HUNTINGTON BEACH

The City Council secretly authorized its outside attorney to settle a multimillion-dollar lawsuit involving salary “spiking” by city employees.

“The public doesn’t know what’s going on, and they have to pay the price,” Councilman Dave Sullivan said.

The city filed suit against the Public Employees Retirement System in July 1997, after the city signed off on labor agreements during the 1980s based on “misrepresentations” by PERS, Sullivan said. The courts later ruled the agreements illegal.

“It was PERS’ fault for advising us incorrectly and therefore it’s their obligation to take care of employee spiking,” he said.

While a majority of the council gave its approval in July for the attorney to attempt a settlement, Sullivan said he grew concerned after a meeting was held Sept. 10 to discuss the potential settlement, which could cost taxpayers roughly $15 million.

“Spiking” refers to the once-common practice of retiring city employees inflating their pension by adding such perks as unused vacation pay and car allowances to their final year of salary. Courts, as early as 1994, ruled spiking illegal.