CalPERS Audit Exposes Pension Spiking by Former CEO of Risk Management Authority
November 16, 2016
Communications & Stakeholder Relations
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Amy Morgan, Information Officer
SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) Board of Administration (Board) voted to adopt an administrative law judge's (ALJ's) decision today that prevents James Towns, the former CEO of the Special District Risk Management Authority (SDRMA), from spiking his pension with an improper 67 percent salary increase.
CalPERS' audit of SDRMA uncovered email communications in which Towns requested the SDRMA Board to convert his merit bonuses to base salary in an effort to boost his pension. The audit also found that there was no publicly available salary schedule for Towns' CEO position, which is required under the retirement law so that taxpayers can know how much public employees are being paid.
"This case exemplifies CalPERS' expanded efforts to identify and root out pension spiking," said Matthew Jacobs, CalPERS General Counsel. "We will not tolerate any form of pension abuse, and invite the public and our public employer partners to assist us in this effort."
Other findings show that the CEO position approved for Towns at a 2005 SDRMA Board meeting was not newly created, but merely an updated job description for Towns' ongoing role as SDRMA's top executive; yet his pay increased from $149,334 to $250,000 per year in 2005.
After voluminous exhibits, multiple witnesses, and 10 days of hearings, the ALJ upheld CalPERS' original decision and agreed that Towns' salary increase of $12,444.50 per month could not be used to set his final pay rate used to calculate his pension.
Towns' employment with SDRMA began in 1994 and continued until he retired in December 2009. After correction, Towns receives a monthly pension benefit payment of $11,315.46 (gross).
CalPERS discovers and pursues violations of the retirement law through all means available, including audits and tips from the public. In Fiscal Year 2015-16, CalPERS completed 127 audits of contracting public agencies and reviewed more than 150 complaints from our Ethics Helpline.
Read the 2012 SDRMA audit (PDF).
Read the agenda item (PDF) on the proposed ALJ decision on James Towns.
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 1.8 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 $299 billion. For more information, visit www.calpers.ca.gov.