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.