Bell scandal could reach La Cañada

La Cañada Flintridge is not in the same liability pool as the city of Bell, officials said this week, but nevertheless could be responsible for financing a portion of bloated pensions of former Bell employees because of complicated mathematical overlaps in the CalPERS system.

“There may be some possibility that La Cañada Flintridge could be responsible for some small, tiny portion of former Bell employees’ pension benefits, but it is so uncertain right now,” said Daniel Jordan, the city’s director of finance.

Fallout from the Bell salary scandal continues to reverberate across the state, and calculations to determine who will pay for what are befuddling public officials and actuaries alike. CalPERS officials initially said that La Cañada would not finance any part of Bell pensions, Jordan said.

La Cañada is one of about 600 small California government entities with a 2% at 55 CalPERS benefit formula, Jordan said. The formula means that La Cañada employees are eligible for retirement at 55, and their pensions are calculated by multiplying the number of years of employment by two, and then multiplying the product by the salary at which the employee retired.

For example, if someone worked for the city for 20 years, and retired with a salary of $100,000, he or she would earn a pension of $40,000 a year, Jordan said.

The city of Bell is part of a separate, more expensive risk pool with a 2.7% at 55 benefit formula, according to CalPERS records.

However, if a former Bell employee previously worked for a government entity that was at any time part of the La Cañada benefit pool, there is a chance that the city, together with the hundreds of other government entities in that pool, will pay a fraction of that person’s pension, Jordan said.

CalPERS, or the California Public Employees’ Retirement System, is the largest public employee pension fund in the United States, with assets of $208 billion. Every city in California with 100 or fewer employees must be part of one of CalPERS’ nine risk pools where the assessments, liabilities and pension funds are pooled for purposes of investment returns.

Bell City Manager Robert Rizzo, Police Chief Randy Adams and Assistant City Manager Angela Spaccia resigned last month under intense public pressure following a Los Angeles Times report that revealed they earned annual salaries of $787,637, $457,000 and $376,288, respectively. The report also exposed the fact that four of the five Bell City Council members were earning nearly $100,000 annually for their part-time positions.

Initially, Rizzo and Bell Mayor Oscar Hernandez publicly defended the salaries despite the city’s modest population (about 37,000 residents) and per-capita income (less than $30,000 a year).

The Times’ exposé triggered multiple investigations into the legality of the salaries. CalPERS officials announced last week it would freeze Rizzo and Adams’ pensions until “satisfied that the pensions are appropriately paid under the law.”

It has also prompted other cities to reevaluate employee salaries and pensions, as well as issues of government transparency. Jordan said multiple La Cañada residents have requested the salary breakdowns of city employees in the wake of the Bell scandal. City Manager Mark Alexander earns $177,120 a year, and council members earn $300 a month, figures that are comparable to other similarly sized cities.

“It is unfortunate when you have these isolated cases of individuals who are taking advantage of the situation, and it reflects badly on the other people that have chosen this as a profession and who are working to sincerely support communities and trying to bring about better government,” Alexander said.

The Bell scandal has already set into motion salary and pension reform. State Controller John Chiang announced Tuesday he would require all cities to publicly report the salaries of elected officials and public employees.

“I think broad reform of the public sector pension system, particularly in California but nationwide, is inevitable and already starting,” Jordan said. “And I think this story and these issues being brought out into the public are going to hurry that along. That is good because it needs to be done. It is sad that the poster child for it is an egregious example of abuse of the system, but often that is what triggers reforms.”