Is O.C. Paying Twice for One Service?

For years, Orange County may have been paying duplicate fees to cover administration of health and other benefit plans for sheriff’s deputies, according to a review of payroll records by the Orange County auditor.

Under its labor contract with the Assn. of Orange County Deputy Sheriffs, the county pays the union to administer health plans for most employees of the Sheriff’s Department -- about $516,000 last year. But for years a separate fee -- scheduled to reach $400,000 next year -- has gone to the county human resources department for similar work, according to Auditor-Controller David Sundstrom.

Sundstrom said the finding raises questions about similar fees paid by other county departments for administration of their benefits.

“Not just this charge [for deputies] but the charge for all the county departments should be reviewed,” said Sundstrom, whose office discovered the duplicate charge during a review of Sheriff’s Department payroll deductions prompted by a request from the Los Angeles Times.

A majority of supervisors said this week that the county fee should be justified or the money restored to the Sheriff’s Department budget.

“It seems like a lot of money we’re paying that’s not going for sheriff’s deputies,” Supervisor Chris Norby said of the double fee.

Supervisor Bill Campbell agreed. “I’m in favor of finding out what this true cost is,” he said.

Sheriff Michael S. Carona couldn’t be reached Tuesday for comment. But returning the fees his department has paid could create a budget windfall at an opportune time: The sheriff is expected to ask the Board of Supervisors next week for an additional $1.2 million for 10 new deputies to be stationed in underpatrolled areas of south Orange County.

Deputies’ health costs have been the focus of many questions in recent weeks as supervisors debated renewal of the county’s $13.4-million contract with the union to run health plans for most department employees.

Pointing out that the union gets more than $2 million more a year from the county than it spends on health coverage, some on the board have said the union should allow an audit -- a demand that union officials have resisted.

The union Monday provided County Executive Officer James D. Ruth with a copy of its annual report to the Internal Revenue Service for its medical trust fund -- a public record that must be filed every year to maintain tax-exempt status.

In an attached list, the union reported taking an administrative fee of $465,243 last year and paying its full-time benefits coordinator $50,859. The reports do not detail how the administrative fee is spent.

A similar agreement between the Orange County Fire Authority and the Orange County Professional Firefighters Assn., to administer a $5.7-million employee health-care fund, caps administrative expenses at $28,500 a year. The firefighter union also conducts an annual audit that is available for public review.

The deputies union’s tax filing also showed that its health-care fund, which it has administered for 16 years, had a reserve of $8 million at the end of 2002 -- even as union negotiators prepared to demand a $2-million increase in annual payments from the Board of Supervisors.

Insurance professionals said privately run health-care funds such as the deputies union’s should have two to six months’ worth of premium payments in reserve; the deputies’ union reserve is equal to about eight months’ worth.

Supervisor Chuck Smith, who joined Norby in voting against the union contract in October over concerns about the health spending, said news of the apparent double charge further strengthens the argument for a comprehensive audit of the union health-care fund and all of the county’s costs.

“There seems to be no accountability here,” he said.