File this in your “stitch-in-time-saves-nine” (and perhaps millions of dollars) file.
We suggest this because you probably don’t have an “if you pay a retiree from a tiny city more than a half-million dollars a year as pension, you might want to look more closely” file — but rest assured that the California Public Retirees’ Employment System now has a file like that.
We’ve been revisiting the saga of Huntington Beach resident Bruce Malkenhorst Sr. — poster boy for public pension reform and once the most handsomely paid retiree in all of California, with pension checks totaling more than $551,000 a year. Malkenhorst held just about every job in the small, strange city of Vernon (motto: “Exclusively Industrial”), pretty much all at the same time. And he collected pay for just about every job, pretty much all at the same time.
Malkenhorst retired in 2005 after 40 years of service. CalPERS paid him that princely pension based on his beefy pay for those myriad jobs, for seven years. Upon closer examination — which followed the public release of CalPERS’ pension rolls; a city investigation (finding that Malkenhorst spent public money on groceries like top sirloin steak and fudge cake, golf outings, country club memberships, Christmas gifts for his family, homeowners association dues, massages, haircuts, property taxes and a multitude of other personal expenses); Malkenhorst’s guilty plea to felony misappropriation of public funds; and a CalPERS audit of his pay records — CalPERS concluded that the data his pension was based on was grossly inflated.
So CalPERS recalculated Malkenhorst’s retirement checks based on the salary for one of his lesser positions. In 2012, his golden nest egg shrank from a cool half-million to a wee $115,000 a year. CalPERS also insisted that Malkenhorst repay some $3.4 million, a request Malkenhorst decried as “elder abuse” and fought in courtroom after courtroom.
Legal battles raged for the next eight or so years. Malkenhorst’s pension is now $252,663, and CalPERS gets credit for reducing his lifetime pension allowance by more than 50 percent.
But what about those millions in overpayments? How’s the clawback going?
An administrative law judge said CalPERS had the right to recoup overpayments of $1.97 million. But in subsequent litigation, CalPERS’ recovery of funds was limited to just three years, spokeswoman Amy Morgan said.
So that original $3.4 million CalPERS sought became more than $700,000 recovered.
Better than nothing, for sure. But the CalPERS folks reviewing Malkenhorst’s “service retirement election application” nearly 20 years ago clearly missed the boat. We trust those folks are now well-acquainted with the disinfecting power of sunlight — which is to say, they know the public (and their bosses) are watching, and if a municipal employee ever claims to hold a half-dozen jobs with the same agency at the same time, their Spidey senses will buzz and they’ll probe more deeply.
After all, every little bit helps keep the fund afloat. On Monday, CalPERS triumphantly reported a preliminary net return of 9.3% on its investments over the last year. That’s good news after several volatile years, but it only pushes CalPERS’ funded status — i.e., how much of what it owes workers/retirees today, and how much it actually has — from 72% to 75%.
That’s sobering, as the ranks of high-priced public pensioners has exploded in California.
