MOORLACH UPDATE — Repealing the Cap — May 7, 2017

The Orange County Breeze provides a hint at the potential fun I may have this coming week on the Senate Floor with a revised version of my SB 590 (also see MOORLACH UPDATE — Budget Reserve Cap — May 5, 2017 may 5, 2017 john moorlach). This exercise could occur on Monday or Thursday. And this should also provide more of an insider’s look regarding today’s LA Times coverage (see

On Monday afternoon, at the Senate Public Employment and Retirement Committee, two of my bills will be heard. SB 371 will attempt to put something very obvious into the state code, as the Meyers-Milias-Brown Act does not prohibit conflicts of interest in bargaining unit negotiations. Consequently, someone on the staff of a municipality who would benefit directly or indirectly from the negotiations is able to represent the entity and its governing board.

I’ve seen first-hand how egregious this can be. The County’s management was not vociferously arguing against granting "2% at 50" or "2.7% at 55," because they would receive the very same benefit improvements. Awkward. But, not prohibited. The public employee unions have already lined up to oppose this bill.

The second bill is SB 671, which is designed to clarify the State Code as it relates to prepaying pension plan system contributions. A financial arrangement that I helped design and implement was the ability to borrow the amount of the annual contribution and deposit the entire amount into the Orange County Employees’ Retirement System (OCERS) at the beginning of the fiscal year.

Instead of making twenty-six deposits, one every two weeks, those payments were redirected to paying down the note. The incentive to do this resulted from OCERS providing a generous discount that exceeded the interest costs of the borrowing. In fact, the first year this was done, the County of Orange saved more than $4 million in net present value savings (so I can assure you that I earned my salary, and then some) (also see MOORLACH UPDATE — Pension Efforts — January 28, 2011 january 28, 2011 john moorlach).

On Tuesday, I will again present SB 59, as amended, to the Senate Governmental Operations Committee (also see MOORLACH UPDATE — Budget Reserve Cap — May 5, 2017 may 5, 2017 john moorlach). The presentation last week to the Senate Governance and Finance Committee, which was a very positive and surreal experience, can be seen at

SB 665 is also on the Senate Floor Agenda and can be brought up on Monday or Thursday (see MOORLACH UPDATE — There Ought Not Be A Law — April 23, 2017 april 23, 2017 john moorlach). This bill springs out of an awkward occurrence with the Registrar of Voters and two parties wishing to provide opposition arguments for a ballot measure. For the Orange Unified School District, the coin toss last November created a very odd result.

To help avoid similar instances in the future, SB 665 "requires an organization or association submitting a statewide, county, city, or school district ballot measure argument to also submit additional information to the elections official to enable the official to determine if it qualifies as a bona fide association of citizens."

I’m glad to have the support of the California State Association of Counties, of whose Executive Board I served for many years on behalf of the County of Orange, the Urban Counties of California, of which I Chaired for one year in the same role, and the Howard Jarvis Taxpayers Association.

It should be another fun week in Sacramento.

Senator Moorlach seeks to protect students during budget shortfalls

Since 2014, there have been several attempts to repeal a cap that prohibits school districts from saving for a rainy day. Senate Bill 590, introduced by Senator John Moorlach (R-Costa Mesa), aimed once again to repeal the burdensome cap. Sacramento Democrats killed SB 590 in the Senate Education Committee last week.

Senator Moorlach will continue his efforts to repeal the cap by introducing a classroom protection amendment to SB 751 that gives locally elected school boards more discretion over their budgets so they can save for a rainy day.

This is a bipartisan issue. Sacramento Democrats and Republicans have agreed that capping reserves limits options for schools.

In a letter dated June 2015 addressed to then-Assembly Speaker Toni Atkins and Senate President pro Tem Kevin de León, 26 Sacramento Democrats – including Chair of the Senate Education Committee, Senator Ben Allen – agreed that “the current cap on school district reserves has potential for several negative impacts, including school districts paying higher interest…” Further, the letter stated that “higher interest rates result in taxpayers paying more and schools having less money.”

The letter went on to state that “the cap leaves school districts more vulnerable to insolvency during economic downturns by forcing them to maintain inadequate reserves.”

Earlier this year Democrat State Superintendent of Public Instruction Tom Torlakson weighed in on this issue in a budget hearing stating his opposition to the cap on school district reserves.

Read the full June 2015 letter here.

This article was released by the Office of Senator John Moorlach.

The video showing Senator Moorlach presenting SB 590 is below.


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