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O.C. Seeks Ways to Slash Budget by $57 Million

Government: Officials consider offering early retirement packages to 1,080 managers but expect only 10% to 20% to accept. Departments are asked to identify cuts.


Faced with a budget shortfall, Orange County officials Tuesday said they intend to offer early retirement packages to more than 1,000 workers and asked departments to identify more cuts.

The county must slash $57 million from its operating budget because of sagging tax revenue and reduced funding from the state.

Contributing to that shortfall is a $55-million deficit in the county's annual payroll because of rising employee pension costs.

Orange County's problems mirror a statewide budget crunch among municipal governments. Retirement plans approved during the stock market boom of the late 1990s are now coming back to haunt public agencies, including Orange County's pension system, as the stock market has swooned.

The county expected that the pension system's investments would yield an 8% gain last year, but the system instead saw a 3% loss, and county government must make up the difference.

The County Executive Office has proposed granting two years of service credit to 1,080 management employees with at least 10 years of service and who are 50 or older.

About 10% to 20% are expected to take the offer.

Those positions would then be frozen, although "critical jobs" would be filled with the approval of Chief Executive Officer Michael Schumacher.

He hopes to further cut costs by streamlining the services that county departments provide.

Schumacher has asked department heads to identify essential core services, including programs mandated by law, said Diane Thomas, a county spokeswoman. The chief executive's staff is looking to save up to $40 million by having departments focus on these core services.

However, officials said that it's too early to tell what services might be eliminated or reduced.

Some county department heads expressed alarm Tuesday over the possible cuts.

Elections officials, for example, have expressed concern about how the loss of employees would affect preparations for the November election."My concern is, 'Wait a minute here,' " Assessor Webster J. Guillory said. "I understand that they need to save some money. But the bottom line is these employees in my department are not only experienced, they're licensed by the state board."

"I would be losing about 400 to 600 hours of legal experience, and I can't do that in 90 days," he said.

Of the county assessor's office's 300 employees, about 52 are eligible for early retirement, Guillory said.

In response to these worries, Supervisor Tom Wilson postponed a board vote on the plan until Sept. 25. "We have to have a strategy to address our budget issues," he said.

"And, we want to approach it very methodically to make sure the [adoption of] this strategy doesn't impact our government services."




At a Glance

The Orange County retirement system's $4.5-billion investment portfolio has taken it on the chin:

* Loss -- The system assumed an 8% annual gain on its investments in the last fiscal year but suffered a 3% loss.

* Proposal -- Michael Schumacher, the county's chief executive officer, has proposed an early retirement program, granting two years of service credit to 1,000 management employees.

Who's eligible -- Employees who are age 50 or older and have worked for the county at least 10 years.


Source: Orange County

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