For Whom The Bell Tolls: City Manager Could Receive $13 Million in Pension Funds

Three administrators in Bell, California have resigned after the national outcry over their inflated salaries. Chief Administrative Officer Robert Rizzo was found to be making $787,637 a year — roughly twice the salary of President Obama — to oversee a city of less than 40,000 people. Assistant City Manager Angela Spaccia and Police Chief Randy Adams also resigned. However, it now appears that Rizzo is entitled to $650,000 a year in pension. It is not clear why the mayor and other officials have not joined the ranks of the recently resigned.

Adams was making 50% more than the chief of police in Los Angeles. He was pulling in $457,000 and Spaccia made $376,288 a year.

Adams could now claim more than $411,000 a year and Spaccia, 51, could claim as much as $250,000 a year. Spaccia would have to wait until when she reaches 55 however. She could then pull in $7,500,000 if she lives another thirty years. Even at 20 years, Adams could pull in $8,220,000. As for Rizzo, a twenty-year pension period would give him an additional $13,000,000 dollars.

The question is now whether these obscene salaries could be viewed as a form of fraud or racketeering. It would be difficult. People elected these city council members and Mayor who must have approved these salaries or did not seek to limit the salaries. If they did not receive kickbacks, it may be perfectly legal. The law does not protect people against the leaders they elect in the performance of discretionary duties. Moreover, since these officials will remain vilified for the rest of their lives, they have little reason to waive such pensions.

Source: Sacramento Bee

39 thoughts on “For Whom The Bell Tolls: City Manager Could Receive $13 Million in Pension Funds”

  1. BIL,

    I came back to see if someone had referenced the Vernon story and was glad to see that you had it up here. More detail from the LA Times:

    Eric T. Fresch was paid nearly $1.65 million in salary and hourly billings in 2008, when he held the dual jobs of city administrator and deputy city attorney, according to documents obtained by The Times through the California Public Records Act.

    Other highly compensated employees include Donal O’Callaghan, who was paid nearly $785,000 last year as city administrator and director of light and power, overseeing Vernon’s city-owned utility. He now earns $384,000 a year overseeing capital projects for the utility after stepping down July 20 as city administrator.

    Former City Atty. Jeffrey A. Harrison earned $800,000 last year and City Treasurer/Finance Director Roirdan Burnett made $570,000, records show. The year before, Harrison was paid $1.04 million.

  2. From the wikipedia article on Bell, California:

    “The median income for a household in the city was $29,946, and the median income for a family was $30,504. Males had a median income of $22,596 versus $17,025 for females. The per capita income for the city was $9,905. About 21.2% of families and 24.1% of the population were below the poverty line, including 29.7% of those under age 18 and 16.7% of those age 65 or over.”

    Something’s fishy here. Population of about 60k, and a median household income of $30k, but they can pay out millions each year in executive branch salaries and pensions?

  3. I’d like to join this conversation because I have a LOT to say. I am, after all, a retired teacher. You know–one of those leaches who suck off taxpayers. But I’m in too good a mood. I picked my daughter and her husband up at the airport this afternoon, listened to their funny tales about their two-week honeymoon in Ireland, and just dined on fresh lobsters that I prepared with a cognac butter sauce (which we ate with a fine Riesling). So…maybe…just maybe…I’ll be back later. And then again…maybe I won’t. Besides, I think Buddha, lottakatz, and rcampbell can handle this discussion without my help.

    😉

  4. Buddha:

    if the guy left the town in the black maybe he is entitled to a large bonus. If he gets 850k and the town has a large surplus and is financially sound maybe the money was well spent.

    I know for a fact that most politicians could not run a surplus because they typically have never run anything but their mouths.

    So I think Puzzling has a reasonable point.

    As a question, would you rather pay the guy 75k and have a 20 million deficit or pay him 850k and have a 20 million surplus?
    The answer seems pretty clear to me and at less than a 5% cost of investment it seems pretty good to me. Taking $1 and turning it into $20 seems pretty good to me.

  5. Lottakatz:

    the point is that union funds belong to the rank and file who may not all be in lockstep with union management. The money private industry uses to lobby is private money. While I think lobbying needs to go the way of the Dodo, I also think unions should use union dues to plan for retirement and health care for union members and not be used for political purposes unless agreed upon by the individual members.

  6. In all cases, arguing against employees’ unions suggests that workers are not entitled to any protection other than the “bosses'” whims from abusive business practices, wage exploitation or aribitrary hiring/firing. It suggests that the king (management, owner, government body, etc.) will provide for the peons as the king sees fit and those mere laborers must simply accept their fate.

    Have some unions been abusive in their own way? Of course. But the abuse of workers without unions continues unabated whenever and wherever possible.

    The mining deaths in KY are one recent example where had this been a union mine various job safety requirements would have been in place to save those miners. Those safety measures exist at mining operations that have unions.

    Since public employees are paid from tax-based funds, without public employees’ unions those workers would be subjected to almost begging for wage increases even while their private sector counterparts. City jobs at every level would return to political patronage as they were in the bad old days before the 1950’s.

  7. puzzling,

    A model for financial prudence, eh?
    Now that’s good comedy!

  8. I believe there is a further update to this story not in the Sacramento Bee article. From the LA Times:

    Bell issued its first public statement on the salary controversy Friday, with Mayor Oscar Hernandez calling Rizzo’s salary well within reason for the excellent job he did for the city of 40,000.

    “Unlike the skewed view of the facts the Los Angeles Times presented to advance the paper’s own agenda, a look at the big picture of city compensation shows that salaries of the city manager and other top city staff have been in line with similar positions over the period of their tenure,” Hernandez said in a letter to the public.

    “A full, fair reporting of the facts would also have demonstrated that Rizzo delivered Bell from a $20-million shortfall to 15 years of balanced budgets. In addition, the city transformed from one of struggling to maintain its day-to-day operations to a city that is a model for financial prudence and effective service delivery”

  9. Puzzeling “These unions have spent a staggering $320 million in the last decade buying their representation..”

    And BP’s contracted for $50 million worth of PR just in response to the disaster in the Gulf. Your shock at the money unions have for lobbying doesn’t stand up to the fact that business as a whole outspends labor for lobbying by about a bazillion percent, LOL.

  10. puzz,

    I did say some unions were problematic.

    They aren’t even consistent from local to local.

    But you handle their bad actions by taking them to court and, of course, limiting their ability to contribute to politicians at the same time you stop corporations from doing so.

    As to the government? We’ve seen what they’ll do if a union goes to far. Just ask the NATCA what happens when you try to hold the FAA hostage. Don’t get me wrong. In general, I’m pro-union, but if they go too far with government and try to interfere with critical structures and services? I have no issue showing them the door. In the private sector? If a business thinks they can get away with that, let them. But what will happen is this: they’ll get rid of the union employees, replace them with cheaper labor, start treating them like shit, and they’ll soon have a union to deal with again and one even more recalcitrant than the one they had before. If their case for renegotiating a contract is based on solid numbers, only the most corrupt of unions would cut off their own noses to spite their members faces (again, UAW looking your direction).

    I’m against corruption in any system, not just the government.

  11. Puzzling “If unions and government regulation are all that prevent rampant worker exploitation, why are unions needed in government of all places?”

    ?

    There are regulations against crime too, should we fire all police, prosecutors etc? Bad argument.

    Thanks Buddha, your posting saved me some effort and stated the case well. I’ll add that SS is invested- it’s invested in the government, government t-bills for the most part (which were paying negative interest a while back I’l add. NEGATIVE interest.) But it’s still the safest investment in the world because the government can’t take the money, declare bankruptcy and pay their executive officers obscene bonus’ as they run out the door.

    I have worked under both defined benefit and defined contribution plans. The defined contribution plans are nothing but a gamble both before you retire and after you retire because they depend on the return of investment.

    In case you and Byron haven’t been watching, the whole investment game is rigged and investors are no more than sheep for the shearing. When I retired the first thing i did was pull all of my money out of my 401k in a lump sum. I was considering quitting my pension plane and pulling the money out even if I had continued to work but circumstance intervened and that decision was not needed.

    I had taken one hit a few years ago and saw exactly where the economy was going and knew I couldn’t afford another hit- or fleecing as it were. I got out with a couple of months to spare before the s***-storm happened and while I lost the potential for further gain in investment dividends by forgoing an annuity I did gain the security of not having my pension left to the whim of free-market looters and criminals. I came out ahead. A lady I worked with (now 65) is continuing to work to ‘make up’ the loss to her pension money. She took both hits.

    Regarding the 401K’s and taking responsibility for your own retirement fund sarcastically advocated above by Byron (Byron, you are so blinded by your dogma I don’t think you know how things work in the real world for working people) people don’t have the choice to make unfettered decisions regarding where the investment house that holds an employer sponsored defined contribution is invested. At best you get a decision which ‘package’ of investments your money gets put into but with my plan (and everybody else’s that worked for the company) the package was painted with broad strokes. The actual companies the package would invest in was not disclosed. Taking responsibility for your own 401K is a joke.

    Also, the deeper point that is greatly disturbing to me is the undercurrent of hostility to worker expectations. The tone of Puzzling’s posting at 11:14. Pensions for public sector employees are “theft”. By what measurement? Why should a public or private sector employee not expect a pension? Or a good wage, a middle class wage? Why should any worker expect a life of labor that pays less that enough to pay the bills, send your kids to college and provide adequate housing and medical care? What is it exactly that makes labor and those things incompatible? Why should everyone that labors not expect that return on their lifetime of work?

    We now live in a country that touted globalization and ‘increased efficiency’ (beginning with Reagan) that expects its workers to compete with employees a world away that make 12 cents an hour and have eating for another day as their expectation. That isn’t capitalism, that’s serfdom; to hold American workers to an economic model that demands global, head to head economic competition is a return to medieval notions of the ‘gentle’ and the indentured.

    I suppose though, if jobs are tough to find and your unemployment is running out our serfs, that is workers, could just do what this man did- move to India for work, $10.00 a week with housing and meals is a good deal there:

    http://boingboing.everyonelookbusy.net/index.php?http://www.boingboing.net/2010/07/23/no-work-in-the-us-mo.html

  12. Buddha,

    You have made eloquent arguments against government graft and corporatism. Yet you support the largest and most expensive corrupting influence on government: public sector unions.

    The top two campaign donors in California are the California State Teachers Association and the California State Council of Service Employees. These unions have spent a staggering $320 million in the last decade buying their representation in legislatures. I hardly see the check-and-balance that you assert. If you are an elected official or plan to run there are 320 million reasons to support government union demands, not counting the tremendous voting power of members and their interested families.

    Lower retirement ages? Approved. Tax-free pensions for “disabilities” like IBS? Approved. Overtime, vacation time and sick time counted in the final earnings to spike pension calculations? Approved. Extraordinary contribution-free health benefits for dependents? Approved. Richer pension and COLA schedules? Approved. Approved. Approved.

    And that’s before we talk about salaries. Or protecting criminal activities by members. Or union support for continuous expansion of government and government power.

    I am not a fan of unions generally, but I do know that if union demands become too expensive in the private sector the firm simply goes out of business. If union demands become too expensive in government, what happens? Does government go out of business?

  13. puzz,

    “Investing would be a lot less risky if government would stop trying to engineer the economy and controlling the monetary system.”

    Flat out bullshit. It was 25 plus years of deregulation of the financial industries that got us into this mess in the first place. The blame starts with Reagan and falls on every President and Congress since his tenure in office and is the culmination of corporatist desires since FDR put them on a shorter leash than their greed liked.

    “If unions and government regulation are all that prevent rampant worker exploitation, why are unions needed in government of all places?”

    Because government is like any complex system – it needs checks. In fact, checks and balances are part and parcel of our entire system – a system that works without graft/campaign finance screwing it up.

    “Isn’t your claim that government by its nature is inherently a force for good, including worker protections?”

    Nothing is inherently good about government and nowhere have I claimed that. Government is necessary. Government is a tool and like any tool is capable of misuse, for example misuse see the Patriot Act and the DOJ circle jerk about punishing those who ordered torture. And like the checks and balances, government can be a force for good in labor protections . . . when graft doesn’t screw it up. For example – instituting the policy of having a minimum wage is a good thing, but allowing industrial graft to keep it below a living wage is a bad thing.

    The price of equity is precisely the same price of liberty: eternal vigilance.

    Elaine,

    Why thank you! Bear hugs are always accepted and appreciated. 😀

  14. Buddha,

    Social security is simply a tax. Those dollars are never deployed as capital to grow businesses or anything else. They are consumed by government immediately in exchange for I.O.U.’s that may or may not ever get collected by taxpayers.

    Investing would be a lot less risky if government would stop trying to engineer the economy and controlling the monetary system. Government allows banks to lend money that doesn’t exist and interest rates to be set by The Federal Reserve rather than the marketplace. This spurs borrowing and malinvestment, creates inflation, and blows bubble after bubble as people try to chase returns rather than see their purchasing power vanish. Then government creates regulation after regulation to try to fix what it did, and the cycle repeats.

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