Almanac

News - January 23, 2013

Menlo Park: Retired city exec's contract illegal

by Sandy Brundage

The state's retirement agency took a hard line against a retired city employee collecting a pension while working as a contractor for the past year, and declared former Menlo Park personnel director Glen Kramer's contract work illegal.

The Almanac broke the news in early January that the California Public Employees Retirement System (CalPERS) was investigating the contract. Although the ruling apparently caught longtime senior city staff by surprise, the agency didn't need much research before finding a problem.

CalPERS requested a copy of Mr. Kramer's contract on Jan. 7, according to Assistant City Manager Starla Jerome-Robinson, who said no one from the agency discussed any issues with the city before reaching an unfavorable decision. A letter about the ruling arrived Jan. 16.

"Mr. Kramer will do no further work for the city," Ms. Jerome-Robinson said on Jan. 17.

After retiring in December 2010, Mr. Kramer returned six days later to serve as interim personnel director for approximately one year. He then came back as an independent contractor in early 2012 under the auspices of Regional Government Services (RGS), an organization that provides staffing for government agencies, with a contract extended into 2013 even though the city had filled the position of human resources director in July 2012.

Mr. Kramer netted $70 per hour from the RGS contract. That adds up to an estimated $67,830 in 2012, based on the city's final count of his invoiced hours, on top of a $130,524 annual pension. Menlo Park staff said he had recently been working about one day a week, helping the city switch from a manual to an automated payroll system, among other tasks.

If he had decided to keep working for Menlo Park after the CalPERS ruling, the state would have required Mr. Kramer to pay back all pension collected since he started working as an independent contractor in 2012.

CalPERS prohibits retired employees from working more than 960 hours per fiscal year as contractors if they continue receiving pension payments. The policies also state that if a temporary assignment seems equivalent to permanent employment, the employee is no longer considered retired, and must stop collecting pension.

The question of whether Mr. Kramer exceeded 960 hours depends on who you ask. He logged 765.5 hours under direct contract to Menlo Park for fiscal year 2011-2012, and another 527 hours through RGS.

According to Menlo Park human resources director Gina Donnelly, the time he worked for RGS doesn't count toward the maximum hours per fiscal year.

CalPERS, on the other hand, wasn't so sure. An agency spokesperson said that in general, "We have found that, upon review, many alleged third-party employment agreements and contracts in fact constitute a common-law employer-employee relationship, and are thus subject to retired annuitant restrictions."

The letter regarding Mr. Kramer's employment appeared to conclude that was the case with Menlo Park: "Although the agreement purports to establish an independent contractor/employee relationship between RGS and the City, our Membership Analysis and Design Unit has reviewed the agreement language and the duties of your former position to determine that your employment through RGS is under the common law control of the City. Therefore, your post retirement employment is subject to the restrictions in the retirement law."

Backdating

A riddle surfaced during the Almanac's research into Mr. Kramer's RGS contract: an apparent two-month gap between the date Menlo Park staff signed and the date company representatives signed.

The gap shrank to five days after this reporter looked at the city's contract log. Although the signatures of Ms. Jerome-Robinson — serving as interim city manager at the time — and City Attorney Bill McClure are dated Feb. 1, 2012 on the contract, the log indicates they actually signed on March 29, 2012.

Ms. Jerome-Robinson said in an email that the first three months of 2012 were "periods of the management transition" with the hiring of a new city manager, and that "may have delayed the contract signatures" although everyone understood that Mr. Kramer began working as an independent contractor on Feb. 1, 2012.

The contract itself lists an effective start date of Feb. 1, 2012. But RGS Executive Director Richard Averett said the signatures don't need to be in place when a contractor begins work "as long as both contracting parties agree and are in the process of completing paperwork."

So why backdate the signatures?

"I can't say with certainty why there are different dates, but probably to be consistent with the start date stated in the contract," Ms. Jerome-Robinson said. "If CalPERS has shared something directly with you I would be interested in learning about it."

For his part, City Attorney Bill McClure said he has no recollection of the dates on the contract or even whether he himself filled in the date next to his signature.

But he didn't think the intent was to backdate the contract. "I don't think it would matter what date it was signed, because it's the effective date that matters."

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