Supervisors Tighten Screws on Retirement Board Funds : Budget: By adding $12.4 million to their spending plan, the supervisors are forcing the pension panel to concede the cash or risk layoffs.

Orange County supervisors last week took $12.4 million that they do not yet have and used it to balance their proposed budget--a move that was as shrewd as it was risky.

The money is expected to come from a reduction in the county’s annual contribution to the retirement fund of its workers. Trouble is, the supervisors cannot trim the contributions without approval from the pension board, and that panel has not agreed to let the county off the hook.

By putting the money in the budget, however, the supervisors have tightened the screws on panel members, forcing them to concede the cash or risk being held responsible for the layoffs of county workers whom they represent.

“I think that we’re all trying to pull together here as a team,” said Supervisor Roger R. Stanton. “It’s long overdue for the retirement board to step up to the plate and join this team.”

The proposed 1991-92 county budget, tentatively adopted by the supervisors last week, is a delicate blend of spending cuts and anticipated revenue, which were combined to make up a $67.7-million shortfall.

The second-largest chunk of new revenue is the $12.4 million, which has been at the center of a 1 1/2-year negotiation that has pitted county officials against the Orange County Employees Retirement System board in a sometimes tense standoff.

The board, which is largely independent of county government, oversees a $1.5-billion fund and currently enjoys a $200-million surplus. When county auditors recently criticized board travel policies, they noted that the surplus is about 13 times larger than what state law requires--which is why the county wants to reduce its new contributions.

The county has long searched for an edge in those negotiations and the supervisors have even considered creating a new retirement system panel, in part to sidestep the current group and speed negotiations.

Pension board members note that while they are sympathetic to the supervisors’ plight, they also have a responsibility to negotiate vigorously for their constituents, the county workers who contribute to the fund and the retired employees whose benefits it pays. As part of their negotiations with the county, retirement board members have offered to help alleviate the county budget shortfall, but they have asked for concessions on medical benefits in return.

“I understand they have a problem, but we’re not the bailout for them,” said retirement board member Keith Concannon. “We’re willing to do our share, but that’s all.”

Robert Thomas, a former county administrative officer who serves on the retirement board, agreed. “This money is not lying in a teapot somewhere,” he said. “It’s not stuffed in a mattress. It’s invested and earning 15% interest.”

Thomas, a member of the pension board’s negotiating group, added that county officials may be trying to pressure the pension board by linking concessions on the government’s fund contributions to resolution of the budget deficit.

“They’d probably go out and say some things in the papers,” he said. “I don’t think the retirement board as a whole would jump up and cheer about that. . . . But I just don’t think it would solve anything.”

County officials denied that including the money in the budget was intended to pressure the board, but conceded that it may have that effect.

“I don’t like to point fingers, but if we’re not able to negotiate this deal, we’ll have to make another $12.4 million in cuts,” Supervisor Don R. Roth said. “That’s $12 million in jobs that will be lost if we don’t get a deal.”

Stanton, who accused the pension board of “playing a little cat-and-mouse game” in its negotiations with county government, said that panel needed to make concessions for the good of the county and its workers.

“Unless the retirement board acts responsibly,” he said, “they’re potentially going to hurt the county family.”

Already, the proposed budget calls for the elimination of 350 positions, and even though many of those are vacant, county officials say they expect to make their first layoffs since 1978, when voters approved Proposition 13, the tax-cutting initiative. The money that has been budgeted from reduced retirement fund contributions is enough to save more than 200 jobs, said Assistant County Administrative Officer Murry Cable.

If the county receives less than $12.4 million in savings from its retirement fund contributions, the difference would have to come from county programs or additional layoffs when the supervisors review their midyear budget update, officials said. The county could also dip into its contingency fund, but that money has been carefully protected in recent years at the urging of finance experts like Auditor-Controller Steve E. Lewis, who say that depleting that reserve fund could leave the county vulnerable in the event of an emergency.

Cable, who is leading the county’s side of the retirement fund negotiation, said he was pleased by recent progress in those talks, which have dragged on for more than a year.

“We’ve agreed that we would shoot for Oct. 1 to wrap this up,” Cable said. “I’m cautiously optimistic.”

Members of the pension board were careful to avoid criticizing the county last week, but several said they were surprised to see the $12.4 million included in the county budget as though it had already been agreed to.

“I don’t know where they got that figure,” Thomas said. “We have not offered them that particular amount.”

Thomas added that four of the pension board representatives are elected by contributors to the retirement system, and that makes those officials accountable to their constituents. It also increases the pressure on the pension board to cut a deal in the best interests of the retirement system, even if it means complicating the county’s budget problems.

“If we just go and say: ‘Hey, we gave away $12.4 million, and the county feels pretty good about it,’ they’re not going to like it,” Thomas said. “That won’t get you elected dogcatcher.”

Staff writer Maria Newman contributed to this report.