Probe of ‘Salary Spiking’ Is Urged : Finances: A Huntington Beach citizens’ group calls for investigation of charges that retiring city employees boosted their salaries to inflate pensions.

HUNTINGTON BEACH — Reacting to state Controller Gray Davis’ call to penalize public officials who artificially inflate their pay to get larger pensions, a citizens’ group Wednesday called for an investigation of Davis’ charges that retiring city employees had engaged in the practice here.

At a news conference, Huntington Beach Tomorrow, which says it has 1,000 members, requested that the city undertake its own inquiry to curb the pension-inflating practice, which Davis has dubbed “salary spiking.”

While acknowledging that the technique does not violate city law, David Sullivan, president of Huntington Beach Tomorrow, denounced the practice as “legal larceny.” He added that the group will form its own investigating committee to determine how much money has been paid out under the practice.

Huntington Beach Tomorrow also is calling for an immediate end to salary spiking, repayment with interest of pension money received as a result of the practice and an explanation from city officials for the contract provisions that allow it.

In Sacramento on Tuesday, Davis singled out Huntington Beach and Anaheim, which are among eight cities where retirees have improperly counted sick leave, vacation days, car allowances and other perks to boost their last-year salaries, from which pension payments are calculated.

Davis’ aides said 16 out of 17 Huntington Beach retirees audited had artificially inflated their salaries to receive larger pensions from the state Public Employees Retirement System (PERS).

The retirees who were audited received at least $2 million more in pension payments than they were entitled to, Davis said. He added that he wants to impose civil and criminal penalties against public officials who took advantage of “pension spiking.”

Huntington Beach city contracts with its employee unions include provisions that enable retiring workers to substantially boost their base salary. Outgoing employees can count car allowances, vacations and city contributions to PERS as part of their final-year salary.

The city contribution to PERS accounts for 7% of the potential salary boost. The city’s car allowance averages about $400 a month, which also can be claimed under employee contracts. Employees with 15 years’ experience can claim 4.8 weeks of vacation pay.

For a top-level official earning $100,000 per year, claiming those perks would increase his or her salary by more than $21,000, or about 21%. That percentage would be higher for retiring employees earning less than $100,000.

Among the Huntington Beach retirees audited by Davis’ office, former Deputy City Atty. William S. Amsbary increased his base salary by 35% to about $72,000, according to aides in Davis’ office. He receives a pension payment of $2,321 per month.

Amsbary said Wednesday that the City Council agreed to his final salary before he actually retired in fall of 1988. He said he agreed to retire early--at the city’s request--only because he received a pension that he considered adequate.

His final-year salary was set under PERS guidelines, he said. “If there was a wrong here, it’s somebody else’s wrong,” said Amsbary, 64. “And there is no real good evidence that it was wrong.”

He assailed Davis as “a cheap politician” who issued the report to benefit his long-term political aspirations. “He cares not one damn bit about the taxpayers of California,” he said. “I find this whole thing appalling.”

A top Huntington Beach official defended the provisions in employees contracts that allow last-year salaries to balloon.

“We think we’ve been following the guidelines of the retirement law, and we expect PERS to tell us if they have a different opinion on that,” Deputy City Administrator Robert J. Franz said.

Sullivan of Huntington Beach Tomorrow said cities should not be excused from blame just because PERS guidelines allow retiring employees to pump up their final salaries.

“This is a blatant raid by Huntington Beach employees on the state retirement system,” Sullivan said in a prepared statement. “Although it may be technically legal, the jacking up of the salary basis for retirement in their final year is flat-out immoral.”

In Anaheim, the retirement packages of former city managers William O. Talley and Bob D. Simpson were both cited by Davis’ office as examples of pension spiking.

Simpson, a current Anaheim city councilman, hiked his last-year salary to nearly $200,000, including $61,571 in added compensation and $21,400 in benefits. He resigned in 1989 with a salary of about $120,000 and receives a $4,583 monthly pension payment.

Simpson, who was elected to the council in 1990, was not available for comment Wednesday.

Talley, the current Dana Point city manager who resigned from the Anaheim post in September, 1987, increased his base salary from $97,390 to $159,109. He collects a $7,558 monthly pension in addition to his $99,500 Dana Point salary.

Talley told The Times on Tuesday that neither he nor the city acted improperly in adjusting his final salary.