State identifies 4th case of pension spiking

SEATTLE — Washington’s retirement system has confirmed another case of pension spiking, and officials said Friday they are now seeking to collect or save more than $125,000 by recalculating benefits.

In the latest conclusion, auditors at the Department of Retirement Systems determined that former Quincy Police Chief Bill Gonzales received a late pay raise and other benefits that were improperly counted toward his pension value. The state is seeking $5,506 from Gonzales to compensate for the overpayments, and officials project that they will save some $123,826 in the coming years due to reduced benefits.

Gonzales’ case was spotlighted earlier this year as part of an Associated Press series about a pension system for law enforcement and firefighters.

Along with the Gonzales money, state officials have previously identified about $160,000 in past overpayments and future benefit reductions from three other pension-spiking cases in Lakewood. The state is also seeking more than $500,000 from the City of DuPont related to how it hired workers highlighted by AP.

The LEOFF-1 retirement system used by Gonzales is unique because it largely determines pension values based on the worker’s final salary. Other pension systems calculate the retiree’s benefit by looking at an average of the person’s salary over time.

AP identified cases in which veteran workers got pay raises shortly before retirement, helping boost their pensions. In 2009, Quincy officials were looking to make changes in the police department and wanted to get Gonzales to leave early. As part of discussions with Gonzales, the city developed a document titled “RETIREMENT INCENTIVE AGREEMENT” that included a 4 percent pay raise, according to records obtained by AP under public records law.

Dave Nelsen, the legal and legislative services manager at the Washington state Department of Retirement Systems, said that raise was clearly a retirement incentive and should not be counted toward pensions under state rules. He also said the city was improperly counting money that was paid in lieu of medical benefits, but he doesn’t believe anyone was trying to take advantage of the system.

“There’s no sense of any sort of intent to hide things or misrepresent or mischaracterize,” Nelsen said.

Gonzales declined to comment Friday. Quincy Mayor Jim Hemberry did not return a call seeking comment.

Gonzales will still have an annual pension exceeding $46,000. It was previously about $56,000.

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