August 6, 2010

City of Bell..the salaries are only the tip of the Iceberg (and the taxpayers are on the Titanic)

We read these two articles below and became even more outraged at the Bell scandal, which really is only just beginning from what we hear from multiple sources. Likely more cities will be drawn into this mess as they are exposed by the media frenzy fed by outraged taxpayers. CalPERS is totally out of control and is going to bankrupt the state. It already lost 40% of its value in the last few years and will be asking taxpayers to foot the bill for Wall Street's plundering. It needs to be reined in. These articles make that painfully clear. This is just the latest is a series of debacles at CalPERS. The inmates are in charge of the asylum now. You ask any public pension recipient about this mess and they just shrug their shoulders and laugh...and then say so what are you gonna do? There is no political will to get a grip on the public employee union problem. This current public taxpayer furor is short lived and is no match for the public employee union grip. This pension problem has been known publicly for at least 5 years (LAAG published stories about it in 2006) and yet nothing has been done. It will take a bankruptcy judge to deal with it. And that is where Calif. is headed.via campaign contributions and easy, direct access to politicians.

Marcia Fritz summed it up pretty well here and below. Its not the salaries that are the crime. Its the pensions. The salaries are but a mere tip of the iceberg.

CFFR’s president Marcia Fritz was on the CBS Evening News again last night. Here are the segment’s opening comments:

When the angry citizens of Bell, California, forced their outrageously overpaid city manager and police chief to resign, it may be the best thing that ever happened to the two. Consider the pension now due city manager Robert Rizzo.

“His lifetime pension will be roughly $30 million,” said Marcia Fritz of the California Foundation for Fiscal Responsibility.

And the pension due police chief Randy Adams.

“His lifetime pension will be more like $15 to $17 million,” said Fritz.

But it’s taxpayers in other cities who will be shelling out for these lavish pensions because in California every city or county an employee worked for has to pick up a portion of the pension. And the pension is based on the final year’s salary alone, reports CBS News correspondent John Blackstone.

Our editorial comments to the article are below in bold.
Pension fund knew about high Bell salaries but didn't stop them, memo shows
August 3, 2010 | 6:39 pm

Officials at California’s state pension fund became aware four years ago of the exorbitant pay raises being given to administrators in the city of Bell and did nothing to stop them, according to an internal memo obtained by The Times.

The memo, which pension staff sent to board members today, shows that the California Public Employees’ Retirement System granted an exemption to its rules in 2006 so the Bell city manager could get a 47% pay hike and still receive a full pension on his salary.

The pension system learned of the salary hike during the course of an audit and informed Bell officials that the exemption would be needed.

“At the time, the city represented that the city manager was part of the top management groups or class, and all of the employees in this group or class received similarly large increases,” [LAAG: like we said before this was the scheme..he got more so we all get more too..that makes it ok if we all rip off the taxpayers as a group...] said the memo, written by Lori McGartland, head of the pensions fund’s employer services division. “Based upon those representations, CalPERS granted a one-time approval of the city manager’s 2005 increase.”

Just last week, CalPERS officials expressed surprise at the hefty increases for the then-city manager and two other top officials and ordered a freeze on their pension benefits pending completion of an investigation by California Atty. Gen. Jerry Brown. [LAAG: how silly..none of them getting the pension yet so its like freezing something that is not going to happen how lame]

The three have resigned but not applied to receive retirement benefits from CalPERS.

CalPERS spokesman Brad Pacheco said such large pay hikes can be permissible under CalPERS rules as long as they are spread out among a group of employees, as was the case in Bell, as opposed to enriching a single official. [LAAG: like we said before this was the scheme..he got more so we all get more too..that makes it ok if we all rip off the taxpayers as a group...the more the merrier...]

“Our job is to enforce the statutes that govern the retirement law,” he said in a statement. “Pay and compensation is the decision of city and county elected officials.” [LAAG: well looks like we better change the law and fast..or that may be like rearranging deck chairs on the Titanic]

But Pacheco said Bell officials may have violated other rules and regulations, and CalPERS is assisting law enforcement in their investigations. [LAAG: what!? you are just now looking at that? Also not your job? Great]

The memo states that CalPERS has expanded its internal probe beyond the city of Bell. “Staff is currently researching the pay of all CalPERS members paid in excess of $400,000 for appropriateness,” the memo states. [LAAG: What" How about in excess of 150k..oh wait that is all govt employees...]

-- Evan Halper and Marc Lifsher in Sacramento,0,711701.story
Bell salaries raise more concerns about CalPERS
The state's embattled pension system did not act four years ago when it learned about the city's runaway salaries. The state attorney general and auditors express shock that nothing was done.

By Evan Halper and Marc Lifsher, Los Angeles Times

August 6, 2010

Reporting from Sacramento

The failure of the state's embattled pension system to take action after learning four years ago of Bell city officials' runaway salaries has put the fund under another unwelcome spotlight. [LAAG: I guess a good question would be what the top management at CalPERS makes and what their pensions will cost us..I guess they did not want to blow the whistle on this thing for fear that their own fat paychecks would be questioned. Once gain the you scratch my back Ill scratch yours buddy system. Here is a related CalPERS sob story for you.]

The state attorney general says he is shocked that nobody at the fund alerted law enforcement. Professional auditors are perplexed by the lack of follow-up that even board members at the California Public Employees' Retirement System are at a loss to explain.

During a routine audit in 2006, CalPERS learned that Bell City Manager Robert Rizzo had received a 47% salary increase the year before, driving his pay up to $442,000. CalPERS is supposed to stop pay spikes that can unduly enlarge retiree pensions, but officials signed off on Rizzo's raise because Bell's assistant city manager and City Council members were also getting enormous boosts. CalPERS took no further action. Rizzo's salary would eventually grow to nearly $800,000.

"A 47% increase in salary should have set off alarm bells," said California Atty. Gen. Jerry Brown, who is also the Democratic nominee for governor. "That kind of jump in pay is shocking and completely unacceptable. CalPERS should have told someone, and the attorney general's office would have been a good place to start." [LAAG: So Jerry why didn't you look into it yourself. Could you not hear any alarms? You are no newcomer to state pension ripoffs are you? Taxpayers have to deliver crimes to you on a silver platter? Is your AG office not the chief investigator and law enforcement officer of the state?...perfect timing though for your underfunded gubernatorial campaign. you cant buy press like this]

Documents released by CalPERS on Thursday show that the fund was also informed of a 42% raise for the assistant city manager and nearly 38% raise for City Council members. That brought council members' pay to $62,000 by 2005 for part-time jobs that in other small cities pay about $400 per month. The newly released records include Bell's explanation to CalPERS of why its officials were worthy of such salaries.

Assistant City Manager Angela Spaccia told CalPERs in writing in October 2006 that the city manager's salary was hiked "to reflect his contributions to the city," which included helping Bell resolve a multimillion-dollar deficit. She said her own pay hike was "provided to reward her for her efforts and new responsibilities" related to a promotion the city had given her.

"It should also be noted that the City Council, also members of the Executive Management classification, were compensated accordingly for their contributions and efforts toward the City's dramatic financial recovery," Spaccia wrote.

CalPERS responded a week later that the city had provided sufficient documentation to authorize "a one-time compensation adjustment" for the officials. The fund conducted no follow-up audits, and Bell salaries continued to soar.

The pension officials' handling of the audit has invited more scrutiny for CalPERS at a time when it is already reeling from a corruption scandal. Brown's office earlier this year accused the fund's former chief executive and a former board member of being engaged in fraud. A civil suit is pending in Los Angeles County Superior Court.

CalPERS has ordered a freeze on the pension benefits of the three highest-paid former Bell officials pending the outcome of an investigation Brown has launched. None of those former officials have yet applied to receive their pensions.

Brad Pacheco, a CalPERS spokesman, said there were no follow-up audits because Bell wasn't scheduled to be looked at until about five years later. Asked why CalPERs did not alert authorities to the salary spikes, he said: "We're not part of that chain of command. It was the elected city officials who negotiated, saw and signed the salaries and who are accountable."

But some CalPERS board members say the fund mishandled the situation.

Among those critics is state Treasurer Bill Lockyer, who says CalPERS staff never alerted the fund's board members to the audit's findings.

"There were no red flags raised for the board," said Lockyer spokesman Tom Dresslar. "That has to change."

He said Lockyer would propose rules requiring CalPERS staff to report to the board any audits that spot excessive salary hikes.

State Controller John Chiang, also a board member, said he would call on CalPERS to require that local governments "immediately notify the pension fund of any proposed salary increase that exceeds a reasonable level, along with a justification and the pay history for that position."

The controller's staff said "reasonable" might be 10% or less.

Political opponents of Lockyer and Chiang, both of whom are running for reelection in November, have sought to blame the two officials for CalPERS' handling of the audit. Lockyer and Chiang said the audit was complete, and CalPERs already had approved the salary hikes, before they joined the board.

Laura Chick, appointed by Gov. Arnold Schwarzenegger as the chief auditor of California's federal stimulus dollars, expressed surprise that nobody at CalPERS flagged the Bell information.

"When you see unusual things and see things that raise eyebrows — and someone's eyebrows go up with a 47% salary increase.…The best thing is to go back and take another look."

Officials at the California Bureau of State Audits say that is their policy. Spokeswoman Margarita Fernandez said her agency routinely does follow-up audits after 60 days, six months and one year.

"If we don't follow up, we don't know if our auditees are taking our recommendations to heart," she said. "Most standards will call for some follow-up."

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