• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Bell scandal fuels push for CA pension reform

August 2, 2010 12:00:00 AM PDT
The local Bell executive salary scandal fuels the push for new pension reform in Sacramento.Pension reform has been tried for years in Sacramento, even this year. But the proposals have always changed. The Bell scandal, though, may finally give pension reform the momentum it needs.

On their first day back from summer recess, state lawmakers are rushing to address the pay and pension scandal brought on by the small Southern California city of Bell, where the now-former city manager Robert Rizzo made nearly $800,000 a year.

His public pension benefit is in the neighborhood of $600,000 a year.

"He is the poster child, whether he likes it or not, for this kind of reform. And so we are going to push it here in Sacramento," said state Assemblyman Hector De La Torre (D-South Gate).

About 90 percent of local public agencies, like Bell, participate in CalPERS (California Public Employees' Retirement System), the state retirement system.

Any time it's running out of money, the pension fund reaches into state coffers that all taxpayers pay into to make up the shortfall.

In this year's budget, nearly $4 billion is going to CalPERS with taxpayer liability growing every year.

"That means that you're going to have all the services that people depend on and expect from government to be cut, and their taxes are going to have to be raised," said Republican Minority Leader, state Senator Dennis Hollingsworth (R-Murrieta).

There's already a 1996 federal IRS rule that limits pension payouts to $245,000 per year, but if a CalPERS investigation into Bell salaries comes up clean, it won't apply to Rizzo or Bell's former police chief, who'll get more than $450,000 a year in retirement, because they were already public employees in other California cities.

"The officials of the city of Bell were actually in the CalPERS system prior to that, so they would not be in effect under that law," said CalPERS spokesman Brad Pacheco.

State workers, though, worry reforms meant for the six-figure club will short-change them. They point out a typical pension is more like $25,000 per year.

"A lot of times, that's what we see is knee-jerk reactions to the hot-button crisis of the moment," said state worker Eric Wiesenthal. "I would hope that's not how pension reform gets decided."

Some of the proposals discussed are forcing those former Bell officials into that $245,000 IRS limit, and limiting salaries, which are used to calculate pensions; and posting those salaries online. But lawmakers will have to act fast: the legislative year ends this month.


Load Comments