New bill targets pension spiking, double dipping

By: Jon Brines, Placer Herald Correspondent
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On May 27 the California Senate Appropriations Committee is expected to hear a bi-partisan bill seeking to combat pension spiking and double dipping by employees in the California Public Employees’ Retirement System. “Last year I heard more from my constituents about public employee pensions than I’ve heard in all my years of public service,” said the bill’s sponsor, State Senator Joe Simitian (D-San Jose). He said the economy, coupled with recent media reports highlighting key abuses by individuals has forced the issue of pension reform this year. “Most people don’t have a problem with those who put in long years with a modest pension to secure their security but what was happening is people who artificially inflate their pension in the final year of their employment.” Controversy erupted last month when The Placer Herald discovered a 42-percent increase in the salary of Rocklin’s City Manager Carlos Urrutia in the last years before his retirement. Government watchdog groups contend the practice leads to increased pension rates for local governments. SB 1425 is one of three bills in the California legislature that would require pensions to be based on the average pay increase in the final three years, not for the retiring individual, but for their job group. “We have to step up, acknowledge the problem and get it solved,” Simitian said. Another provision, aimed at “double-dipping,” requires a new retiree to wait at least six months before taking another job covered by a state or local government pension. Rocklin recently boosted the pensions of nine retiring managers by giving them credit for an additional two years of service in exchange for early retirement but then rehired them in their old jobs as part-time employees. City officials reported it saves nearly $650,000 in salary at a time when the city needs the breathing room to get through the great recession. The rehired annuitants work part-time without health and additional pension payments. Urrutia for example, reportedly draws more than $170,000 from CalPERS pension and $139,000 as a part-timer from the city, topping his previous base pay by $79,000. Police Chief Mark Siemens, Assistant City Manager Terry Richardson, Chief Building Official Pete Guisasola and Senior Engineer Jee Choy took similar deals, according to the city. “That is not what a retirement system is designed to be,” Simitian said. “It’s one thing to provide a retirement to somebody in their later years. It is another thing to pay them twice for the same job.” If the bill passes out of committee it will go to the Senate floor for a vote. Urrutia could not be reached for comment. Mayor Scott Yuill refused to comment on Urrutia’s employment deal but said pension reform is important for Rocklin. “There is a need for public pension reform on both a state-wide and federal-wide basis,” Yuill said. “The unfunded legacy costs of (retiree’s health plans) that these pensions place on government and taxpayers is unsustainable.” Yuill points out the city has been fiscally prudent by putting away $10 million to address some of its legacy costs at a time when the city is facing continued revenue shortages and layoffs. An audit scheduled for next month will shed some light on just how much Rocklin owes in retiree health care costs. Anti-Pension Spiking SB 1425 • Requires pensions based on average pay increase over years/job class • Authorizes CalPERS to assess fee on employers who fail to report salary changes • Gives CalPERS the authority to recover costs from employers Anti-Double Dipping • Limits rehiring of annuitants to six months past retirement date