The Public Eye: Natomas schools flagged by CalSTRS for pay bumps before retirement

Published: Sunday, Apr. 14, 2013 - 12:00 am | Page 1B
Last Modified: Friday, May. 24, 2013 - 6:15 am

Natomas Unified School District made the state's Top 100 list, but it's not good news.

The district is among 100 identified by the California State Teachers' Retirement System as having given numerous big pay bumps to employees close to retirement, resulting in larger pensions.

As public pensions have drawn more attention in recent years, CalSTRS has faced scrutiny, including a state Controller's Office report last year that criticized its oversight of "pension spiking."

To address the issue, CalSTRS has conducted systematic audits of school districts it believes may be improperly boosting pension benefits through spiking, including Natomas.

The highest year of pay determines the size of employees' annual pensions when they retire with 25 years of service or more. For employees with less time on the job, the average of the highest three years of pay determines the annual pension.

About 130 full-time workers retired from Natomas Unified in the past five years, according to a Bee review of data from CalSTRS. Nearly half of them – 61 – got at least a 10 percent bump during that period. Of those, 34 received such a raise in the final three years.

By comparison, only 15 employees got a 10 percent pay bump eight to 10 years before they retired.

A 10 percent pay raise for a 60-year-old employee with 25 years of experience and a $75,000-a-year salary would translate into roughly $300 extra in pension benefits per month for life.

"An increase isn't automatically considered spiking," said Michael Sicilia, spokesman for CalSTRS. "Has that person got a promotion? Do they have new duties?"

Natomas Unified Superintendent Chris Evans says the district has received a CalSTRS request for information about six retirees in particular. A spokesman at CalSTRS said its Compensation Review Unit plans to review more.

The current Natomas list is composed of two teachers, three administrators at charter schools and former Superintendent Steven Farrar, according to a source familiar with the inquiry.

The former superintendent's salary ballooned from $160,996 to $191,370 two years before his retirement, nearly a 19 percent increase.

The district's current superintendent, Chris Evans, said Farrar negotiated a raise when the district grew to 12,300 students. The district had grown 30 percent since Farrar started as superintendent in 2004.

Superintendent salaries in the district since Farrar's departure in 2009 have remained consistent – all hovering around $175,000.

"Consistent with our practice of superintendent contract negotiations, we strive to compensate at a level that matches the size and complexity of leading our school district," said Sue Heredia, Natomas United School District in a statement.

Sicilia said the Compensation Review Unit takes a look at the pension of any person who makes over $143,000 a year while employed or receives an annual retirement salary over $100,000.

While administrators were among those receiving large, late-career pay bumps at Natomas, so were teachers earning less pay.

Evans said some of the teachers who received at least a 10 percent pay bump in the last five years were substitutes who worked with the district only a few years and retired.

One teacher under CalSTRS review had a $10,000 bump after moving up the salary schedule because of experience and obtaining additional college credits, Evans said. Another boosted her pay by increasing her workdays from 183 to 200 by doing additional work in the district office.

State Controller John Chiang's report last year said CalSTRS had not done enough to detect unjustified late-career raises. The report said that such salary increases should be justified with a performance evaluation, assessment, or other type of written documentation, especially when the increase occurs shortly prior to retirement.

The Compensation Review Unit has been in existence since late 2011 and has reviewed hundreds of pensions for spiking, CalSTRS said. It has cut pension payments for 14 members, closed 128 cases with no issues and has another 40 in review status.

When the Compensation Review Unit finds employees spiked their salaries, CalSTRS docks their benefits by 5 percent until it recoups the amount overpaid to the retiree, Sicilia said. Future pension amounts are also revised. "We can claw it back if we determine there has been spiking," Sicilia said. "We reset the correct amount."

The school districts involved aren't sanctioned.

Call The Bee's Diana Lambert, (916) 321-1090. Read her Report Card blog at http://blogs.sacbee.com/report-card/.

© Copyright The Sacramento Bee. All rights reserved.



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