Audit Finds Pension Abuse by 3 Ex-City Officials in County : Retirement: Controller Davis says 2 Anaheim leaders and a Huntington Beach man inflated their final pay.

Three former Orange County city officials are among half a dozen such officials in the state who are drawing excessive pensions from the State Public Employees’ Retirement System, according to an audit prepared by the state controller’s office.

The audit by Controller Gray Davis referred to but did not name two former Anaheim officials and one from Huntington Beach as among those who allegedly abused the $63-billion retirement system by inflating their salaries upon retirement with sick leave, vacation pay and automobile allowances.

Anaheim City Atty. Jack L. White said that, while the city had not yet received a copy of the audit, it is his “understanding” that the two Anaheim officials described are former city managers Bob D. Simpson, now an Anaheim city councilman, and William O. Talley, now Dana Point city manager.

State auditors were in Anaheim three to four months ago, White said, “looking at records of Bob Simpson and Bill Talley, and if (the auditors) are talking about the city of Anaheim it’s in connection with those two individuals.”

Neither Simpson nor Talley could be reached Saturday. Talley resigned in 1987 and Simpson, also a former Anaheim fire chief, resigned in 1989.

Former Huntington Beach Deputy City Atty. William S. Amsbary said Saturday he believes that he is the ex-official from that city. “The controversy raised in part that Huntington Beach did something to injure the Public Employees Retirement System is not true, and it shows an inadequate understanding of the system,” Amsbary said in an interview Saturday. “Is it an election year for Gray Davis?”

Amsbary said he took early retirement only after he was told that he would get the same pension that he would if he waited.

He said that his retirement would have “been a little bit higher” if he had worked until he was 63, rather than retiring at 60, and that “it did not cost the city of Huntington Beach or the retirement system a cent.”

Although the audit did not cite fraud or criminal misconduct, Davis said, it suggested that the retirement system could be fraught with problems. The largest of its kind in the nation, it administers pensions for 1,200 California cities and government agencies.

The audit found that one Anaheim official had increased his salary report by converting benefits to cash when he left Anaheim city government in 1987 and that the other had added a final settlement to his pay.

The Huntington Beach official added his final settlement to his salary in 1988, the audit said.

The audit was prompted by allegations of fraud last year at a fire district in Sacramento.

The eight cities selected for the audit--Anaheim, Bellflower, Beverly Hills, Culver City, Manhattan Beach, Hawthorne, Huntington Beach and Torrance--based pensions on an employee’s final year’s salary, rather than the commonly used average of the final three years.

Auditors found varied problems in the administration of pension programs and the methods for calculating retirement benefits. At least two-thirds of the cities studied had improperly calculated pensions, by allowing retiring employees to include car allowances, accumulated sick leave and business expense accounts as salary, the report said.

One of the Anaheim pensions was cited as a dramatic example. The audit showed that when he left his post, the official converted many fringe benefits and expenses to cash, raising his final salary from $97,390 to $159,109.

Amsbary said his so-called “golden handshake” increased his pension from about 28% of his salary to 32% and increased his last year’s salary from about $70,000 to $86,000. He said he receives about $2,300 a month from his city retirement.