Report 2011-131 Recommendation 11 Responses

Report 2011-131: City of Vernon: Although Reform Is Ongoing, Past Poor Decision Making Threatens Its Financial Stability (Release Date: June 2012)

Recommendation #11 To: Vernon, City of

To ensure accurate reporting and payment of retirement benefits, the city should work with California Public Employees' Retirement System (CalPERS) to resolve the reported findings and observation noted in CalPERS April 2012 audit report within a reasonable period of time.

Annual Follow-Up Agency Response From October 2015

As of September 28, 2015, five (5) previous employees are awaiting CalPERS appeal hearings. All other matters have been resolved and the City of Vernon has taken corrective action as instructed by CalPERS.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The city provided a letter from CalPERS stating that the city completed all required actions to resolve the findings.

Annual Follow-Up Agency Response From July 2014

Of the 10 findings and 1 observation noted in the CalPERS April 2012 audit report, 3 of the findings and the observation have been fully resolved as of May 20, 2014, and 7 of the findings are pending an administrative appeal process and may be subject to further review as a result of the final appeal determinations. Where required, corrective documents and payments have been provided by the City and credits have been issued by CalPERS.

On April 16, 2014, City representatives met with CalPERS representatives in Sacramento to receive further clarification and direction with regard to any audit items considered open as of that point. The meeting included five Vernon representatives: City Administrator and staff, HR Director, Deputy City Attorney, and outside labor law counsel; and seven CalPERS representatives from the following divisions: membership, payroll, compensation review, and legal/appeals.

As instructed by CalPERS at said meeting, the Citys HR Director has provided additional documentation relating to Findings 2, 3, 4, 5, 6, 7, 10 and is awaiting further instruction from CalPERS regarding these remaining open items.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

On October 16, 2012, the City Council adopted Resolution No. 2012-192, correcting the City's contract with CalPERS to revoke the erroneous 2005 inclusion of Local Prosecutors as local safety members. No members of the City Attorney's Office retired during the time the erroneous provision was in place. The City is working with CalPERS to receive a refund of contributions that were overpaid during the 7.5 years that the erroneous provision was in place. In April 2011, the City implemented the EDEN Payroll Module to ensure that reportable compensation is limited to the maximum rates established by the IRS and that premium and specialty pays are reported under their proper pay codes. Effective December 29, 2012, the individual who previously held the Fire Chief and City Administrator positions simultaneously, resigned as Fire Chief and, effective December 30, 2012, entered into an at-will employment agreement to serve exclusively as the City Administrator. As of June 26, 2013, the HR Director has provided all corresponding documentation requested by CalPERS Compensation Review Division to resolve this matter. As of May 29, 2013, the HR Director has confirmed with CalPERS Membership Division that there are no outstanding issues with current employees' membership status. The HR Director continues to work with CalPERS and the City's Payroll Division to correct any previous reporting errors and to resolve the remaining findings in the CalPERS report related to uniform allowance for miscellaneous employees and reportable compensation for certain City Council members.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

The city states that the human resources director continues to work with CalPERS and the city's payroll division to correct previous reporting errors and resolve the remaining findings in the CalPERS report. The city did not indicate when it anticipates full resolution of all issues.

6-Month Agency Response

The city council adopted a resolution in October 2012 to eliminate local prosecutors as local safety members from its CalPERS contract. The city indicated that it continues to work with CalPERS to correct previous reporting errors and resolve the findings that CalPERS reported in May 2012. Finally, as of December 31, 2012, the city reports that the city administrator no longer also serves as fire chief. He now serves and is exclusively paid as the city administrator and has been removed from the safety coverage group.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

The city has begun reporting its attorney contributions under the miscellaneous classification and is working with CalPERS to remove the safety classification for attorneys from its contract. (See 2013-406, p. 192)

California State Auditor's Assessment of 60-Day Status: Partially Implemented

All Recommendations in 2011-131

Agency responses received after June 2013 are posted verbatim.