Bee Exclusive: Police chief's pension raises red flag

Sacramento Police Chief Albert Nájera's salary boost of more than 19.8 percent since July will raise his pension by $1,000 a month, increasing his yearly draw to $173,250 when he retires at the end of the year, according to Bee calculations.

On Wednesday, state pension officials and other pension experts raised questions about such sudden pay increases so close to retirement.

State pension officials said until Nájera submits his retirement paperwork they cannot comment specifically on his case. But they said a state law was passed to prevent "pension spiking" and requires a careful look at raises given within 12 months of retirement.

"We need to look very closely at sudden pay raises," said Pat Macht, a spokeswoman for the California Public Employees' Retirement System. "We would look to see whether it is part of an overall program, which would be allowed, or just given to one individual."

Pension spiking is barred because the retirement plan has to shoulder an added, lifetime cost it hadn't planned.

Nájera said, "This is a real technical area; we're going to have to let CalPERS decide."

Nájera received an 8.6 percent merit increase in July, along with some other city administrators, bringing his salary to $194,000. Then City Manager Ray Kerridge awarded him an additional 11.2 percent hike two months later for "exceptional performance," increasing his annual pay to more than $216,000.

Kerridge continued to defend the raises Wednesday but would not comment on potential CalPERS concerns. "For me, this is all about performance," Kerridge said. "Al is the best police chief I've ever worked with."

Mayor Heather Fargo said that while she keeps in regular contact with Kerridge, they do not discuss pay raise amounts. She said Kerridge told her in July he was giving Nájera a raise but she wasn't informed about the second hike.

"I knew the chief was doing a good job and the city manager wanted to give an increase that seemed reasonable," Fargo said.

The city is in the midst of a sudden and unexpected financial downturn, and facing a deficit of between $45 million and $55 million in 2008-09.

Kerridge and Fargo said that for months Nájera has privately indicated he would be retiring in the near future, but until Tuesday a date wasn't announced.

Nájera, 56, has spent 36 years on the force – four years as the city's top cop.

Both Nájera and Kerridge stressed Wednesday that the raises were not tied to any promise from the chief to retire, or that a specific date was discussed.

Nájera got his merit raise in July, at the same time many other city employees did. Asked why he didn't give Nájera the entire 19.8 percent raise then, Kerridge said: "I didn't think about it."

In September, the two met again to discuss another pay hike. Nájera said he wanted a raise large enough that in 2007 he would earn the maximum allowed in the city's range for the chief's job – $194,772.

Considering his salary for the first six months of the year, Nájera had to receive an additional 11.2 percent raise.

"That was the expectation, to take me to the cap," Nájera said. "I wouldn't have expected a penny more."

But that boost meant Nájera would be earning a $216,572 annual salary – more than $21,000 above the current ceiling for the chief's post.

City regulations require that employee pay must stay within the pay range for that particular job description. So, Kerridge said he used an exemption in the city's administrative policy that gives him that authority.

According to that policy, "there may be rare instances where employment marketplace situations or other factors require a one-time or permanent exception to the salary policy system."

Kerridge said he believed that next year, he could remove that 11.2 percent pay increase if Nájera did not continue to perform at such a high level. Kerridge said he was unsure how often he had used the exemption, but said it was rarely done.

Based on the Bee's calculations, after the first raise, Nájera's annual pension would have been $168,343.

Nájera said he has rarely taken a vacation, hasn't called in sick since he was a patrol officer and has accrued a "ton" of leave days. The city's policy is to pay the retiring employee a lump sum for the days.

Marcia Fritz, a pension expert and vice president of the California Foundation for Fiscal Responsibility, said Nájera's raises – particularly his last - pose concerns. Fritz said she will be using Nájera's raise as an example of the need for pension reform when she testifies before the Public Employee Post-Employment Benefits Commission on Friday.

"It certainly looks like pension spiking," said Fritz, who sits on a government accounting standards board. "It doesn't make sense that he would get a bump like that otherwise."

Earlier this year, CalPERS notified the city that a prearranged retirement agreement between Kerridge and former Sacramento Fire Chief Julius "Joe" Cherry broke state rules.

Cherry had hoped to return to the city as a "retired annuitant" which would allow him to collect more than $300,000 annually in salary and pension while the city searched for a replacement.

Nájera said he and Kerridge discussed the problems associated with Cherry's departure and didn't want similar issues to crop up.

"I told Ray, just take me to the top of the salary range," Nájera said. "This has to pass muster."

About the writer:

• Call The Bee's Terri Hardy, (916) 321-1073. Bee staff writers Dorothy Korber and Chelsea Phua contributed to this report.