The Orange County Register Continues to Pound the Pension Tsunami Drum

In yesterday's online Op Ed, the OC Register once again bangs the drum for fiscal responsibility by our elected representatives. With many seats opening up on city councils throughout California, thanks in part to term limits (more on that later), we have an opportunity to fix a broken system.

The OC Register points out Orange County's estimated unfunded pension gap of $3,700,000,000, which has enough zeros to strain my eyes on any computer monitor and should make you mad!

But how do we fix the mess? Some say the quickest fix is for municipalities to file for bankruptcy. That is an unethical response that will cause more harm than good. Orange County hit the financial reset button on December 6, 1994 when we filed for bankruptcy. It was a hard recovery which has been made worse by errant spending and overly generous pensions. Did we not learn anything? Of course not.

If not bankruptcy, what can we do? The other day I heard someone suggest a bond measure to bail out the pension systems of California (including cities and counties). It is a known liability versus an unknown liability.  The socialistic idea that the wealthier, more conservative agencies would help pay for the liberally generous agencies reeks of a Bush/Obama bailout on the backs of tax payers. No, a bond is not the solution.

Sue the bastards! Sue the employee associations for being smart enough to pull the wool over the eyes of our elected representatives. Yeah, that’ll teach them! Meanwhile, we will spend millions on attorneys and court fees, etc. etc. Throwing good money after bad money is not a practical solution for many municipalities who are already cash-strapped and making deep cuts. However, should the County Board of Supervisor’s suit against the Orange County Employees Retirement System win, I could see many more agencies heading to court with high hopes of victory.

The first step in fixing the pension mess is recognizing opportunities. One opportunity will arrive on November 2 when you can cast your vote and choose pension-minded candidates for your local offices.

Another opportunity exists due to this economic depression. With some of the highest unemployment numbers since 1939, we have a deep labor pool. As the OC Register reports, we need to engage the employee associations in negotiations and help them come to terms with the inevitable: the pension ship is sinking and the deals on the table will continue to shrink the longer they wait.

The next step is realizing that the switch from the current defined-benefit plan to the defined-contribution plan cannot be optional. Defined-contribution plans must be standard fair for all new hires.

The final step is accountability. We hold our elected representatives accountable by voting for new candidates who haven’t succumbed to the will of the workers. Public employee association leaders must be held responsible for their complicity in the entitlement foray.

Somewhere in this fix we must include education for the tax payer and education for the employees. When I was a young green Orange County worker, there was no one to help explain retirement benefits. There was one option and it was mandatory. Employees need to know how to invest in their future which includes short-term investment in their employer and long-term investment in their retirement. If public employees hurt their employers today, there may be nothing left for tomorrow.