From Christian Berthelsen's story:

Orange County has filed a lawsuit seeking to invalidate a portion of the terms of its 2001 labor pact with the union representing its sheriff's deputies, saying that a deal that gave deputies a retroactive increase in their pensions violated the state Constitution.

Read it all right here.

Acting Sheriff Anderson yesterday addressed the Board of Supervisors. We'll have video posted this afternoon.  Additionally, AOCDS (Deputy Sheriffs' Union) sent a letter out to their members, which is posted below the Acting Sheriff's remarks. Here's what the Acting Sheriff had to say.:

Thank you Mr. Chairman and members of the Board for allowing me to address you this morning.

My name is Assistant Sheriff Jack Anderson, Acting as Sheriff of the County of Orange.

Retired Sheriff Michael Carona had twice addressed this honorable Board last year on the matter of the 3%@50 retirement for the current public safety members and those who retired after July 27th of 2002 from the Sheriff’s Department. I listened to Retired Sheriff Carona’s presentations before this Board and have since had the opportunity to read over his notes and PowerPoint presentation. Since members of this Board were present during those presentations, for the sake of brevity I will not repeat previous comments that were made.

I want to begin by stating that as a resident of Orange County that I, as I am sure the over three-million residents of our community, truly appreciate this Board’s efforts to be fiscally responsible in the management of our all too scarce tax-dollars. I am going on record today to say that I applaud this Board’s efforts in seeking ways to reduce the unfunded liability related to the 3%@50 retirement plan for public safety member employees of the County. More...

Sent to AOCDS Thursday evening:

"We fully recognize the frustrations that you, your membership and your Board are experiencing around the stalled negotiations with the County and our Board of Supervisors.  However, we are beginning to walk a fine line of “work-to-rule” and its impact on our courts and the community we serve. 

While we know that you and our deputies and public safety personnel have been diligent in ensuring that no cases are dismissed and that public safety is not put in jeopardy, work-to-rule is having cataclysmic effects on court operations and may jeopardize cases pending in the criminal courts.  

At the same time we understand from conversations with you and Mark Nichols that the negotiations held this week did not go well.

We request that the “work-to-rule” policy be abated until Tuesday, October 16, after the Board of Supervisors concludes their closed session discussion on bargaining issues.  While we have no personal knowledge of a possible resolution, it is our hope that you all can return to the bargaining table to resolve this stalemate without future negative impacts on court operations and public safety. 

We both understand this is a tough request in light of the fact that our deputies and public safety personnel have been without a contract for a year; however, we believe the abatement of “work-to-rule” is necessary to ensure continue public safety and sent a good-will gesture to the county and the Board of Supervisors."

*Signed by Sheriff Michael Carona and D.A. Tony Rackauckas

Rising transportation costs as well as the cost of a barrel of oil appear to be at least partly to blame for our Board of Supervisors' decision to increase their pension contribution by 30 percent (while increasing other benefits) on the very day they moved to decrease public safety pensions by 33 percent.

Peggy Lowe's story, "Supervisors criticized over pensions," apparently struck a nerve. In an email, Supervisor Moorlach wrote, "The headline for the article begs for a response, as the article does not provide the full story. Transportation costs have increased. Oil is trading today at $82 a barrel."

The move was defended, in part, to maintain a benefit and pay differential between the county's appointed executives and elected officials. One wonders if there is some concern over at the Hall of Administration over the county's ability to recruit qualified elected officials in the future, thus the need for higher pay and benefits. Such a concern is surprisingly similar to the Sheriff's Department's challenge to recruit qualified law enforcement personnel.

The debate over appropriate pay and benefits will continue to grow. Especially as retired county workers see their pensions and benefits cut. Beginning January 1, 2008, retired county workers will see increases in their monthly medical premiums rise by, in some cases, about $1,000. Here's the spreadsheet on insurance rates.

Keep in mind, the supervisors don't pay a premium for their medical benefits. Their dependents are also covered.

The Board held a discussion on retired medical benefits on September 11th. Rising transportation costs and the cost of a barrel of oil affect these individuals too. But the county continues to move forward with cutting their benefits. And it has an impact:

Peggy Lowe writes:

"The Orange County Board of Supervisors sweetened their own retirement plans on the very day they made their first move to cut the pensions of sheriff's deputies.

Just minutes after approving the increase to their own retirement savings plans July 31– along with those of other elected officials and county executives – the board began discussions on Supervisor John Moorlach's plan to slash the retired deputies' benefits by a third.

The five supervisors upped the biweekly contribution to their 401(a) accounts – the government's version of a 401(k) defined contribution plan – from 6 percent to 8 percent[...]and increased their monthly car stipend to $765."

Yesterday, she issued a slight correction here. It's a moot point, however. The Supervisors receive a salary. Like any salaried worker, they aren't required to punch a timecard. They receive the same pay whether they show up healthy or stay home ill.

Let me be clear, this blog entry is not meant as a debate over benefits and who receives more or less. It is, however, meant to shed some light on this growing debate, the decisions being made and the excuses for those decisions.

Here's some OC blog reaction to Peggy's story:

The Liberal OC - Moorlach you spiked your own pension, get over it, and this.

OC Blog - Moorlach Responds To 'Hypocrisy' Charge

The Sheriff's speech is transcribed below. Here's his presentation, if you'd like to follow along.

Here's the conclusion:

And so I make the same recommendation to you that I did two months ago.  Thoughtful deliberation of all the facts need to be handled by this Board before you waste more money on frivolous lawsuits or political grandstanding.   

I would make one other request.  As information comes available on this, because I have some 500 retirees and 2200 active members of my department that are concerned with this issue, as an elected department head, I'd like to be informed so I can keep them informed.  This is creating a crisis for the men and women of the Sheriff's Department and frankly, for all public employees because if Supervisor Moorlach is correct about the Constitutional infirmity, it's going to apply to everybody in the State of California.  It's going to apply to OCEA.   

So the actions that you take are being watched by a number of people.  We need to hire qualified people which is why this 3% @ 50 was passed.  Please respect your employees.  Give them that dignity, and do the right thing not only for them but for the citizens of Orange County by having transparency in government. I'd be happy to answer any questions.

Read it all: 

Mr. Chairman, thank you very much for the opportunity to speak.  I know your office made that available to me yesterday afternoon.   Thank you sir.  

I had this Power Point presentation put together for you yesterday afternoon, and I have to tell you, it's changed--not the Power Point presentation, but some editorial comments that I'll be making.  I had the opportunity last night to be at an academy graduation where Supervisor Bates was the keynote speaker.  I did not leave there until after 10 o'clock last night.  And when I got home, I had delivered to my house by fax, a blog site, written by Peggy Lowe, about information surrounding the pension and issues around 3% @ 50.   

Two months ago when I appeared before this Board, I said I was frustrated by the lack of information that had been given to me as the Sheriff of Orange County and as elected department head that would be directly impacted by this.  Last night I was angry that I would, once again, read in the newspaper about what's happening with 3% @ 50, in the newspaper rather than being told about it as the elected department head.  More importantly, that the men and women of my department, those who are retired as well as those who are on the job who are concerned about this, who were worried about what the board may take as an action, are probably equally as frustrated this morning and probably equally as angry.   I've calmed down a little bit. I've had the time to think about the requests that I'm going make of you and some prudence that I think you can entertain as elected officials, as board members.  And I'll get back to the original Power Point presentation that I had for you because I want to educate you.  

You see, the last point on this first slide says the board continues to pursue civilian oversight.  I've heard from each one of you about your desire to have transparency in government, clarity.  Now that argument  has always been focused on the Orange County Sheriff's Department.  You want clarity as to how the men and women act in the field. You want clarity as to how they act in the jails.  You want clarity into the investigations that take place.  And frankly, I agree with the need for transparency.  I've disagreed with you about the way to accomplish that.  But I've never argued once that this Board should not be well informed.  Two months ago you decided that you were going to drop this, what I called a nuclear bomb, on the employees of the Orange County Sheriff's Department, especially AOCDS.  I read about it in the newspaper.  Then I saw a press conference, and then eventually I got a chance to speak before the board of supervisors.  Today this was supposed to come back. I understood this was going to be a public hearing.  And then I find out a couple days ago this was going to be in closed session.  If you're looking for transparency in government, I would argue this issue, of all the issues, needs to be put out in the public.  And now let me walk you through why.  

Next slide.  The road to 3% @ 50.  What you should know, as policymakers, as you go into your deliberations in closed sessions, is exactly how 3% @ 50 came about here in Orange County.  On August 25th, of 2000, the California Legislature passed AB 1937. This bill will authorize counties or districts, subject to the approval of the County Board of Supervisors to one, provide service retirement allowances for safety members based on 3% at 50 or 3% at 55 formula and two, increase allowances being paid on account of retired and deceased members by up to 6% as specified. September the 16th, 2000, the California Legislature SB 1696, this bill would authorize a board of supervisors or governing body of a district to apply any formula, retroactively, to service credit earned during the designated period prior to the adoption of the formula and two, subject to the approval by the employee representatives authorize collection of additional contributions attributable to that formula during the designated period as specified.   

Now, this particular piece of legislation was sponsored  by the State Association of County Retirement Systems.   OCERS, the Orange County Employee Retirement System, is a member of that 20-member body.  Then, Orange County Treasurer, now Supervisor, John Moorlach was a member of the OCERS board of directors.  He understood that this bill was moving forward.  We have researched the legislative intent behind this.  There were no letters of opposition from anyone on this particular piece of legislation.  There were no letters of opposition from OCERS or any of the board members.   

Next, August, 2001, AOCDS, the Association of Orange County Sheriff's enters into negotiations with the County of Orange. Supervisor Moorlach, then Treasurer Moorlach, was a member of the OCE, OCERS board.  The following meetings were held, and these are the accounts that I have in the documentation that we were able to pull up over the last two months from the archives that we have as to what took place of 3% at 50.  Meetings were held between the County the CEO's office, County HR, members of my department, and members of the Association of Orange County Department Sheriffs on August 8, 14, 22nd and 30th, September 13th, 21st, 24th and 27th. I had requested, as did other members at the table, that an actuarial report be run because there was some concern between the County and the Deputy's union as to which numbers were correct.  And so an independent third party that being OCERS, was contacted, and they were requested to hire an actuarial.  OCERS did that.  They hired Towers Perrin.  They conducted a cost analysis of the retirement.  

The next slides that you have to the right of this and on the next page are difficult to read, but what I want to highlight are the areas at the very top.  You'll notice on November the 2nd, 2000, there was a report issued by Towers Perrin with respect to the 3% @ 50 and the cost of 3% @ 50 for not only Orange County Deputy Sheriffs but for firefighers, and they come up with a total.  And that analysis, if you look at top header, it shows that the Orange County Employees Retirement System 3% @ 50, all service assuming shortfall paid by the member.  The page before that was all service assuming shortfall paid by the County.  If you go to that slide on the bottom on the right-hand side, 3% @ 50, future service only, you'll notice some marked increase in the overall cost between future service only at about $5 million for law enforcement to almost $15 million, if it's paid for either by the employer or by the employee.  Towers Perrin on the next page also ran a series of alternative  investment profiles and what the cost would be, again assuming a shortfall paid by the County, assuming a short fall paid by the member, still about $15 million.  

Next page.  And then Towers Perrin also did the examination of what it would be if it were only for future years.  The reason I want the board to understand that, there have been arguments made that this was some type of retroactive benefit.  Well, the discussion was had with the CEO, with the board of supervisors, with HR, about exactly what they were buying into in 3% @ 50.  You had an option, the board had an option, to buy into only future service.  That was given to them.  Towers Perrin did a 3% @ 55 calculation.  They did a 3% @ 50 calculation.  They analyzed it in an alternative environment.  All this information was presented to the board of supervisors, and by the way, the Towers Perrin report was appended to the board action that was taken in December of 2001.  The actuarial costs on November of 2001, were reviewed by the CEO, by AOCDS, by myself, and all of us agreed that those numbers were correct.  In December of 2001, the board of supervisors at that point in time reviewed the CEO's report, the Human Resources Department's report, the amended MOU, as Supervisor Campbell mentioned in the reopener, an approved resolution, 01410, which allowed for 3% @ 50.  I want to read these things into the record because I want the board to understand what has taken place.  

The board's motivation, because that was questioned the last time I was up here, now we're able to pull the exact verbiage.  The reason the Board of Supervisors approved this is because the request was primarily based upon market factors, i.e. a significant number of agencies in California had already implemented the benefit which would impact Orange County's ability to recruit top law enforcement candidates.  Number two, Board's words:  The applicant pool of qualified law enforcement recruits is diminishing, no different today six years later.  Factors causing this impact include a decline in population of people, people's ages 20 to 25 which is the sector where most law enforcement candidates come from.  Number three, the competition for top qualified law enforcement is fierce.  In order to remain competitive and to recruit the best officers, Orange County's benefits cannot lag behind those of other public sector jurisdictions.  Now specific to the funding. Next page.  We were able to pull up in the data that I have and we've now submitted to the County, the information that shows how these dollars were calculated.  At the table in the August 30th meeting was the CEO's office, County HR, AOCDS, members of my staff.  We debated and validated the CEO's calculations,  the 3% @ 50 would cost somewhere between $14.4 million and $15.8  million.  Calculations were based upon looking at one pay period, period 16, and then annualizing that over a year.  It was consistent with what Towers Perrin did in their report.  Towers Perrin also using their assumption came up with 26.6% of the work force that would be eligible to retire.  That was calculated into a shortfall that would have to be made up in one-time expenses.  Staff then calculated the first year.  We actually put a Cola to that. The revised amount that we came up with was $14.7 million, not significantly different than the CEO's findings and consistent with the assumptions given by the actuarial Towers Perrin.  One-time paydowns utilized in the 26.6% of the people that were eligible for retirement was $6.2 million, as calculated by my staff.   

Next page.   On August 30th, we went forward and discussed how we would pay for this.  Revenue offsets from contract cities were approximately $2.7 million, could be used to reduce the overall cost of this program.  Total first-year costs for ongoing retirement and one-time paydowns was $21 million.  How do we fund that?  Well, we came up with some very specific bullets as you can see before you.  $3.7 million came from rate reductions and retirement.  Law enforcement, public safety, the Orange County Sheriff's Department had a reduction from about 22% down to 8% in our retirement costs.  We had been supplementing the overall retirement system for a number of years, and we had dramatic reduction.  One-time pickups took that number back up to about 14%.  The overall savings were calculated into this particular formula. Law enforcement contract revenues from our partners, Santa Margarita's contract revenue, Aliso Viejo's contract revenue.  14B for $6.2 million, that's the one-time paydown.  Those costs are always my responsibility as a department head.  And we utilized 14B as a funding source to pay those off.  At the end of the day we still had a shortfall some $3.8 million.  The question was put back on the table on August the 30th, how do we pay for that. Gary Burton, who was the representative, from the CEO's office at that point in time, argued there is no general fund money to make this happen.  His words not mine.  So we had to figure out how to cover that debt.  AOCDS came to the table, the Association of County Law Enforcement Managers came to the table, and it was decided that 1.78% of their base pay would be utilized to cover this.  And they calculated out what would be a $3.8 million shortfall, and that was to be from June 28th, the inception of this contract, to the end of the contract, which made up the $3.8 million.   

Next page.  Some things that we know today:  According to Supervisor Moorlach, the retroactive pension increase violates the debt limitation provision.  That's what's been put before you.  We've had a group of attorneys that are reserves with the Orange County Sheriff's Department volunteer their time that took this on as a project to do some legal analysis.  I am not a lawyer.  I am just reciting some of their thoughts.  They came across two areas that were persuasive.  The first, the State Attorney General has specifically opined the so-called unfunded liability of the state's portion of the public employees retirement system does not violate Article 16, Section 1 of the California Constitution.  State Attorney General has said there is nothing in the debt limitation provisions of the State Constitution which suggests that the economic advisability of increasing contributions to a pension system is tantamount to indebtedness for a liability.  More importantly, you as a board of supervisors, Supervisor Moorlach when he was in his position as treasurer, and clearly the Auditor/Controller, has never identified the retirement contributions, the unfunded liability as a debt in any of the bond issues that you've put forward.  It is illegal to not list debt.  And my sense is that you wouldn't do something to violate the law.  My sense is the reason it's not listed as a debt is because you've never intended it to be a debt that in fact, this is an on-going obligation.  And so, therefore, we have by our own definition, not shown this as a debt in Orange County.  Number 2, Not a gift, Not extra compensation. In the presentation was made, it was identified as a gift of public funds.  A few weeks back again the same attorneys brought forward dozens of case citations which I'm sure now, after reading Peggy Lowe's article, you have as well.  They argue there are numerous cases that show that increased pension benefits based upon past service are not gifts.  In fact, that's true for both the State and Federal level.  Extra compensation for work already performed which is one of the other arguments that was put before you.  Again, pensions for all service have been okayed since 1941 by the California Supreme Court.   

Next page. What am I asking this for to do. Much like I did two months ago, I'm asking to you examine all the facts.  This was dropped on me, and I couldn't make as detailed a presentation two months ago as I could today.  I've spent hundreds of hours with my staff, digging through boxes in our archives, looking for every scrap of paper to try to piece together what took place during 2000 and 2001.  I now have that.  You now have that.  You've asked for an outside legal opinion.  And I believe you're going to get conflicting comments from the legal experts from what you heard two months ago.   Here's what I believe is the case.  Two months ago you were told in no uncertain terms that you were violating the Constitution of the State of California.  I heard a number of you say, "I took an oath of office to support and defend the Constitution of the United States.  I do not want to violate that oath." There were people that came up here and told you that you may be personally liable for the actions that you've taken.  You were told that if you don't rescind the benefits, if you continue paying these benefits to the individuals who are retired, you are in violation of the law.  Well, I'm going to give you some information now that I know.  First of all, this was not a gift.  This was not retroactive for all employees.  It was paid to anybody that was an active employee the date of July 28th, 2001, for all prior service which is consistent with what happens at the State of California and STERS and PERS and what was allowed under the Senate bill that was passed and adopted by this Board of Supervisors and your resolution.  It was fully funded at $21 million by a series of contributions including contributions by members of the Association of Orange County Deputy Sheriffs.   

This is the newest slide.  Do The Right Thing.  With Peggy Lowe's breaking news last night and the legal opinions now being presented, this clearly deserves more analysis.  I think the legal arguments that you're going to hear are compelling.  More compelling are the analytics behind what took place.  That I can share with you.  That you now have.  That we can now answer for you.  This was fully funded.   

The suddenly tight-lipped Supervisor Moorlach to the Daily Pilot's Alicia Robinson: “I just think while we’re still in the middle of all this that we wait until we get all the data and then I’ll comment,” he said Monday.

     **********

Sheriff Carona requested the opportunity to speak on a non-agenda item at today's Board of Supervisor's meeting. Today was supposed to be the day that the board met to discuss, once again, their intention (or lack thereof) to take the deputies, retirees, and other public safety personnel to court to rescind 1/3 of their pension.

In conduct not becoming their very public cry for transparency and open government (for others), the pension item was deleted from the public session and squirreled away to closed session. After the Sheriff's presentation, he was invited to attend the closed session, until he was uninvited.

Apparently not all of the Supervisors would agree to the Sheriff's presence.

Despite breaking news from the Register's Peggy Lowe, the Sheriff stuck to the PowerPoint we prepared because he felt it was still necessary to get the FACTS of this debate out in the open. A lot has been said as to the motive and intent of 3 @ 50 and most of this opining is being done by individuals who weren't in the middle of the discussion in 2001. The Sheriff was there and he knows the facts.

Here's the video of the meeting. Here's the Sheriff's presentation. Here's Peggy Lowe's take from her blog. Here's the statement from Morrison & Foerster, LLP to the Board of Supervisors "Regarding the lack of legal support for the Board's proposed rescission of the Deputy Sheriffs' pension benefits." Key graph:

"The Board now seeks to spend even more taxpayer money on a third legal opinion. In light of the opinion of the independent counsel retained by the County, we respectfully urge the Board to flatly reject the proposal for expending additional taxpayer funds to obtain yet a third legal opinion."

After the public session, the board went into closed session. Here's what Supervisor Moorlach had to say after closed session had wrapped:

"The Board selected a litigation firm during closed session to continue the process of evaluating the constitutionality of the 1% retroactive pension benefits and, if appropriate, representing the County in litigation.  The selected firm will review the facts of the matter and return to the Board of Supervisors with their assessment."

This firm, of course, will be the firm who would take this to court, should the board decide to head in that direction. This fact, in and of itself, would lead any reasonable person to believe that the scales are tipped in favor of heading to court. After all, this firm will be paid by the taxpayers for as long as this issue remains an issue.

Total bill so far: $80,000 and counting.

We'll have a transcript of the Sheriff's speech later this afternoon. Here's the speech.

So reads today's Los Angeles Times headline on the pension issue. It seems the law firm Supervisor Bates requested to review Moorlach's pension theories during the last public meeting came back with their report:

"Orange County supervisors have slowed the pace of their move toward reducing sheriff's deputies' pensions after receiving a sobering legal opinion questioning the plan's viability.

But people who have seen the legal memo say it doesn't appear to have dissuaded the officials from pursuing their case.

Supervisors originally had planned to vote this Tuesday on selecting a law firm to challenge the 2001 pension agreement. After receiving the memo drafted at their suggestion by an independent attorney, they decided instead to discuss the matter in a closed session Tuesday, possibly postponing a final decision."

It's quite a stretch to conclude that the Board did not know what they were voting for on December 4, 2001, the day they unanimously approved the 3% @ 50 benefit for safety members of the Orange County Employee Retirement System.

In fact, it's clear that they were aware of what they were voting for when one reviews the documents provided to the board "on that quiet December day."

Well, it's clear to most people, but not to Supervisor Moorlach, who wrote in an email on August 16:

"The AOCDS, CEO/Office of Human Resources, CFO, OCERS, Sheriff's Department and District Attorney's Office have worked together in a collaborative that will ensure the county remains competitive in the diminishing market for qualified law enforcement.

The recommended actions before your Board are the result of this collective effort and provide for necessary and appropriate salary and benefit adjustments aimed at maintaining the County's competitiveness in the labor market. The recommendations are in keeping with the parameters set by your Board and the County's Strategic Financial Plan."

When the Board unanimously approved this benefit, they agreed that it was essential for the County to remain competitive in the recruitment of qualified public safety personnel.

Paying the tab: From the amendment of the Memorandum of Understanding stating, "Article XXI Retirement, shall be amended as follows":

Effective June 29, 2001, the County will pay any remaining employee retirement contributions normally required of general and safety members, pursuant to government code Section 31581.2.

When the Board unanimously approved this benefit, they agreed that the County would be paying the cost associated with the benefit.

What is the cost? From the Resolution of the Board of Supervisors of Orange County, California, December 4, 2001:

"WHEREAS, as required by Government Code section 7507, the County has provided an actuarial study showing the potential cost of the implementation of such benefits."

When the Board unanimously approved this benefit, they were made aware of the potential costs associated with the benefit.

While this vote may have taken place "on that quiet December day," the Board of Supervisors did not unanimously approve this benefit based simply on blind faith. The documentation is clear.

Here's a presentation from OCERS, which sheds more light on this benefit and why the Board unanimously approved this benefit for public safety employees.

Every once in awhile I read a line that I wish I would have come up with on my own. Here's one: Supervisor Moorlach is using headstones as stepping stones.

This particular line comes at the end of an especially informative blog post over at Tin Star blog. Here's an excerpt:

"In his bid to make a political name for himself, Supervisor John Moorlach uses bad data and misrepresents fact in his attack on deputy sheriff pensions.

Moorlach apparently feels that old retirees are a burden.

Moorlach represents that living to a projected 'life expectancy' of age 80 for a retired deputy sheriff is a detriment to the pension system because it creates a huge cost to the system which was made worse when the pension formula was changed to '3% @ 50.'"

Here's the entire post.

Sorry for the headline but last night I got an email from Undersheriff Galisky reminding me that I hadn't linked to Christian Berthelsen's article in the Los Angeles Times.  

So here it is, San Diego's pension problem offers a cautionary tale for O.C. The key graphs are near the bottom of the article:

"The legal challenges face an uphill battle: A large body of state and federal constitutional and other protections generally safeguard worker pensions from employers seeking to roll them back. Several labor lawyers said there has never been a case in which a judge allowed an employer to rescind benefits it had already granted.

At their core, the pension problems in San Diego and Orange County vary significantly, with different issues and different legal theories. San Diego's case has largely been based on fraud allegations; Orange County's is more focused on constitutional issues.

Moorlach, who has been leading his colleagues on the issue, said the troubles with the San Diego case did not concern him.

'We're going after constitutional issues,' Moorlach said. 'We think the issues we're raising are a little more weighty than the approach [Aguirre] took.'

But the cases also hold similarities. In each case, the employer is going to court seeking to invalidate benefits it has already granted, and each involves a claim that the debts created by the agreement are unconstitutional.

Orange County is planning to make one of the same arguments that Aguirre used in his case -- that the deal violated the state Constitution's prohibition on deficit spending.

On that point, a San Diego judge ruled against the city earlier this year, finding that violations of the debt limit were the city's own fault and not the fault of the pension fund.

A San Diego union representative said the city's tactics are doomed to fail.

'In addition to being a flawed legal theory and a poorly implemented legal strategy, from the inception it was morally and ethically wrong to attempt to undo a bargain that was made fairly and squarely,' said Ann M. Smith, a lawyer who represented the Municipal Employees Assn. in San Diego. Meanwhile, Peters, the council president, said the city has made progress on repairing its pension finances by making tough choices to put more money into the plan and through negotiations that have forced employees to put up more of their own money. He says the plan is now 80% funded. Aguirre disputes the success of the efforts..."

In other news, The Tin Star blog has a post up on the law firm hired by the Deputies' Union (AOCDS):

"Wayne Quint, President of the AOCDS, said 'We retained Morrison & Foerster because of their record of success in litigation, as well as their extensive experience in constitutional and pension-related issues. We would hate to see the Board of Supervisors renege on their agreement with us, but if they do, we have a duty to make sure that our members and their families, especially the widows and orphans of those who fallen in the line of duty, have the most qualified firm to represent them.'"

The Register's Martin Wisckol writes, "This law firm is a powerhouse and it will be a high-profile case if the county actually files. So you can bet MoFo will be throwing some of its top talent at Moorlach and the county."

And, in somewhat related news, it was reported this morning that "Top executives at major U.S. businesses last year made as much money in one day of work on the job as the average worker made over the entire year, according to a report released on Wednesday."

From the San Jose Mercury News: "Public anger [regarding CEO pay] is high. In a June poll by the Los Angeles Times and Bloomberg, more than eight of 10 Americans said CEOs are paid too much. Congress is seriously debating proposals to boost income taxes for money managers and corporate executives. And more shareholders are telling company boards that pay policies are out of control."

From an NPR report in June: "In a new Bloomberg/Los Angeles Times poll, most Americans say CEOs are unethical and overpaid."

Again, from the San Jose Mercury News:

Highlights from the report on executive pay released today by the Institute for Policy Studies and United for a Fair Economy:

Gaps in pensions: The average pension for CEOs at a large U.S. corporations grew by $1.3 million last year. By comparison, for the years between 2001 and 2004, the average U.S. household with some kind of retirement account saw an increase of $3,775 in value annually.  

Executive retirement funds: A CEO running an S&P 500 company retired on average with $10.1 million in a "supplemental executive retirement plans." Such accounts are limited to high-level executives. Only about one-third of U.S. households headed by someone over 65 even had a retirement account. On average, those accounts were worth $173,552.

Perks: The top 386 CEOs received perks averaging $438,342 in value last year. That would take someone earning the minimum wage 36 years to earn.

Pay for leadership: There's also a gap between pay for business executives and other leaders of U.S. society who do demanding, high-level jobs. According to the report, the top 20 best-paid people at public companies were paid an average of $36.4 million last year. That is 38 times the compensation of the top 20 best-paid leaders at non-profits and 204 times the top 20 generals in the U.S. military.

Los Angeles Times' Dana Parsons wrote a column for yesterday's paper on the issue of pensions:

"I wish I were more resolute for one side or the other. I can't be. Call it the Curse of the Libra.

That curse compels me to be fair, and I'd have a hard time reneging on a collective bargaining agreement. As Carre argues, what comes out in the end is a product of give-and-take. Nobody forced the county to agree.

Do I have misgivings, however, about a cushy retirement package that, if the supervisors are correct, will sink the rest of us? You bet. Life is tough and I don't know many people who can retire comfortably at 50, as deputies and DA investigators now can.

So, I'm torn. But unless a court rules against the deputies, my bottom line is that a deal is a deal. Even if I have to pay for it."

The Sheriff has argued a similar point, as he wrote to the department on July 20th, "As the Sheriff, I have always believed it is extremely important to honor our commitments to our employees."

This theme continued when the Sheriff spoke to the board on July 31:

"Now, granted, I'm not a lawyer and I'm not an actuarial, but I do have responsibility for forty-two hundred men and women of the Sheriff's Department, and I take very seriously the concerns of their lives and what they do.  What you're suggesting is, because you don't know whether or not you have the right to do what a former Board has done, is to impact the salaries of those people who retired in good faith and in reliance on a decision that was made by the Board of Supervisors by some 33%.  You tell them overnight we're going to take that money from you, and we're going to put it into an escrow account, because we're not sure, and until this is litigated, we're not going to give you the money back.  If it is, we'll give you the money back.  And if it isn’t, we are going to keep it.  That is the most Draconian of all the options." 

Got questions on the pension issue? We got answers.

Want to read more? Here's our Deputy Pension archive.

Who created the 3% @ 50 pension benefit?

The State of California passed legislation that allowed the 3% @ 50 to be enacted in cities and counties.  Orange County was one of the last counties in California to adopt 3% at 50.  

Here’s the legislation: SB400 (1999), AB1937 (2000), and AB1696 (2000)

Why did counties and cities choose to offer this benefit? 

Well, it's the same reason you give pay raises and benefits to people. Orange County is one of the most expensive areas in America to live.  You want to have competitive salaries so you get the best people.  Orange County recognized that.  Our local government leaders looked all around us, and found competitive wages and benefits and realized we were falling behind.  We were losing people from the Sheriff's Department and the D.A.'s office – they were going to other counties and other municipalities.  Because we wanted to remain competitive, the Board of Supervisors, through the C.E.O., reopened negotiations with the Deputy Sheriffs, and they negotiated 3% @ 50. 

Here’s a comparison of current wages for Law Enforcement in Southern California.

The median price for a single-family home is approximately $700,000, with a monthly payment of nearly $4,200 (7% interest rate with 10% down). Additionally, Orange County’s cost of living was the 3^rd highest “among our peer regions,” according to a study conducted in 2006. Only San Francisco and Los Angeles/Long Beach ranked higher in cost of living.

You keep saying recruiting is a challenge. How can that be with the generous pay and pension we hear about from the media? 

Currently, the OCSD has approximately 350 vacancies -- a shortage of deputy sheriffs and special officers. According to the California Employment Development Department (EDD), from 2004 to 2014, the Orange County workforce will require 17.3% additional law enforcement officers.

In 2006, 4,414 people applied to the OCSD for a deputy sheriff position, 1,146 passed the written exam, and 118 completed the background process and were hired. Of these 118, 19 were lateral transfers from another law enforcement agency and the rest were sent to the OCSD Academy. Of the 99 sent to the OCSD Academy, 49 graduated.  

It’s going to take more than designer desks and plasma televisions to recruit qualified public safety employees. We live in one of the most expensive areas of the country and must work within the constraints of a very tight labor market. Competition to fill law enforcement vacancies is fierce; therefore, pay and benefits must be attractive.

The agreement between AOCDS and the County authorizing 3% @ 50 is unconstitutional. You guys don’t have a leg to stand on. Why are you more interested in maintaining your benefits than following the “rule or law”? 

Although the media and those supporting the rescission of public safety pensions have taken Supervisor Moorlach’s untested legal theory as the infallible truth, the theory remains untested. Until such time as a judge, in a court – and most likely, many judges in many courts - makes a determination, this remains nothing more than an untested legal theory.

What about the retroactive portion of the benefit that everyone keeps singling out? Why should people who retired prior to 3% @ 50 get the benefit? 

Any person who retired prior to approval of 3% @ 50 did not receive any increase in their pension benefit. If an individual retired at 2% @ 50 they still receive 2% @ 50. Only those individuals who were employed at the time 3% was approved and implemented received the increased benefit.  

We repeat: The benefit was not retroactive. All retired personnel were subject to the pension benefit they received at the time of retirement. Nothing more.

Well, the 3% @ 50 is really nothing more than an “unintentional mistake” made by an uneducated Board of Supervisors back in 2001. Had they only known what they were voting for, they never would have voted to okay this public safety pension.  

You appear to be stating opinion more than asking a question, but we’ll answer anyway.

When questioned about his vote to approve the 3% @ 50 when he was an OC Supervisor, Assemblymen Todd Spitzer told Register editorial writer Steven Greenhut that he still zealously defends it.

There was nothing unintentional about the Board’s decision. Nor is there any question as to what the California legislature was intending to do when they passed the bill to allow counties to offer 3% @ 50. Furthermore, referring to this as a "mistake" is premature given the fact that at this point all we have is an untested legal theory with which to form such an opinion.  

The current pension, as agreed upon by the