SOLANA BEACH — It’s not often a person willingly takes a pay cut and is then told it’s not allowed, but that’s essentially what’s happening in Solana Beach.
City Manager David Ott retired in 2010 and then worked as an interim employee before being hired back full time less than a year later.
He agreed to return to the position under the terms of a two-tier pension program, adopted unanimously a few months before he retired in 2010, that affects newly hired employees.
But Ott was informed by officials from the California Public Employees Retirement System, or CalPERS, that he couldn’t do that.
Calling him a “trailblazer” for pension reform — he helped craft the tiered system — City Attorney Johanna Canlas said Ott, as part of his re-employment, “volunteered to be the first one to be under the new retirement system.”
“Unfortunately, CalPERS did not see it that way,” she said. “Despite the contractual agreement between the city and Mr. Ott, CalPERS has resisted our efforts in fulfilling pension reform.”
Ott joined the city in 2003 as fire chief and director of public safety and became the city manager in 2006.
His current contract, which began Dec. 2, 2011, is for a two-year term with an optional one-year extension. In it his pension is based on a 2 percent at age 60 formula using the average of his highest three-year salary.
Under his previous employment he was entitled to earn 2.5 percent at 55 based on his highest one-year salary.
Ott also agreed to pay the entire cost of his portion of the CalPERS retirement contribution, which was not previously required.
Despite his “continued insistence,” the staff report states, “CalPERS refuses to allow Mr. Ott to receive the reduced retirement benefit, and mandates” he receives the 2.5 percent at age 55.
Ott was told the computer program wouldn’t allow him to participate in the new tier, claiming his re-employment terms couldn’t be implemented into the system.
“This is just ludicrous,” Councilman Tom Campbell said. “We entered into a contractual obligation. We’re doing the right thing, what the public wants, what the state needs, and these people are saying that we can’t do it. There needs to be some real changes with that organization.”
Councilman Dave Roberts agreed. “I just think this is outrageous,” he said.
Roberts recommended sending a letter to Gov. Jerry Brown, Assemblyman Martin Garrick and state Sen. Mark Wyland “highlighting this fact and what’s wrong at the state level.” His colleagues agreed.
“We’re trying to … maintain fiscal discipline,” Roberts said.
“We have to administer retirement benefits according to the law,” Amy Norris, a spokeswoman for CalPERS, said. “The benefit to which you are entitled is based on the first date of hire and all subsequent service.
“We can’t break the law just because someone wants to,” she said. “That would jeopardize the law. It could be detrimental if we chose to go outside the law.”
Norris said agencies that participate in CalPERS agree to those laws when they sign the contract.
“Our members rely on us to administer the pension fund according to the law, and we must do that in order to protect the retirement security of our more than 1.6 million members,” she said.
Norris said people don’t usually go back to work after retirement so this scenario isn’t very common. Although this is the first case she’s heard of, she said that doesn’t mean it hasn’t happened before.
Ott is appealing the mandate. In the meantime, at his request, council voted unanimously at the July 11 meeting to reduce his salary to $193,250.
When Ott retired his salary and benefits totaled $228,900, including $180,250 in base pay. Under the new contract, his salary and benefits package is the same total, but with reduced benefits and a base salary of $201,250.
When he was rehired, Ott took on additional responsibilities from retired directors whose positions weren’t filled to help balance the city’s budget.
If Ott’s appeal is successful, his original higher salary will be reinstated.