The State Worker

Chronicling civil-service life for California state workers

May 31, 2012
CalPERS cuts pension benefits for Vernon officials

Editor's note, 6:11 a.m., June 1, 2012: An earlier version of this post incorrectly attributed the following memo to CalPERS. The summary is from a source outside of the fund, but CalPERS confirmed its accuracy.

CalPERS has whacked the pensions for several former City of Vernon officials in the wake of the scandal there and a subsequent audit that looked at city records from 2002 to 2010.

The decisions severely cut or completely eliminate benefits for most of the named CalPERS members.

Here's a memo detailing the fund's determinations followed by letters sent to each person earlier this month explaining the penalties and the rationale:

City of Vernon Membership and Compensation

Below is the information regarding the membership and compensation determinations for the City of Vernon employees. Based on the information we received, you will find that there were service credit periods removed for most of these members. In our letters addressed to the individuals below, we stated that determinations were given as a result of conflicting and insufficient information. The individuals and/or the City may provide additional documentation to supplement the information previously submitted. Any additional information must be submitted within 30 days of the date of the letter and must be specific and clearly show evidence that the members properly held the specific positions listed and that those positions were established and meet the requirements outlined by law, resolution or ordinance.

Eric Fresch (All service removed)
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City from 1986-2010
· 28.746 total years of service removed - of which 16.1 years was arrears service
· 5 years of Additional Retirement Service Credit removed - Reimbursement and/or credit to be effectuated in accordance with State and Federal law.
· Safety Classification denied
· If membership is proved CalPERS cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Jeffrey Harrison (All service removed)
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City
· 4.676 total years of service removed
· Safety Classification denied
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Eduardo Olivo
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City for 1994-2002
· 15.265 total years of service removed - of which 7.770 years was arrears service
· 5 years of Additional Retirement Service Credit removed - Reimbursement and/or credit to be effectuated in accordance with State and Federal law.
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Roirdan Burnett
· Eligible membership date was changed to February 6, 2008 from December 3, 2002
· Part of his 4.462 years of service credit is determined to be as an Independent Contractor but still determining the period - If no documentation is provided, all service will be removed
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Bruce Malkenhorst Jr. (Membership and Comp)
· Part of his 10.647 years of service credit is determined to be as an Independent Contractor but still determining the period - If no documentation is provided, all service will be removed
· Safety Classification denied
· Pending the verification of membership, payrates have been verified from 11/97-6/05 and 10/07-last day of employment
· If membership is proven the payrate cannot be determined from 7/05-9/07
· Member has requested a refund
· Member informed, upon correction of payroll elements by the City, CalPERS will contact member regarding a refund and/or credit of normal contributions. Reimbursement and/or credit to be effectuated in accordance with State and Federal law.

Bruce Malkenhorst Sr. (Comp Issue Only)
· The pre-deprevation letter, which includes our preliminary determination to adjust his allowance downward, was returned to program from LEGO on 5/21/12 for review. The letter will be mailed Friday 5/25/12, giving them until 6/25/12 to respond.
· He held multiple positions simultaneously, which were unable to be pulled apart to determine compensation related to each position
· His payrate did not comply with the requirements of being paid "pursuant to publicly available pay schedules" under the meaning of that phrase in the statutory and regulatory definitions for payrate. In addition, the amounts failed to meet other definitional requirements of payrate in so far as they were not for the normal duties of one full-time position and were amounts reported for duties or services performed for other simultaneous positions that would constitute "overtime" under the PERL.
· In an effort to determine a reportable payrate for the member CalPERS will be using $7,875 to calculate his allowance. This amount is the payrate for the position of the acting City Clerk, which is one of the position Mr. Malkenhorst held during the tenure of his employment. The $7,875 payrate was given to Mr. Malkenhorst's successor. It was provided in a Resolution signed June 29, 2005, and effective July 1, 2005. Mr. Malkenhorst's retirement date was July 1, 2005.
· His longevity has been determined to be limited to 20%, instead of the 25% his initial allowance was calculated with. This is due to the additional 5% only being available to him.
· The final compensation amount of $44,128 originally used to calculate his retirement allowance has been reduced to $9,450. This will reduce his allowance amount from $45,073.52 to $9,654.

Mark Whitworth (Comp Issue Only)
· The City is currently reporting a payrate based on his service rendered as the Fire Chief. This compensation includes a payrate of $16,599 and 5% ($829.95) Educational Incentive for a total reported compensation amount of $17,429.01.
· Mr. Whitworth is currently working in multiple positions and the City must substantiate the full-time payrate for each position and report the payrate(s) accordingly.
The pay must be for services rendered on a full-time basis during normal working hours and cannot be for additional duties or services related to other positions

Donal O'Callaghan
· Member refunded
· Notes have been added to the system in order to insure he cannot reinstate or redeposit without being reviewed and approved by the Compensation Committee.

Here are the cover letters and determination letters that CalPERS sent to each official:

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at jortiz@sacbee.com.

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