Moorlach takes stock: looking back on two decades of fiscal reform
John Moorlach owes it all to Half Dome.
The outgoing Orange County Supervisor, who has spent the past two decades reforming his county’s finances, might’ve been just some CPA with a habit of kvetching about politics.
“I went on a hike in Yosemite Valley with a friend, and he said, ‘You’ve been complaining about things the whole trip,’” says Moorlach. “Why don’t you consider running for Treasurer.”
So he did.
It was 1994, and he didn’t have a prayer.
“I knew full well I would not win,” he says. “Incumbents win 90 percent of the time, but I thought it was a perfect way to raise awareness about what was going on, how they were borrowing to invest, using derivatives, and everyone was comfortable because the treasurer was making a lot of money.
“I was telling anyone who would listen that if interest rates rise, that portfolio would implode.”
The Los Angeles Times endorsed the incumbent. “The reporter said what I was saying was just a bum rap.”
The rest, of course, is history. Moorlach lost the race, interest rates shot up, County Treasurer Robert Citron resigned in disgrace and on Dec. 6 of 1994, Orange County declared bankruptcy. Three months later, Moorlach was appointed treasurer, a position to which he was repeatedly reelected over the next decade.
And then came the pension wars.
“In 2004, the Board of Supervisors passed another pension increase, this time for general members,” he says. “I went to the podium and said, ‘You shouldn’t do this for obvious reasons.’ It’s like a lobster trap, once you’re in it, you’re in it.”
So the Holland born accountant says, he got angry and decided it was time to run for Supervisor.
“I wanted to fix the pension problem,” he says.
Upon his election in 2006, he drew up a list of 15 things he wanted to accomplish. Eight years later, he won some, he lost some, but overall, the Republican supervisor had a few grand slams.
Moorlach’s Little List
Here’s what the list looked like and how he faired:
Number One: “Make government employees pay for their fat pensions.”
“That’s a quote from a Long Beach Press Telegram article from 2005,” says Moorlach. “We’ve accomplished that. We’ve just completed our negotiations with every bargaining unit. We have one unit that we’re still dealing with, the attorney’s association–it’s a long story–but overall management and employees are responsible for paying for their share of pensions.”
Number Two: “Implement two-tiered plans.”
“We negotiated that back in 2009,” he says. “Governor Brown did it with his pension reform, but what we did in ’09 was we made it optional. The younger kids would take the lower formula.”
Number Three: “Start replacing government workers with contract employees.”
“I tried to put that in the charter for the November ballot,” says Moorlach. “My colleagues didn’t give me the third vote. Two were running for additional office. I put this one in the ‘fail’ column.”
Number Four: “Require voters to approve retroactive pension increases.”
“We called this Measure J, and it was wholeheartedly passed by the voters in 2008,” he says.
Number Five: “Put caps on COLAs (cost of living increases).”
“I tried to do it,” he says. “I just didn’t get traction.”
Number Six: “Attempt another ballot proposition that pursues paycheck protection.”
“We tried this with Prop. 32, but the unions just went ballistic. This was a fail.”
Number Seven: “Have the board of supervisors members or an independent third party negotiate employee bargaining union agreements and not rely on staff to do it for you. Employee unions are to be business partners and not buddies to further your political careers.”
“It’s just one of the abuses that I observed,” says Moorlach. “So what I did when I got here, I required an outside legal firm to be our negotiators… we got that taken care of.”
Number Eight: “Increase the retirement age.”
“That was done in ’09, it’s now 65 here at the county,” he says. “That was part of the two-tier change.”
Number Nine: “Add a charter amendment that requires immediate payment of actuarially unfunded benefits the day they become effective.”
“I got this from the state of Georgia,” he says. “If you’re gonna negotiate a pension benefit increase that creates an immediate liability, you got to pay for it immediately. Because we did Measure J, I felt like we got it covered. For more than 25 years, it wasn’t required to put the real cost of pension increases on the ballot sheets. It was in the shadows.”
Number Ten: “Pursue a statewide ballot measure requiring a two-tier system.”
“This was accomplished by PEPRA (Governor Brown’s reform),” he says.
Number Eleven: “Establish a blue ribbon committee from local industry to review personnel costs.”
“I just didn’t get to it,” he says.
Number Twelve: “The state constitution forbids cities, counties, and other public entities to spend money more than they make in one year unless two thirds of the voters in that locality approve that overflowing cost.”
“That’s a quote from the Voice of San Diego in 2006,” says Moorlach. “We took this to trial, filing a lawsuit against the Deputy Sheriffs for getting three percent at 50.”
But he says, even though it was technically illegal according to the state constitution, politics got in the way and pension debt was made exempt. In 2011, the California Supreme Court chose not to hear the lawsuit.
“It put blood on the hands of the legislature, on the Governor and the state judges,” he says. “We tried real hard but failed.”
Number Thirteen: “Pension reform bill.”
“This was about the acquisition of life insurance contracts using the pooling technique,” he says. “If you insure your employees, when they pass away, you could pay off part of the pensions. This was too hard a sell. If you can’t explain something to the public sector in 30 seconds, forget about it.”
Number Fourteen: “Labor negotiations could be done in public.”
“We adopted (this) and we got it,” he says. “It’s nice for the public to see the crazy offers that they put on the first round. It changes the whole dynamic.”
Number Fifteen: “Gradually lower the rate of return and invest accordingly.”
“This idea came from a Wall Street Journal article in 2006,” he says. “We’ve gotten the assumed rate down just by influencing members of the board. This was a win.”
It’s just pension reform, don’t take it personal
But despite accomplishing much of what he set out to do, the reforms came at a steep personal price for Moorlach.
“The first few years it was really rough,” he says. “All the unions were going after me. They’d come to the podium and say, ‘If I die in the line of duty, I don’t want Moorlach at my funeral.’ They took it personally, and that was difficult. All I was trying to do was protect their pensions because if they’re underfunded, they’ll implode.”
But thanks to friends, there came a turning point. “Some pals stepped up, put some money together and bought a one-page ad in the Orange County Register. It had a photo of a widow and boy at a funeral, calling out the Deputy Sheriffs union for doing what the mafia does in movies. A lot of the nonsense stopped after that.”
He says his battles took its toll on his family, but they stood behind him.
“Right after I was sworn in as Supervisor, I got a call from a reporter who said, ‘You called the Deputy Sheriffs Union thugs. I didn’t report it, but do you still feel that way?’
“I thought to myself, ‘If I say yes, I’m gonna be toast. If I say no, I’m gonna be a typical politician.’ I said, ‘Yes, I still feel that way.’
“The next morning I got up early, picked up the paper, and there was the headline: ‘Moorlach Calls Deputies Thugs!’ I told my wife, ‘I’m not cut out for this.’ My wife said, as angrily as she could, ‘They are thugs!’
“With my wife’s support, I felt it would all be okay. I told myself not to let these knuckleheads intimidate me and to just keep moving.”
Despite plans to take a sabbatical and return to the happy trails of Yosemite, he’s decided to run for state senate, an election that will likely happen in March of 2015.
“I don’t want to sound trite or weird. I’d had my fill,” he says. “But I just see mediocre candidates running all the time. And when the 150th person comes up to you and says, ‘Can’t you run for something else?’ I found myself weeping. You’re supposed to say to an elected official, ‘Don’t let the door hit you on the way out.’
He says he just wants to be a voice.
Well, there are a couple other items.
“I want to fix this state in pensionland. I want to fully review Calpers. Just go in there and start hammering away at all the abuses, try to clean things up, show people how silly it all is.”
He says he knows the path ahead won’t be all rainbows and unicorns.
“This stuff isn’t easy but you can’t back down,” he says. “Arnold Schwarzenegger turned into a wimp. You can’t stop fighting.”