ORANGE COUNTY IN BANKRUPTCY : Supervisors Clash Over Plan to Revamp County : Crisis: Roger Stanton, irking his colleagues, goes solo with a blueprint to remake government after bankruptcy.

As Orange County supervisors publicly sought to make peace with angry labor unions, they privately battled among themselves Friday over who would take the lead in revamping government in the wake of an unprecedented bankruptcy.

Supervisor Roger R. Stanton was completing a “white paper” on restructuring the county late in the day when colleagues accused him of acting behind their backs.

“It looks to me like Roger is operating independently and perhaps has his own agenda,” said a fuming Supervisor William G. Steiner, who was surprised to learn that the “white paper” was being drafted without his contributions. Steiner said Stanton had previously asked him to co-author the work.

Supervisor Gaddi H. Vasquez refused to comment but also appeared visibly upset upon learning of Stanton’s solo effort.

The infighting marked the first visible rift among the county’s incumbent supervisors, who have sought to present a united front in trying to restore confidence in a county battered by the 4-week-old financial crisis.

In outlining his “white paper” to The Times, Stanton questioned whether County Administrative Officer Ernie Schneider provided adequate oversight of the county’s financial dealings.

“What did the CAO fail in doing?” Stanton said. “What are his responsibilities of oversight?”

Stanton said he plans to release the “white paper” today.

Earlier in the day, the board tried to soften the blow of what is expected to be hundreds of layoffs and forced early retirements. Supervisors promised those let go because of the county’s bankruptcy will receive a onetime cash payment for their sick leave, vacation and other benefits.

Supervisors also reversed their initial demand that county workers who choose to take early retirement by Jan. 10 sign waivers saying they will not sue if the county fails to pay their benefits over the next three years.

Officials characterized both moves as good-faith efforts to deal with angry labor leaders and the county’s 18,000 workers. But spokesmen for county employees decried the concessions as meaningless and said they would move ahead next week with legal action to halt widespread layoffs.

“It’s like somebody who is trying to cut off both of your arms then says, ‘Wait a minute, I’ll only cut off one of your arms,’ ” said Paul Crost, a lawyer for the Orange County Attorneys Assn., whose members include all deputy district attorneys, public defenders and lawyers in the county counsel’s office.

Charities Will Go on

In other developments:

* Supervisors began meeting with consultants who are seeking to help the county out of bankruptcy. In separate sessions with Vasquez and Stanton, William O’Connor--a principal in a Newport Beach public finance firm--suggested increasing various fees, such as landfill dumping charges and utility taxes, to help restore the county’s solvency.

* In an emergency session called to discuss the impact of the county’s bankruptcy, Catholic Charities of Orange County vowed to continue job placement and other programs despite concerns that the agency may not be reimbursed for the services, whose funding is administered by the county. Those services include emergency food and housing for the needy, in-home care for the elderly, gang prevention efforts and services to people with hearing impairments.

* The National Assn. of Counties established a “county financial hot line” to respond to inquiries from counties regarding investments. A task force also has been established to analyze the current state of county investments and the creation of a financial services center to assist counties in matters of public finance.

* County leaders started working on separate plans for dealing with the county’s future. Vasquez, the board’s new chairman, said he was studying whether to allow private companies to run county-owned parks, landfills and other facilities to raise money. Meanwhile, Stanton was completing his “white paper” on restructuring county government.

Stanton said his proposal starts “with a basic examination of everything we do.” The county has long neglected to trim fat or chop layers of bureaucracy, Stanton said, because the economy was good and there was an attitude of “if it ain’t broke, don’t fix it.”

“Now it’s broke,” Stanton said. “We don’t want to patch up the same ship and sail on.”

But Stanton’s proposal seemed to rile other supervisors, including Steiner and Vasquez, who said they were not aware their colleague was putting together a restructuring plan.

“Roger Stanton specifically asked me to join him in this restructuring effort,” Steiner said. “I’m surprised at this--what did he call it, white paper or proposal--because I was under the impression that I was to be joining Roger. . . . I’m certainly interested in his ideas, but I don’t think county government necessarily needs to be dismantled.”

Stanton said his paper proposes identifying county services that are essential and then looking at each department to see if it should be merged, cut, restructured or left alone. He said the county has been a “catch basin for every little project” from communities and the county.

Following accusations the county officials neglected to oversee Treasurer-Tax Collector Robert L. Citron and the investments he made on their behalf, Stanton also said the county needs “a clear delineation of authority and communication.”

The responsibility of county leaders needs to be re-examined, he said. Stanton specifically cited the administrative office run by Schneider, with whom he has frequently--though privately--clashed. Schneider could not be reached for comment Friday night.

Bracing for Cutbacks

Across the county, frustrated city and school officials braced for more severe cutbacks.

In Huntington Beach, the City Council is set to make nearly $1 million in cuts Wednesday in an effort to close a budget shortfall that has been worsened by the county’s financial crisis. “We have to bite the bullet and see how to deal with it,” said Councilman Ralph Bauer.

In Irvine, school board member Hank Adler said Friday that he expects the Irvine Unified School District to lay off workers. But he said he doubted the district would follow the county into bankruptcy.

“I think we can work our way through it,” he said. “I think (bankruptcy) is possible, but I think it’s unlikely. I’m going to do everything I can to prevent that from happening.”

Irvine schools have the most of any Orange County school district--$102 million--in the county’s now-frozen investment fund, which has lost $2.02 billion in value this year.

Adler and other board members said the district could avoid bankruptcy by selling some assets, such as surplus property. But they said they would try to avoid selling parcels slated as school sites.

“We have some assets we can sell,” Adler said. “Obviously, there’s a lot of steps you can take in a $100-million organization.”

Other school districts said they would consider cutbacks next week.

Placentia-Yorba Linda Unified School District Supt. James O. Fleming is preparing a list of budget cuts for the Board of Trustees to consider Jan. 10. “We put a hold on a bunch of projects,” after the county declared bankruptcy, said trustee Jerry Brakebill.

Trustees of the Tustin Unified School District meet Friday to consider a second round of cuts. They also will consider whether to stop the construction of an elementary school in Tustin Ranch because about $12.8 million of the district’s money is now frozen in the county treasury. Two weeks ago, trustees approved more than $1 million in cuts.

At the Los Alamitos Unified School District, the financial crisis might force a delay in the reopening of long-anticipated reopening of Oak Middle School.

School Board President Donna Artukovic said Friday that renovations to Oak Middle School have been put on hold, “until we get a better feel of how much money we can get.”

Labor Actions Dismissed

In Santa Ana, the Board of Supervisors, which announced a blueprint last week for broad cuts and layoffs, did an about-face Friday on its requirement that retirees sign a waiver that would have prohibited them from suing if they did not receive all payments due for accrued sick time, vacation and compensatory time during the next three years.

Nonetheless, John H. Sawyer, general manager of the Orange County Employees Assn., called the board’s decisions “entirely self-serving” and hardly a concession.

The lump-sum cash payment for laid-off workers already is called for in labor contracts that the board unilaterally voided, and the waiver demanded of retirees was blatantly wrong, said Sawyer, whose group representing 11,000 workers is the county’s largest employee union.

“The board’s action does nothing to restore the provisions of the labor agreements rejected by the board last week,” the association said in a statement Friday. “The county is continuing to act in a unilateral manner, and it is not acceptable to us.

Sawyer said there are more than 2,000 county employees eligible to retire. But he charged that the county, by imposing a Jan. 10 deadline for retirement decisions, is trying to frighten employees into retiring early.

“That deadline alone is enticing people to retire early,” Sawyer said. “We think that the employees who want to retire early should be allowed to. But we definitely don’t want the county talking people into retirement when they might be better served working another year or five years.”

Sawyer, who initially estimated that 800 to 1,000 employees would lose their jobs as a result of the cutbacks announced last week, now says he does not expect such massive layoffs to take place right away.

On Thursday, eight people were laid off from the county administrative office--five part-time staffers and three interns. More layoffs are expected.

Tom Uram, director of the county Health Care Agency and a member of the three-person management council devising the county’s budget cuts, said the Board of Supervisors backed off the waiver for retirees because of employee concerns that “it looked like a trick.” Uram said removing the waiver would certainly help more workers make the decision to retire early. A letter detailing the removal of the waiver requirement will be sent to all eligible employees, he said.

But Steiner downplayed the significance of Friday’s action.

“For what it’s worth, it softens the impact of the layoffs,” he said. “Secondly, employees who retire now maintain their legal rights if the county doesn’t have money in 1996-97.”

Steiner said meeting the county’s obligations to those who retire “should be our highest priority.”

Airport Sale Unlikely

Under the bargaining agreement approved by supervisors last week, employees who retire before Jan. 10 would receive the balance of their sick and compensatory time and vacation in three payments over the next three years. The benefits of those who retire after Jan. 10 will be subject to the bankruptcy process, which could cloud the payment picture.

Friday’s action by the board also clarified that all employees who are laid off due to budget cuts will receive their compensatory time and vacation pay in one lump sum. Some employees had expressed concern that their money could be tied up in the bankruptcy process, officials said.

Uram said that the management council, which last week unveiled $40.2 million in budget reductions, had not received word of any additional layoffs as of Friday, but that department heads have been encouraged to make those decisions and alert employees as soon as possible. Department heads must give employees 14 days notice if their jobs are to be cut.

Sawyer said the union is meeting with department heads to talk about ways to make budget cuts without layoffs. Worker representatives are encouraging department heads to check all contracts, eliminate overtime, initiate job sharing and be more liberal in granting leaves of absence.

While supervisors still are weighing ways to privatize various government services, Vasquez and Steiner warned that there are obstacles to selling John Wayne Airport.

Steiner said the airport still is subject to $254 million in bonded debt that would have to be paid off before any sale could be completed. Another $70 million in federal funds would have to be returned.

Times staff writer Rich Simon contributed from Los Angeles and correspondents Shelby Grad, Bill Billiter, Mimi Ko, Russ Loar, Lesley Wright and Holly J. Wagner contributed from Orange County.

More on Bankruptcy

* News and analysis on the Orange County bankruptcy, including profiles of the key players, is available on-line through TimesLink. Reprints of two articles about bond transactions are available through Times on Demand. Call 808-8463, press *8630 and select option 1. Order No. 2811. $3.95. For a reprint explaining derivatives, order No. 2810. $2.95.

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