John Moorlach, a conservative politician in a conservative county, just got elected to a seat on the Orange County Board of Supervisors. And the first thing he wants to do is copy San Francisco.
Come again? That's right. Moorlach was close to being a single-issue candidate, and his issue was pensions. Orange County's pension system for its government workers is generous – and underfunded.
San Francisco, otherwise a center of big-government liberalism, has a charter provision that requires county officials to seek voter approval when they want to increase employee pension benefits. That check on the impulses of its elected leaders has left the city with a pension plan that is probably the soundest of any major jurisdiction in the state. It is fully funded and costs the taxpayers only about 15 cents for every dollar of payroll. Orange County's system costs nearly twice that, and faces a $2 billion deficit.
“It's a killer,” Moorlach says of the contrast. “And the last I heard, we were the conservative county. Everything is backwards.”
Moorlach is Orange County's treasurer. He rose to local fame in 1994 by warning, as a private citizen, that the county's investment fund was invested in a risky portfolio that could lead to bankruptcy if interest rates rose. Nobody listened, but he proved prophetic.
Now he believes that retirement benefits are a looming crisis, in Orange County and for local governments across California. His focus on the issue made him the No. 1 target of the public employee unions in the June 6 election. They spent more than a quarter-million dollars trying to defeat him.
One mailer the unions sent to voters was especially egregious. On the cover, it showed a picture of a firefighter battling a blaze with the words “We lost him” in all capital letters. Inside, the piece charged that Moorlach “wants to take money from the widows and orphans of our first responders.”
That charge, similar to one the unions used effectively against Gov. Arnold Schwarzenegger a year ago, stems from Moorlach's (and Schwarzenegger's) support for a proposal that would have created a new pension system for future government employees that featured individual investment accounts rather than guaranteed retirement benefits. Because death and disability benefits for employees killed or hurt in the line of duty are provided as part of the current system, the unions argued that the change would leave widows and orphans out in the cold.
Moorlach says that's nonsense, that their needs could easily have been covered by simple insurance, which might have provided an even richer benefit. Besides, that particular proposal is no longer even on the table. But that didn't stop the unions from trying to use the issue against him.
Instead, the attack backfired. The union campaign made Moorlach's race a referendum on the pension issue. Had he lost, it would have sent a message to every politician in the state to address the issue at their peril. He won with 70 percent of the vote, and now he is more determined than ever to follow through.
There is nothing Moorlach can or will do about pensions for county employees who are already retired or are still working. Their benefits are guaranteed by contract and by law and cannot be changed. Most county employees can retire at age 55 with a pension equal to 80 percent of their final salary. And public safety workers can get 100 percent of their salary in retirement.
But with the pension fund short more than $2 billion of what it needs to pay all the benefits already promised, Moorlach wants to make sure the problem does not worsen. So he wants Orange County, like San Francisco, to put future pension increases to a vote of the people.
His long-term goal remains the adoption of a defined contribution plan that would have new employees contribute to an individual account, with the county matching their contribution. Workers would own the accounts and could take them with them when they quit, which would be an advantage for employees who do not spend their entire career with the government.
“We have to do the marketing,” Moorlach says. “We have to educate the voters. We have to educate the employees.”
A lot of people in Orange County seem to have learned something on June 6: A candidate who is willing to stand up to the public employee unions can win. Maybe that lesson can help end the political flame-throwing and pave the way for an intelligent conversation on a difficult problem.
