The Point of the ‘Spike’ Hits Taxpayers Where It Hurts

When I heard there was a “spiking” controversy in Huntington Beach, I was distressed to think that someone might be rigging volleyball games in the latest Pro-Am tournament by the pier.

Would that it were that respectable.

No, spiking was a little game worked up around the county in recent years by public officials and employees and that was a lot of fun to play. Basically, it’s a game in which the officials convinced themselves they were entitled to a bunch of money for nothing. You can see its appeal.

You might be tempted to call spiking a form of white-collar welfare fraud, although I’d differentiate spikers from welfare recipients by saying that at least the people in poverty who rip off the system actually need the money.

Spikers, on the other hand, are sharp cookies who knew the best way to make money was to have money. So, they stored up vacation days, sick days and things like car allowances and then cashed them in a year or so before retiring. By counting those benefits as income, they jacked up their final year’s salary, which is the figure upon which their pensions were based. While most were modest bumps, the biggest eye-opener in Orange County involved that of a city manager whose final-year salary went from $97,400 to $159,100 after he cashed in unused benefits.

What spikers did wasn’t illegal, which no doubt led them to turn their palms upward and say, “Who, me?” when anyone suggested the practice was a murky one.

Those of us not on the public payroll perhaps see the issue more clearly. Let’s say you’d been paying into a retirement system during your public career and that you peaked at, let’s say, $30,000 a year in salary. The system is geared to give you a pension linked to what you’ve put in. So, if you suddenly spike your salary to $35,000 your last year . . . well, someone is paying to fatten your pension, but it sure isn’t you.

The Huntington Beach City Council is now in the odd position of saying it doesn’t like spiking but refuses to pay a bill sent by the state to collect money for inflated pensions. The council says the spiking that inflated the pensions was legally approved.

The figure being quoted for the ultimate cost of Huntington Beach spiking is $13 million.

Huntington Beach is not the lone wolf of spiking. Earlier this year, the state Public Employees Retirement System reported that about 80 cities and agencies around the state improperly spiked salary figures. It cited Huntington Beach and Orange as among the worst offenders.

Michael Ogata, a spokesman for the state agency, said spiking is financially unsound for the retirement system, besides being unethical. One of the ethics problems, he said, was that spiking opportunities were not doled out uniformly to all employees.

The problems inherent in spiking should be cleared up by a new state law, Ogata said, which includes provisions that ban unused vacation days and sick leave as salary components. It also includes a method that should send up warning flags if salaries jump inordinately before a person retires, he said.

You’d think people who spiked their salaries would be somewhat ashamed, but Ogata said that didn’t appear to be the case.

I asked him about the dollars involved. Maybe if the spikers had seen the figures, they would have been more ashamed of themselves. Over the typical lifetime of a pension payment, Ogata said, it costs the system $150 for every dollar above the level at which a person paid in to the system. “So the long-term cost could be pretty high,” Ogata said.

Maybe he’s just a nice guy, but Ogata was somewhat circumspect in assessing blame. He said the problem stemmed from not having a “sound process” in place to monitor abuses and that local officials may not have understood “the long-term ramifications” of what they were permitting. Even within his own agency, Ogata said, “there was a lot of naivete as far as what was happening.”

As citizens, we’re not paying public officials to be naive. We expect them to have sound processes. We expect them to understand long-term ramifications.

And we’re not paying them to play little games among themselves where the outcome is rigged, especially games where they always win and we always lose and where we have to pay off in real money.

Dana Parsons’ column appears Wednesday, Friday and Sunday. Readers may reach Parsons by writing to him at The Times Orange County Edition, 1375 Sunflower Ave., Costa Mesa, Calif. 92626, or calling (714) 966-7821.