Bellflower : City Disputes Overpayment Amount Given to Retirees

Bellflower officials acknowledge that the city overreported the wages of city employees to the state retirement system for more than a decade, but the city contends that a state audit last year contained incorrect salary information and overstated the excess monthly payments to 15 retired city employees.

In response to a state controller’s audit for the state Public Employees Retirement System (PERS), Bellflower said the overpayment to city retirees is $1,848, rather than the $2,500 a month listed by auditors. Retirement system officials are reviewing the Bellflower response, said Barbara Hegdal, chief of the benefit application services division.

In a study of payroll practices completed by the state controller in October, auditors said Bellflower improperly listed as salary city contributions made on behalf of employees to the retirement system. The city also permitted some retiring employees during their final year with the city to convert unused sick leave and vacation time into salary in order to boost their retirement benefits.

Both procedures--which the controller said resulted in higher pensions than employees were entitled to under state law--were halted last summer after field auditors told the city they were improper. However, city officials continue to defend the practices as legitimate employee benefits in place of salary increases.

“No attempt was made to hide the intentions of the city to provide its employees with an increased benefit,” the city said in a press release accompanying the response to the audit.

Hegdal said PERS has no plans to reduce retirements at the present time. All affected retirees will be sent letters inviting them to respond to audit findings and submit information or documents covering employment agreements. “Once we get all this information, we will look at it before deciding what to do next,” she said.