CalPERS released an audit of the City of Vernon that details ten findings that range from the City’s failure to provide documentation on compensation and enrollment for its employees to improperly classifying its attorneys in safety classifications that provide enhanced retirement benefits.
CalPERS actions to implement the findings may include adjustments to retirement benefits or reported compensation for nearly two dozen active, inactive and retired employees of the City. The Pension Fund will review records on each individual and issue final determinations by the end of May 2012. Impacted members have rights to appeal under the law.
This audit raises serious concerns about Vernon’s reporting to CalPERS and its decisions about pension benefits for its employees,” said Anne Stausboll, CalPERS Chief Executive Officer. “The City of Vernon has indicated it has no further documentation to provide in response to our audit. In accordance with our audit findings, we will take appropriate actions to adjust current and future benefits for those City of Vernon employees and retirees who were wrongly enrolled or where compensation was incorrectly reported to CalPERS.”
CalPERS auditors reviewed more than 20,000 pages of documents, resulting in the following findings and actions:
- Attorneys were erroneously reported under a safety coverage group, resulting in enhanced benefit formulas. CalPERS will reclassify the City’s attorneys to the appropriate lower benefit formula, from 3% at 55 to 2.7% at 55;
- Some employees were incorrectly enrolled and received additional years of service credit for which they were not entitled. CalPERS is denying all Additional Retirement Service Credit purchases until membership eligibility is proven;
- Sufficient information to determine the accuracy of retirement benefits, reportable compensation and membership enrollment was not provided by the City;
- The City over-reported special compensation, including longevity pay for its former City Administrator, and failed to properly report various elements of payroll. CalPERS is moving forward with individual determinations that may affect active, inactive and retired members;
- The City did not notify CalPERS that an Elected Officer was convicted of perjury that could result in the forfeiture of years of service.
The audit concludes a year-long review by CalPERS auditors that examined a sampling of records provided by the City. The audit covered the time from July 1, 2002 through June 30, 2010, including on-site fieldwork in Vernon offices.
The City of Vernon has contracted with CalPERS to provide retirement benefits for its employees, police officers and firefighters since 1948.
View a full copy (PDF, 774 KB) of the Vernon audit and the City’s early response to the findings.
CalPERS, with assets of approximately $236 billion, is the largest public pension fund in the U.S. It administers retirement benefits for more than 1.6 million California State, local government, and public school employees, retirees, and their families on behalf of more than 3,000 public employers, and health benefits for more than 1.3 million enrollees. The average CalPERS pension benefit is $2,332 per month. The average benefit for those who retired in the most recent fiscal year that ended June 30, 2011, is $3,065 per month.
City of Vernon Audit Report (PDF, 774 KB)
Fact Sheet (PDF, 113 KB)