TUSTIN : Pension Fund Probes City Atty.’s Pay Hikes

The Public Employees Retirement System is investigating whether a 150% increase in the monthly retainer granted to City Atty. James G. Rourke four years ago was “legitimate” or was inflated to boost his pension, a PERS official said.

“We’re gathering and reviewing information,” Ken Marzion, manager of the PERS compensation review unit in Sacramento, said this week. He noted that Rourke is not being investigated for any wrongdoing.

Marzion said the investigation will focus on the adjustment of Rourke’s retainer from $2,400 to $6,000 a month in fiscal year 1988-89.

PERS has been cracking down on agencies that inflate salaries for employees who are about to retire. The practice, called “spiking,” is usually done to increase pension benefits.

Marzion said the current investigation is a follow-up to a PERS inquiry begun in 1991 but never resolved.

According to PERS documents, Bryant Hughes of the PERS Member Services Division informed Tustin Finance Director Ronald Nault in an October, 1991, letter that only $2,000 of Rourke’s $6,000 monthly retainer should be considered as “reportable compensation.”

Reportable compensation, or base pay, is any payment for services rendered during a normal work schedule, and includes such deductions as health-care premiums. It is the basis for determining pension payment.

In replying to Hughes, Nault wrote in a November, 1991, letter that Rourke’s $6,000 retainer constituted his reportable compensation because it represented his pay for regular and normal duties.

Nault said in an interview that since that initial exchange of letters, he has not received any further communication from PERS.

The city pays into Rourke’s retirement plan with PERS as part of his benefits package that includes life and health insurance. Financial records show that the city’s PERS contribution for Rourke doubled from $1,656 in fiscal year 1988-89 to $3,244 in fiscal year 1989-90. The next fiscal year, the contribution rose to $4,315, and in fiscal year 1992-93 it was $4,995.

This year’s PERS payment on Rourke’s behalf would be about the same as last year’s, Nault said. The city has paid more than $90,000 toward Rourke’s pension over the past 27 years, according to city records.

Rourke said in a recent interview that if he were to retire today, he would probably receive close to $50,000 a year in pension. “But I’m not retiring yet, and I plan to stay on for a long time,” he said.

The five people who served on the council in 1989 are out of office now. They are divided over how the increase in Rourke’s retainer was approved. Two said the raise was “buried” in the 1988-89 budget and two others said there was thorough discussion before a vote. The fifth member could not be reached for comment.

Former councilman Richard Edgar said: “We fully understood that we did it for his (Rourke’s) retirement benefits. I understood that when I voted for it.”

Edgar said that even with the increase in Rourke’s retainer, the council majority believed that the city would benefit because it would pay Rourke at least $6 an hour less for the first 35 hours of legal work he performed each month. In addition to his retainer, Rourke is paid $120 an hour for legal services.

Edgar, and then-council members Ronald Hoesterey and Ursula Kennedy voted for the passage of the 1988-89 budget that contained the raise in retainer. Former Councilmen John Kelly and Earl Prescott voted against it.

“They shielded it (raise) from us because they knew we would have raised hell,” Kelly said. “There were too many increases in that budget. I rejected it entirely.”