MOORLACH UPDATE — Questioning Outsourcing — July 23, 2014

The first piece below, from the OC Register, provides a surface review of yesterday’s attempt to provide the County with another critical fiscal management tool. The second piece in the Voice of OC digs down a layer. A great third piece would have gone a little deeper by asking who lobbied my colleagues. Not one union representative bothered to make a public comment on this agenda item.

There was plenty of time for my colleagues to prepare for this vote. My office provided the information for this agenda item to the offices of my colleagues on July 10th. Supervisor Spitzer provided his Charter amendment last Friday afternoon, July 18th. There was nothing confusing about my proposal, as it mirrored that of Los Angeles County (see MOORLACH UPDATE — Outsourcing Measure — July 21, 2014). I could explain outsourcing in less than 30 seconds. Supervisor Spitzer couldn’t explain his measure in less than five minutes. Consequently, for your consideration, I’m providing a bonus below. It is the e-mail that Supervisor Spitzer referred to when he said it was the impetus for needing additional time to study this very simple proposal (it is referred to in the OC Register piece, less a zero or two). After abstaining on outsourcing, the Board then approved, after an agonizing discussion on wording, Supervisor Spitzer’s request for a miniscule and insignificant Charter amendment for the November ballot to fix his Measure V, the original Charter measure, with four votes. Go figure.

Proposal to outsource county jobs fizzles

Supervisors want more details on plan that would reduce salary, pension costs.

BY ERIKA I. RITCHIE STAFF WRITER

A plan to ask Orange County voters to consider outsourcing county jobs to private contractors fell flat Tuesday when three supervisors abstained from voting on the issue.

Supervisor John Moorlach proposed managed outsourcing – as a way to lower the county’s unfunded pension liability – by reducing government workers and hiring contract employees. By doing that, the county could pay salaries and pension costs more like those in the private sector, reducing the county’s overall expenditures, he said.

Moorlach noted examples of outsourcing in Los Angeles and San Diego counties.

In San Diego, he said, recent reports show the county has saved hundreds of thousands of dollars by outsourcing through private companies. Moorlach also citedthe Orange County Transportation System’s use of outsourcing.

OCTA earlier this year signed a contract in which up to 40 percent of their bus drivers come from a private company. Some engineering and design work is also done by contractors, said OCTA spokesman Joel Zlotnik.

“This is an excellent management tool for the county and for the unions as a way to reduce cost,” he said.

Supervisor Todd Spitzer liked the idea but said he couldn’t support it without doing research.

“I’m excited you brought this forward but I don’t know what you’re trying to fix,” Spitzer said. “I feel we’re on a hard-pressed deadline to put something on the Novemberballot. I’m not prepared to support it. I have a lot more questions.”

“I certainly think competitive bidding in the private and public sectors is good and can reduce costs,” Supervisor Pat Bates said. “But I don’t think we should put something before the voters without context. Makes more sense to have meat on the bones.”

“The language of the ordinance was not clearly crafted,” Supervisor Janet Nguyen wrote in a email response. “An ordinance should not be a mere statement of intention. Particulars need to be addressed, so that the public knows what they are voting on.”

Nguyen, Spitzer and Bates abstained from voting. The item failed for lack of amajority. Moorlach needed three votes by Tuesday to put the item on the November ballot.

“Unfortunately political priorities for the November election took a higher priority than doing what’s right for the taxpayers,” Moorlach said after the vote.

The plan would have required voters to approve a change to the county’s charter.

In 2002, with the approval of Measure V, Orange County became a charter county. That means what the county decides becomes the “law of the state” and can affect legislation. Charter approvals usually trump any conflicting state law.

If voters had approved the charter amendment on outsourcing, the board would have had to specify the criteria for each contract.

Moorlach said he did not have specific jobs in mind when he proposed the ordinance.

The issue comes up as the city of Costa Mesa continues to facelegal battles regarding attempts to outsource city jobs. The city looked to outsourcing as a way to reduce costs and avoid dipping deep into its reserves.

Opponents of the outsourcing idea disagree with Moorlach and say that outside contracting could mean lower quality and might be prompted by lucrative agreements that could finance elected officials’ political campaigns.

Separately, the board approved changes to an ordinance that will make discussions on county contract negotiations with unions more transparent. But labor groups still want the board to meet with them and hash out the issue. The Orange County Employees Association on July 11 filed an unfair practice charge with the state Public Employment Relations Board.

“The board has repeatedly rejected our efforts to make county contracting truly transparent by shining a light on all contracts – those with employees groups as well as those with outside contractors,” said Jennifer Muir, general manager of the employee union. “This program is not only unlawful, it’s a way to divert the community’s attention from all the money changing hands between lobbyists, contractors, politicians and the county during the process of awarding millions of taxpayer dollars. It’s a free-for all, which is why even the Orange County Grand Jury called for an ethics commission in Orange County to clean it up, and repeated internal audits have shown millions of dollars in no-bid contracts.”

The board removed a provision to automatically appeal the ordinance on Jan. 1, 2017. If approved on Aug. 5, the ordinance will be valid until another board changes or deletes it.

The ordinance, brought to the board by Moorlach, gives the public the opportunity to review contracts with organized employees. Called Civic Openness in Negotiations, it will prevent the approval of labor contracts with little or no public scrutiny. It follows a similar one passed in Costa Mesa in 2012.

The ordinance will require the board to report formal offers and counteroffers from closed sessions.

When a labor contract is proposed, the county auditor-controller would estimate the financial impacts of its terms and also provide the current contract’s terms. The information will be posted on the county website and be available for comment by labor groups and the public.

The board alsoadopted an ordinance prohibiting the collection of signatures supporting political candidates at county workplaces. The law goes into effect in 30 days.

Contact the writer: 949-492-5152 or eritchieTwitter: @lagunaini

Colleagues Reject Moorlach’s Effort to Outsource More Jobs

Orange County Supervisor John Moorlach (Photo by: Violeta Vaqueiro)

By NORBERTO SANTANA JR. Voice of OC

Orange County supervisors on Tuesday soundly rejected a proposal to amend the county charter to allow for greater outsourcing of government jobs, barely even allowing a brief public discussion of the issue.

Two county supervisors seeking election this November to the state senate — Pat Bates and the OC GOP Elected Official of the Year Janet Nguyen — never even uttered a word from the dais about the idea to outsource government work to the private sector, other than to quietly indicate they didn’t support the idea.

County Supervisor John Moorlach – who is finishing his second and final term this year – said he felt election-year jitters likely prevented his colleagues from taking a vote or dealing with the issue publicly.

“The drift was, ‘John, we have an election in November, and our priority is to get people elected,” Moorlach said was the message he got from his colleagues.

“I said, my priority is to give taxpayers tools to balance budgets. That’s what I came here for. I came here to hunt for Bear. Not to swat flies.”

Moorlach told other supervisors about his idea just this last week, saying it was part of his original goal to enact charter reform. But, there seemed to be little appetite for an initiative that would be seen as an attempt at union busting to go alongside Bates and Nguyen on the November ballot.

“I sensed that the political priority was probably going to override, but I wasn’t sure, so the only way to find out was to move forward, explain it and watch the dance,” Moorlach said.

Supervisor Todd Spitzer was the only audible voice from the majority on the dais Tuesday.

“I’m excited that you brought it forward,” Spitzer said. “But I’m not sure what I’m trying to fix yet.”

Spitzer suggested the debate was better for a charter review commission. “I just don’t’ have enough information to support it,” he said.

While Supervisors’ Chairman Shawn Nelson was the only supervisor to offer Moorlach a second to his motion, thus allowing debate, he said the measure’s timing was off.

Asking colleagues to engage in a ballot measure on the last day to qualify just didn’t give them enough time, Nelson said.

“John is running out of time. He doesn’t get another bite at the apple. I understand he’s frustrated,” Nelson said.

“I was willing to give him a second. But it didn’t have any legs.”

One Moorlach proposal that did end up with enough legs on Tuesday was his proposal to make labor deals public before a final vote by county supervisors.

While Moorlach’s colleagues balked earlier this month at approving his Civic Openness In Negotiations (COIN) ordinance, they did give final unanimous approval to the measure Tuesday.

BONUS:

Members of the Board of Supervisors:

Item no. 39 on tomorrow’s agenda, if approved by the Board and adopted by the electorate, would authorize the County to utilize managed competition (i.e., “outsourcing”) in the delivery of County services. The proposal that is before the Board is almost identical to Section 44.7 of the Los Angeles County Charter.

Los Angeles County

In August 1987, the Los Angeles County Economy and Efficiency Commission reviewed the success of Los Angeles County in its utilization of its outsourcing. In Los Angeles County, contracts let pursuant to this outsourcing authority are called “Proposition A” contracts. A copy of the Commission’s report is available at this link:

http://eec.co.la.ca.us/publications/html/contract/8708-contractingpolicy.asp#result

Though now somewhat dated, the Commission’s findings give some insight as to how the County of Orange might utilize similar outsourcing authority, as well as the amount of savings that might be realized.

· The 1986 report indicated that Los Angeles County utilized its outsourcing authority to contract out 20% of its operating budget. The report indicated that Proposition A contracting, for work formerly performed exclusively by County employees, amounted to 1% of Los Angeles County’s operating budget and was generating (in 1986 dollars) annual savings amounting to $24 million.

· The 1986 report indicated that Proposition A contracting had not substantially reduced Los Angeles County’s workforce. The report found that over 1,060 of the 1,320 employees whose jobs were eliminated by contracting still worked for Los Angeles County in similar jobs. The report indicated that, of the 1,320 employees whose jobs were eliminated, 805 (61%) transferred to equivalent positions, 224 (17%) were promoted, 128 (10%) went to work for the contractors, 96 (7%) left County service, 35 (3%) were laid off, and 32 (2%) were demoted. The County rehired 26 (74%) of the 35 laid off.

· The 1986 report indicated that, at that time, Los Angeles County government had utilized its outsourcing authority for “low level internal services – custodial, maintenance, food service, security guards, and so forth.”

San Diego County

In 2010, the San Diego County Grand Jury reviewed San Diego County’s utilization of the outsourcing authority granted by the San Diego Board of Supervisors to the County Director of Purchasing and Contracting. A copy of the Grand Jury’s report is available at this link:

http://www.sdcounty.ca.gov/grandjury/reports/2009-2010/EfficiencyGovManagedCompetitionReport.pdf

The San Diego County Grand Jury reported the following findings:

· On March 13, 2007, the San Diego County Board of Supervisors adopted Ordinance No. 9836 granting the Director of Purchasing and Contracting expanded authority to enter into contracts to purchase, rent or lease all personal property for the County and to engage independent contractors to perform services for the County. The ordinance also granted the Director authority to enter into contracts, without the approval of the Board of Supervisors, where the total anticipated value of the services or non-services provided are under $1,000,000 per year.

· The Grand Jury found that the San Diego County Director of Purchasing and Contracting had administered managed competition, outsourcing and reverse auction transactions under the County ordinance, which together with reengineering, had resulted in savings of $678,596,736 for the taxpayers of San Diego County through FY 2008.

· San Diego County’s managed competitionprogram resulted in savings of $78,935,727 through FY 2008.

· According to the San Diego Grand Jury, San Diego County saved $261,100 on the cost of supplies and tree removal in reverse auctions conducted in December 2009 alone.

If approved, such a charter amendment would provide this County with additional flexibility in the delivery of public services in the future. It would also provide the County with an additional legal defense in the event that any of the County’s existing contracts with outside providers are ever challenged.

Please contact me or Senior Deputy County Counsel Leon Page if you have any questions.

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