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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 [Association of Orange County Deputy Sheriffs] 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.

Orange County Project Labor Agreements: One Advances, One Gets Jammed

Within three days last week, elected boards of two of the four community college districts in Orange County, California voted on proposals to require their construction contractors to sign Project Labor Agreements with construction trade unions as a condition of work.

1. Rancho Santiago Community College District: Anaheim Hills, Garden Grove, Irvine, Orange, Santa Ana, Tustin and Villa Park

On April 1, 2013, the elected board of the Rancho Santiago Community College District voted 5-2 for the district to begin negotiations with the Los Angeles-Orange County Building and Construction Trades Council for a Project Labor Agreement. Construction companies and their trade associations will not be invited to participate in the negotiations, but companies will be required to sign the final union agreement in order to perform contract work.

The Project Labor Agreement will apply to contracts funded by $198 million borrowed through bond sales authorized by Measure Q, approved by 72.6% of district voters in November 2012. This $198 million figure does not include state matching grants and interest paid to bond investors. Neither the official voter ballot information nor campaign material indicated any plans to require contractors to sign a union agreement as a condition of work.

Voting for the union negotiations was board member José Solorio, who reportedly plans to run in 2014 for an open seat in the 34th State Senate District, possibly against Orange County Supervisor Janet Nguyen, who voted in 2009 to ban Project Labor Agreements as a condition of winning Orange County contracts.

Opposing the Project Labor Agreement were board members Phil Yarbrough, who is a Republican, and Arianna Barrios, who is not registered with a party. The five Democrats on the board (José Solorio, Larry Labrado, Claudia Alvarez, John Hanna, and Nelida Mendoza) voted for it.

2. Coast Community College District: Costa Mesa, Fountain Valley, Garden Grove, Huntington Beach, Midway City, Newport Beach, Seal Beach, Stanton, Sunset Beach, and Westminster

On April 3, 2013, the elected board of the Coast Community College District voted 3-2 for a task force to continue evaluating positive and negative implications of requiring contractors to sign a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council. A directive to begin negotiations with the unions was made and seconded, but was then withdrawn when it was clear that a majority vote was lacking.

Union lobbyists want construction companies to sign a Project Labor Agreement in order to perform contract work funded by $698 million borrowed through bond sales authorized by Measure M, approved by 57.2% of voters in November 2012. Neither the official voter ballot information nor campaign material indicated any plans to require contractors to sign a union agreement as a condition of work. In fact, school district administrators informed the Orange County Taxpayers Association via an email during the campaign that the college district would not require its contractors to sign a union Project Labor Agreement.

The total construction program, including state matching grants and other funding sources, is $957 million. This figure does not include interest paid to bond investors.

Board members Jim Moreno and Jerry Patterson aggressively pushed for the Project Labor Agreement. They are both Democrats. Jim Moreno is considering a campaign in 2014 for a seat on the Orange County Board of Supervisors.

Board members Lorraine Prinsky and David Grant (Democrats) and Mary Hornbuckle (the one Republican on the board) rejected the motion for negotiations and voted for a task force to evaluate the proposal and return with a report.

A Bit of Hope for California’s Future: At both community college districts, the student trustees on the board voted AGAINST the faction pushing for a union Project Labor Agreement. Ryan Ahari was a NO vote at the Rancho Santiago Community College District and Kolby Keo was a YES vote at the Coast Community College District. Student trustees generally aren’t beholden to unions to advance their political careers, so they can make the correct decision to seek the best quality construction at the best price for the benefit of students.

News Coverage

Will the RSCCD Trustees vote for a union-only PLA on Measure Q projects?www.NewSantaAna.com – December 3, 2012

College district caught in labor agreement fightNewport Beach/Costa Mesa Daily Pilot – March 7, 2013

Pugnacious Defense of Economic Freedom in Orange County Can Inspire California’s Free-Market Activistswww.FlashReport.org – March 11, 2012

College district changes its tuneOrange County Register (op-ed by Orange County Taxpayers Association President & CEO Carolyn Cavecche) – March 28, 2013  (note: paywall in effect)

Bond betrayal: Did college district dupe OC Tax on PLA?www.CalWatchdog.com – March 29, 2013

The RSCCD Trustees are for a Measure Q union-only PLA tonightwww.NewSantaAna.com – April 1, 2013

Jose Solorio gives Janet Nguyen an early Christmas present  – www.NewSantaAna.com – April 2, 2013

Union-only O.C. hiring pacts raise alarmsOrange County Register – April 3, 2013 (note: paywall in effect)

Playing fair means no PLAOrange County Register (editorial) – April 3, 2013 (note: paywall in effect)

PLAs bad for taxpayers, competitionOrange County Register (op-ed by Rancho Santiago Community College board member Phillip Yarbrough) – April 3, 2013  (note: paywall in effect)

Jim Moreno wants to give away $100 million to unions – example of recorded call to Coast Community College District voters – April 3, 2013

Coast district delays decision on union-only labor pactOrange County Register – April 4, 2013 (note: paywall in effect)

No pro-union pact at CCCD: Bond measure floated on promise not to seek PLAOrange County Register (editorial) – April 4, 2013 (note: paywall in effect)

How union only project labor agreements rip off the taxpayerswww.NewSantaAna.com – April 3, 2013

Coast Community stymied on labor agreementNewport Beach/Costa Mesa Daily Pilot – April 5, 2013

Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.