MOORLACH UPDATE — Hold ’em/Fold ’em — March 11, 2014

When I served as the Chair of the Board of Supervisors in 2012, the year was billed as the Super Bowl of employee bargaining unit negotiations. The two major unions, the Orange County Employees Association (OCEA) and the Association of Orange County Deputy Sheriffs (AOCDS) were up for renewal. The negotiations did not conclude in 2012. Nor did they conclude in 2013. It has taken more than two years to finally come to closure with these two units. The first piece below is from the OC Register and it is about the successful employee approval of a compromise deal with OCEA. To say that both sides held out is an understatement.

The County receives 92 percent of its net county costs budget from property taxes. The Great Recession was very unkind to this revenue source. And, the State of California has absconded with $73 million per year of our property taxes by classifying them as vehicle license fees (a move that also jeopardizes the very existence of four recently incorporated cities in Riverside County). The rub is that Governor Brown was successful in getting the Proposition 30 tax increases passed, plus grabbing some of Orange County’s revenues, with blessings from the courts, and now he can give state employees raises. With the OC having fewer resources and minimal growth in revenues, the Board has been holding to a stance of a zero increase in total compensation. The unions would like increases in wages, on top of the increases in pension contributions and medical insurance premium payments that the County has been incurring. With both sides holding fast to their positions, the negotiations went into impasse and a mediator proposed a deal that was a compromise for both OCEA and the County and subsequently accepted by OCEA and will be on the March 25th Board agenda for approval.

It is still premature to discuss the AOCDS contract, but I’ve provided the necessary color. Both sides are firmly holding to their positions in the face of difficult fiscal realities, but a compromise is being pursued. The Voice of OC covers their negotiations in the second article below.

I am reminded that Governor Gray Davis was a professional politician that would spend the entire morning making fund raising calls. In the afternoon he would get to his actual job. You know the rest of the story. He was able to fund his two gubernatorial campaigns, but he failed in the performance of his elected position (we’re still reeling from his signing bills permitting retroactive defined benefit pension plan formula enhancements). He became the second Governor in U.S. history to be recalled. Although I’ve enjoyed serving in elected positions for nearly two decades, I still don’t consider myself a professional politician. I do not constantly bother people for campaign contributions to build up and maintain a war chest. It’s not in my approach. I usually call or host an event when I really need some funding. So I started the campaign for Congress and found myself peeling time away from my elected position to make calls, but it was not enough and I was not succeeding as well as I should have in this endeavor. I could not ignore the duties to which I volunteered to serve in the role of Supervisor. It’s just not in my DNA. When you join a poker game, it’s nice to have a good stack of chips when you start. I didn’t gather enough and I made a self-assessment to disengage and, therefore, I plan to return to the private sector after the end of this year. I’m thankful to those who were so affirming of my efforts. The OC Register covers the news in the third piece below.

County workers agree to contract

Compromise includes 1.25% raise but increases health care costs.

Members of Orange County government’s largest employee union have voted to approve a contract that will cost the county about $22.2 million in increased salaries and benefits, Human Resources Director Steve Danley said Monday.

If the Board of Supervisors approves the contract later this month, employees will get $37.8 million in raises and bonuses between this month and June 2016. During that same time, they’ll give up $15.6 million in healthcare costs and will generate other savings for the county, Danley said.

While the new contract’s term would be through June 25, 2015, some of its provisions take effect after that date.

The deal brings an end to protracted negotiations and gives the employees their first across-the-board raise since the Great Recession. With the sheriff’s deputies facing a Friday deadline for their contract talks, it also sends a signal about the administration’s willingness to compromise.

“I know that not getting a pay raise is a formula for burn-out,” said Supervisor John Moorlach. “Maybe the compromise works for both sides, and we have to hope that the economy helps us out with real estate taxes.”

Employees will receive a 1.25 percent across-the-board raise and a 1.25 percent one-time bonus. On the other hand, the county won concessions by increasing employee healthcare costs, by reducing performance pay and other savings.

Only $4 million of the $22.2 million will be from the general fund. The remainder will come from state and federal revenue.

Orange County Employees Association General Manager Nick Berardino said the deal was ratified by more than 75 percent of the association’s 12,000 rank-and-file workers.

“It’s a bridge agreement that allows us to get working collaboratively,” said Berardino.

In the meantime, Berardino wants to find additional healthcare savings through preventative medicine, and work on making the bureaucracy more efficient. He also wants to take “the influence of politics” out of compensation decisions.


Sheriff’s Deputies Will Likely Receive Pay Raises


As county supervisors find themselves at or near settlement on contracts with most of the county’s unions — managers, attorneys and rank-and-file employees — they’re now left facing their most formidable challenge in the Super Bowl of labor talks.

Public safety.

To date, the all-Republican board has made no secret about its insistence that all county workers pay the full employee share of their pensions. But what is different this time is that when they say everybody, they also mean sheriff’s deputies.

“Their pension reimbursement to me is nonnegotiable. Everybody has to pay their portion of the pension,” said Supervisor Shawn Nelson.

No county employee group has been given a salary raise to help with that obligation in recent times.

Expect that to change.

Given the political calendar — we’re just a few months away from the June primary — and that San Diego deputies got an 8-percent raise over four years have sources close to law enforcement negotiations indicating that deputies may be offered to a 4-percent salary raise to partially cover the new requirement they pick up the employee share of their pensions, estimated to average 16 percent of a deputy’s paycheck.

So where would county officials get the extra money to fund raises?

There are indications that cities contracting with the county could be asked to step up their contributions, especially since they don’t carry the county unfunded pension liability for each deputy working under contract.

“She has to anticipate and strategize for increases,” said Lt. Jeff Hallock, a spokesman for Orange County Sheriff Sandra Hutchens. “Some of those costs would potentially be passed on to contract cities.”

Sheriff’s deputy union leaders are busy reminding those pushing for a hard line on law enforcement that deputies can move to other agencies if Orange County pay and benefits fall behind.

“There is a cost associated with replacement,” said Tom Dominguez, president of the Association of Orange County Deputy Sheriffs, who noted that the cost includes training. “It’s about $180,000 per person. … That adds up substantially.”

Dominguez added that there are worries about OC deputies leaving for other agencies.

“It puts a lot of stress on the department, which costs a lot," he said. "That’s the concern we have, and I know the county has the same concern.”

While other unions have come to public blows with county supervisors during contract talks — most visibly seen in the public campaign “The Real Supervisors of Orange County” by the Orange County Employees Association — Dominguez said deputies are focused on quietly negotiating a deal that benefits both sides.

“We’re not knuckle-draggers, ‘give us all the money’ ” type of people, Dominguez said. “That’s not what we’re about.”

Yet he knows this year’s negotiations don’t offer any side much wiggle room.

“It is going to be a challenge. The last, best and final [offer] is a 13- to 15-percent pay cut, … so I don’t think for any of us a 13-percent pay raise is in our future. For us to suggest otherwise, wouldn’t be reasonable,” he said.

So what is reasonable?

“We’re going to have to continue to meet with the county and see if there’s something creative that can get us through this contract,” Dominguez said. “The board has a lot of choices to make, just like we do. There are a lot of tough decisions to make.”

Yet Nelson, who has led negotiations, said deputies’ 2001 pension enhancement has effectively broken the bank, not leaving much room to maneuver.

With county costs for an annual pension payment soaring beyond 60 percent of a deputy’s paycheck, Nelson said there are tough choices ahead.

Supervisor John Moorlach often points to the 60-percent figure, saying that it’s the best argument that employee groups should collectively work to lower their pension benefit.

Nelson balks at deputies describing the imposition of pension payments on them as a pay cut.

“When I pay it, I don’t get any credit. But when they do, it’s a pay cut,” Nelson said.

“They chose this pension,” Nelson said, disputing a claim by Dominguez that county officials asked deputies to take pension enhancements a decade ago because it was cheaper for the general fund to enhance pensions as opposed to wages.

Despite what actuarial estimates might have been a decade ago, today the reality is ugly.

“This pension is so expensive, Nelson said. "Even if you pay your full share, the employee share, they’re in shock at how much it costs. No kidding. Where have you guys been over the last eight years?”

Nelson adds that when the last Board of Supervisors negotiated with the deputies last time around in 2009, they scaled up deputy payments to their pension in too feeble a fashion.

So while the county’s unfunded pension liability soared beyond the $5-billion mark, deputies’ pension payments were too little. Today, the Board of Supervisors wants them to go from paying about 6 percent to 16 percent.

“They’ve all gotten huge raises. Huge raises. They just demanded it go into the pension jar,” Nelson said.

Yet Nelson admits changing now is a big disruption for deputies. “The hit is big, there’s no denying that.”

Nelson even opened the door to the discussion of raises for the rank and file, saying even a best case scenario means a pay cut for them.

“If they got 4-percent pay increase, it’s actually a pay cut,” Nelson said.

Despite sentiments among deputies that the Board of Supervisors doesn’t appreciate their service, Nelson indicates there isn’t much wiggle room on the budget.

“I’m not looking to screw anybody. It’s not my fault the county budget is flat,” Nelson said.

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Moorlach drops bid for Congressional seat



John ‍Moor‍‍lach, the Orange County supervisor who entered the congressional race to replace retiring Rep. John Campbell, R-Irvine, said Monday he’s exiting the race.

Moorlach, a Republican, said in an interview that the internal pressure of the campaign was too much for him to handle with his current duties as county supervisor.

“I felt I could not back off from the duties at the office,” he said. “I looked at my fundraising numbers and thought, ‘I’m not achieving my goals.’ … Being a candidate is 24/7,” he said, reflecting on the short-lived campaign.

Moorlach received almost $50,000 in the fourth quarter of 2013 and had more than $36,000 cash on hand going into 2014, according to the latest Federal Election Commission reports. He said he has not thought about what he was going to do with the remaining funds and if he was going to run again in two years when the next election cycle comes around.

But he said that he was going to give $2,000 to Rep. Tom McClintock, R-Turlock, because McClintock was scheduled to travel to Orange County to help ‍Moorlach fundraise.

Where there were four in the race for the open Orange County district that spans Anaheim Hills to Rancho Santa Margarita and Trabuco Canyon, there are now three: Republicans State Sen. Mimi Walters, a front-runner in fundraising and endorsements from House Republicans; and retired Marine Corps Col. Greg Raths.

On the Democratic side is Drew Leavens, owner of a company that provides teaching materials for mental health professionals.

Moorlach said he was going to take some time to breathe after the grueling pace of the campaign and then work out what the next steps would be in terms of endorsements and disbursements of the remaining campaign funds.

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