Perk Gives Retirement Pay a Boost

Top-level managers in Ventura County government can pad their retirement pay an average of $6,000 a year because of a generous financial perk that allows them to tack on up to seven extra weeks of unused vacation time, an analysis by The Times shows.

Some long-serving bureaucrats will receive more than $14,000 in additional pay due to the lucrative practice known as “salary-spiking.” While not illegal, local and state officials sharply criticize the practice, calling it a violation of public trust.

“On a basic smell-test level, it really stinks,” said Sen. Ray Haynes (R-Riverside), vice chairman of the state’s Public Employment and Retirement Committee. Haynes voted to rid the state’s retirement system of salary-spiking.

“It may be legal, but it stinks and it’s not right,” Haynes said.

In Ventura County, six elected department heads have no restrictions on how much vacation time they can use and routinely take several weeks a year. So the vacation payout is essentially a cash bonus they can use to boost their end-of-career salary--the basis for determining pension payments.

Former Auditor Tom Mahon, for instance, took off numerous weeks to care for his ailing wife before retiring in December. But he will still receive the cash equivalent of seven weeks’ vacation time.

Last year Sheriff Bob Brooks took 17 days off for vacation, while Dist. Atty. Michael D. Bradbury estimated he took about 20 days off. Health Care Agency Director Pierre Durand did not return phone calls regarding his vacation time.

This little-known perk received new attention recently when Supervisor Steve Bennett questioned why the board decided to add the benefit for the county’s six elected department heads in 1999.

The board voted to give the district attorney, sheriff, auditor, clerk-recorder, treasurer-tax collector and assessor the cash equivalent of seven weeks’ vacation time. The decision, which exempts the five supervisors, was an effort to make the perks for elected managers comparable with those enjoyed by appointed department heads.

Citing confidentiality rules, county officials refused to release estimates of how much extra retirement pay department managers will receive as a result of the perk. But an analysis by The Times shows many top managers will reap a significant financial windfall.

The option, for instance, would add at least $14,796 a year to Bradbury’s retirement pay. That means Bradbury, who has 34 years of service, would receive at least $121,652 annually in retirement, close to the $152,500 he now earns as an active county employee.

Health care chief Durand would receive an estimated $9,020 in bonus retirement pay, bringing his after-career annual check to $74,162. And Barbara Fitzgerald, head of the county’s social services department, would get an extra $8,956, bringing her retirement pay to $73,637 annually.

The analysis was done using the county’s formula for determining retirement pension--a complex calculation that includes the department head’s age, length of service and base salary. Each estimate reflects the extra pension pay a manager would receive if retirement occurred this year.

Other perks, including unused sick time, car and uniform allowances, are also routinely included as salary, very likely pushing those retirement pay estimates even higher. All county employees, including firefighters and sheriff’s deputies, can use the benefits to increase final pay.

Bennett questioned the practice of adding a vacation bonus for elected officials when the issue came before the board following the retirement of Mahon, who left his post in December after 30 years with the county. Mahon will receive about $97,394 a year in retirement pay, according to The Times analysis. Last month board members approved the vacation bonus, entitling Mahon to an additional $13,485 annually.

Although he voted in favor of the bonus, Bennett said he wanted board members to end the practice for future elected officials, calling it the kind of pay padding that made the public distrustful of government.

“Public trust and confidence is a major issue, and elected officials need to pay attention to it,” Bennett said. “And you can’t build public confidence when you have hidden perks. Because that’s what this is. A hidden perk.”

Haynes agrees. He voted in favor of a 1994 law that ended salary-spiking for public employees who earn pension benefits through the state’s Public Employment and Retirement System. A 1992 state audit found officials from several cities in Los Angeles and Orange counties had improperly counted sick leave, vacation days and automobile allowances as part of their last-year salaries. As a result, the state would overpay retirees about $2 million, the audit said.

Then-state Controller Gray Davis pushed for reforms that resulted in the 1994 law banning salary-spiking.

The law, however, only applies to employees who are part of the state’s retirement plan. Retirement payments for Ventura County government employees do not come from the Public Employment and Retirement System account. The county instead manages its own pension trust fund, which makes it exempt from the 1994 law.

County officials initially resisted efforts from employees’ unions to use the perks to spike pay, mandating that pensions be based solely on base salary. But in 1995 the Ventura County Deputy Sheriff’s Assn. filed suit against the county. Despite the PERS legislation, the state Supreme Court ruled in favor of the deputies.

That ruling paved the way for all county workers to consider a myriad of benefits as pay. County employees can receive extra pay credit for cleaning uniforms, speaking a second language, taking classes, holding a college degree, maintaining a car and even for staying on the job for years, a so-called “longevity” bonus.

Defenders of pay-padding say the extra benefits are necessary to compete with private industry for the best candidates. Many private companies offer high-level executives such perks as salary bonuses, stock options, country club memberships and generous raises.

It’s not an unreasonable argument, Bennett says. But he said he would rather pay higher salaries to account for the various perks than tacking on the cash equivalent at retirement, when taxpayers may not realize what is happening.

“Be up front and tell people what you are paying,” Bennett said. “With these hidden perks, it’s impossible for the average citizen to understand what the true pay is and it’s a very inappropriate way to build public confidence.”

Don Facciano, president of the Ventura County Taxpayers Assn., said such choice perks generally are enjoyed only by top-level chief executive officers in the private sector.

“What do we do in the real world?” Facciano asked. “We might pay for unused vacation, but you can’t use it to [increase pension payments]. I mean, look at the real purpose of vacation. It’s to give you a break from work so you can come back and do a better job. Not to increase your pay.”

It doesn’t help, critics argue, that the bonus pay for elected department heads was passed by the board as part of the consent calendar, which is reserved for noncontroversial items that do not warrant public debate.

“These things are always done under the radar, with no real voter input or knowledge of what has occurred,” Hanes said.

Top county earners include Brooks, whose $167,684 salary jumps to $190,902 with the vacation bonus; Chief Administrative Officer Johnny Johnston, who bumps from $167,000 to $186,912, and health care’s Durand, who moves from $154,000 to $175,323.

But a new Internal Revenue Service regulation could significantly cut back on the pension-padding practice of future employees. In July 1996 the IRS enacted a law that sets a $170,000 limit on salary used for calculating retirement benefits. The law, which affects workers hired after 1996, only applies to those calculating benefits as cash to increase final compensation.

Bennett has promised to bring the issue back to the board within weeks to advocate an end to the perk for future elected officials. The Supreme Court decision prevents changes elsewhere.

But it’s expected to be controversial. Elected officials argue if appointed department heads get the perk, then they should not be treated any different.

Treasurer-Tax Collector Hal Pittman said it is a matter of equity to spread the perk across the board.

“It’s hard to complain about because it sounds very self-serving,” Pittman said. “But I don’t understand why some people want to treat us differently.”

Pittman, for instance, said non-elected department heads are entitled to use the vacation buyback perk each year, which pushes up their pay annually.

“They do it every year,” Pittman said. “If you look at the W-2 for appointeds and electeds, you see a big difference. Where’s the equity and fairness there?”

Bennett, however, said the fact that elected officials can take unlimited time off is payment enough. And he appears to have support on the issue from a board member who voted in favor of the vacation pay bonus.

Supervisor Frank Schillo said at the time he did not realize the payout would have such a dramatic impact on pension pay.

“I voted for it,” Schillo said. “But there was no indication this would mean spiking for the pensions. . . . I just don’t believe that should be done at all.”

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Retirement Pay

Top managers in Ventura County government can pad retirement pay by tacking on up to seven weeks of unused vacation time to their final salary. On average, annual retirement pay goes up $6,000, though longer-serving bureaucrats will earn more than $14,000 in extra retirement pay. Below are estimated retirement incomes for 23 county managers.

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Before perk After perk Michael D. Bradbury, district attorney $106,856 $121,652 Pierre Durand, Health Care Agency $65,142 $74,162 Barbara Fitzgerald, Human Services $64,681 $73,637 Bob Brooks, sheriff $58,337 $66,415 Richard Dean, clerk recorder $55,916 $63,659 Tom Berg, Resource Management Agency $54,173 $61,674 Ken Clayman, public defender $53,746 $60,817 Hal Pittman, treasurer-tax collector $50,027 $56,953 Cal Remington, Probation Department $49,330 $56,160 Bob Roper, fire chief * $45,646 $51,967 Johnny Johnston, chief administrator $45,541 $50,971 Frank Sieh, county counsel $45,140 $51,390 Christine Cohen, auditor-controller $44,982 $51,210 Paul Ruffin, General Services Agency $39,634 $45,479 Ron Coons, Public Works director * $33,917 $38,623 Earl McPhail, agriculture commissioner $31,392 $35,738 Starrett Kreissman, Library Services * $29,685 $32,653 Kathy Jenks, Animal Regulation $29,491 $33,597 Matt Carroll, Information Systems * $29,217 $33,262 Colleen House, Agency on Aging $26,173 $29,797 Scott Smith, airports director * $21,818 $24,000 Dan Goodwin, assessor * $17,935 $20,073 Lyn Krieger, harbor director * $15,971 $17,568

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* Projected pension when employee reaches age 50 with 10 years of service to the county.

Source: Based on information supplied by the county auditor’s office and retirement department.