In wake of Bell scandal, CalPERS may change pension calculation rules

California pension officials are investigating the pay received by former top officials of Bell with an eye toward excluding large chunks of their salaries from retirement calculations.

A ruling against former City Manager Robert Rizzo and his colleagues could affect other officials across California who receive salaries from several government agencies simultaneously.

Rizzo is set to receive a pension of about $600,000 a year, which would make him the highest-paid pensioner in the California Public Employees’ Retirement fund. That amount is calculated from a salary of nearly $800,000.

His most recent contract split up his compensation so that his pay came not only for his work as city manager but as executive director of Bell’s Surplus Property Authority, Community Housing Authority, Public Financing Authority and Solid Waste and Recycling Authority.

The pay arrangement made it difficult for outsiders to determine Rizzo’s full salary, and it might come back to haunt him.

Brad Pacheco, a spokesman for CalPERS, said the fund is investigating whether pay that Rizzo received for jobs other than city administrator should count toward his pension. CalPERS is also looking at compensation for former Assistant City Manager Angela Spaccia and former Police Chief Randy Adams, he said.

If CalPERS rules that pay drawn from other agencies cannot be counted for retirement calculations, it could reduce pensions received by retired Bell council members. For example, former Councilman George Cole, who during some of his tenure received pay from various agencies, is receiving a pension of nearly $50,000 a year for the part-time job.

A Times survey of city managers’ pay last month turned up officials in several cities who had been receiving payments for more than one municipal job.

Rizzo’s salary and pension benefits have prompted widespread outrage and legislation that limits the raises of local government officials.

Rizzo’s attorney, James Spertus, said he would fight efforts to reduce his client’s pension.

“Mr. Rizzo never agreed to accept less compensation or to do anything that would impact his retirement,” Spertus said.

Rizzo’s latest contracts were signed by himself and Mayor Oscar Hernandez. Former City Atty. Edward Lee said he neither prepared the contract nor approved it. Hernandez did not return calls Friday.

CalPERS itself has been sharply criticized because it knew about the high salaries paid to Rizzo and Spaccia four years ago and did nothing to stop them.

Pedro Carrillo, Bell’s interim administrative officer, said CalPERS officials recently spent about three weeks at city offices going through records. He said he expected to receive a draft report identifying any problems within 10 days.

“The salaries and pensions of certain individuals are certainly a concern of myself, the city attorney and most folks in the city of Bell,” he said.

Along with the CalPERS audit, the Los Angeles County district attorney and state attorney general have launched wide-ranging investigations in Bell that include the high salaries city officials received and allegations of voter fraud and improper business dealings. The state controller is also conducting an investigation.

A review of records by The Times showed that City Council members were paid for their work on commissions that rarely met or did so for only a few minutes.

Questions about Rizzo’s pension may be the result of five new contracts he signed in September 2008, two months after his previous one went into effect. Old contracts paid him for being city manager. The new contracts paid him as city manager and as executive director of the four city commissions.

His total compensation remained the same. He received about $221,460 a year to run the city, and the remaining $566,177 was split among the authorities.

This final contract was not provided to The Times in its original request for Rizzo’s contract in June, a violation of the California Public Records Act.

In addition, Bell’s City Council on Friday announced plans to sue former city administrators, consultants and attorneys for actions that led to the city’s crisis.

City leaders said they suspect Rizzo conducted city business using his personal e-mail account and issued a subpoena to obtain copies of messages and computer files going back five years

The decision to subpoena the e-mails came after The Times reported that Rizzo had given city loans of nearly $400,000 to two businesses without public notice or council approval.

Rizzo was ordered to appear in person and produce copies of the e-mails by the next City Council meeting, which is scheduled for Sept. 20.

Spertus said his client wants the facts to come out, but the city has refused to talk to him.

“It would not surprise me if the city of Bell or other agencies in this political time … tried to pursue criminal or civil actions against Mr. Rizzo that are unfounded,” Spertus said.

jeff.gottlieb@latimes.com

ruben.vives@latimes.com