April 26, 2016

Communications & Stakeholder Relations
(916) 795-3991
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Amy Morgan, Information Officer
newsroom@calpers.ca.gov

Board approves administrative law judge's original decision that Kathleen King was not a public employee

SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) Board of Administration voted to reject a joint appeal by the Santa Clara County Health Authority (SCCHA) and Kathleen King, the Executive Director of a private corporation who attempted to secure a public pension to which she was not entitled.

In their appeal, which the CalPERS Board considered last week after a full hearing, King and SCCHA claimed that she was eligible for a CalPERS pension even though she never worked for an agency that was in CalPERS.

"We are dedicated to ensuring that only those eligible for public pensions receive them. We remain on the lookout for all abuses and encourage the public to help in those efforts," said Matthew Jacobs, CalPERS' General Counsel. Senior CalPERS Staff Attorney Christopher Phillips handled the case.

King asserted that even though she was the executive director for the private, non-profit Santa Clara County Health Foundation (Foundation), she should have been considered an employee of SCCHA and thereby eligible for CalPERS membership. Among the evidence to the contrary was a sworn affidavit (PDF) King had filed in another case in which she and the Foundation claimed that she was not an employee of the SCCHA. In that case, King and the Foundation swore under oath that the two entities (SCCHA and the Foundation) are "entirely separate and independent agencies and the relationship between [them] is purely contractual."

In 2013, CalPERS performed a Public Agency Review of SCCHA (PDF) as part of its ongoing efforts to audit local member agencies for compliance with the retirement laws. Through the audit, CalPERS determined that SCCHA was reporting a number of Foundation employees to CalPERS as employees of SCCHA to reap the benefits of a public pension. As a result of this case, CalPERS will begin reviewing the membership status of all SCCHA employees to ensure they comply with the retirement law.

SCCHA and King appealed CalPERS' determination in August 2015, and in December 2015, an administrative law judge issued a Proposed Decision upholding CalPERS' determination that King was not an employee of SCCHA and not eligible for membership in CalPERS. In that decision, the judge found that the "evidence did not establish that [SCCHA] controlled [King's] employment in significant or meaningful ways and it certainly did not have the right to do so."

SCCHA has 145 CalPERS-covered employees as of June 30, 2015.

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 received 180 complaints from our Ethics Helpline.

Read the full agenda item on Santa Clara County Health Authority and Kathleen King (PDF).

Read more of CalPERS' argument in the Santa Clara County Health Authority and Kathleen King appeal (PDF).

View the videos of the full Board hearing and the Board's final decision.

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 $293 billion. For more information, visit www.calpers.ca.gov.