MOORLACH UPDATE — OC Register — February 10, 2010

Today’s OC Register has two articles that I’m mentioned in, they are below, and one on a similar theme in which I am not.  This is your bonus article, and can be found at, but it mentions something that occurred at our Board meeting.

Since I’ve left you alone for awhile, there are also a few Look Backs, which I’ve organized in year order, then by date.

Yesterday’s Board meeting was a study in contrasts.  In the bonus story, you are told that the Board criticized the Sheriff’s recent reorganization, but you are not told the whole story. In the first story below, you are told that the Board approved the new contract with the deputy sheriffs’ union (the AOCDS), over my dissent, but again, you are not told the whole story.  

On Friday, the Sheriff announced a reorganization that included the layoff of Assistant Sheriff Mike Hillmann, for a total layoff of 29 people.  The Sheriff and District Attorney have been working with Supervisors Bill Campbell and Pat Bates and the rest of the Public Safety Working Group to resolve the difficulties in the public safety budgets due to the dramatic decline in Proposition 172 funds from the dramatic declines in sales tax revenue.  Originally, the Sheriff identified 57 positions to be laid off.  However, in the plan presented Friday, the Sheriff was able to reduce the layoffs to only 29, through the use of resignations, transfers to vacant positions, and retirements—with the same cost savings that was agreed to by the Public Safety Working Group.  In addition, in order to address the difficulties in a thin command staff, the Sheriff temporarily promoted 15 positions, and those good people agreed to the promotions without any increase in pay, so this move will not cost us any additional money.  This is creative thinking from a department head.  From personal experience as a former department head, doing either a reorganization or laying off employees is very time consuming and stressful.  Doing them both at the same time is very difficult.  Add this to your regular job tasks and it’s a real strain.  Consequently, the communication component with the Board was lacking.  Perhaps the Sheriff’s Department could have done a better job of communicating this plan to us before Friday.  They did hold a briefing for Board staff representatives to explain the reorganization on Monday morning, and only three offices elected to attend the meeting.    

I would assume that with the news on Friday and the partially attended briefing on Monday, that some questions could be lingering on Tuesday.  But, when you ask a department head to make dramatic cuts and then attack her reorganization, incorrectly claiming it will cost money, and that it could lead to lawsuits, that’s a bit unfortunate.  Even though it was a tight timeline, I believe the facts were clearly delivered to any office willing to listen and read the briefing materials on Monday.  Indeed, this approach is similar to one the Sheriff took previously, when she was able to eliminate or defund 121 positions while laying off only 24 personnel.

At some point, as I explain below with regard to the AOCDS contract, we won’t be able to avoid much deeper cuts and layoffs in the Sheriff’s Department.  But, for now, the Sheriff’s plan keeps some good people serving us in public safety.

But the theme is communication.  And it comes through in the second article about the early release of inmates due to an interpretation that requires a retroactive look at good behavior.  I still have not been briefed, in person or in writing, by either the District Attorney or Sheriff’s Department on this public safety issue.

In the first article, the Board approved the latest AOCDS bargaining unit agreement.  I voted to oppose.  As I’ve stated in prior e-mails, it is a good agreement, but it is not the best.  And why settle for good?

I won’t repeat my speech, but we needed more movement to address the economic downturn and budget crisis impacting the Sheriff’s Department.  From an economic standpoint, it’s 2000 again.

And we need to downsize back to 2000.  With hindsight, an increase from “2% at 50” to “3% at 50” was a major mistake.  Going to a “3% at 55” formula is a step in the right direction.  But, it’s a baby step. It saves us at most 2.33%.

With the majority of the Sheriff’s budget comprising wages and benefits, a wage cut would be the best remedy for a looming $60 million shortfall.  It is more understandable than a furlough, and it’s preferred to layoffs.

Medical insurance costs are rising, but giving an 18% increase in benefits (costing an additional $2.85 million annually) is a tough pill to swallow.  Our non-safety employees have less expensive medical plans, and the Sheriff’s Department could transition into these plans.

With these, and a few more, reasons, I elected to vote against the contract.  Don’t get me wrong.  It’s a good plan.  But, in this economic cycle, it may not be enough.

Supervisors approve deal with deputies union

By Jennifer Muir

County supervisors this morning approved a three-year contract agreement with the deputy sheriff’s union that calls for deputies to contribute toward their retirement and pushes back the retirement age for new hires.

The deal marks a compromise reached after six months of negotiations, as declining tax revenue and climbing retirement costs continue straining county coffers.

Supervisors got some pension reforms and no raises for deputies. The Association of Orange County Deputy Sheriffs got the county to agree to pay more toward their health care costs.  If the county had forced further overhauls, it wouldn’t have gotten any pension changes at all, Supervisor Bill Campbell said.

“Politics is the art of the possible,” he said. “There were certainly things I wanted out of this negotiation that I didn’t get. I certainly got things, too.”

In all, county staffers say the new deal should save the county $4.5 million over three years.

Union members voted overwhelmingly to approve the agreement last month. Executive director Mark Nichols said the deputies are feeling the recession along with the rest of the county, as their income from overtime has decreased and they have friends and family members losing their jobs.

“We chip in when times are tough,” Nichols said.

The agreement calls for new employees to retire later, at 55 instead of 50, and contribute 6.6 percent of their pay toward retirement costs. Current employees also would have to start chipping in — up to five percent by January 2012. Currently, deputies don’t share the cost of their retirement plans.

In all, the pension reforms should save more than $8.1 million over the next three years, and even more as time passes and the sheriff’s department hires more employees, county budget staff says.

In addition, changes to how the department calculates overtime should save an additional $3 million.

But increased health benefits will cost the county $4.1 million.

Supervisor John Moorlach, who cast the lone vote against the deal, pointed out that pension savings are offset by agreeing to the health costs. And he urged supervisors to go back to the negotiating table, calling for deputies to share in a higher percentage of their retirement costs, “reasonable” medical benefits, and a five percent pay cut.

If they don’t, he says, layoffs are inevitable.    

D.A. to build list of released inmates



The District Attorney’s office plans to build a list of Orange County inmates as they are released early from state prison, in an effort to mitigate the effects of those releases on local communities.

The list would then be distributed among Orange County law enforcement agencies as a way to moderate some of the concerns expressed by local police, said Orange County District Attorney Tony Rackauckas. Under the new law, which went into effect Jan. 25, inmates who are released early would no longer be required to undergo regular supervision by a parole agent or be returned to prison for technical violations, though they could still be searched by authorities without a warrant.

By knowing who is being released early, law enforcement agencies will be able to know who is subject to be searched.

"My suggestion is we should be able to meet these people. We’re hopeful they’ll be successful," Rackauckas said in an interview Tuesday. "(But) those people that will be released, we know from history those people will likely re-offend."

That would shift the cost that the state is saving to local jurisdictions, which would have to pay to prosecute new cases instead of sending the former inmate back to prison on a parole violation, Rackauckas said.

The list is one of the ways local law enforcement in the county is hoping to deal with what Rackauckas characterized as a continued effort by state officials to release prison inmates early as a means to address budget woes. He and other officials at the District Attorney’s office have been communicating with state officials since 2007 hoping to curb a continued effort to release prison inmates early, he said.

Last year, a three-judge federal panel found that state prisoners were being denied adequate health care because of crowding and ordered the state to reduce the population by more than 40,000 inmates. That order is still pending an appeal, much to the angst of local law enforcement officials.

But in September, state legislature passed a law that allows "low-risk" inmates to earn additional credits toward early release for good behavior and for completing other programs, in a plan to cut the prison population by 6,500. That law also allowed for the early release of inmates in county jails across California, a move that caught several local officials off-guard. According to the Orange County Sheriff’s Department, 311 county inmates have been released early to comply with the law since Jan. 25.

Both Republican and Democratic lawmakers in Sacramento have called for repealing and modifying parts of the law – including one assemblyman who helped author the law. Meanwhile, the Sacramento County Deputy Sheriffs’ Association filed a lawsuit trying to get a state order to block the early release of inmates from county jails.

Orange County officials were among those in nearly 20 counties in the state that decided to apply the law retroactively, meaning inmates were given the additional credit for good behavior served before the law took effect on Jan. 25. The first releases in Orange County took place that same day. About the same number of counties decided that the law does not apply retroactively, so inmates did not begin to accrue credits until Jan. 25.

The law is not meant to apply to those with a violent or serious felony in their past, or an offense requiring them to register as a sex offender.

The inclusion of county jails in the law caught local officials by surprise and left authorities scrambling to figure what it meant at the local level. The District Attorney’s office was told in early December that the law would apply to county inmates as well – reducing their sentence by up to half. That meant officials with the Sheriff’s Department, District Attorney’s Office, Public Defenders Office and board of supervisors had less than two months to figure the legal ramifications, Rackauckas said.

Using a 1978 case as precedent, county officials decided the law should be applied retroactively in Orange County, Rackauckas said.

County Supervisor John Moorlach said supervisors were not briefed by Sheriff’s officials or the District Attorney’s office about that decision. Officials in the City of Orange, where one of the county jails sits, also said they were not informed.

William Feccia, senior assistant to the district attorney, said officials had focused on preparing to implement the early release by Jan. 25, not on notifying local public officials.

In the county, the new law means inmates could be released up to two months early. The maximum sentence for most county inmates is one year. Before the new law took effect, they were able to reduce their time served by one third – four months for those serving a year. The new law allows them to earn up to six months of credit.

Local officials will be keeping an eye on state inmates who are released, Rackauckas said.

"There aren’t going to be any plea deals to anyone who commits a new crime after early release," he said.

— The Associated Press contributed to this report.



February 6

The bankruptcy filing continued to generate discussions on various topics.  Today’s front-page headline in the OC Register was “Schools may not be innocent fund victim—Bond Crisis:  Legal experts question whether they had to invest money they want back.”  The article was written by recently hired reporter John Gittelsohn.  Many years later, as Treasurer, I worked on legislation that successfully dealt with the word “surplus.”  Here are the opening paragraphs and those where I am quoted.

                The argument goes something like this:

                By law, Orange County’s 27 school districts had to deposit every penny with the county treasury.  They are innocent victims of the county’s bankruptcy.  They should get all their money back.

                However logical that position sounds, some legal experts are poking holes in it.  School districts, recent legal opinions have found, can choose to invest outside their county treasury.  More than 100 districts across California, it turns out, already do.

                The debate turns on the definition of one word:  surplus.

                John Moorlach, who warned of the fiscal collapse last year during his election campaign against Citron, said school districts should be entitled to full reimbursement of the money they were required to keep in the county treasury, but not money they deposited voluntarily.

                That means they should get back operating funds, but not any surpluses, reserves or money they borrowed to invest.

                “If you want to bet your money, you take your chances,” Moorlach said.  “It was your decision.  You live with it.” 

February 10

I was frustrated and I had to release pent up emotions.  There were some individuals who should have known better when the county was in need of an accurate analysis of how Citron was investing our tax dollars.

Many county treasurers and treasury employees from neighboring counties, when contacted by reporters, parroted the party line. 

They almost unanimously praised Citron, with some providing a qualifier about how they wouldn’t take that level of risk.

If only one or two of them would have said, “Citron is crazy and headed for an implosion,” then maybe, just maybe, some reporters would have done some heavy lifting and figured out what I was trying to communicate.

As a frustrated losing candidate who had to watch his county file for bankruptcy protection, you can bet I chewed a few people out that should have provided a helping hand to avoid this situation.

The Tustin Weekly covered my appearance at the Tustin City Council meeting the previous Monday night.  In fact, the reporter was sitting next to me in the back row.

So let me set up the situation.

It was Don Gilchrist who recommended that I should meet with Tustin area resident George Jeffries during the campaign.

By divine providence, he was sitting at a breakfast table for the Anaheim Mayor’s Prayer Breakfast that a client had invited me to attend.

Mr. Broberg, my fifth-grade elementary school teacher was also at the table.  It was quite an amazing morning.

I had a chance to explain my campaign to George.  I can even remember his response when I asked how he felt about governments borrowing to invest:  “It’s immoral.”  Absolutely.  I used this phrase throughout the remainder of the campaign.

But, when the papers contacted George, his response was something like, “I don’t agree with people crying wolf.”

The city of Tustin withdrew their funds from Citron’s investment pool during the campaign.  George was on their audit committee and was acknowledged for assisting in making the decision to do so.

The title of the article is “Praise, criticism offered by Moorlach in city decision to pull pool funds.”  This is the beginning of this story with George Jeffries.  You’ll learn about how we would became dear friends in a future LOOK BACK.

                The City Council took time Monday to thank Tustin’s treasurer, two members of the Audit Committee and one of its own for deciding to pull Tustin’s $4 million out of the now collapsed county investment pool.

                Proclamations were awarded to City Treasurer Ron Nault, Audit Committee members Dan O’Connell and George Jeffries and Councilman Jeff Thomas.

                Last February Nault became concerned about the county’s risky investment strategy, which was confirmed by information Thomas had obtained.  Further investigation by O’Connell and Jeffries led to the decision to pull out the money and place it in a safer state fund.

                But minutes after the quarter was honored, John Moorlach, the man who unsuccessfully ran for county treasurer in June despite calling attention to risky investments made by now former county treasurer Bob Citron, appeared before the council issuing both praise and criticism.

                Although he recognized Tustin for its decision to pull out of the troubled fund, he silenced the audience with criticism of Jeffries, who is Los Angeles County’s chief investment officer.

                Moorlach referred to a Jeffries’ comment in April that the Moorlach campaign was “crying wolf.”  Criticizing Jeffries for not speaking out more about Citron’s investment policy, Moorlach said he had turned into “political jello.”

                “If he (Jeffries) had a backbone and said more, a lot of people would have stood up and taken notice.  His opinion is well respected,” Moorlach said.

                “I’m not condemning him but I think he should be held accountable.”

                Jeffries had left the meeting before Moorlach’s comments, but when contacted admitted he wished he had known more a year ago.

“Obvious a lot of us were wrong,” Jeffries said.  “Maybe if I could have seen the entire portfolio I could have said more, but most of us didn’t know.  I could not have imagined how much Citron had the investment pool leveraged.  Hopefully what will come out of this is some reasonable controls to avoid it from happening again.”


February 5

Jenifer B. McKim continued on the toll road theme with “Initiative brushed aside in 91 deal? – Transportation:  Sales tax approved in 1990 could have paid for car-pool lanes and prevented toll lanes, critics say.”  It’s interesting what a reporter can come up with if you take the time to peel the onion.  Here are selected clips.

                A sample ballot, sent to voters, said that approval of Measure M would include:  “On State Route 91, adding an additional lane in each direction and improving major interchanges from Los Angeles to Riverside.”

                A month after voters approved the tax, the California Private Transportation Co. was awarded a franchise by Caltrans to build toll lanes along 10 miles of the freeway.

                Dave Elbaum, the Transportation Authority’s planning director, said the county was supportive of a state bill that created the toll roads and was happy to divert Measure M funds to other much-needed projects.

                For some, like county Treasurer John Moorlach, OCTA’s quick abandonment of the carpool lanes is ironic – given the current debate about light rail.  The agency has been saying that it must build a light-rail system because of its commitment to Measure M voters.

                “Is there no mandate for light rail if what we voted for is optional?” Moorlach asked.

February 7

Tony Dodero, in his “Editor’s Notebook” column in the Daily Pilot, addressed three topics.  The middle one poked fun at me.  The column was titled “We were left frozen in our tracks about news tip.”

Recognizing three reporters/columnists who did a great job on uncovering and derailing the 91 Express Lanes sale was worthy of recognition.  I really struggled over this idea.  But, we gave it a shot.  The results are provided below Tony Dodero’s observations, which we considered we might receive during our struggle to thank those who provided good journalism to the Orange County community.  But, if you’ve read the recent LOOK BACKS for 1999/2000, you know that these individuals deserved some recognition.

You can say a lot of things about John Moorlach, the county’s treasurer and chief tax collector. Top of the list of course is that he’s a great financial whiz who, if we would have listened to him in 1994, probably could have saved the county from suffering the worst municipal bankruptcy in history.

He’s also the guy, I, and other property owners write our property tax checks to each year. And I’m sure people say a lot of things about him at that point.

But being a great judge of newspaper journalism isn’t something I’d particularly ascribe to him. Nonetheless, we in the media now have more than Pulitzers to aim for, now that the Moorlach Award for Excellence in Journalism on Government Accountability is in existence.

The three awards, kicked off this year by Moorlach’s office, are titled, Breaking the Story, The Heavy Lifting and The Insightful Column.

And apparently the only catch to winning such a coveted prize is you have to write about something Moorlach thinks is important. Take for instance the stories Moorlach deemed the best in all three categories of his inaugural awards.

Each dealt with his latest cause, the 91 Express Lane toll road.

Curse that road for not stretching down to Newport-Mesa. Otherwise, I know we would have had a chance. But I guess not everyone can win a Moorlach.

From the press release:

Those recognized for their efforts were instrumental in informing the public about the “91 Express Lane” and the “sweetheart” terms for its potential sale.  The pursuit of the facts and bringing them to light resulted in the pricing of the bonds to be halted at the eleventh hour.  The winners in the following three categories are:

                Breaking the Story:  Meg James, The Los Angeles Times

                The Heavy Lifting:  Jenifer McKim, The Orange County Register

                The Insightful Column:  Jonathan Lansner, The Orange County Register

Each one attended our Second Annual Orange County Treasurer’s Conference Luncheon and received crystal-like trophies for their accomplishments.


February 8

OC Register Columns Editor Chris Reed provided a column titled “Straight talk vs. happy talk – Riverside County’s response to fiscal woes puts O.C. board’s to shame.”  It shows you the tenor of the times from the columns editor himself.  Chris is still busy in this role with the San Diego Union Tribune.  He and I vociferously disagreed on his claim that I supported the first of two pension enhancements.  I did not. 

Over the time that has elapsed, it would be interesting to once again compare OC versus Riverside County in the area of pension plan and retiree medical contributions as a percentage of payroll and the percentages of funding for both benefits.






With $807 million still remaining in debt from the 1994 bankruptcy, a staggering $2.2 billion in unfunded pension and medical benefits promised to retirees and current workers, and a coming, demographics-driven surge in demand for state-mandated social services, we could be just a few years from the equivalent of a fiscal perfect storm battering the Orange County government.


And not a one-time storm, either. Imagine a perpetual one, sort of like the frenzied atmosphere of Venus.


That’s the bad news. Here’s the worse news: Not only do we not have an Arnold-style leader ready to fight for reforms, for the most part our leaders don’t even think – or won’t admit – that Orange County is in trouble.


That’s why Board of Supervisors Chairman Bill Campbell delivered such a sunny State of the County address last week. It’s what one would expect from any of the many county leaders complicit in the two rounds of pension spikes that could end up staggering the O.C. every bit as much as the bankruptcy.



When public pension investment funds were posting 20 percent-plus gains year after year in the 1990s during the stock market boom, perhaps it was defensible for lawmakers to boost retiree benefits. But the market began a long free fall in March 2000 and then sank into a new trough after the Sept. 11, 2001, terrorist attacks. With pension holdings shrinking or stagnating, any steward of public funds would be cautious about adding benefits.



Or so one would think. Instead, in December 2001, the board approved a pension hike of 50 percent for public safety employees. The toll that 9/11 took on financial markets evidently having escaped them, current Supervisors Tom Wilson and Jim Silva, then-supervisor, now-Assemblyman Todd Spitzer and county Treasurer John Moorlach were among those who went along with the giant increase.



As bad as that was, it pales compared to what the board did in August 2004.



Last year is likely to be remembered as the year California finally faced up to its public-employee pension mess. The reckoning was galvanized by the meltdown in San Diego, where years of increasing pension benefits while reducing funding of the pension system left city residents with a huge bill – and a likely double whammy of tax hikes and program cuts.



Statewide, the push for reforms to rein in pension costs built momentum throughout the year. In Riverside County, for example, officials took the first steps toward shifting to 401(k)s or smaller pensions for new public employees.



So what happened in August in Orange County, whose pension underfunding was already much more severe than Riverside County’s? Supervisors Campbell, Wilson and Silva approved a 62 percent boost in benefits for more than 14,000 county workers. What did workers do to earn a pension spike that is bigger, as far as my research could determine, than any ever given by a large U.S. company in the private sector? Nothing – nothing, that is, but make an unenforceable promise to pay for the long-term costs.