In a settlement of a wrongful firing, a suburban San Diego water district agreed six years later to put its former general counsel back on the payroll for one year at $222,000, with a leave of absence that left him free to take another job.
The rancorous firing of Thomas Harron and six others by the Otay Water District in 2001 was alleged to be a race-based purge. A lawsuit contended that a district board member said: “We got to get rid of all of the gringos.”
Harron acknowledged during a CalPERS board hearing yesterday that the one-year return to the payroll in February 2008, with a prohibition against returning to district offices, was intended to increase his pension.
A reform group’s listing of public pension retirees in the “100,000 Club” shows Harron with a $103,575 pension from the water district. CalPERS estimated the additional year would boost his pension by about $36,000 a year.
But CalPERS staff denied the increase for the additional year. Harron appealed the decision, arguing that he placed a call to CalPERS on the morning of the settlement in 2007 and was told the additional year would count toward his pension.
“The only reason I did this is because CalPERS said ‘yes,’” Harron told the CalPERS board yesterday by telephone from San Diego. “If they had said ‘no,’ I would have said I want cash or some other kind of structure to the settlement.”
CalPERS lawyers said Harron apparently misunderstood call-center staff and, as an experienced lawyer, should have sent the California Public Employees Retirement System a copy of the settlement and awaited official confirmation.
The CalPERS board yesterday voted to uphold an administrative law judge’s denial of the additional year. The board also rejected the judge’s attempt to give Harron a consolation pension boost by setting his retirement date two years earlier.
Board member Tony Oliveira said the “false employment” seemed to be the “epitome” of what is known as “spiking,” manipulation to boost pensions. He asked Harron why he “ever thought that could be legal.”
Harron said he had heard of similar pension boosts in county systems operating under a 1937 act. He said he confirmed that with a legal expert who serves several county systems.
“I knew it was a common practice,” Harron said. “I just didn’t know if CalPERS accepted that practice.”
The 20 county retirement systems that operate under the 1937 act are notoriously generous. When CalPERS sponsored legislation two decades ago that tightened its spiking controls, similar legislation for the county systems failed to pass.
The door for spiking opened wider in 1997 when the state Supreme Court ruled in a Ventura County suit that nearly all types of pay except overtime must be counted toward 1937 act pensions, including cashing out unused vacation time and sick leave.
The Contra Costa Times reported in 2009 that two Contra Costa fire chiefs, ages 50 and 51, retired with pensions well above their final pay. For one chief, the final salary was $221,000 and the pension $284,000 a year.
In Sonoma County, a former county auditor-controller-treasurer who retired in May at age 59 has a $254,625 annual pension, $46,600 more than his final pay, the Santa Rosa Press Democrat reported last month.
The newspaper filed a lawsuit that forced the Sonoma County system to release pension payments. Since 2009 there have been seven separate superior court decisions, upheld by three appeals court, ordering county systems to release pension records.
Because of recent court decisions, CalPERS will begin releasing more detailed pension information when requested under the public records act, Peter Mixon, CalPERS general counsel, said yesterday.
Without being forced by a lawsuit, CalPERS gave Marcia Friz’s reform group the names and pension amounts of retirees receiving $100,000 or more a year and has provided some updates.
“Now we will include those two items plus the last employer and the position that the member held,” Mixon told the board. “We will be providing a breakdown of the calculation, which typically includes years of service, salary and COLAs (cost of living adjustments).”
The California State Teachers Retirement System also voluntarily released retiree names and pension amounts. But it was criticized earlier this year for not doing enough to control spiking.
The Sacramento Bee reported that a whistle-blower, Scott Thompson, was fired by CalSTRS executives who claimed he reduced a pension without authorization and refused to restore it.
A Bee analysis found that nearly half of the 225 Sacramento area retirees drawing six-figure CalSTRS pensions received at least a 10 percent pay raise in one of their final three years. Some of the raises were 20 percent or even 40 percent.
The CalSTRS board pushed for amendments that would have removed most current teachers from an anti-spiking bill, leaving the new controls to apply mainly to new hires and highly paid administrators.
Last month CalSTRS announced a new “pension abuse reporting hotline” (855-844-2468) and a new “compensation review unit” that will look for pay changes that may signal spiking.
“Over the last fiscal year, an anti-spiking task force within CalSTRS has ´the ball´ on controlling pension spiking,” the CalSTRS board chairwoman, Dana Dillon, said in a news release. “Today’s actions put CalSTRS at the forefront of efforts to prevent, detect and correct incidents of spiking.”
This month 34 retired Yuba Community College teachers began receiving a 10 to 15 percent cut in their pension checks after CalSTRS ruled their salaries had been overstated in “alleged spiking,” the Appeal-Democrat in Marysville reported last week.
The college said it had CalSTRS approval for a cost-cutting move begun in 2003 that gave teachers nearing retirement lower pay for a lower workload, with the incentive of a separate “stipend” of 10 percent of their pay and no reduction in their pensions.
“We really perceive this (the CalSTRS reversal) to be they are scrutinizing everyone that comes through now because of the public scrutiny of pensions,” Al Alt, Yuba College vice chancellor, told the newspaper.
CalSTRS announced last week that Yuba incorrectly reported pay resulting in 44 retirees receiving a total of $844,000 in “pension overpayments, otherwise known as pension spiking.”
Jack Ehnes, CalSTRS chief executive, said in a news release: “CalSTRS takes pension spiking very seriously. We adhere to thorough and comprehensive processes while reviewing any suspected spiking cases prior to changing a member’s pension payment in a manner consistent with the law.”
But Bee editors said CalSTRS, which wants Gov. Brown to boost its funding, needs more than the hotline and the pay review unit before receiving a “blank check.” An editorial last Sunday urged a “top-to-bottom audit” of CalSTRS.
“Following the pay scandal at the city of Bell, CalPERS began a comprehensive review of all high-end pensions it pays out,” said the Bee editorial. “CalSTRS should do the same. Special attention should be paid to pensioners who retired in their 50s with annual retirement incomes of $100,000 or more.”
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at http://calpensions.com/ Posted 20 Oct 11