Thursday, October 20, 2011
By Ed Mendel

In a settlement of a wrongful firing, a suburban San Diego water district agreed six years later to put its former general counsel back on the payroll for one year at $222,000, with a leave of absence that left him free to take another job.

The rancorous firing of Thomas Harron and six others by the Otay Mesa Water District in 2001 was alleged to be a race-based purge. A lawsuit contended that a district board member said: “We got to get rid of all of the gringos.”

Harron acknowledged during a CalPERS board hearing yesterday that the one-year return to the payroll in February 2008, with a prohibition against returning to district offices, was intended to increase his pension.

A reform group’s listing of public pension retirees in the “100,000 Club” shows Harron with a $103,575 pension from the water district. CalPERS estimated the additional year would boost his pension by about $36,000 a year.

But CalPERS staff denied the increase for the additional year. Harron appealed the decision, arguing that he placed a call to CalPERS on the morning of the settlement in 2007 and was told the additional year would count toward his pension.

“The only reason I did this is because CalPERS said ‘yes,’” Harron told the CalPERS board yesterday by telephone from San Diego. “If they had said ‘no,’ I would have said I want cash or some other kind of structure to the settlement.”

CalPERS lawyers said Harron apparently misunderstood call-center staff and, as an experienced lawyer, should have sent the California Public Employees Retirement System a copy of the settlement and awaited official confirmation.

The CalPERS board yesterday voted to uphold an administrative law judge’s denial of the additional year. The board also rejected the judge’s attempt to give Harron a consolation pension boost by setting his retirement date two years earlier.

Board member Tony Oliveira said the “false employment” seemed to be the “epitome” of what is known as “spiking,” manipulation to boost pensions. He asked Harron why he “ever thought that could be legal.”

Harron said he had heard of similar pension boosts in county systems operating under a 1937 act. He said he confirmed that with a legal expert who serves several county systems.

“I knew it was a common practice,” Harron said. “I just didn’t know if CalPERS accepted that practice.”

The 20 county retirement systems that operate under the 1937 act are notoriously generous. When CalPERS sponsored legislation two decades ago that tightened its spiking controls, similar legislation for the county systems failed to pass.

The door for spiking opened wider in 1997 when the state Supreme Court ruled in a Ventura County suit that nearly all types of pay except overtime must be counted toward 1937 act pensions, including cashing out unused vacation time and sick leave.

The Contra Costa Times reported in 2009 that two Contra Costa fire chiefs, ages 50 and 51, retired with pensions well above their final pay. For one chief, the final salary was $221,000 and the pension $284,000 a year.

In Sonoma County, a former county auditor-controller-treasurer who retired in May at age 59 has a $254,625 annual pension, $46,600 more than his final pay, the Santa Rosa Press Democrat reported last month.

The newspaper filed a lawsuit that forced the Sonoma County system to release pension payments. Since 2009 there have been seven separate superior court decisions, upheld by three appeals court, ordering county systems to release pension records.

Because of recent court decisions, CalPERS will begin releasing more detailed pension information when requested under the public records act, Peter Mixon, CalPERS general counsel, said yesterday.

Without being forced by a lawsuit, CalPERS gave Marcia Friz’s reform group the names and pension amounts of retirees receiving $100,000 or more a year and has provided some updates.

“Now we will include those two items plus the last employer and the position that the member held,” Mixon told the board. “We will be providing a breakdown of the calculation, which typically includes years of service, salary and COLAs (cost of living adjustments).”

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