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Bell scandal could reach La Cañada

CalPERS officials had initially said the city wouldn't be on the hook for Bell pensions.

August 04, 2010|By Megan O'Neil, megan.oneil@latimes.com

La Cañada Flintridge is not in the same liability pool as the city of Bell, officials said this week, but nevertheless could be responsible for financing a portion of bloated pensions of former Bell employees because of complicated mathematical overlaps in the CalPERS system.

"There may be some possibility that La Cañada Flintridge could be responsible for some small, tiny portion of former Bell employees' pension benefits, but it is so uncertain right now," said Daniel Jordan, the city's director of finance.

Fallout from the Bell salary scandal continues to reverberate across the state, and calculations to determine who will pay for what are befuddling public officials and actuaries alike. CalPERS officials initially said that La Cañada would not finance any part of Bell pensions, Jordan said.

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La Cañada is one of about 600 small California government entities with a 2% at 55 CalPERS benefit formula, Jordan said. The formula means that La Cañada employees are eligible for retirement at 55, and their pensions are calculated by multiplying the number of years of employment by two, and then multiplying the product by the salary at which the employee retired.

For example, if someone worked for the city for 20 years, and retired with a salary of $100,000, he or she would earn a pension of $40,000 a year, Jordan said.

The city of Bell is part of a separate, more expensive risk pool with a 2.7% at 55 benefit formula, according to CalPERS records.

However, if a former Bell employee previously worked for a government entity that was at any time part of the La Cañada benefit pool, there is a chance that the city, together with the hundreds of other government entities in that pool, will pay a fraction of that person's pension, Jordan said.

CalPERS, or the California Public Employees' Retirement System, is the largest public employee pension fund in the United States, with assets of $208 billion. Every city in California with 100 or fewer employees must be part of one of CalPERS' nine risk pools where the assessments, liabilities and pension funds are pooled for purposes of investment returns.

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