Secret Sheriff Union Negotiations Endanger Orange County’s Financial Future

Mark Bucher

Board Director

Mark Bucher
July 14, 2014

Secret Sheriff Union Negotiations Endanger Orange County’s Financial Future

The Orange County Board of Supervisors has tentatively approved a transparency ordinance, known as COIN (for Civic Openness In Negotiations) that would require negotiations with government employee unions to be open to the public. Boy, do they need it.

The current negotiations between the sheriffs’ union and the Orange County Board of Supervisors are a perfect example of why COIN is needed. On Friday, after two years of secret negotiations with the Sheriffs’ union, the proposed terms of the contract being offered by the union were revealed to the public for the first time. And now the Board proposes to take a final vote this Tuesday!

That’s right, fellow taxpayers. We get one business day to review the complex business deal that will bind our County for years to come, and then our elected officials will vote.

This not nearly enough time for the taxpayers, who are going to be on the hook for these salaries and pensions, to understand the costs of what is being offered or fully weigh in. Which is, of course, the point of keeping the details secret until the last minute. Secret negotiations, followed by sudden and final votes, is how business has always been done in Orange County and throughout California’s cities and counties. So we should not be surprised that our County again faces grave financial challenges.

The unions do not want those of us who pay the bill to have the time to calculate how much this new contract will add to the current average full time compensation, including benefits, of $186,682 per year for sworn sheriffs, compared to the average Orange County household income, with two wage earners in many households, of $75,566 (ref. U.S. Census).

And the last thing the unions want the public to fully digest is how this deal may affect Orange County’s unfunded pension liability. The officially recognized amount of this debt – that must be paid by taxpayers – is over $5 billion dollars, but it grows to almost $8 billion if you assume a more reasonable 6.2% return on investments rather than the highly optimistic 7.25%. It might have been an impediment to their negotiations, after all, if more people understood how much needs to be paid in order to eventually eliminate this debt. To pay it off in twenty years requires annual payments estimated between $500 million and $800 million, which equates to a $500 to $800 per year payment for each of Orange County’s roughly 1.0 million households.

Pension costs constitute a mortal threat to Orange County’s financial health. The county has already been bankrupt once because of a lack of transparency regarding its finances. The public should have more than a long weekend and contract bullet points to consider so that everyone knows how much our children and grandchildren are going to have to pay to fund this contract.

Here are a few things we know about this proposal thanks to an email from Supervisor Moorlach sent on Friday:

“It adds two new steps to the salary schedule, a thirteenth and a fourteenth. This creates two problems. The first is that it benefits all of those who are at the top of their pay scale (step 12), which represents some 77 percent of the workforce in this union. The second is that the pay increases to these impacted employees would be effective immediately, which is a pay raise, but not implemented until the following year.

The retiree medical strategy for AOCDS  is different than that of the other bargaining units. The County’s assumption of the employees’ portion, the Annual Required Contribution (ARC), assumes that this annual commitment of 3.6 percent will remain flat. That is not the case, as it will most likely continue to increase over time, based on actuarial studies. By the County assuming 2 percent of the cost (more than half), another pay raise, there is a blurring effect that, in future negotiations, could have the County picking up all of the costs. This may subject the taxpayers to an ever-increasing cost that this Board may initiate in perpetuity for subsequent Boards.

Now the costs of the “3% @ 50” pension enhancement have come home to roost and it must be addressed. Consequently, all employees should at least pick up the employee portion that the employer had previously, and generously, subsidized. In 2001, AOCDS determined that a pension increase, retroactive to the date of hire, was more important than salaries. Therefore, dealing with this growing fiscal tumor will require an impact on wages. Every other bargaining unit has stepped up to the plate. This proposal provides an almost full offset for this maneuver, a point that may not settle well with the other bargaining units in future deliberations.”

And it is not just private citizens who should be allowed to digest the agreement. The county only has a limited amount of money, so what is negotiated with the sheriffs union will impact other county employees and vital services. Supervisor Moorlach said it best “This is not an equitable proposal. Someone has to sacrifice to pay the Sheriff Department’s employees, and it would be the employees of all the other County departments.”

Moorlach also made this observation: “The contract cities will have to budget for this proposal. I hope that they have an opportunity to weigh in and provide their counsel before the Board of Supervisors votes on this matter.”

The reality, of course, is that the cities, county employees, and the public will not have an adequate opportunity to understand this proposal and have their voices heard. The vote is tomorrow. The consequences will last for decades.

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Mark Bucher is the President of the California Policy Center.

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