Morro Bay sucked into City of Bell scandal

August 3, 2010

Taxpayers in Morro Bay are about to find out they’re on the hook for the pension bills of disgraced public officials in a city more than two hundred miles away. [LA Times]

A public firestorm erupted earlier this summer in the small Los Angeles suburb of Bell, when it was discovered that city officials were paying themselves as much as $800,000 a year. Several officials were forced to resign.

However, more than half of former city manager Robert Rizzo’s $600,000-a-year pension will be spread among 140 small cities and special districts such as Ridgecrest, Norco and Morro Bay that are in the same pension liability pool as Bell.

In the case of former police chief Randy Adams, Bell escapes nearly all the costs of his estimated $411,300 a-year pension. Under CalPERS rules, the city is responsible for just three percent of his pension because he only worked there for one year. Taxpayers in Glendale, Simi Valley and Ventura will have to pick up the rest.

Other cities will be on the hook for much of Rizzo’s and Adams’ pensions costs even though their salaries were relatively modest until they landed in Bell. When they resigned last week, Rizzo was making nearly $800,000 a year and Adams was making $457,000.

CalPERS last week said it is putting both the Adam and Rizzo’s pensions on hold pending multiple investigations into Bell’s lavish salaries.

CalPERS manages retirements for 1.6 million active and retired employees. An estimated 90 percent of public agencies in California participate in the retirement system.

Despite the controversy, public pensions are difficult to rescind. Courts have repeatedly upheld the contracts in favor of employees, said Stephen Silver, an attorney who specializes in public pension law.