More on Moorlach's Proposal - From Moorlach

In a featured column over on the FlashReport this morning, Supervisor John Moorlach pens a column concerning his proposal to discontinue what he believes is an unconstitutional retroactive pension hike for law enforcement retirees.

The column begins...

Let’s say that your employee starts working for you at age 25.  You provide a starting salary of $54,000 per year and promise that when he/she retires in 25 years that you will pay him/her 50 percent of their last year’s salary for the rest of their life, plus an annual 3 percent cost of living adjustment.  This formula is known in the public sector as “2 percent at 50.”

In order to pre-fund this obligation, you need to hire an actuary and a money manager.

The actuary tells you that your 25 year old employee is expected to live to age 80.

Your money manager tells you that you can expect a net annual rate of return on your investments of 7.75 percent and that you should make the annual contribution on the first day of each year during the period of employment.

Your business plan tells you that your employee should average an annual raise of 4 percent per year over the 25 year period that he/she will be with your company.

Believe it or not, his/her salary will be $143,955 at the time of retirement. The annual benefit in year 26 will be $71,978, which increases by 3 percent per year for the next 30 years.

Your actuary will tell you to contribute 17.284 percent of the annual salary at the beginning of the year.  The first year’s contribution will be $9,333.  By the 25th year the annual contribution will be $24,881.  The funds available at retirement in the retirement trust will be $1,124,038, which will last until the former employee reaches age 80. At age 80 the annual benefit will be some $169,620.

           

You can check out the entire column here.

Comments

[Patricia]

"Believe it or not..."

You mean county employees get 2% at 50?! Or just safety members? I can see where 25 years of being a cop is more daunting than 25 years as a clerical worker, but this is too generous.

I have to quibble with a few assumptions, though. I worked for the State for 25 years and my income doubled, not tripled, with a couple step raises and generous raises twice (with Republican governors) in the earlier years. Newer employees have fewer benefits. And I question the 80-year-old actuarial assumption.

State employees get 2% at 60. The State makes no contributions to their 401k or 457. They can take their medical with them, depending on decades of service, at their own expense.

So, are pensions the problem, or is it the unending orgy of spending in Sacto? So glad we spent those billions on stem cell research....

[cols as ice]

checking all the online actuarial life sites as perfectly healthy 25 year can expect to live until 74. And that was just a quick check, I could not find any that came close to the 80 year figure moolach has in his figures which makes me question his other figures and facts

[Green Machine]

CALIFORNIA CONSTITUTION
ARTICLE 11 LOCAL GOVERNMENT

SEC. 10. (a) A local government body may not grant extra
compensation or extra allowance to a public officer, public employee, or contractor after service has been rendered or a contract has been entered into and performed in whole or in part, or pay a claim under an agreement made WITHOUT AUTHORITY OF LAW.

I noticed in Supervisor Moorlach's argument he conveniently left that last 4 words out of his presentation. I'm willing to bet the other paraphrased language will also do this. Make no mistake, he didn't do this for the sake of brevity. He's clearly attempting to utilize language in the constitution to bolster his argument and leaving out the parts that provide an alternate conclusion.

"Without authority of law" is an important part of this equation. I'm willing to bet that there are attorney's who are much better versed at this stuff than I am who will find significant counter arguments to Moorlach's interpretation of this article of the constitution.

Mr. Moorlach's Chief of Staff is a law professor who can certainly make some persuasive arguments for his boss, but there will assuredly be a legal battle that refutes these claims. Given that scenario, it would be foolhardy for the BOS to immediately reduce pension benefits for retirees. If the retirees suffer damages as a result of the reduction and then later discover that the BOS had no authority to reduce their benefits, the legal and punitive costs the county would incur are significant.

I'm in no hurry to retire and plan to be around for quite some time, so this has little immediate impact on me. But for those who stand to lose their retirement benefits, the damage will be monumental. The county had better make sure they get it right!

[cold as ice]

would the laws passed by the legislature that allowed [email protected] and retroactivity be that "AUTHORITY OF LAW" required to allow them?

[jake]

Whats the hold up just start the blue flu.

[Sergeant]

Moorlach's scenario relys on his fictional employee living to be 80 years old and getting a benefit, after age 65 that the employee did not earn.

According to Moorlach, his fictional employee only had enough money to pay retirement benefits to age 65 and Moorlach claims the rest of the pension benefits through age 80 when the death of the retiree takes place becomes a "gift of public funds" and an "illegal benefit" according to Moorlach.

What happens if Mr. Moorlach's employee dies at age 60, rather than at age 80?

Moorlach claims that the retiree had enough money in the account to pay out until age 65. So, according to Moorlach, this retiree still had at least FIVE YEARS of accumulated money in that retirement fund. Where did that money, Mr. Moorlach?

Since it cannot be paid out to a dead person, it needs to go somewhere - doesn't it?

Who kept it?

Is the government stealing money from the dead retiree who died before the money ran out?

Is the government making a "gift of public funds" to Moorlach's fictional retiree who lived beyond age 65 and stealing the unused funds of a retiree who dies before 65?

Hmmm....

The answer is no - in both cases!

That is because there is a little more to the funding and management of a retirement system than Mr. Moorlach would like the unsuspecting public to really know.

He doesn't want you to know the facts because it interferes with his agenda.

Mr. Moorlach should be asked about what happens to the unused retirement benefit if it isn't paid out!

[Green Blade]

Sergeant,

Your argument is lame and doesn't hold water. What happens if I feed my dog Science Diet instead of Chuck Wagon, does the store profit more or less? The unsuspecting public would like to know!

And Green Machine said,

"But for those who stand to lose their retirement benefits, the damage will be monumental."

Helllooo! Stop with the sensationalism already. Nobody is going to lose retirement benefits; they are simply going to be reduced to a fairer level that we ALL can live with. Even then, it will be better than most private plans found anywhere.

[cold as ice]

sadly most do not know or understand how pension systems work, all they see is the amounts which are misleading, because it is the minority who makes great amounts , most barely make the same as SS, and lots will make less, a few make better, but that is how the private sector is to............

And the usual tirade of it's not what the private sector gets really underscores that ignorance, if you compare private to public there is not much difference in benefits paid to them across the same spectrum

not every private employee is a CEO (who receives millions for doing little more than their employees), nor is every public employee is a safety employee (who places their lives on the line every day)

the majority of public/private employees are just barley above poverty level and are hard working people trying to get ahead

the only reason public pensions have not changed greatly yet is because there were no way to "RAID" them, you cannot "TAKE" over a government like you can "TAKE" over a company

companies got out of defined benefit because those billions of dollars they were holding could be raided by "RAIDERS" taking over and stealing it and using to pay for the 'RAIDERS' cost of taking over the company

So, they created the individual pensions, yet did not make them mandatory , and everyone depended on SS to save them, and companies did not fund them (beyond a piddle matching %) because they (the companies) would not have access to those funds like that had with defined benefit cash they stored

And to answer Sarge, the money goes to beneficiaries of the deceased at a reduced rate of 60% (spouse) until deceased or until the primary amount (+ any interest on it) paid by the retiree is consumed (if not the spouse), if any are defined, if no beneficiaries the funds stay in the fund to pay other retirees

[cold as ice]

GB

And GM is closer to being right than you are, but you inability to understand makes it impossible to have a rational conversation about it, it is sensational, because if it was not then it would not have been released as it was , it would have been handled without press conferences, or lawyers, or threats, or impacting lives

Your taxes will not be reduced one cent, your services will not be increased one cent, the savings being touted by moolach are paper savings, they are not actual CASH savings, nor future CASH savings. It is all about looking good on PAPER, there will be no magical refund of taxes, no magical increase in ROADS, no magical increase in parks. All that will happen is on paper the county will not have to pay their portion of the money to the system.

And the fallacy of 'unfunded' liability is propaganda, the only time there would be a liability is if the county decided to stop being a government, and eliminated all county employees and had to pay out those in the system without income from existing employees, just as SS is seeing with the reduction in income due to fewer workers and more retirees

[Crazy guy]

Joe Monroe is the bomb.

Moorlach has brought a storm to Orange County. If Moorlach has his way there will soon be a relationship between County law enforcement and other government workers that exists in Los Angeles County. That's a fact and hopefully that will not occur

[Dave Swanson]

To "You'll be sorry"

You effectively epitomize the term "Union Thug" with your bullying rhetoric. I would be extremely impressed if John Moorlach could single-handedly change the pension formula for every police office in California. Your scare tactics and threatening tone may work well with your crowd, but trying to scare an elected official on a public news blog is childish and immature. Save the rest of us trouble and waste of time it takes to read your absurd comments.

[Cindy Fisher]

First. Moorlach wants to take the retired safety member's medical grants and put it in a "split pool" thus forcing retiree's to pay much higher premiums for medical insurance. Now he springs this unconstitutional stuff in regards to their pension benefit. I'm sure he has been researching this for quite sometime and of course he never brings this to anyone's attention. He just let unsuspecting employees retire and make life altering decisions. Some have moved out of California. He should have consulted with all parties who are affected. Now you tell me if Moorlach doesn't loath safety employees? His motives are transparent. Anyone can see it. He knew what he was doing all along

[redperegrine]

"There are at least two dozen crazy retired cops that would probably take care of this POS. Good luck John, wear your target well!"

Hey, ice, that's not a metaphor; that's a veiled death threat - or maybe an incitement of same. No difficult interpretation necessary. And of course "POS" is typical of the level of intelligent dialog we have come to expect from your union's members.

[Dave Swanson]

"Cold as ice" talk about interpeting what you dont understand, I nowhere in my post took the previous posters threats seriously. I commented on his thugish demeanor. And him saying he knows 2 dozen crazy retired cops that would take care of him is more than just a threat to Moorlachs "political aspirations." The most they could do to attempt to end his political career is vote against him or attempt to get someone to unseat him. Ask Dave Shawver and Nick Berardino how well that worked last June.

[Jubal]

You'll Be Sorry:

You have been banned. No one crosses that line here.

[Jubal]

Cold as ice:

Keep defending that kind of remark and you'll be banned as well.