CalPERS Orders Former City of Vernon Official to Repay $3.4 Million
November 18, 2015
Communications & Stakeholder Relations
Brad W. Pacheco, Deputy Executive Officer
Contact: Amy Morgan, Information Officer
CalPERS Board approves an administrative law judge's finding that Bruce Malkenhorst, Sr. received a pension based on an improperly inflated pay rate
SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) Board of Administration (Board) today approved, in part, the decision of an Administrative Law Judge (ALJ) that addressed the appeal of former City of Vernon Administrator, Bruce Malkenhorst, Sr.
The Board affirmed the ALJ's finding that Malkenhorst had been receiving a pension based on compensation he received for working in positions that were not disclosed on publicly available pay schedules. Based on the Board's decision, CalPERS will now begin the process of recovering more than $3.4 million in overpayments to Malkenhorst.
"As the judge specifically found, Malkenhorst and other Vernon officials intentionally obscured Malkenhorst's pay increases, making it impossible for the public to figure out how much the city was paying for what services, and subverting the law's transparency requirements," said Matthew Jacobs, CalPERS' General Counsel. "CalPERS will not tolerate these kinds of abuse. We remain on the lookout for all forms of pension spiking and encourage the public to help us root it out."
The legitimacy of Malkenhorst's pay rate was called into question during a 2011 audit of the City of Vernon that CalPERS began after Malkenhorst was convicted of felony misappropriation of public funds. The audit revealed that Malkenhorst was not only being paid to serve as full-time City Administrator and City Clerk, but was also receiving compensation to serve as Treasurer, CEO of the city's power department, and several other positions not listed on the city's pay schedules.
Based on available city records, CalPERS cut Malkenhorst's final compensation, used to determine the amount of his pension, from $44,128 to $9,450 per month.
Due to cost of living increases, Malkenhorst's current monthly pension is $10,244.72.
CalPERS discovers and pursues violations of the retirement law through all means available, including audits and tips from the public to our Ethics Helpline. In Fiscal Year 2014-15, CalPERS completed 125 audits of contracting public agencies and reviewed more than 100 complaints from our Ethics Helpline.
For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.7 million members in the CalPERS retirement system and administers benefits for nearly 1.4 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $291 billion. For more information, visit www.calpers.ca.gov.