The plan, which will allow the county to deal with a roughly $3 billion unfunded liability, is heralded as a potential model for the rest of the state. Its approval came as the state unveiled a budget proposal that calls for taking millions of dollars from local governments. Orange County, adjacent to Los Angeles County, is likely to lose $89 million to $93 million, according to the County Executive Office. 'The governor walked away from pension reform as part of the overall budget discussion,' said County Executive Officer Thomas Mauk. 'So that leaves Orange County as a leader in this area.' The two-tier plan requires legislative approval. The bill is expected to be voted on next month. 'It is a breakthrough program that both the workers, the Orange County Employees Association and the county of Orange have agreed to,' state Sen. Lou Correa said. 'It's one (plan) that I think could serve as a role model for the rest of the state.' Under the plan, incoming employees as of March 1, 2010 would have the option to choose the older pension plan of 2.7 percent of the average of an employee's 36 months of highest salary at age 55 or 1.62 percent at age 65, which includes a 401K-style retirement account with up to 2 percent employer matching. Existing county employees would also be given the chance to move down to the new tier, if the legislation passes. The lower tier is expected to appeal to new hires who may not stay with the county long or those who may need more money in their pockets now. If the bill is not approved, then all new employees will come in under the reduced plan. But county officials, who have worked on and negotiated a two-tier option for six months, were optimistic that the legislation would pass given its support among both Democrats and Republicans at the state level. 'This was a clear demonstration that labor organizations, public employee unions and public employers can work together if they're both committed to finding solutions that do not negatively impact either party,' said Nick Berardino, general manager of the Orange County Employees Association, which represents 13,500 county workers. Board of Supervisors Chair Patricia Bates said the county would be a 'trendsetter' with the new plan. Mauk lauded it as 'monumental' and 'creative.' But Supervisor John Moorlach said the plan is just a 'long-term fix' and the county will continue to deal with a large unfunded liability. 'This pig is still going to go through the python,' he said. 