CalPERS Places Hold on Pensions of City of Bell Members

August 5, 2010 ( - The California Public Employees’ Retirement System (CalPERS) is launching a comprehensive review of its members who earn more than $400,000 annually in salary and has begun to draft new regulations to ensure increased transparency of public agency salaries.

CalPERS’ announcement of the review follows revelations that officials of the City of Bell, a poor, mostly Hispanic community, were being paid lavish salaries.  

The pension fund also announced it is joining California Attorney General Jerry Brown’s investigation of the facts surrounding the salaries and other compensation of City of Bell officials, conducting its own review of Bell, and placing on hold the retirement accounts of the individuals under investigation in Bell and committing not to approve any pensions until satisfied the pensions are appropriate under the law.  

The Los Angeles Times reported last month that in addition to the $787,637 salary of Chief Administrative Officer Robert Rizzo, Bell paid Police Chief Randy Adams $457,000 a year, about 50% more than Los Angeles Police Chief Charlie Beck or Los Angeles County Sheriff Lee Baca and more than double New York City’s police commissioner. Bell paid Assistant City Manager Angela Spaccia $376,288. The three have resigned.  

CalPERS said it performed a membership and payroll review of the City in 2006 that showed Bell’s city manager received a 47% salary increase.  CalPERS informed the city that it could request an exception to the average increase for an individual who is not in a group or class as provided under regulations.  The city requested such an exception in October 2006.  At that time, the city represented that the city manager was part of the top management group or class, and all of the employees were receiving similarly large pay increases.    

Based on these representations, CalPERS granted a one-time approval of the city manager’s 2005 increase.  The fund said in its announcement that it wishes to correct the assertion that has been widely reported that the fund granted an exception to its rules.  State law allows salary increases for groups or classes.  

According to the CalPERS press release, both the city’s miscellaneous and safety plans are in risk pools, and the financial impact of the other agencies in the pools will most likely be negligible since the increased liabilities for these few employees will be spread across the entire risk pool and because the City of Bell and the individual employees were contributing the required contribution percentages based on the high salaries.  The actual impact on the risk pools and other employers cannot be determined until the compensation that may be used is finalized and actuarial valuations are performed.  

CalPERS is planning a review of its policies and processes around employer risk pooling.  

Bloomberg reports that California Controller John Chiang said he will require cities to post salary information on his office’s Web site starting in November.  

CalPERS is working with members of the Legislature and the League of California Cities on potential legislation to address issues of transparency in local governments.