August 4, 2010
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today announced it 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.
“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.
In addition to its review of high public official salaries, CalPERS is:
CalPERS performed a membership and payroll review of the City 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. Based on these representations, CalPERS granted a one-time approval of the city manager’s 2005 increase. (CalPERS wishes 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.)
“The laws regarding public pensions need to be rigorously followed and CalPERS is here to make sure they are,” said Stausboll. “It is important to remember that pay and compensation are set by elected city and county officials. CalPERS review of the one- time increase in the city manager’s salary was based on state law for retirement purposes and was not an endorsement of the size of the salary increase.”
CalPERS also wishes to correct the reported statements that have been made about the impact and costs to other agencies in the same risk pools as Bell. Both the City’s miscellaneous and safety plans are in 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.
CalPERS is planning a review of its policies and processes around employer risk pooling.
CalPERS, with approximately $210 billion in assets, is the nation’s largest public pension fund and administers retirement benefits for more than 1.6 million active and retired State, public school, and local public agency employees and their families. For information about CalPERS, visit www.calpers.ca.gov.
Source: Press Release http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2010/aug/salary-review.xml