August 17, 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

SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) Board of Administration (Board) today adopted an administrative law judge's (ALJ's) decision that will prevent former Los Angeles County school district superintendent Jose Fernandez from spiking his pension by improperly adding thousands of dollars in pay increases to his final pay rate.

The ALJ had found that because there was no publicly available salary schedule for Fernandez's position as superintendent, CalPERS had correctly used the closest published salary schedule - that of an assistant superintendent - to set Fernandez's pension. The ALJ also upheld CalPERS' decision not to use Fernandez's longevity pay and bonus pay increases in determining his pension.

"CalPERS does not tolerate pension spiking," said Matthew Jacobs, CalPERS' general counsel. "We invite the public to assist us in identifying any and all instances of this or any other pension abuse."

Fernandez received several types of compensation in addition to his regular salary between July 2009 and the end of his employment with Centinela Valley Union High School District in August, 2014. The supplemental compensation with which Fernandez attempted to boost his pension included:

  • An annual 9 percent longevity pay salary adjustment
  • A $1,000 per month management incentive pay increase
  • An annual stipend of $2,500 for having a post-graduate degree
  • An annual cost of living salary adjustment
  • Bonus pay of over $50,000 for working beyond his contracted full-time schedule base

In September 2013, the Los Angeles County Office of Education (LACOE) asked CalPERS to review Fernandez's salaries and benefits. During that review, CalPERS identified and denied improper enhancements to Fernandez's final compensation, which were also determined to be incorrectly reported. Fernandez appealed CalPERS' determination in August 2014, after the LACOE terminated him. After two days of hearings, in February 2016 the presiding ALJ made the decision to deny Fernandez's appeal. Fernandez retired from active service in February 2015 and currently receives a monthly pension benefit payment of $7,316.59 (gross).

Read the full agenda item on the proposed ALJ decision on Jose Fernandez (PDF).

Read the ALJ decision (PDF, 1.35 MB) and the CalPERS staff argument (PDF) for more information.

CalPERS discovers and pursues violations of the retirement law through all means available, including audits and tips from the public to our Ethics Helpline. To make a confidential report, use the CalPERS 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 1.8 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 $306 billion. For more information, visit www.calpers.ca.gov.