Eureka kicked the “Pers” can down the road for years, now it’s time to pay the piper!

Yesterdays LA Times story about CalPERS make us wonder why the State of California hasn’t called out David Tyson and the City of Eureka for all the “legal” pension spiking over the last two decades. Tyson had no problem kicking the can down the road for another manager and finance director to have to deal with. Now it looks like the chickens have come home to roost statewide and here.

This the Times story and it absolutely applies to the City of Eureka.

Calpers

Taxpayers and local governments are on the hook to pay nearly $800 million stemming from “legal” pension spiking over the next two decades, the state controller said Tuesday.The price tag came as Controller John Chiang issued a new audit of the California Public Employees’ Retirement System and New charges filed against ex-CalPERS official in corruption case

The audit of 11 state and local government agencies found no illegal pension spiking but concluded that the country’s largest public retirement fund makes itself vulnerable to the practice by not aggressively reviewing its 3,100 member agencies’ payroll records.

Pension spiking is the practice of hiking a public employee’s pay, through a promotion or salary hike, just before the employee retires. As a result, the monthly pension checks received, sometimes for decades, can be significantly increased. Pension benefits are calculated using a mathematical formula based on the pay received by a retiree during the three years of his or her highest compensation.

Chiang said he especially was concerned by the practice at 97 local agencies of fattening a worker’s final year’s pay when the collective bargaining agreement calls for the agency to pay both the employer’s and the employee’s share of the total pension contribution.

The benefit, which is no longer available to people hired after Jan. 1, 2013, increased CalPERS member compensation by $39.1 million a year. But it has the potential to cost the state and local agencies and taxpayers an estimated $796 million in additional pension costs over the next two decades, Chiang

CalPERS in a formal response said it has no discretion to prevent such legal spiking when the local agency has complied with the law. Moreover, it argued that a discussion of the particular benefit was “outside the stated scope of the audit.”

The California Public Employees’ Retirement System, which provides benefits to 1.7 million state and local government members, retirees and their families, also lacks sufficient audit capacity, said Chiang, who sits on the CalPERS board. The board oversees a $301.5-billion investment portfolio.

The review, covering July 1, 2010, through June 30, 2012, contained some “good news,” Chiang said. His auditors closely reviewed pension records at 11 different public agencies and “found no incidences of pension spiking,” he said.

The agencies included the state Department of Fish and Wildlife, the California State University Chancellor’s Office, Riverside County, CalPERS, Placer County, the city of Oakland, the city of Colton, the Grossmont Healthcare district, the Inverness Public Utility District, the Metropolitan Water District of Southern California and the Woodside Fire Protection District.

But the “discouraging news,” added Chiang, “is CalPERS’ lack of robust auditing, underutilization of advanced technology and its generally passive approach to the problem invites abuse. The state’s largest pension system can and must be more vigorous in protecting taxpayers from this form of public theft.”

More oversight is needed with that much money at stake, Chiang said. “On the current audit schedule a nest egglocal government that contracts with CalPERS, for example, would only face an audit once in every 66 years,” he said.

CalPERS Chief Executive Anne Stausboll countered that the controller ” ‘did not identify pension spiking’ among the nearly dozen public agencies reviewed.” Additionally, she said, CalPERS “has significantly increased audit staff” in the last fiscal year, doubling the number of audits of public agencies to 99.

By Marc Lifsher Los Angeles Times

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14 thoughts on “Eureka kicked the “Pers” can down the road for years, now it’s time to pay the piper!

  1. This is a problem across the state created in the first place by the state legislature and the public employee unions. I’d be hard pressed to blame Tyson or the Eureka City Council for it.

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  2. I can blame him for fully abusing Pers and sticking to the tax payers, and I do!

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  3. Let’s hope they don’t adopt the Ferguson Method of city finance.

    The attempt at new law for bike riders seems a tiny first step.

    You all are next to experience the ‘broken windows’ Rudy Guiliani version of community policing.

    (Ferguson Missouri is in the news because partly the way they and many small poorly managed cities fund themselves thru police state tactics that impoverish the vastly higher numbers of poorer people with fines, fees,and all manner of devious means to extract their monies…a huge part of their city budget is from traffic fines, and the fees and fines resulting from entangling poor people in The System, then purposely! making The System un-navigable so their fees and fines add up.
    The city budget from fines and fees is over 50%!!!

    While it’s a black town next to the whiter parts of st Louis, there are an average of three warrants many for non-appearance and probation violations per household. Think about that…the Ferguson Method. And expect some good old boy genius to come up with this good idea here…I mean, what’s taking them so long?)

    ‘Banning the bums’ doesn’t pay the bills now does it?..It just helps Mills get thru the prayer breakfasts and get reelected or however it needs to be applied today. ‘we got bills to pay’.

    Liked by 1 person

  4. If city officials in Eureka have engaged in pension “spiking,” then they share in the blame for this problem. The practice may be legal, but it’s unethical.

    If they did engage in “spiking,” what would be helpful would be some specific examples — name of employee, what their salary was prior to being spiked and what it was after being spiked; what their pension would have been if their salary hadn’t been spiked and what their pension ended up being thanks to the spiking.

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    • Two Lieutenant’s from the Eureka Police Department were promoted to Captains by Chief Mills. They spiked their pay and then retired very recently, with golden handshakes. That was a bump in pay of more than $15K a year. Tony Zanotti and Len Johnson were the names, in case you want to check the facts.

      Dave Tyson “spiked” his pay with an over $11K pay raise from 2011 to 2012, when he retired.

      http://transparentcalifornia.com/salaries/search/?q=David+Tyson

      Liked by 1 person

    • JP,

      Thanks for the examples. As far as Tyson’s salary is concerned, that falls squarely on the city council, as they’re the ones who agreed to his contract.

      Zanotti and Johnson have both retired? Weren’t they just promoted this past spring!?

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    • Yup. Retired. At least according to Mills on talkshop. Spiking at its best! Or worst, so to speak.

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    • JP,

      According to the LA Times article above, CalPERS pension payment are based on the three highest-earning years in an employee’s career. So if Zanotti and Johnson really have both resigned so soon after having been promoted and received large raises just this past spring, it seems like they’re bound to get a lot less in pension payments than if they had stuck around a couple more years so that their three highest-earning years would all be under their new, higher pay. Am I wrong about that?

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    • Sparky-

      The short answer is maybe. It depends on the contract with PERs. For new employees it’s the 3 highest years. But in the past, you could contract for the single highest year. I don’t know whether EPD falls under the 1 or 3 year contract. Regardless, if if it was 3 an extra 55 a year for the rest of your life is a pretty sweet deal!

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    • That should have been $5K a year extra based on the 3 year formula. Sorry if the typos were confusing.

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    • O.K., now I’m curious — does the CalPERS formula use the salary number (what the employee would have earned if they had actually worked all year) or does it go by what actually earned that year? Because if it’s the latter, then it seems like retiring part way through the “spike” year would be very disadvantageous to the retiree.

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    • I’m not sure Sparky. I think that would be a dumb move if it was only partially covered for the year. But your thoughts have led me down another rabbit hole….Maybe the Lt.’s were being forced out by Mills and giving them a pay raise in PERS, even a small bump, was a way to soften the blow. Not sure if that’s how it works, but it makes sense. Either way, spiking salaries at the end of careers to get a boost in PERS seems to be unethical.

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  5. I wonder if the Times Standard subscriptions would increase if they actually reported in the public interest in this manner?

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  6. But those public servants work so HARD.

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