Local

Fresno County retirees not liable for $3.4 million mistake

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County officials didn’t think the retirement board understood the county’s position.

• Current employees will pay for the mistake, county officials said.

• The retirement board didn’t want to penalize retirees for the error.

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Fresno County’s retirement board Wednesday rejected making about 6,750 retirees pick up the tab for a $3.4 million overpayment error.

In November, the retirement board stopped payments on the “bonus benefit” months before it was supposed to end but refused to require retirees to pay back the mistakenly issued money. The bonus, which generally ranged from $2.50 to $150 per month, was originally forecast to conclude later this year but should have ended in May 2014. It continued into November 2014, however.

On Wednesday, county officials asked retirement board members to have retirees reimburse the retirement system for the overpayments.

County Administrative Officer John Navarrette said if the retirees don’t reimburse the overpayment, current county employees will have to foot the bill. He said he didn’t feel the retirement board took the county’s position into account in November when it voted against charging retirees.

He suggested that the retirement board consider imposing the repayments next year when a new cost-of-living allowance and new, lower-cost system is in place. The payback would be $20 per month of the cost-of-living allowance so recipients wouldn’t feel the financial effects. He said they shouldn’t be further penalized by paying interest.

Fresno County Counsel Dan Cederborg said the retirement board has the authority to forgo seeking repayments from retirees.

He said the county promised bondholders it would pay off its unfunded liability, so the retirement board’s decision could be a problem with bondholders.

Not requiring repayment could “have some negative impact” if the county needed to seek bond indebtedness, he said.

Supervisor Debbie Poochigian, who was attending her first meeting as a retirement board member, appealed to retirees in the standing-room only audience, telling them that their overpaid benefit will have to be repaid by their children, many of whom followed in the retirees’ footsteps to become county employees.

“Our job here is to be fair to everyone,” said Poochigian, who abstained from voting. “I do not think that we have totally vetted our options.”

But retirement board members said the mistake was not the fault of retirees and voted — as they did in November — against making retirees reimburse the fund.

Eulalio Gomez, the retirement board member who made the motion, said charging retirees would have been a “bad faith” response.

The overdrawn amount — $3.4 million — could have been used to pay down the unfunded liability in the pension program. Right now, the county can cover only 75% of expected retirement costs.

The average overpayment was $778. About 47% received less than $500 and 53% got more than $500. Only 10 of the overpayments exceeded $1,000. The maximum overpayment was more than $2,500 while the minimum was 70 cents.

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