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CalPERS reviews top salaries, drafts new regulations

State pension fund officials say they have launched a review of members who earn more than $400,000 a year and are drafting new regulations to boost disclosure of public-sector pay.

The move comes in the wake of salary and pension scandals in the Los Angeles County city of Bell, where the former city manager earned nearly $800,000 annually, drew unused vacation pay and had other perks that pushed his compensation to $1.5 million annually, according to a Los Angeles Times report.

“We are taking immediate action to investigate whether salaries of top public officials are being reported correctly and in accordance with the laws and rules that govern our system,” said Anne Stausboll, CalPERS’ chief executive officer. “We are committed to increased transparency and will take all steps necessary to protect our members, employers and stakeholders.”

“We followed all the existing pension rules related to Bell four years ago, but it is clear that we need to work toward strengthening our regulations and possibly state law,” said Stausboll.

CalPERS, with approximately $210 billion in assets, is the nation’s largest public pension fund. It administers retirement benefits for more than 1.6 million active and retired state, public school, and local public agency employees and their families.

CalPERS  also said it was:

Joining the California Attorney General to investigate the facts surrounding the salaries and other compensation of City of Bell officials;

Conducting a second CalPERS review of Bell;

Placing on hold the retirement accounts of the individuals under investigation in the City of Bell and committing not to approve any pensions until satisfied the pensions are appropriate under the law;

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

CalPERS said it conducted a membership and payroll review of Bell in 2006 that showed Bell’s city manager received a 47 percent salary increase.  

“CalPERS informed the City that they 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,” CalPERS said in a statement distributed last week.  

“Based on these representations, CalPERS granted a one-time approval of the city manager’s 2005 increase.” They also wished “to correct the assertion that has been widely reported that the fund granted an exception to its rules.  This is incorrect.  State law allows salary increases for groups or classes.”

CalPERS also said it was examining the impact of the Bell issues upon other participants in the area risk pools.

“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.


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