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Bell paid $1 million to boost officials' retirement

The payment was made under a CalPERS program that was discontinued this year. The agency has disallowed the upgrades and made the money available to the city.

March 05, 2013|By Jeff Gottlieb, Los Angeles Times
  • Former Bell city administrator Robert Rizzo, right, received the largest payment from the city -- $229,241.
Former Bell city administrator Robert Rizzo, right, received the largest… (Al Seib / Los Angeles Times )

Bell paid more than $1 million to give 12 city officials — including six former council members now on trial in a municipal corruption case —- substantial boosts in retirement pay.

The biggest payment, $930,000 for 11 employees, was made under a California Public Employees' Retirement System program that allowed those it covered to buy as many as five extra years of service time for their pensions. Pensions are partly determined by the employee's highest salary and the number of years in CalPERS.

According to CalPERS, employees must pay for extra service credit themselves. In Bell, however, the city picked up the bill and the council never approved the payments, officials in the city said.

FULL COVERAGE: Bell corruption case

CalPERS has since disallowed the pension upgrades for the officials and placed the money in an account the city can tap.

Doug Willmore, Bell's city manager, said he was unaware of how extensive and costly the program had been for the small, working-class city.

Willmore said the city is considering whether to file a lawsuit against those for whom it paid the CalPERS money.

The largest payment the city made was $229,241 for Robert Rizzo, the former city manager.

Others the city paid for included $120,496 for former Mayor Oscar Hernandez and $61,073 for Teresa Jacobo, a former councilwoman. The city paid slightly more than $36,000 for former Councilmen George Mirabal and George Cole.

All four are among the former council members standing trial on charges of pumping up their annual salaries as high as $100,000 by drawing pay for serving on city boards that rarely met and did little work.

In a settlement over his pension, Rizzo agreed in January to give up the additional service credits. Still, his pension is $185,364 a year. Cole and former Assistant City Manager Angela Spaccia are fighting to keep their pensions intact.

CalPERS established the program in 2004 and ended it at the beginning of 2013.

Besides the council members, the other six who received service time were among the highest-paid municipal employees in the country. Among them were Eric Eggena, the director of general services for whom the city paid $112,798 to CalPERS; Luis Ramirez, the deputy engineer, $95,288; Annette Peretz, the director of community services; $86,459; Spaccia, $71,085; and Lourdes Garcia, the director of administrative services, $52,624.

Rizzo and Spaccia have also been charged with corruption. Their trial is expected to start later this year.

In an advisory decision about Spaccia's pension, an administrative law judge gave hope to those who received the five-year service gift from Bell. Judge James Ahlers ruled the payments were permissible because in 2004, a CalPERS employee told Spaccia there "would be no problem" if Bell purchased the service time

CalPERS legal staff is studying the decision.

Steve Onstot, the attorney who represented Bell at the hearing, said the CalPERS employee was not authorized to make that decision and that regardless, it never was approved by the council, as required.

The CalPERS board will decide next month whether to accept the decision, send it back to the judge for additional evidence or hold its own hearing.

In addition to buying service time in CalPERS for some employees, the city operated its own retirement plan, which provided some employees with one of the most lucrative pension plans in the state for non-safety workers. The city also had a supplemental pension plan for Rizzo and Spaccia that would have boosted the then-city manager's retirement pay to nearly $1 million annually.

The CalPERS payments were not be the only city money Rizzo used for Bell council members. Deputy Dist. Atty. Sean Hassett said that in 2008 and 2009, the city paid $15,500 each year into a 401(k)-like accounts for former council members Victor Bello, Mirabal, Hernandez and Jacobo.

The city also made a single $15,500 payment into accounts set up for Cole and former Councilman Luis Artiga, Hassett said.

Cole testified during his corruption trial that he told Rizzo he didn't want the money, but the city administrator refused to take it out of his account.

Alex Hannah, a spokesman for ICMA-RC, the firm that handles the deferred accounts, declined to comment.

Kevin Duggan, West Coast regional director for the International City/County Management Assn., said that although it is not unusual for a city to pay employees' deferred compensation, he had never heard of a city paying it for an elected official.

"They've taken a not unusual vehicle and are using it in an unusual and unconventional way," he said.

jeff.gottlieb@latimes.com

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