The State Worker

‘He did not perform any work’: former CSU professor loses 10 years of CalPERS service credit

A former California State University Chico professor who arranged to accrue credit toward his public pension while only occasionally working won’t be able to collect benefits from that time, an appellate court judge has ruled.

Abdel-Moaty Fayek sued the university and the California Public Employees’ Retirement System after he learned he would not receive a pension based on 32 years of service, according to court documents.

The university and CalPERS denied him 10.5 years worth of credits toward his pension, which significantly reduced his expected retirement earnings.

The dispute dated to 1997 when a supervisor suggested that Fayek take a leave of absence while continuing to accrue service credit, according to the documents.

The arrangement was supposed to allow Fayek to receive his salary, but pay back the money, plus an administrative fee, to the CSU Chico Research Foundation in a “self-funded buy-out” arrangement.

CSU continued making contributions to his CalPERS account and continued reporting his time on leave for service credit, according to the lawsuit.

Fayek started some computer-related businesses, occasionally came on campus to teach a course, and returned to full-time faculty duties in 2006. In 2007, he became chairman of the Department of Computer Science, according to the documents.

CSU sent him a letter in June 2012 acknowledging the agreement while stating that “during plaintiff’s leave he did not perform any work for or do anything to benefit CSU, thus CSU had determined to deny plaintiff service credit for the period of the agreement,” according to Third Appellate District Court Judge Coleman Blease’s ruling.

Most California State University employees accrue pension benefits at a basic rate of 2 percent of their salaries per year of service, meaning someone who retires with 35 years of service would roughly expect to earn about 70 percent of his or her wages in retirement.

Fayek, 63, who first filed his complaint in Butte County Superior Court in 2013, received about $27,000 in a judgment from that court to compensate him for the administrative fees he paid the CSU Foundation. He appealed the court’s decision on other parts of the case.

Judge Blease rejected Fayek’s arguments that he had been providing a service to CSU by developing his computer knowledge, and that his extended time away counted as a leave of absence.

“The entire alleged agreement appears to be a scheme devised precisely to allow plaintiff to circumvent the requirements of (state law) and accrue service credit toward retirement without rendering services for which he was compensated,” Blease wrote in his ruling.

Blease also rejected a defamation claim Fayek filed against CSU for the way it characterized the years in question in emails.

“It’s a terribly unjust result,” said Fayek’s attorney, George Allen, of Sacramento. “There was basically no dispute that (Fayek) entered into this agreement at the request of and with the full knowledge and cooperation .. of his superiors. No one said or acknowledged there was any problem with it until way after the fact.”

CSU Chico did not provide a comment by deadline.

Blease’s ruling notes that CalPERS is beholden to state law more so than to the public employers that contract with it to provide retirement benefits. His ruling cites another case that reads, “PERS’ fiduciary duty to its members does not make it an insurer of every retirement promise contracting agencies make to their employees.”

“We’re pleased the court agreed that Mr. Fayek couldn’t use his inventive scheme to spike his pension,” CalPERS general counsel Matt Jacobs said in an emailed statement. “Pension-spiking hurts the fund and it hurts honest workers. We will not tolerate any form of pension fraud, waste, or abuse.”

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Wes Venteicher anchors The Bee’s popular State Worker coverage in the newspaper’s Capitol Bureau. He covers taxes, pensions, unions, state spending and California government. A Montana native, he reported on health care and politics in Chicago and Pittsburgh before joining The Bee in 2018.