Orange County Seal

Posted: Monday, November 18, 2013 10:39 pm | Updated: 11:33 pm, Mon Nov 18, 2013.

Following months of intense debates over how to best handle $5.7 billion in unfunded retirement obligations, leaders of Orange County’s local pension system have struck a deal to avoid a major surge in public agency payments that officials warned could bankrupt small cities.

After spending hours locked in a series of 5-4 votes battling over repayment schedules, board members at the Orange County Employees Retirement System eventually voted 8-1 on Monday to shift all of its unfunded liabilities into a 20-year payment plan that keeps agencies’ contributions stable. Chairman Tom Flanigan dissented.

Some, like Lincoln Club president and supervisors appointee Wayne Lindholm, argued for 15-year repayment windows. Others argued for even shorter repayment periods.

Lindholm argued the pension system needed to be aggressively paying down its unfunded obligations in order to avoid imploding.

The board needs to get ahead of this issue “before this helicopter hits the wall,” he said.

Eventually, the board coalesced around the 20-year mark.

“There’s a way to work this down if everybody was working together,” said OCERS board member David Ball, who was recently appointed by county supervisors to the post after public protests from labor leaders who attacked Ball as too extreme. “I think we’ve gone through a very unusual bad time.”

Monday’s compromise came after an intense debate raged for months between conservative and labor appointees to the board, after the conservative wing on the board sought to lower the plan’s investment assumptions and shorten its pay-off period – moves that could have skyrocketed most cities’ payments.

Officials in the small city of Stanton – which contracts with the sheriff’s department for police services – warned that such a move could blow apart their budget, potentially forcing a municipal bankruptcy. Other South County contract cities also raised concerns, as did a Westminster councilwoman.

Sheriff union officials, along with the Superior Court, even threatened to leave OCERS altogether for the state’s CalPERS system.

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