Senator John Moorlach: Chapter 9 bankruptcy, a “friendly alternative” to waiting for pensions to tank our economy

29 May

Sheesh – at least a month ago, Bob sent me this taped interview with SoCal Senator John Moorlach (R, Orange Co.), and I’ve only recently been able to finish it.

The impact of coronavirus on California pensions

Not that Moorlach isn’t an engaging speaker – he’s very natural and easy going, and he puts financial matters in terms the average person can understand. But, it’s so shocking, I had to listen in bits and pieces, and then I had to rewind a lot. 

Moorlach has an impressive resume, in fact, I wish he’d run  for governor. A certified public accountant and financial planner by trade, he has served since 2015 as California State Senator, 37th District.  He started his political career as Orange County Treasurer-Tax Collector, from 1995 – 2006. He quit his Treasurer job to run for Orange County Board of Supervisors, serving for the next 10 years. He left the Board of Supervisors to run for Senator in 2015. 

During his campaign for county treasurer, Moorlach exposed his predecessor’s risky and illegal finance escapades and predicted the coming Orange County bankruptcy – according to wikipedia, the largest municipal bond portfolio loss and bankruptcy in U.S. history. He led Orange County back to solvency (he talks about how in the interview) He has earned a reputation as an expert on municipal bankruptcies. 

He suggests the same remedies for California’s financial problems that we have heard from Edward Ring, Adam Andrzejewski, and many other financial “experts.” I don’t usually care for “experts” but all this stuff sounds perfectly legitimate to me,  cause I’ve seen the books Downtown, and these guys are RIGHT ON.

So, I hope you will listen to that interview, but I tried to squeeze Moorlach’s suggestions into the 250 word limit imposed by the Enterprise Record:

State Senator John Moorlach (R, Orange County) tells us, “if you abuse a defined benefit plan, you are headed for trouble.” The abuses – a “reckless” investment target, a retroactive change in the retirement formula that increased benefits by 50%, and employee unions bankrolling board members and judges, making it almost impossible to take any proactive measures on the pensions.

As we’ve been told repeatedly by city staff, Chico is in trouble.

Moorlach notes that Wisconsin’s pensions are 100% funded because they dumped the DBP and instituted “shared risk plans”. They changed the retirement age to 65, raised employee “shares”, and therefore the total agency contributions. They ended the Cost of Living Increase and went with a realistic investment projection of 3%, as opposed to CalPERS’ “reckless” 8%.

But, Moorlach says, pensioned legislators are unlikey to enact this solution, while “the proposition route has been brutalized by the AG’s we’ve had…”

Moorlach’s suggestion is Chapter 9 bankruptcy, a “friendly alternative” to waiting for pensions to tank our economy. “A federal judge can rescind, change or modify existing local bargaining agreements.”

Moorlach believes a well-managed DBP would work. That would require the following changes:  employees pay more; no COLA until a plan is 80% or more funded, and realistic investment target of 1 – 3%. I would add, sustainable salaries and reduced retirement health benefits. Why are we paying health benefits for people getting 70 – 90% of their highest year’s salary?

We must elect city council members in November who will accept these measures and act now.

Juanita Sumner, Chico

 

4 Responses to “Senator John Moorlach: Chapter 9 bankruptcy, a “friendly alternative” to waiting for pensions to tank our economy”

  1. bob May 29, 2020 at 7:47 pm #

    They changed the retirement age to 65…

    And things are so bad this is considered reform! But it would be. After all, we have bureaucrats, cops, fire and many other government employees who retire in their early 50s with 6 figure pensions!

    We are being screwed by our politicians and that includes the city council. And they call themselves public servants. What a laugh.

    And they expect us to pass that sales tax increase so all this can continue. HOW STUPID CAN THE VOTERS OF CHICO BE?

  2. bob May 31, 2020 at 7:31 am #

    In the spirit of the old Willie Nelson song “Mommas Don’t Let Your Baby’s Grow Up to Be Anything But Government Employees” department….

    While millions of Californians take lose their jobs or take pay cuts the California Senate has a budget that will give state workers raises.

    https://www.sacbee.com/news/politics-government/the-state-worker/article243092236.html

    And even though they are cutting consultants they will continue to waste billions more on the Bullet Train to Nowhere.

    If Orme wants more money maybe he should head to Sacramento. Apparently, they have plenty.

    • Juanita Sumner May 31, 2020 at 12:40 pm #

      Thanks Bob, great suggestion! My hope is that when the sales tax measure fails, Orme and Constantin will pack up their carpet bags and head for the next town down the interstate.

    • Juanita Sumner May 31, 2020 at 12:40 pm #

      Thanks Bob, great suggestion! My hope is that when the sales tax measure fails, Orme and Constantin will pack up their carpet bags and head for the next town down the interstate.

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