small amount because I made 500 other purchases that were all for $1 apiece. That doesn’t make dilute the impact of paying for the yacht!”

CalPERS says retirees with pensions of $100,000 or more are “executives who hold seats in either city or county offices, or are physicians, or senior managers for police and fire departments.” And, unlike the private sector, about one-third of CalPERS retirees don’t get Social Security benefits, so their pension may be their sole source of retirement income, CalPERS’ Morgan said.

Where to?

“Not everyone wants to blow up the defined benefit system,” said Edward Ring, co-founder of the conservative California Policy Center, referring to the CalPERS’ model of guaranteed payouts.

“I think defined benefit is a tremendous opportunity. It can be sustainable. It was sustainable. And then they jacked up all the benefits by 50 percent and made it retroactive — basically doubled liability overnight. Now, they’re not sustainable. Make them sustainable again.”

That would require overturning the so-called California Rule, which holds that benefits can be adjusted up, but never down. Reformers are waiting for the issue to go to the state Supreme Court.

“If they say yes, we can make changes prospectively and start negotiating lower rates going forward,” said state Sen. John Moorlach, R-Costa Mesa, who began warning that the system is unsustainable years before the issue pierced the popular consciousness.

“But it’s awkward. Those judges are in a public pension plan.”

Lawmakers understand the gravity of the situation, Moorlach said, but moving them to action is difficult. He was a co-author on Democratic Sen. Steve Glazer’s bill that would have allowed new hires to choose a 401(k)-type defined contribution plan, with a guaranteed state pay-in, rather than CalPERS’ defined benefit plan, with a guaranteed state payout. The bill died in committee.

“Things are developing exactly as all experts predicted,” said Fellner of Transparent California. “Present and future taxpayers are paying more, and will continue to pay more, in order to fund pension benefits that are vastly richer than what the average California taxpayer will receive.”


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MOORLACH UPDATE — State and OC Cities Finances — August 4, 2019

I proposed to my wife 39 years ago at the Five Crowns Restaurant. I’m glad it’s still a local, highly regarded establishment and it’s always an honor to speak to the Newport Beach Sunrise Rotary Club, which holds its weekly breakfast meetings there.

The Laguna Beach Independent and the Newport Beach Independent were present and impart their perspective in the first piece below. The first photo includes Laura Dietz, who served with me on the California Sesquicentennial Foundation Board many years ago, and is now involved in putting a replica statue of the raising of the flag at Iwo Jima near the entrance of U.S. Marine Corps Station Camp Pendleton.

It has been the busiest year to date in the state Capitol. The number of topics to touch on makes for a long list in addressing the "fun" in Sacramento. And, the piece seems to have covered the major points in my talk. For more on SB 640, see MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019).

For more on my concerns about the fiscal well-being of Orange County’s 34 cities, the OC Register provides my submission in the second piece below (also see MOORLACH UPDATE — Happy 130th Birthday, Orange County! — August 1, 2019).

It is fascinating to watch Sacramento enjoying a bumper crop of tax revenues, while many cities, counties and school districts are barely scraping by, thanks to decisions they’ve made in the past. When Sacramento runs out of cash during a recession, it usually takes it away from cities and counties. Now you’ll know which cities to keep an eye on during the next multi-year recession.

P.S. Happy Birthday, Caleb!

Moorlach Talks Mental Health, State finances

By Sara Hall | NB Indy

Sen. John Moorlach chats with residents after speaking at a Newport Beach Sunrise Rotary Club meeting on Tuesday. Photo by Sara Hall

Senator John Moorlach speaks to a crowd at a Newport Beach Sunrise Rotary Club meeting on Tuesday.
— Photo by Sara Hall ©

Mental health and financial concerns were two serious topics Sen. John Moorlach discussed at a breakfast meeting this week, emphasizing the issues in between a few jokes and a mostly lighthearted speech.

Newport Beach Sunrise Rotary Club hosted Moorlach for a report on current events in Orange County and the California state legislature at a Tuesday morning meeting at Five Crowns in Corona del Mar.

Moorlach represents the 37th district, which stretches from Anaheim to Laguna Beach. A former Rotarian himself, Moorlach is a trained Certified Financial Planner and the only trained CPA in the California Senate.

He began public service in 1995, served for 12 years, then was elected to the Orange County Board of Supervisors in 2006, where he served on the OC Transportation Authority and Southern California Regional Airport Authority boards. In March of 2015, Moorlach was elected State Senator for the 37th District.

Moorlach is vice-chair of several committees: Senate Energy, Utilities and Communications; Governance and Finance; and Public Safety. He also sits on Budget and Fiscal Review, Housing, and Insurance committees, as well as several sub-committees.

Moorlach listed several issues he’s worked on, including wildfires, PG&E issues, the housing shortage, taxes, poverty, homelessness, mental health, and public safety. Much of the discussion revolved around mental health, a topic Moorlach has been addressing through legislature recently.

This year, he introduced Senate Bill 640 to expand the definition of “gravely disabled.” Moorlach said he got the most pushback from hospitals.

Existing law (the Lanterman-Petris-Short Act) provides for the involuntary commitment and treatment of a person who is a danger to themselves or others or who is gravely disabled. In 1967, the LPSA passed, which argued that mentally ill people were not being treated properly by involuntarily admitting them into institutions, Moorlach explained.

“They migrated to the street and then they migrated to the jail,” Moorlach said. “So now the largest mental institution in Orange County is the central jail in Santa Ana.”

The idea with SB 640 is that maybe there should be involuntary holds, apart from 5150, he added.

SB 640 would modify the definition of “gravely disabled” to be a person that, as a result of a mental health disorder, is incapable of making informed decisions about, or providing for, the person’s own basic personal needs for food, clothing, or shelter, without significant supervision and assistance.

It would also clarify that, as a result of being incapable of making these informed decisions, the person is at risk of substantial bodily harm, dangerous worsening of a concomitant serious physical illness, significant psychiatric deterioration, or mismanagement of the person’s essential needs that could result in bodily harm.

The bill would authorize this condition to be demonstrated by the person’s treatment history and recent acts or omissions. By increasing the level of service required of county mental health departments, this bill would impose a state-mandated local program.

He also joint-authored SB 1004 with democratic Sen. Scott Weiner from San Francisco that deals with prevention and early intervention for kids that have mental health issues early in life.

“I don’t need another Newport Beach couple coming into my office saying they lost a child to depression,” Moorlach said. “So, we’re trying.”

The financial state of Orange County and the state was also a focus of discussion during the meeting. Moorlach painted a worrisome picture about the financial future of California. In 2020, split roll will be on the ballot, and there will be a lot of bond measures, he pointed out, questioning how, if passed, they will be paid for.

Until last year, California had the highest unrestricted net deficit in the country, Moorlach said. The state went from $169.5 billion upside down to $213.3 upside down. The only “good news” is that New Jersey is in the hole by about $1 billion more, so “we’re 49ers,” he joked.

“We’ve got the worst balance sheet,” Moorlach said. “Something’s going to snap.”

On Monday, Moorlach released his breakdown of the financial state of all 34 cities in Orange County. He reviews each city’s Comprehensive Annual Financial Reports and looks at their unrestricted net assets, or net deficit, divided by the population.

“This is like your net worth; it should be a positive number. Regretfully, for a lot of them, most of them, it is a negative number,” Moorlach said.

Last year, Newport Beach placed 32nd on the list. But, thanks to an aggressive approach to the unfunded pension liability, Moorlach explained, the city moved up to 30th.

“Which is pretty impressive,” he said.

Laguna Beach lands at number three, then Irvine, and the city of Tustin takes the top spot.


Half of O.C. cities are in a positive fiscal position

State Sen. John Moorlach, R-Costa Mesa, looks over a stack of papers as the Senate plows through a variety of bills, Tuesday, Aug. 21, 2018, in Sacramento.


By John M. W. Moorlach

High net worth individuals are ranked by magazines. Ranking cities by a similar approach now finds the city of Tustin at the top of the list among Orange County’s 34 cities.

Compared to the year before, Irvine moved up a notch, to second place from third and Laguna Beach moved from fourth up to third.

Updating my report on OC city finances from last year, half of the 34 city balance sheets in Orange County are still in the black. I base my rankings on each city’s Comprehensive Annual Financial Report (CAFR).

The CAFRs are for fiscal years 2017 and 2018, ending on June 30 each year. As audited financial statements, the CAFRs are by far the best resource for analysis of a city, county, school district or state budget.

In each CAFR, I specifically look for the Unrestricted Net Position (UNP) because it reflects the net assets minus the net liabilities. Hopefully, this amount should be positive, as every operating entity should have more assets than debts to pay its creditors.

Then using census data, I divide the UNP by the city’s population. The per capitas produce a range with which to compare similar entities and reflects each resident’s share of the net assets or net deficit.

The biggest change this year is the inclusion of retiree medical liabilities, as now required by the Government Accounting Standards Board. Some cities started recognizing this unfunded liability a year or so earlier than this year’s deadline.

The combined year-over-year change in the UNP for Orange County’s 34 cities has reduced their net worth by $631 million in the last year. The overall retiree medical liability inclusion of $469 million represents three-quarters of the cumulative decline.

We should be thankful since there are more dismal balance sheets in other counties. For instance, the Los Angeles Unified School District had to add $15 billion to its liabilities this year for its actuarial accrued retiree medical obligations.

On the flip side the cities of Mission Viejo and Stanton overfunded their contributions for funding toward retiree medical commitments and report the balances as assets. This is unusual, but reflects a proactive posture.

The state of California is enjoying additional personal income tax revenues. But this not a source cities participate in. Cities are watching every dollar, addressing every increase in pension plan contribution requirements and dealing with debt obligations from retiree medical promises made many years ago. Sacramento is not sharing its largess with its 482 cities.

In spite of these pressures, 12 of Orange County’s cities have had positive movement, year over year, with their UNPs: Tustin, Irvine, Laguna Beach, Dana Point, Lake Forest, Laguna Woods, Aliso Viejo, Villa Park, San Clemente, Rancho Santa Margarita, Stanton and Huntington Beach.

Such improvement shows positive progress can be made. However, the granting of generous defined benefit pension and retiree medical plans has come home to roost. And their impacts are becoming more transparent and measurable.

The other 22 cities felt the impact of having to now include what are also known as Other Post Employment Benefit (OPEB) liabilities on their balance sheets. Using the city of Anaheim as an example, the retiree medical cost of $138.2 million was 98 percent of its Unrestricted Net Deficit increase of $141 million.

City councils, going forward, must remain keenly aware of their employee bargaining efforts or find themselves continuing to decrease staffing levels.

In times of a growing economy, balance sheets should be going up, not down. Withstanding an economic leveling or decline will be the challenge facing many of Orange County’s cities in the months and years to come.

You should be able to do your own research with the CAFRs on the finance pages of your city’s website, or you can call the city for a hard copy. John M. W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate.

1 Tustin $1,835 25 Orange ($1,051)
2 Irvine $1,601 26 Westminster ($1,068)
3 Laguna Beach $1,540 27 Fullerton ($1,179)
4 Cypress $1,517 28 Huntington Beach ($1,256)
5 Laguna Niguel $1,032 29 Fountain Valley ($1,288)
6 Dana Point $733 30 Newport Beach ($1,374)
7 Lake Forest $698 31 Santa Ana ($1,482)
8 Laguna Woods $599 32 Anaheim ($1,545)
9 Aliso Viejo $564 33 Brea ($1,740)
10 Villa Park $491 34 Costa Mesa ($1,949)


This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District. If you no longer wish to subscribe, just let me know by responding with a request to do so.

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MOORLACH CAMPAIGN UPDATE — Financial Reports Compared — August 3, 2019

The 2020 Primary election will be in March, so the campaign season is solidifying. Last month the OC Register provided a perspective on my race against two Democrat candidates. It is the first piece below.

July 31st was the deadline for filing campaign contribution reports, so the customary pieces are also below. The second piece is from the OC Register and the third piece is from the Daily Pilot.

This has been the busiest year in the state Capitol to date, which has limited my time. I want to thank everyone who contributed to my campaign and those who intend to in the near future. As you know I’ll be in touch after the Session concludes in mid-September.

As the incumbent, I get to be attacked for the next seven months by two Democrat opponents. That’s why they call it a campaign. After the Primary, I will, hopefully, only be taking attacks from the Primary’s prevailing Democrat.

This is a partisan seat and Orange County’s Democrats were very successful in last November’s General election. Consequently, I want to thank the Orange County Republican Party, through its Central Committee, for its endorsement. I also want to thank the California Republican Party for its endorsement. My list of local elected official endorsements is growing with each passing week. I have great support. And, I have a solid and proven record to stand on.

I was not contacted by the reporters for any of the three pieces below. So, I could not engage in responding to the old and warn out cliches thrown my way. But, it’s game on. Orange County will have a chance to decide if Sacramento should be run by one party or if it deems that a more healthy two-party approach is preferable. With me, voters have someone who is trying to keep Sacramento’s spending down and the Democrats accountable. More importantly, business owners will have to decide if they are comfortable with labor organizations supporting those Democrats, thus making a difficult state in which to run a business even more so.

Democrats target Orange County’s State Senate seats for 2020 elections

Chang faces familiar foe; Moorlach will meet two viable contenders.


Two of the five State Senate seats that touch Orange County are up for election in 2020, and while both are held by Republican incumbents Democrats see both as potential flip districts, as the party hopes to make the county match its statewide super majority.

But Republicans are confident that a controversial challenger in one race, and a well-known incumbent in the other will help Sens. Ling Ling Chang, R-Diamond Bar, and John Moorlach, R-Costa Mesa, hang on to their seats.

“We feel very good about their chances to be sent back to Sacramento,” said Matt Fleming, spokesman for the California Republican Party.

Though some local state senate districts have switched party representation in recent years, Republicans have long held at least three of the county’s five seats.

State senators are elected to four-year terms, with half of the seats up during presidential elections and the other half up during midterms. Last year, incumbents held on to all three OC state senate seats that were contested. Those included the solidly Republican 36th District in south OC, represented by Pat Bates, R-Laguna Niguel; the solidly blue 32nd District, which covers part of south Los Angeles County plus a slice of north OC and is represented by Bob Archuleta, D-Pico Rivera; and central OC’s 34th District, a seat that has flipped between red and blue in recent years and now is represented Tom Umberg, D-Santa Ana.

Next year, if either or both Chang and Moorlach fall to what figure to be viable contenders, a majority of local state senate districts would be blue for the first time in recent history.

Chang vs. Newman rematch

Chang’s seat has the most complicated background and the most headline-grabbing contender.

The 29th District covers much of northeast Orange County, from Yorba Linda through Fullerton and over to Cypress, plus Diamond Bar in Los Angeles County and Chino Hills in San Bernardino County.

The seat had been held by a Republican for multiple terms, but voter registration now leans blue, with 36.1 percent Democrats vs. 31.07 percent GOP. The district also chose Hillary Clinton over Donald Trump by nearly 13 percentage points in 2016, the same year it elected Democrat Josh Newman over Chang, by just 2,498 votes.

The seat didn’t stay blue for long, though.

In 2017, months after entering office, Newman was among 81 legislators who voted to raise the state gas tax by 12 cents per gallon to help pay for transportation projects and road improvements around the state. Republicans, who saw Newman as vulnerable, soon launched a recall effort against him, touting the gas tax vote as part of their recall campaign. That effort succeeded, and a year ago, in a low turnout primary, voters recalled Newman and sent Chang to take his place.

Chang, a Taiwanese immigrant who worked for a business consulting group, served one prior term on the State Assembly and two terms on the Diamond Bar City Council. Since being elected to the State Senate, she has focused on issues surrounding public safety, veterans and technology. This week, her office announced that eight bills she’s authored on these issues all passed out of key committees.

Given her track record, and the fact that she’s likely going to face only Newman, who was handily recalled (58% of voters were favor his ouster), state GOP spokesman Fleming believes Chang will be on solid ground next year.

But Newman pointed out that he was an underdog when he won in 2016. And, since then, Democrats have only expanded their voter registration advantage in SD 29, with voters sending Democrats to Congressional seats that overlap the district. Plus, Newman noted that Republicans were criticized for using the recall process to oust him for casting a vote — not for malfeasance — just months after voters sent him to Sacramento.

In his bid for a comeback in 2020, Newman, a former Army officer and businessman, isn’t wasting any time resuming his use of unusual campaign tactics.

Last time around, he dressed in a bear suit and used a remote-controlled blimp to attract attention. This time, his campaign bought an ice cream truck, with a plan to visit key locations in the district and hand out free treats with campaign information on the wrappers.

Fleming called the tactics “crazy,” but Newman sees them as “whimsical” and effective ways to engage voters on serious issues.

“It turns out people are actually hungry for elected leaders who are real people who are willing to be accessible, accountable and up to the task of tackling hard problems without endlessly dodging or spinning.”

Challengers for Moorlach

Heading into 2020, Moorlach can point to strong name recognition earned during a long career in Orange County.

Starting with famously predicting the county’s 1994 bankruptcy, and riding that fame to elected office as county treasurer and, later, as a supervisor, Moorlach also has a reputation for fiscal conservancy. A reprimand for giving a woman a playful but unwanted “noogie” is about the only controversy Moorlach has found himself in.

“He’s a household name,” Fleming said.

But there are some signs that the seat could be up for grabs this election cycle, with some GOP insiders saying Moorlach might have a tough race ahead.

The 37th District covers central Orange County, stretching from Anaheim to Laguna Beach and including at least portions of major cities such as Irvine, Costa Mesa, Huntington Beach and Newport Beach. The district still leans red, with 34.7 percent of voters registered Republicans vs. 31.3 percent Democrats, but voters did go for Hillary Clinton over Donald Trump by 6 percentage points in 2016. And, last year, voters elected Democrats to Congress for overlapping House seats.

Katrina Foley, one of two Democrats so far challenging Moorlach in the 2020 race, says the recent voting pattern “underscores the ripe opportunity to flip this Senate seat red-to-blue.”

Foley, an attorney and a 10-year member of the Costa Mesa City Council, is now serving as the city’s first directly elected mayor. Her campaign for state senate is centered on fighting climate change, public safety and job creation. And she has been racking up endorsements from labor groups and prominent Democrats, including CA 48 Rep. Harley Rouda, D-Laguna Beach.

The other Democrat challenging Moorlach is Dave Min, a law professor at UC Irvine. Min, a first generation Korean American, hasn’t previously held political office, but he served as senior policy adviser for the Joint Economic Committee of Congress. Last year, he ran for the 45th Congressional seat and lost a bid to make the general election when Katie Porter edged him by 2.5 percentage points in the primary.

Along with protecting the environment and fighting for affordable housing, Min is running on reducing gun violence, protecting immigrant communities and standing up to Trump.

Big money flowing into state Senate, Assembly races in Orange County

First half of 2019 shows donations roughly even between Dems and GOP candidates.


Donors have already poured nearly $4 million into nine races for seats representing Orange County in the state Assembly and state Senate, according to the first campaign finance reports of the 2020 election cycle.

Six of the nine seats are held by Republicans, but records for the six months ending June 30 show fundraising is nearly even between the two parties. For the period, local Democrats pulled in $2.2 million and local Republicans $1.8 million.

Figures show some repeat candidates are ahead of where they were at this time last election cycle, though several challengers have out-raised the incumbents they hope to beat. And with seven months until the primary and 15 months until the general election, all but one of the state races in Orange County has soared past the national average of $150,000 per seat.

Here’s a closer look at how each state Assembly and Senate race is shaping up.

Money flows into AD-74

Assembly District 74 in central coastal Orange County could be one of the most expensive state seats in California next year, with candidates already bringing in nearly $900,000 and spending $127,502.

Though the GOP says freshmen incumbent Cottie Petrie-Norris, D-Laguna Beach, is the “most vulnerable” local incumbent in the legislature, to date she has raised more money than any other O.C. candidate — $613,588. She hopes to fend off two GOP competitors in the narrowly red district.

Major Petrie-Norris’ donors include public safety, building, labor, health care, cannabis and banking groups, as well as Planned Parenthood and other candidates.

One GOP challenger, Newport Beach Mayor Diane Dixon, raised $207,789, mostly from individuals and developers. That figure also includes $24,000 that she loaned to the campaign.

Republican Kelly Ernby of Huntington Beach, an Orange County deputy district attorney, reported $72,433 in contributions largely from individuals.

Incumbent leads in AD-55

Two-term incumbent Phillip Chen, R-Brea, is so far easily besting two Democratic challengers in the race for the 55th Assembly District, which includes northeast Orange County plus parts of Los Angeles and San Bernardino counties.

Chen raised $305,538 through June, with money coming from public safety, health care, banking, energy, tobacco and cannabis groups. That’s more than double what he’d raised at the same point in the last election cycle.

Democratic challenger Andrew Rodriguez, mayor pro tem of Walnut, raised $113,001, much of it from labor groups, developers and individuals. He also loaned himself $1,800.

Another Democratic challenger, Michelle Hamilton, who founded a nonprofit that helps combat workplace inequality, has raised $23,496 almost entirely from individuals.

Challenger drawing money in AD-68

Bragging rights for the biggest fundraising haul in the 68th Assembly District, which includes much of central Orange County, go to Democratic challenger Melissa Fox. The attorney who sits on the Irvine City Council took in $174,515, including contributions from labor, firefighters and real estate groups.

Fox’s total is more than double the $77,785 amount raised so far by two-term incumbent Steven Choi, R-Irvine, who hopes to keep his seat in a narrowly red district.

Republican challenger Benjamin Yu, president of a foundation that advocates for Asian-American equality, listed $132,318 in money raised for the period. That figure includes a $100,000 loan from himself.

State records don’t show any fundraising reports for Democratic challenger Eugene Fields.

GOP incumbent leads in AD-72

Freshmen incumbent Tyler Diep, R-Westminster, has brought in $309,650 to hold his 72nd Assembly seat, a narrowly red district that includes northern coastal Orange County. The money has come from, among others, public safety groups, cannabis companies, energy companies and Native American tribes.

Diep’s challenger Josh Lowenthal, who lost to Diep by 3.2 percentage points in November, reported $66,621 in fundraising through a single donation from the California Democratic Party.

Money flowing in SD-29 rematch

In the pending rematch for California’s 29th Senate District, which covers much of northeast Orange County and parts of Los Angeles and San Bernardino counties, GOP incumbent Ling Ling Chang has the edge over Democrat Josh Newman — though the difference is not as big as it first appears.

Chang, R-Diamond Bar, reported $393,839 in contributions, including a $70,000 loan she made to her campaign. Much of the rest comes from building, tobacco, pharmaceutical, banking and health care groups.

Newman has raised $109,307, from labor groups, Planned Parenthood, other candidates and individual donors, among others. But he also rolled over some banked cash and took back $240,000 he’d loaned from his 2020 campaign when he was targeted last year for recall. After expenses, he’s left with $233,909 in cash.

Newman defeated Chang by less than 1 percentage point in 2016, but was recalled last year after he voted in favor of the state gas tax. In June 2018, Chang won the seat. Since then, Democrats in SD-29 have widened their advantage in voter registration.

Dems take money lead in SD-37

The two Democrats challenging GOP incumbent John Moorlach for California’s 37th Senate District, in central OC, each raised much more money than Moorlach did in the first six months.

Dave Min, a law professor at UC Irvine, brought in $325,393 largely from individual donors and other blue candidates. He also has the most cash on hand, with $245,091 left going into July.

Katrina Foley, an attorney and member of the Costa Mesa City Council, reported $246,383 in contributions from individual donors, labor groups and other candidates. She reported $181,985 in cash after expenses.

Moorlach, R-Costa Mesa, took in $163,803 with major contributions from tobacco, insurance, developer, energy and health care groups plus Facebook and Nike. After expenses and with funds raised earlier in his four-year term, he had $233,924 in cash heading into July.

No challengers; lots of money

Both Sharon Quirk-Silva, D-Fullerton, and Tom Daly, D-Anaheim, are running unopposed for the 65th and 69th Assembly District seats respectively. But both are still raising big cash for their campaigns.

Quirk-Silva raised $234,310 for a fourth term in the 65th, which represents heavily Democratic central and northern Orange County. Daly, who represents the even deeper blue 69th, also in central OC, reported $277,721 in contributions.

Picture incomplete in AD-73

Three-term GOP incumbent Bill Brough, R-Dana Point, is the only candidate raising money in the race for the 73rd Assembly District. But in his bid to hold the solidly GOP seat, the early numbers aren’t the whole story.

Brough brought in $143,216 in the first six months, from real estate, health care, alcohol, tobacco and energy groups plus Home Depot’s PAC. The state shows no fundraising so far from Democrat Scott Rhinehart, who challenged Brough in 2018 and filed to run against him again in 2020.

But in late June, following reports that Brough made aggressive, unwanted sexual advances against several women in recent years, two GOP challengers entered the race. Brough denies the allegations. And while complaints have been filed, no charges or sanctions have been brought against him.

“We need change,” said one of his challengers, Melanie Eustice, chief of administration in the Orange County District Attorney’s Office.

Eustice and another GOP challenger, Mission Viejo Councilman Ed Sachs, both entered the race after the fundraising period, so the financial side of the race will become more clear after Jan. 31, 2020, when the next reports are due.

Political Landscape: Petrie-Norris raises more than $600K for re-election, Dixon leads challengers


Freshman Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) is currently far ahead of her two declared 2020 rivals in terms of fundraising as she seeks to hold onto her seat in the 74th District.

Petrie-Norris raised about $614,000 between Jan. 1 and June 30, the latest financial disclosures show. Republican challengers Diane Dixon and Kelly Ernby raised about $208,000 and $72,000, respectively, over the same period.

“Thanks to donations of all amounts, I am confident we will have the resources to run a sophisticated and effective campaign — one that is focused on the progress we are making on critical issues such as housing and homelessness, climate change, public safety and economic development,” Petrie-Norris said in a statement. “I look forward to continuing this momentum.”

Although her totals aren’t as robust as Petrie-Norris’ so far, Dixon is leading all candidates seeking to unseat Assembly incumbents statewide.

"Republicans and [independent] voters in the 74th District are uniting against the far-left, one-party-dominated policies coming from Sacramento that Cottie Petrie-Norris has embraced,” Dixon said in a statement. “Sacramento has not made us safer. Sacramento has not fixed our roads. Sacramento has not fixed the pension crisis. But Sacramento does spend more of our money and then doles it back in celebrations with oversized checks. We can do better than that and the voters and donors know it.”

The 74th Assembly District covers Newport Beach, Costa Mesa, Laguna Beach, part of Huntington Beach and most of Irvine.

Over in Assembly District 72 — which covers Fountain Valley and a portion of Huntington Beach — incumbent Tyler Diep (R-Westminster) raised about $310,000. He is currently running unopposed.

In state Senate District 37, challenger Dave Min is pacing the three-candidate pack in terms of fundraising.

Moorlach Foley MinThe candidates for the 37th Senate District are, from left, incumbent John

Moorlach, Katrina Foley and Dave Min.
(File Photos)

Min, a UC Irvine law professor, pulled in about $325,000 from Jan. 1 to June 30. Fellow challenger Katrina Foley raised $246,000, while incumbent John Moorlach (R-Costa Mesa) raised about $164,000.

Min and Foley are Democrats.

“I’m so proud of the people-powered movement we’re building on the ground here in SD 37,” Min said in a statement. “Sen. Moorlach is a career politician whose extremist views — on Donald Trump, immigration, the environment, women’s rights and gun control — are completely out of touch with the values of hardworking Orange County families.”

The district includes Costa Mesa, Newport Beach, Laguna Beach and about half of Huntington Beach, plus Irvine.

Campaign contribution forms were submitted to the Secretary of State’s office. Figures are rounded to the nearest dollar.

74th Assembly District
Cottie Petrie-Norris

  • Contributions received: $613,588
  • Expenditures made: $70,188
  • Ending cash balance: $557,734

Diane Dixon

  • Contributions received: $207,790
  • Expenditures made: $33,452
  • Ending cash balance: $177,338

Kelly Ernby

  • Contributions received: $72,433
  • Expenditures made: $23,864
  • Ending cash balance: $54,028

72nd Assembly District
Tyler Diep

  • Contributions received: $309,650
  • Expenditures made: $29,002
  • Ending cash balance: $280,648

37th Senate District
John Moorlach

  • Contributions received: $163,803
  • Expenditures made: $41,243
  • Ending cash balance: $233,925

Katrina Foley

  • Contributions received: $246,384
  • Expenditures made: $69,494
  • Ending cash balance: $181,986

Dave Min

  • Contributions received: $325,393
  • Expenditures made: $87,235
  • Ending cash balance: $245,092

MOORLACH UPDATE — Happy 130th Birthday, Orange County! — August 1, 2019

On August 1, 1889, 130 years ago today, the County of Orange officially incorporated after splitting off from Los Angeles County. During the 125th anniversary, I recognized the County’s quasquicentennial in my UPDATEs with the following commemorative logo:

The joys of data and proofing. There are a few changes to the fiscal ranking list of Orange County’s 34 cities. I apologize for the inconvenience. Like trying on a new suit, sometimes minor alterations need to be made.

The chart for Table One below supersedes and replaces Table One in MOORLACH UPDATE — Local Debts Versus State Surplus — July 29, 2019. I have also moved the ranking change column. Table Two is provided again, but has no changes.

Due to this modification, I’m providing a bonus chart. Table Three provides the population numbers I’ve used, as well as the Unrestricted Net Positions for Governmental Activities (in thousands) provided in the June 30, 2018 and June 30, 2017 Comprehensive Annual Financial Reports. Note that those living in unincorporated islands in the County, like Rossmoor and North Tustin, will not be included in the total population number provided.

After a little more settling down of the data, the major mover was the city of Yorba Linda, with the other cities staying near their former rankings. Adding $17.5 million in retiree medical liabilities to its balance sheet had an impact.

Table One

Rank June 30,2018 Per Capita Change Rank June 30, 2017 Per Capita
1 Tustin $1,835 1 1 Cypress $1,805
2 Irvine $1,601 1 2 Tustin $1,754
3 Laguna Beach $1,540 1 3 Irvine $1,624
4 Cypress $1,517 -3 4 Laguna Beach $1,159
5 Laguna Niguel $1,032 0 5 Laguna Niguel $1,154
6 Dana Point $733 1 6 Lake Forest $677
7 Lake Forest $698 -1 7 Dana Point $668
8 Laguna Woods $599 0 8 Laguna Woods $595
9 Aliso Viejo $564 1 9 La Palma $566
10 Villa Park $491 2 10 Aliso Viejo $534
11 La Palma $481 -2 11 Yorba Linda $423
12 San Clemente $361 1 12 Villa Park $421
13 Rancho Santa Margarita $353 2 13 San Clemente $350
14 Stanton $330 0 14 Stanton $321
15 Mission Viejo $181 1 15 Rancho Santa Margarita $287
16 Laguna Hills $93 1 16 Mission Viejo $211
17 Yorba Linda $43 -6 17 Laguna Hills $105
18 San Juan Capistrano ($165) 1 18 Seal Beach $83
19 Seal Beach ($189) -1 19 San Juan Capistrano ($6)
20 Garden Grove ($631) 3 20 Buena Park ($348)
21 La Habra ($664) 0 21 La Habra ($446)
22 Buena Park ($697) -2 22 Los Alamitos ($487)
23 Los Alamitos ($900) -1 23 Garden Grove ($491)
24 Placentia ($987) 1 24 Westminster ($565)
25 Orange ($1,051) 2 25 Placentia ($583)
26 Westminster ($1,068) -2 26 Fountain Valley ($689)
27 Fullerton ($1,179) 1 27 Orange ($738)
28 Huntington Beach ($1,256) 1 28 Fullerton ($868)
29 Fountain Valley ($1,288) -3 29 Huntington Beach ($1,128)
30 Newport Beach ($1,374) 2 30 Santa Ana ($1,134)
31 Santa Ana ($1,482) -1 31 Anaheim ($1,145)
32 Anaheim ($1,545) -1 32 Newport Beach ($1,269)
33 Brea ($1,740) 0 33 Brea ($1,312)
34 Costa Mesa ($1,949) 0 34 Costa Mesa ($1,419)

Table Two

Retiree Medical UNP
Rank City Change YoY Change YoY
1 Mission Viejo $809,563 ($2,946,000)
2 Laguna Niguel $348,661 ($224,000)
3 Stanton $232,215 $295,000
4 San Juan Capistrano $53,741 ($3,741,000)
5 Laguna Hills $0 ($359,000)
6 Laguna Woods ($12,092) $233,000
7 Aliso Viejo ($40,354) $2,429,000
8 Villa Park ($92,999) $237,000
9 Lake Forest ($194,027) $1,731,000
10 Rancho Santa Margarita ($422,899) $3,467,000
11 San Clemente ($975,558) $545,000
12 La Palma ($1,055,124) ($1,379,000)
13 Dana Point ($1,203,785) $1,876,000
14 Laguna Beach ($1,598,059) $816,000
15 La Habra ($3,094,000) ($5,056,000)
16 Los Alamitos ($3,710,480) ($4,962,000)
17 Cypress ($4,717,348) ($13,847,000)
18 Irvine ($4,933,000) $8,499,000
19 Tustin ($5,159,284) $6,676,000
20 Seal Beach ($5,662,789) ($7,134,000)
21 Buena Park ($5,782,282) ($29,346,000)
22 Huntington Beach ($7,866,000) $8,346,000
23 Garden Grove ($10,175,285) ($24,906,000)
24 Orange ($13,681,913) ($45,286,000)
25 Fullerton ($14,200,984) ($46,475,000)
26 Brea ($15,759,208) ($20,953,000)
27 Yorba Linda ($17,460,790) ($27,933,000)
28 Placentia ($22,847,375) ($19,309,000)
29 Newport Beach ($24,201,323) ($12,043,000)
30 Fountain Valley ($31,602,037) ($34,231,000)
31 Westminster ($39,487,411) ($48,050,000)
32 Santa Ana ($47,157,171) ($114,372,000)
33 Costa Mesa ($49,152,118) ($62,853,000)
34 Anaheim ($138,177,000) ($140,994,000)
Total ($468,978,515) ($631,249,000)

Table Three

Rank City Population UNP UNP Difference
2018 6/30/2018 6/30/2017
1 Tustin 82,344 $151,119 $144,443 $6,676
2 Irvine 276,176 $442,116 $433,617 $8,499
3 Laguna Beach 23,309 $35,893 $35,077 $816
4 Cypress 49,978 $75,804 $89,651 ($13,847)
5 Laguna Niguel 65,377 $67,450 $67,674 ($224)
6 Dana Point 34,071 $24,965 $23,089 $1,876
7 Lake Forest 84,845 $59,234 $57,503 $1,731
8 Laguna Woods 16,597 $9,937 $9,704 $233
9 Aliso Viejo 51,950 $29,312 $26,883 $2,429
10 Villa Park 5,951 $2,919 $2,682 $237
11 La Palma 15,948 $7,673 $9,052 ($1,379)
12 San Clemente 65,543 $23,634 $23,089 $545
13 Rancho Santa Margarita 49,329 $17,427 $13,960 $3,467
14 Stanton 39,470 $13,015 $12,720 $295
15 Mission Viejo 95,987 $17,421 $20,367 ($2,946)
16 Laguna Hills 31,818 $2,956 $3,315 ($359)
17 Yorba Linda 69,121 $2,992 $30,925 ($27,933)
18 San Juan Capistrano 36,759 ($6,050) ($2,309) ($3,741)
19 Seal Beach 25,984 ($4,911) $2,223 ($7,134)
20 Garden Grove 176,896 ($111,538) ($86,632) ($24,906)
21 La Habra 62,850 ($41,737) ($36,681) ($5,056)
22 Buena Park 83,995 ($58,567) ($29,221) ($29,346)
23 Los Alamitos 11,863 ($10,679) ($5,717) ($4,962)
24 Placentia 52,755 ($52,089) ($32,780) ($19,309)
25 Orange 141,952 ($149,196) ($103,910) ($45,286)
26 Westminster 94,476 ($100,942) ($52,892) ($48,050)
27 Fullerton 144,214 ($169,976) ($123,501) ($46,475)
28 Huntington Beach 202,648 ($254,528) ($262,874) $8,346
29 Fountain Valley 56,920 ($73,294) ($39,063) ($34,231)
30 Newport Beach 87,182 ($119,818) ($107,775) ($12,043)
31 Santa Ana 338,247 ($501,404) ($387,032) ($114,372)
32 Anaheim 357,084 ($551,607) ($410,613) ($140,994)
33 Brea 44,890 ($78,107) ($57,154) ($20,953)
34 Costa Mesa 115,296 ($224,658) ($161,805) ($62,853)
3,091,825 ($1,525,234) ($893,985) ($631,249)


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MOORLACH UPDATE — AB 392 and Use of Deadly Force — July 30, 2019

It’s fascinating how someone can read a newspaper article and presume or project certain positions based on just one of many sentences I shared on the Senate Floor regarding AB 392 (see MOORLACH UPDATE — AB 1054 and Investor-Owned Utilities — July 9, 2019).

The editorial in OpsLens below is an example of why context and full understanding is so vitally important when discussing important topics.

For my complete Floor speech, go to

I stated that I fully appreciate that public safety personnel have difficult responsibilities, as we had honored Sacramento Police Officer Tara O’Sullivan that morning at the beginning of the Senate Session.  Officer O’Sullivan was killed in the line of duty this past June.

I stated that I serve as the Vice Chair of the Senate Public Safety Committee, where both AB 392 and SB 230 were heard.  Both bills had numerous individuals present to share their support (AB 392) and opposition (SB 230) for several hours.

I had to deal with inappropriate use of force claims as an officer of the County of Orange.  It was those experiences that provided the context of my vote, and not some naive let’s-all-get-along dance that he supposed.  He may be surprised that a party registration does not necessarily mean some of us can’t be independent thinkers.

I supported additional training and expressed the hope that the final, amended version of AB 392 would strike the right balance.

I am keenly aware that those working in the public safety arena have very little room for error in protecting themselves and others.  I grieve openly when lives are needlessly lost on both sides.

Finally, I believe many police shootings could be reduced, in particular the one I referenced in my Senate Floor speech, which would later be determined as “a tragic and possibly preventable death” of U.S. Marine Corps Sgt. Manuel  Loggins, Jr.  And then he would know what I was thinking of when I cast my vote for AB 392.

For as difficult as public safety work is, it does not come with the role of judge, jury and executioner when circumstances dictate a different and less severe use of force.

Twenty-fifth Anniversary Look Back

Twenty-five years ago this month, I wrote a letter to then-Assemblyman Curt Pringle with legislation suggestions. I shared what I had learned from my experience the prior few months, garnered from running for the countywide elected position of Treasurer-Tax Collector.

From a closure standpoint, earlier this year I attended an evening reception near the Capitol sponsored by the Orange County Children and Families Commission. While there, I had the pleasure of watching Curt Pringle and State Senator Tom Umberg exchange some healthy bantering. Time does heal wounds.

I am now on the receiving end of legislative requests. Believe it or not, it’s fun to receive legislative recommendations from you. Many of my most successful bills came from friends, constituents, elected leaders and industry groups. If you have a bill idea, my staff and I work on it after the conclusion of Session and take the fall and winter months to narrow the list down from about 100 suggestions to the roughly 17 bill slots I actually have available. Consider this an invitation.

My correspondence was several pages long, so I have been providing it in segments. For the first segment on city investment policies, see MOORLACH UPDATE — Housing and Banking — July 4, 2019. For the second segment, requesting the reporting of investments at the current market value, see MOORLACH UPDATE — Marking to Market — July 12, 2019. For the third, covering school districts, see MOORLACH UPDATE — More Housing — July 17, 2019. And for the fourth, addressing outside participants, see MOORLACH UPDATE — Lonely Republicans — July 24, 2019.

This final segment concludes my effort to make legislative recommendations. Of course, before the next legislative year started in January 1995, the County of Orange filed for Chapter 9 bankruptcy and this crisis was very disruptive. But, it instigated hearings by the California State Senate, resulting in legislation, and by the U.S. Congress.

I refer to a number of derivative debacles that were occurring around the time of my campaign. For Proctor and Gamble, see For Granite Capital, see And for Piper Jaffray, see

Here’s what I wrote in 1995, less than five months before Orange County filed for Chapter 9 bankruptcy protection (with bolding to point out some prescient insights):

I apologize for the length of my letter, but it was brief. Honestly. I will be in touch to pursue each of these proposals individually and will write on each specific legislative idea in greater detail.

Please call me when you have an opportunity. I stand ready to do research, write and testify in Sacramento on the above concerns.

I will be carbon copying selected legislators to keep them appraised as well. But, with your fond memories of Mr. Citron, I thought I would approach you and encourage your leadership on these concerns.

Again, thanks for your encouragement, endorsement and involvement in my campaign. We made a quiet little race into a national debate on the way municipalities invest. The topic of derivatives, leveraging, and arbitrage will not leave the scene for many years. The efficacy of their use deserve a formal hearing, at the least.

If we do not act quickly, we may see the County of Orange receive article coverage in the country’s business pages with the other casualties. We’ll soon join names like Proctor and Gamble, Dell Computers, Granite Capital, Bank of America, Kidder Peabody, Paine Webber, Piper Jaffray, and the beat goes on. these are serious concerns. I look forward to your serious involvement.

Very truly yours,

John M. W. Moorlach, CPA, CFP

cc: Senator John Lewis
Senator Rob Hurtt
Assemblyman Mickey Conroy
Assemblyman Gil Ferguson

OpsLens 3


New California Law Will Put its Law Enforcers at Higher Risk


It’s fascinating (not in a good way) what can happen when leftist politicians and community activists, with the help of a complicit mainstream media, create a myth and then endeavor to “fix” the “problem” the myth alleges.

The myth: That America’s cops are too quick to use force and are specifically shooting and killing minorities.

Recently, the California legislature approved a Use of Force bill that virtue-signaler extraordinaire Governor Gavin Newsom is likely to sign. According to The Sacramento Bee, back in May, Governor Newsom said it was “‘an important bill’ that will ‘help restore community trust in our criminal justice system.’”

Restore trust? Yeah, after the left has done and is doing everything it can to destroy that trust. Primarily, they demonize cops and expect them to perform perfectly in an imperfect world, according to their unrealistic standards.

Recently on Fox News Channel, Laura Ingraham interviewed conservative commentator and former NYPD police officer Dan Bongino and Democrat commentator Jonathan Harris. Bongino drilled Harris a new one for his absurd views about police killing some 900 to 1,000 suspects annually over recent years.

The thing is, though that is an accurate number, Harris said it as if there were something inherently wrong with the number. Reasonable people believe the vast majority of the suspects cops kill warrant it. The problem: We’re not dealing with reasonable people, such as Jonathan Harris.

Unreasonable also applies to those who passed Assembly Bill 392 in the California Senate after a year of debate. The new law “allows officers to use deadly force based on the totality of the circumstances.”

Sounds reasonable, right? But this used to mean when the officer felt lethal force was “reasonable” under the circumstances. This bill will change the standard to “necessary” as defined by investigators (and second-guessers, politicians, critics, cop-haters, etc.), after days, weeks, and months assessing what an officer had to decide in an instant.

I know the reply to this next question will probably be a resounding “No,” which may cause more aftershocks in southern Cali. But shouldn’t the benefit of the doubt in a use of force go to the trained, sworn law enforcement officer rather than the suspected criminal? Okay, California’s Richter Scale is going off the chart.

Sadly, this law’s passage shows the disconnect between the cops they say they support and even our friends with Rs after their names. Reportedly, Sen. John Moorlach (R-Costa Mesa) said, “the bill would reduce ‘tragic and possibly preventable’ deaths.” The Bee also reported, “Dozens of law enforcement representatives from across the state, however, still oppose the measure.” Though the revised bill may be “better” than it was, that doesn’t make it good—especially for cops. But, in this one-party state, the left was going to enact something bad for law enforcement.

Unfortunately, “Many of his fellow Republicans joined him in supporting the bill,” The Bee reported. So much for a loyal opposition. Republicans always feel if they compromise across the aisle, the Democrats will reciprocate. Nope. The neo-Democrats (socialists) see it as a sign of weakness and come after more.

I’ll engage in some educated speculation here. I could be wrong, but anyone want to wager when Sen. Moorlach thought about tragic and possibly preventable deaths, just like the Democrats, he was thinking about the tragic, preventable deaths of suspects, not of law enforcement officers?

Steve Pomper

Steve Pomper is an OpsLens contributor, a retired Seattle police officer, and the author of four non-fiction books, including De-Policing America: A Street Cop’s View of the Anti-Police State. You can read a review of this new book in Front Page Magazine and listen to an interview with Steve on the Joe Pags Show. Steve was a field-training officer, on the East Precinct Community Police Team, and served his entire career on the streets. He has a BA in English Language and Literature. He enjoys spending time with his kids and grand-kids. He loves to ride his Harley, hike, and cycle with his wife, Jody, a retired firefighter. You can find out more about Steve and send him comments and questions at


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MOORLACH UPDATE — Local Debts Versus State Surplus — July 29, 2019

With the requirement by the Government Accounting Standards Board to include the unfunded actuarial accrued liability for retiree medical for the fiscal year ended June 30, 2018, many municipalities have been slow to release their annual outside independent audits, as they have been waiting for actuarial reports. Although we’re still waiting for a number of Comprehensive Annual Financial Reports (CAFRs) from several of California’s 482 cities, we do have them from all 34 of Orange County’s cities. For states, I’m still waiting for Illinois. For California’s counties, it’s Modoc.

Some cities started recognizing this unfunded liability a year or so earlier than this year’s deadline. Most have reflected information in the disclosures and footnotes accompanying their annual audited financial statements. Unfortunately, amounts that should be on the balance sheet, but are not, can be difficult to understand for a layperson when reviewing a one-inch thick financial report.

The metric I’ve been using over the years is very simple. Take the Unrestricted Net Assets or Unrestricted Net Deficit from the Basic Financial Statements for Governmental Activities and divide that number by the population of the municipality. The populations are provided by census data and other sources.

I’ve already provided the 2018 rankings for California’s Community College Districts (see MOORLACH UPDATE — Recognizing Movement — June 7, 2019). Since there was so much movement in the college rankings, I included the number of positions, up or down, each District had moved.

I’ve done the same for Orange County’s cities in Table 1 below.

There is movement in the listing, but the top 16 cities are still the top 16 cities, and the bottom 11 cities are still the bottom 11 cities. In the middle of the pack, the city of Los Alamitos made a significant improvement in the standings, moving from 22 to 17.

Due to the now-required inclusion of the retiree medical liability, Table 2 provides the change, year-over-year, of the approximate journal entry that had to be made. This is shown in the first column. I have ranked the 34 cities in the order of the magnitude of the added liability to each balance sheet.

The cities of Mission Viejo and Stanton overfunded their retiree medical commitment and show them as assets. Four cities actually had net increases in their funding toward the retiree medical liability in the past year (new actuarial costs less funds set aside). One city has shown no liability in 2017 or 2018 for its Other Post Employment Benefit (OPEB).

The legacy cities, those either incorporated for some time and/or having both their own police and fire departments, have had to reflect sizable liabilities. In fact, combined, Orange County’s cities have added nearly a half-billion dollars of debts to their balance sheets this past year just for OPEBs.

The year-over-year change in the combined Unrestricted Net Deficit for Orange County’s 34 cities has risen $631 million in the last year. This is reflected in the second column of Table 2. Consequently, overall the retiree medical liability inclusion of $469 million represents three-quarters of the cumulative negative growth of net assets in Orange County.

We should be thankful, as the Los Angeles Unified School District had to add $15 billion to its liabilities, making for a dismal balance sheet (see MOORLACH UPDATE — $15 Billion Obligation — December 27, 2018).

Every city has a different story. A dozen cities have improved their Unrestricted Net Position in the last year, in spite of the retiree medical recognition. Using the city of Anaheim as an example, the retiree medical was the major cause of its Unrestricted Net Deficit increase.

The data are from the Comprehensive Annual Financial Reports for June 30, 2018 and June 30, 2017, provided on each city’s websites. The data provide an objective metric, from audited financial statements, to see what the range is and where city leadership can pursue improvements.

California’s Governor has enjoyed spreading around a $21.5 billion “surplus,” yet California’s cities have not enjoyed the same personal income tax largess. Cities rely mostly on property and sales tax revenues, which have not seen the same growth as the state’s income tax revenues. Moreover, the state has not seen fit to spread much of the wealth with its counties, cities and school districts. You can understand why cities have been putting sales tax rate increases on their local ballots (see MOORLACH CAMPAIGN UPDATE — OC Ballot Measures — October 17, 2018).

Finally, if the state’s tax appetite were not enough, it is still raising taxes, mostly on basic necessities, like cellphone lines. This will mean less disposable income for residents to purchase items subject to sales tax or to move up into a larger home as the property tax increase will be too costly. This will not be a good trend for Sacramento’s subsidiary municipalities and the OC Register provides a dialogue on the subject in the column provided in Sunday’s Commentary section below. It sets the table for the provision of the local data provided directly below.

Table 1

Rank June 30,2018 Per Capita Rank June 30, 2017 Per Capita Change
1 Tustin $1,835 1 Cypress $1,805 1
2 Irvine $1,601 2 Tustin $1,754 1
3 Laguna Beach $1,540 3 Irvine $1,624 1
4 Cypress $1,517 4 Laguna Beach $1,159 -3
5 Laguna Niguel $1,035 5 Laguna Niguel $1,154 0
6 Dana Point $733 6 Lake Forest $677 1
7 Lake Forest $698 7 Dana Point $668 -1
8 Laguna Woods $599 8 Laguna Woods $595 0
9 Aliso Viejo $564 9 La Palma $566 1
10 Villa Park $491 10 Aliso Viejo $534 2
11 La Palma $481 11 Yorba Linda $423 -2
12 Yorba Linda $447 12 Villa Park $421 -1
13 San Clemente $361 13 San Clemente $350 0
14 Rancho Santa Margarita $353 14 Stanton $321 1
15 Stanton $330 15 Rancho Santa Margarita $287 -1
16 Mission Viejo $181 16 Mission Viejo $211 0
17 Los Alamitos $120 17 Laguna Hills $105 5
18 Laguna Hills $93 18 Seal Beach $83 -1
19 San Juan Capistrano ($165) 19 San Juan Capistrano ($6) 0
20 Seal Beach ($189) 20 Buena Park ($348) -2
21 La Habra ($584) 21 La Habra ($446) 0
22 Garden Grove ($631) 22 Los Alamitos ($487) 1
23 Buena Park ($697) 23 Garden Grove ($491) -3
24 Placentia ($987) 24 Westminster ($565) 1
25 Orange ($1,051) 25 Placentia ($583) 2
26 Westminster ($1,068) 26 Fountain Valley ($689) -2
27 Fullerton ($1,179) 27 Orange ($738) 1
28 Huntington Beach ($1,256) 28 Fullerton ($868) 1
29 Fountain Valley ($1,288) 29 Huntington Beach ($1,128) -3
30 Newport Beach ($1,374) 30 Santa Ana ($1,134) 2
31 Santa Ana ($1,482) 31 Anaheim ($1,145) -1
32 Anaheim ($1,545) 32 Newport Beach ($1,269) -1
33 Brea ($1,740) 33 Brea ($1,312) 0
34 Costa Mesa ($1,949) 34 Costa Mesa ($1,419) 0

Table 2

Rank City Retiree Medical
Change YoY
Change YoY
1 Mission Viejo $809,563 ($2,946,000)
2 Laguna Niguel $348,661 ($224,000)
3 Stanton $232,215 $295,000
4 San Juan Capistrano $53,741 ($3,741,000)
5 Laguna Hills $0 ($359,000)
6 Laguna Woods ($12,092) $233,000
7 Aliso Viejo ($40,354) $2,429,000
8 Villa Park ($92,999) $237,000
9 Lake Forest ($194,027) $1,731,000
10 Rancho Santa Margarita ($422,899) $3,467,000
11 San Clemente ($975,558) $545,000
12 La Palma ($1,055,124) ($1,379,000)
13 Dana Point ($1,203,785) $1,876,000
14 Laguna Beach ($1,598,059) $816,000
15 La Habra ($3,094,000) ($5,056,000)
16 Los Alamitos ($3,710,480) ($4,962,000)
17 Cypress ($4,717,348) ($13,847,000)
18 Irvine ($4,933,000) $8,499,000
19 Tustin ($5,159,284) $6,676,000
20 Seal Beach ($5,662,789) ($7,134,000)
21 Buena Park ($5,782,282) ($29,346,000)
22 Huntington Beach ($7,866,000) $8,346,000
23 Garden Grove ($10,175,285) ($24,906,000)
24 Orange ($13,681,913) ($45,286,000)
25 Fullerton ($14,200,984) ($46,475,000)
26 Brea ($15,759,208) ($20,953,000)
27 Yorba Linda ($17,460,790) ($27,933,000)
28 Placentia ($22,847,375) ($19,309,000)
29 Newport Beach ($24,201,323) ($12,043,000)
30 Fountain Valley ($31,602,037) ($34,231,000)
31 Westminster ($39,487,411) ($48,050,000)
32 Santa Ana ($47,157,171) ($114,372,000)
33 Costa Mesa ($49,152,118) ($62,853,000)
34 Anaheim ($138,177,000) ($140,994,000)
   Total ($468,978,515) ($631,249,000)


Surpluses distract from big debts


During a recent meeting with allied organizations concerned about California’s high taxes, the question on everyone’s mind was: why do our political adversaries continue to push for even more taxes given that the state has a huge budget surplus? Also, how much excess revenue is there?

But like most questions involving public policy – and particularly those related to fiscal issues – the question quickly begot more questions. For example, what’s the difference between a surplus and a reserve? Also, should we look at just the general fund or should we expand the inquiry to special funds as well?

If one includes reserves from special funds and adds them to the generally accepted figure of the surplus, the answer is stunning. General fund reserves exceed $20 billion and special fund reserves exceed $16 billion. In short, California is sitting on over $36 billion. This doesn’t even include the billions kept in reserve by local governments.

So with all this good news, why do the state and local governments continue to press for ever higher taxes? The answer — which they prefer to conceal from the taxpaying public — is that they know that the bill will soon be due for all the accumulated government debt.

A large budget surplus provides a grossly incomplete picture of the fiscal health of a state, city or county. A budget is more like an income statement. The revenues exceeding expenditures in any given year do not reflect liabilities in the way that a balance sheet would. For example, if a family sees an increase in take-home pay because mom or dad got a raise, that obviously has a positive effect on the family budget. But if they are still losing ground every month because of a big mortgage that they can’t afford, one can’t conclude that the family is financially stable.

Public debt is the dark cloud hanging over all levels of government. At the national level, the economy is booming, unemployment is at record lows and the stock market seems to hit new highs on a daily basis. But few people are talking about the national debt. The Obama administration added more than $10 trillion to the national debt and, regrettably, the Trump administration is on a pace to match it. In the hyper-partisan environment that is Washington, where Republicans and Democrats disagree on just about everything, it is troubling that both parties have quietly agreed to increase the national debt limit while increasing spending.

The problem for California is that, unlike the federal government, it can’t print money. One estimate of total government debt for California exceeds a trillion dollars. Even if that estimate is at the high end, there is no disputing that, sooner or later, we will have to satisfy all the legally binding promises our political leaders have made to various interests. This includes all bond holders and, of course, all the public employee retirees who are the beneficiaries of some of the most generous pension plans in the nation.

If there is a silver lining to this story it is that some political leaders and pundits are shining a brighter light on the debt issue. Even former Gov. Jerry Brown was able to secure some minor pension reforms, and a recent court ruling opened the door to further reforms. Sen. John Moorlach, R-Costa Mesa, the CPA who blew the whistle on Orange County’s pending bankruptcy more than a decade ago, has exposed the dangerous path that the state and local governments are on and is receiving well-deserved recognition for his work. Finally, new accounting rules promulgated by the Government Accounting Standards Board (GASB) have made it easier for the media and citizen activists to determining the true financial health of their local communities.

The upshot of all this is that there needs to be greater focus on managing debt because as good as budget surpluses may appear, they will disappear in a heartbeat when — not if — we have a severe recession.


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