SANTA ANA — Hundreds of county managers will have something extra to cheer about when Orange County officially emerges from bankruptcy Wednesday: about $2 million in merit pay raises that they have waited more than a year to receive.
The management salary increases, approved by the Board of Supervisors in October 1994, were frozen two months later--along with the raises promised rank-and-file employees--when the county filed for bankruptcy.
Officials announced earlier this year that the county needed to spend more than $20 million to grant its 14,000 union workers retroactive cost-of-living and merit pay raises, complying with the terms of the workers' contracts.
But until recently, the fate of the managers' merit raises remained uncertain. Because the managers are not represented by a union, their pay increases were not written into a collective bargaining agreement.
This spring, a group of managers hired an attorney who filed a claim in U.S. Bankruptcy Court seeking payment of the merit raises. After examining the issue, county officials said they recently determined that the raises should be granted.
"We looked at it and decided the county was obligated" to honor the raises, said Laurence M. Watson, acting county counsel.
Roughly 700 to 800 managers are eligible for the pay raises, though not all will receive them.
The county expects the pay increases, which will begin appearing on the managers' paychecks after the county pulls out of bankruptcy Wednesday, to add about $2 million to the annual county payroll.
Managers expressed satisfaction Monday that the matter was finally being settled.
"I think this is the right way," said Frank Madrigal, a manager in the county's Health Care Agency and one of those who retained a lawyer to help secure what they had been promised. "It's important that [county officials] . . . accept the obligation the county has to the managers."
But some activists questioned the logic of granting more pay to bureaucrats after the Board of Supervisors slashed budgets and took on nearly $900 million of debt in an effort to get out of bankruptcy.
"This is business as usual," said Carole Walters, president of the Orange Taxpayers Assn. "It's as if they were never in bankruptcy. It's as if they haven't learned anything."
While the details have yet to be finalized, both managers and union workers are expected to begin receiving their raises--including retroactive pay--within 90 days.
The workers are considered county creditors, along with bondholders and vendors. As part of its bankruptcy recovery plan, the county last week sold about $900 million worth of bonds and will use the proceeds to pay off creditors, beginning Wednesday.
Jan Walden, the county's human resources director, said raises awarded to managers will vary in size depending on several factors, including merit evaluations from their supervisors and their present salaries in relation to the range for a given position.
Some managers won't receive any increases, while others could earn raises ranging from 1% to 6%, she said.
By contrast, many of the union workers will receive a flat 2.5% raise.
"Obviously, people are happy they are going to be getting it," said Frank Eley, president of the Orange County Employees Assn. "The employees have been very concerned that we are treated fairly. I think this restores some of the employee confidence in the county."
Madrigal and other managers said they too were encouraged by the outcome but cautioned that they still await details of the settlement, including whether merit increases calculated in 1994 will be used.
While the raises are modest, both workers and managers said the money will come in handy because the county is unlikely to grant additional pay increases in the near future.
"It's a whole new ballgame from here on," Supervisor Marian Bergeson said.
"This is a good-faith agreement made before the bankruptcy that we should recognize," Bergeson said. "In the future, we are going to have to evaluate how appropriate our wages and benefits are . . . and set new goals."
Bergeson suggested that future salary increases should be based at least in part on the performance of individual employees in accomplishing specific goals.
In a related development, two employee associations have agreed to extend their contracts through July 1998.
The Orange County Law Enforcement Managers Assn., which represents captains and lieutenants in the Sheriff's Department, and the Orange County Attorneys Assn., which represents county lawyers and prosecutors, have about 420 members between them.
Under agreements worked out with the human resources department, either the county or the associations can request new negotiations next year. The associations can also reopen negotiations if another employee group receives pay increases.