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Moorlach Objects to Partial Fund Transfer

Finances: Workers may face higher fees, lower returns if portion of deferred accounts are held, treasurer says.

August 20, 1996|SHELBY GRAD | SPECIAL TO THE TIMES

SANTA ANA — County Treasurer John M.W. Moorlach has raised objections to a plan that would transfer control of deferred compensation accounts of county employees from his office to a private firm that is allowing the county to keep part of the money.

The proposal, which would make the National Assn. of Counties and two other firms responsible for the $83 million that some employees voluntarily have set aside for retirement, comes before the Board of Supervisors for a vote this morning.

County officials insist that the plan would save Orange County money and place the deferred compensation program in the hands of respected firms that already perform the service for hundreds of other counties.

But Moorlach said in a memo that employees might suffer because of a clause in the contract that requires the county to deposit only $75 million of the $83 million total with the National Assn. of Counties.

The county could keep a portion of the $8-million difference depending on the amount of reimbursements the association makes to employees.

Moorlach complained that the provision "allows the county to have its cake and eat it too," saying employees might face higher fees or lower returns as a result.

"As a certified public accountant and certified financial planner, I could not, in good conscience, advise my clients to agree to this arrangement," he said.

County Chief Executive Officer Jan Mittermeier responded with her own memo to supervisors Monday, saying she took "strong exception" to some of Moorlach's concerns.

Mittermeier said that the association's deferred compensation program already tops $3 billion, and that county employees would earn the same returns and pay the same fees as other participants in the association's program.

Moreover, the proposal was thoroughly reviewed by the county's benefits consultant, William Mercer Co., which found that the arrangement offers "advantages [that] would not be met by other providers."

Mittermeier expressed hope that transferring control of the program would increase employee participation in the plan, which has plummeted since the December 1994 bankruptcy.

Of the 2,400 employees with assets in the plan, less than 15% now make contributions, according to a county report on the subject.

The proposal "will provide participants with greater control and access to the assets held on their behalf, more choices for investments, security of principal and the potential for greater return on investments," the report stated.

Moorlach stressed that he supports transferring the deferred compensation plan out of the treasurer's office but asked supervisors to delay action on the proposal until the new county chief financial officer reviewed it.

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