(July 31, 2007) -- In a development that may have major positive implications for LB taxpayers but is likely to be strongly opposed by LB public employee unions, the OC Board of Supervisors voted on Tuesday July 31 to pursue the possibility of rescinding a previously granted pension increase given to OC Sheriffs under a 2001 state law.
The OC Supervisors voted to issue a Request for Proposals for independent counsel to file a declaratory court action that would seek court authority to rescind the pension increases...an action that may have parallel applicability in LB.
The OC Supervisors' action stemmed from a memorandum from the office of OC Supervisor John Moorlach which cited a number of legal grounds in arguing that the retroactive pension increases were illegal and void at their inception.
Recent legal analysis performed by our office and by independent counsel retained by the
County demonstrates that the retroactive pension increase, paid for almost entirely out of General
Fund money, violates the California Constitution in several respects: (1) it violates the debt
limitation of Article XVI, Section 18; (2) it is a gift of public funds in violation of Article XVI,
Section 6; and (3) it is extra compensation to public employees who already performed the
services for which they were compensated, in violation of Article IV, Section 17 and Article XI,
Section 10. Because this retroactive increase was unconstitutional and thus illegal, it must be
rescinded. Any one of the three grounds will suffice for rescinding the retroactive increase.
To view the memo in its entirety, click here and click for memo.
[LBReort.com provides the text of OC Supervisors' item as agendized, supporting memorandum and video link to Board proceedings below].
Among those supporting the Moorlach memo's legal analysis was LB resident and Chapman University Law School Dean/Professor John Eastman [speaking in his personal, non-Chapman capacity]. Among other things, Prof. Eastman warned OC Supervisors that they might be held personally liable for the pension costs if they failed to seek a court determination on the matter.
Prof. Eastman stressed that the state constitution trumps the statute enacted by state lawmakers...on which the OC [and we believe the LB] retroactive pension increases were based.
The legally arguments presented in the Moorlach memo and Prof. Eastman's own presentation were apparently sufficiently strong that OC D.A. Tony Rackauckas didn't try to controvert them outright. Instead, he urged caution by the Board, noting that in such litigation experienced lawyers on both sides make persuasive arguments.
OC Sheriff Mike Carona argued against pursuing the pension challenge.
Ultimately, the Board of Supervisors agreed also to seek a separate independent legal opinion from a constitutional law expert on the matter before filing the request for a declaratory ruling. The issue is ultimately expected to wind up before an appellate court...probably the CA Supreme Court.
So...might the reasoning of the Moorlach memo be applicable to LB...to free LB taxpayers from the costly 2002 "pension spike" given to non-public-safety employees...an action that 2006 Mayoral candidate Bob Foster publicly criticized and cited against his election opponent, then-Council incumbent Frank Colonna?
LBReport.com has webposted this story as breaking and wasn't able confirm with LB city management by the end of the July 31 business day that [as we believe] LB City Hall used the same state law as OC to give a major 2002 pension increase to LB's non-public-safety city employees...or whether LB's pension increases [for non-public safety and public safety employeers] were [as we believe] awarded retroactively, a key point in OC's challenge.
And we haven't yet asked the LB City Attorney's office what it thinks of the Moorlach memo or Prof. Eastman's reasoning...but we will...and we'll provide responses as received.
Apart from legal issues, the issue is pregnant with political implications as LB enters the 2008 election cycle with contests likely in Council districts 2, 4, 6 and 8 and two other Council incumbents seeking Sacramento office. Will they side with taxpayers in seeking relief from the pension spikes...or with public employee unions who want their pension increases despite the taxpayer expense?
LB's 2002 "pension spike" for non-public-safety employees stemmed from an item scheduled on the last day of an outgoing Council and the first day of an incoming Council under Mayor Beverly O'Neill, after she was safely reelected a few weeks earlier. City management under then-City Manager Henry Taboada supported the action and then-City Auditor Gary Burroughs didn't oppose it.
In the 2006 election cycle, Mayoral candidates Bob Foster and Doug Drummond and (separately) City Auditor candidate Laura Doud cited the costly "pension spike" in pummeling their incumbent opponents. Candidate Foster indicated in several public venues that he thought the agreement probably shouldn't have been entered into.
Prior to today's OC Supervisors meeting, the LB Police Officers Ass'n -- which endorsed Foster for Mayor -- issued a scathing release calling Supervisor Moorlach's pension motion as an attack on OC law enforcement officers.
In the 1990s, private citizen Moorlach regularly warned the OC Board of Supervisors of an impending financial disaster...and was brushed aside. When his warnings proved right on, he was hailed as a hero and elected to OC countywide office. In 2006, he won election to the policy setting OC Board of Supervisors despite efforts by public employee groups to defeat him.
The item as agendized was:
"Consider indicating intent to rescind the retroactive portion of the 3% at 50 pension increase to all Public Safety employees who received such retroactive increase as part of amendment to Memorandum of Understanding approved on December 4, 2001, except that members who have retired since increase took effect shall not be required to repay any pension payments that they have actually received; direct staff to return to Board on September 11, 2007 with a recommendation on how to effect rescission; direct County Counsel to complete a Request for Proposals and return to Board on September 11, 2007 with a recommendation to employ counsel to file a Declaratory Relief action in Orange County Superior Court against Association of Orange County Deputy Sheriffs (AOCDS) and the Orange County Employees Retirement System (OCERS) and seeking an injunction against further payments of the retroactive portion of retiree payments; and direct staff to determine with OCERS the cost of payment of retroactive benefit by active safety employees and consult with AOCDS regarding proposed contract to make such payments."
To view the video of the OC Board of Supervisors discussion on the item, do the following: (1) click the hyperlink below that opens a video index page; (2) scroll down to "Board meeting archive; (3) locate the 7/31 board item "Morning session" and click "Play" and the video player should open, THEN (4) look in the lower left box for "Select Meeting Segment" and scroll down to agenda item 27. Click on it and you should jump to video of the discussion which starts at 46:19 into the meeting.
Ready? To open the video index page, click here
