SAN FRANCISCO — The Orange County, Calif., Board of Supervisors voted this week to proceed with a lawsuit that seeks to reverse pension benefit hikes granted to sheriff’s deputies in 2002.
The board voted 5 to 0 to authorize law firm Kirkland & Ellis LLP to move forward with a suit to seek a declaration that the benefit increases were unconstitutional and to seek an injunction barring the county’s retirement board from paying out the increased pension benefits for any years of service prior to 2002.
That’s when county supervisors — none of whom remain on the board — voted to change the retirement formula for deputies to a “3% at 50” formula from “2% at 50.” The higher formula pays retirees 3% of their top salary multiplied by their years of service.
The county’s action then was part of a wave of similar pension increases throughout the state — and like many of those increases, the change of formulas applied to years before benefits were increased.
County Supervisor John Moorlach spearheaded the challenge to the formula. He was the county’s treasurer and tax collector at the time the pension increases were granted, and he criticized them at the time.
Moorlach, who was elected to the Board of Supervisors in 2006, argued that not only was the retroactive benefit hike bad financial policy, but that it also violated the state constitution.
By creating a new liability for prior years of service, Moorlach argued, the benefit hike violated state constitutional prohibitions against incurring debt without voter approval, making gifts of public funds, and granting extra compensation to employees after a service has been rendered.
The county supervisors hired Kirkland & Ellis in September to study the pension issue. Following the firm’s report that it believed the benefit hikes were unconstitutional, the supervisors voted Tuesday to proceed with the suit.
“Creating a debt without a voter approval is unconstitutional,” Moorlach said in an e-mail to his mailing list yesterday. “So is paying twice for services performed. So we approved rescinding the benefits.”
Moorlach in the past has said that the retroactive benefits could be preserved if the deputies’ union agrees to finance the cost of paying them through the collective bargaining process.
The deputies’ union, the Association of Orange County Deputy Sheriffs, issued a statement after the vote saying that it intends to fight the county’s action.
“Our resolve remains firm that the county continues to be ‘wrong on the facts and wrong on the law,’” the statement said. “Be advised that the AOCDS does not stand alone in this fight. We have received commitments of support from numerous organizations and groups throughout California.”
The union has retained law firm Morrison & Foerster LLP to defend the benefit package. Supporters of the deputies packed the supervisors chambers Tuesday.