Supervisors’ OK of Pension Plan Would Help Them

Orange County supervisors will do more than help county employees if they agree to increase pension benefits next week -- they will fatten their own retirement checks as well.

On Tuesday, the board is scheduled to consider a proposal to substantially increase pensions for most of the county’s nearly 17,000 workers -- benefits upon which the supervisors’ own are modeled. The deal would allow the county to improve worker compensation without spending any money, officials say.

Supervisor Jim Silva would stand to benefit the most from the increase. His county pension would jump by about $8,400 to about $37,000 annually when he is termed out of office at age 62 in January 2007. If Silva lives to age 80, his yes vote could mean at least an additional $151,200 in retirement pay.

“Let’s hope that this is not something that influences them,” said Orange County Treasurer John M. W. Moorlach, who has spoken out against the pension increase even though county workers will pay for the higher benefits themselves, through a salary freeze, cash payments and other concessions.

“I don’t question the integrity of the elected officials, but the process certainly creates the appearance of a conflict of interest, especially when the benefits are so lavish compared to those in the private sector,” said Reed Royalty, president of the Orange County Taxpayers Assn.

Supervisor Tom Wilson, the board’s chairman, said his vote would be based on what’s best for the county and not his own interests. If the board votes to increase the pension payouts, he would gain an additional $3,000 per year in retirement when he is termed out in January 2007.

“Obviously whatever decisions I make aren’t going to be based on the benefits I receive,” he said. “Some of the components of this agreement are going to help the employees in their retirement years, and it’s going to help the county as far as our budget is concerned.”

The county’s auditor-controller and chief finance officer have reviewed proposed union contracts and agreed that the pension increase would not cost the county any money, Wilson said. Workers will pay for it by forgoing a raise, making increased retirement contributions and accepting concessions on health benefits, he said.

The increased benefits would help improve what has long been one of the state’s lowest-paying public pension systems, said Nick Berardino, general manager of the Orange County Employees Assn.

Despite the county finance staff’s blessing, Moorlach has said he doesn’t think the county should agree to the pact because it places additional liability on the retirement system. If the system’s investments fail, the county would still be responsible for the increased payments, Moorlach said.

The way Orange County’s employee benefits are structured, supervisors and other elected officials end up with same benefits given to county managers.

“If the unions get these benefits, then everybody gets these benefits,” Moorlach said. “I’m sort of hindering my own financial status by coming out against this.”

Supervisors do not face conflicts of interest on their pay because in 2000 they adopted a formula that sets it at 80% of the salary of a Superior Court judge. Supervisors earn $115,065 a year.

Royalty, the tax activist, said the county should consider setting up another independent mechanism, such as a committee of public and private sector employees, to help determine county benefits. “It could maintain some fair balance between public and private compensation and help dispel the appearance of conflict of interest.”

Supervisor Bill Campbell said that if the board agreed to increase the pensions of county employees -- and its own members -- then the board members should agree to start paying for their pensions like most other county workers. Currently, the county makes 100% of the pension system contributions for county supervisors and top executives.

“We’re asking the employees to pick up all of the costs. We ought to fully pay for it too. That’s only fair,” he said.

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How supervisors may be affected

A proposed increase to the Orange County employee pension plan would increase county supervisors’ pensions by up to $8,400 per year. Figures assume the salaries do not change before retirement and that each man serves the maximum allowable term.

Orange County supervisors’ annual pensions:

Current age/ Annual pension plan: District/supervisor retirement age Current Proposed Diff. Chuck Smith 72 / 72 $22,839 $22,839 None* Jim Silva 60 / 62 28,800 37,200 $8,400 Bill Campbell 62 / 70 28,000 31,000 3,000 Chris Norby 54 / 61 18,300 24,800 6,500 Tom Wilson 64 / 66 28,000 31,000 3,000

*Smith leaves office before the plan would take effect in 2005. Sources: County of Orange, Orange County Employees Retirement System