The State Worker

CSU professor lost a cut of his CalPERS pension. 5 of his peers with the same deal kept theirs

California State University Chico reduced a former professor’s pension after determining he rarely worked for 10 years, but did not trim the pensions of at least five other faculty members who took leave under similar circumstances, according to court records.

The former professor, Abdel-Moaty Fayek, arrived at the end of a long legal fight to try to restore his pension last week, when the state Supreme Court notified his attorney it wouldn’t review his case.

Fayek, a computer science professor, sued CSU Chico and CalPERS in 2013 after university officials told him they were removing 10.5 years of service credit from his CalPERS pension. The decision cost him thousands of dollars a year in his expected retirement income.

From 1997 to 2007, Fayek was on leave, operating several computer-related businesses.

Even though he rarely taught classes in that period, Fayek continued to accrue service credit through a “self-funded buy-out” arrangement approved by his supervisor. He kept receiving his salary but repaid the money to the CSU Chico Research Foundation, now known as Chico State Enterprises.

A court document filed in the case shows CSU Chico approved the buyouts for at least five other faculty members from 1996 through 2008.

CSU Chico didn’t respond to questions about why the university revoked part of Fayek’s pension but not the others.

CalPERS spokeswoman Amy Morgan said the retirement fund reviewed the other pensions after they showed up in the court documents and found “no integrity issues or anything unusual” in the other five.

Over the 10.5 years, Fayek paid about $650,000 to the CSU Foundation through his arrangement, according to the complaint filed in his lawsuit. The money was from his salary and a 5 percent fee he paid during most of the years.

The other agreements, detailed in a document Fayek’s attorney said was produced by defendants in the lawsuit, reflect smaller amounts paid to the foundation for shorter time periods than Fayek’s.

CSU dean approved pension plan

One of the other agreements lasted five years. Another appeared to be for three semesters. Two were for a year, and another was for just one semester.

Kenneth Derucher, the former dean of Chico’s College of Engineering, Computer Science, and Technology, approved Fayek’s buyout and three of the other five agreements. Other administrators approved the other two.

Most CSU 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’s attorney, George Allen, said the records suggest the university targeted Fayek by reducing his pension and not others.

“From the documents they produced, it seems like this is a widespread practice,” Allen said. “And for no reason that was ever provided to Dr. Fayek, they decided they just weren’t going to honor the deal with him.”

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Third Appellate District Court Judge Coleman Blease used strong language to describe Fayek’s arrangement.

“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 July 9 ruling.

‘How is this benefiting the campus?’

The lawsuit also turned up a letter from a CSU auditor to CSU Chico Research Foundation asking about three of the faculty members’ buyout arrangements, including Fayek’s.

In the 2001 letter, auditor Ed Soria said the projects for which faculty members typically take leave often receive funding from outside sources.

“Review of the above referenced files indicate that (faculty members) provided all the funding for the projects which essentially funded the buy-out of their own time,” Soria wrote. “How is this benefiting the campus ... was there a formal proposal submitted for evaluation and approval?”

In response, Jeff Wright, then the director of the research foundation’s Office of Sponsored Programs at Chico, said the arrangements gave recipients opportunities to pursue “professional development activities of various types that help keep them active and current in their disciplines.”

“The nature of these personal professional development arrangements do not involve proposals but, rather, are arrangements made between the individual faculty member and the dean,” Wright wrote. “The dean has the authority to make and approve such arrangements.”

Fayek returned from leave in 2006. In 2007, he became chairman of the Department of Computer Science, according to court documents. He retired in 2012.

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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.
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