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Pensions are a benefit meant for employees basking in the glow of retirement.
For two retired Sweetwater school district administrators, pension checks came – and kept coming – even as they resumed full-time work leading the district under six-figure consultant contracts. One even signed both sides of her own contract – as the person receiving work, and as the district representative approving it.
California pension officials say their actions were illegal, letters obtained by Voice of San Diego show. The cases represent some of the first local effects of a state pension crackdown aimed at preventing abuse of the system.
Ed Brand, former superintendent of the Sweetwater Union High School District, and Dianne Russo, the district’s former deputy superintendent, both face hefty penalties from their pension systems for keeping their pensions and paychecks flowing simultaneously.
Brand, a member of the state Teachers’ Retirement System, was told Dec. 29 he must repay $136,451 for breaking state rules his first year back on the job in fiscal year 2011-12 and for consultant work in 2007-08 through a North County nonprofit he created called Partnership for Success.
Russo, a member of the state’s Public Employees’ Retirement System, was notified Feb. 4 she needs to repay about $200,000 in pension benefits, plus a yet-to-be-determined amount for missing employee contributions during the two and a half years she worked as a consultant, plus interest.
Based on past contribution amounts, Sweetwater could be on the hook for $41,200 in missed payments, and Russo could be responsible for another $26,900, before interest.
Brand and Russo returned to lead the beleaguered South Bay district in the aftermath of superintendent Jesus Gandara’s ouster in June 2011. They stuck around through a corruption case that led to guilty pleas for four out of five board members and their removal from office last school year.
Neither Brand nor Russo responded to repeated requests for comment. Both have the right to appeal the decisions.
District records obtained by Voice of San Diego show Russo signed internal forms authorizing her first two consultant agreements as both the consultant and district representative approving the contract.
The pair – who also worked together during Brand’s first tenure as Sweetwater superintendent from 1995 to 2005 – are subject to different restrictions within their respective pension systems.
Here’s a closer look at their cases, some of the laws at issue and what’s changed for retirees.
Ed Brand, aka Ed Brand & Associates
• Pay: Sweetwater paid him $240,000 through Ed Brand & Associates for work as superintendent in 2011-12. State officials say he was paid $46,600 as a schools consultant with his nonprofit Partnership for Success in 2007-08.
• Pension: Received more than $117,700 in pension payments in 2011-12 before exiting retirement in the fall of 2012, when CalSTRS began reviewing his case. He received a $109,300 pension in 2007-08.
• The latest: He re-retired last October after spending three months on paid leave and began collecting a higher pension, totaling $142,770 a year, or nearly $11,900 a month.
• The issue: Exceeded limits on post-retirement earnings allowed while collecting a pension in both 2011-12 and 2007-08.
• The result: CalSTRS is ordering Brand to repay $136,451 in pension overpayments.
“CalSTRS will collect the overpayment at 100% of your retirement benefit until the entire overpayment amount is collected,” pension officials wrote.
• What’s new: This year’s retiree earnings limit is $40,173. Any amount earned above the annual limit is deducted from the retiree’s pension, dollar for dollar, if they do not reinstate as an employee, unless the work is not usually done by an employee or if it lasts less than 24 months or meets another narrow exemption.
When Brand first retired in April 2007 – seven months after leaving his job as superintendent at San Marcos Unified School District – state law gave a free pass to pension-collecting retirees who waited a full-year before returning to work for a CalSTRS employer. That exemption expired in July 2012 and Brand’s Partnership for Success work disqualifies him, according to state officials.
Effective Jan. 1, 2013, retirees cannot earn any income in the first 180 days after they retire, without facing a dollar for dollar deduction to their pension, unless various narrow exceptions apply and an exemption is approved by CalSTRS.
Dianne Russo, aka DLR Consulting
• Pay: Paid more than $207,000 from July 2011 through August 2012 for work as deputy superintendent, and nearly $5,000 in 2013-14 for unspecified $75 hourly work through DLR Consulting, district records show. Her new job combined her former chief financial officer duties and added facilities oversight. She used the same office, email and staff.
• Pension: Began collecting a $76,800 annual pension in the summer of 2011 after taking an early retirement incentive at the age of 55.
• The latest: Cost-of-living increases have pushed Russo’s pension slightly higher, to $79,589 a year, or $6,632 per month. Russo now works as an associate for Carlsbad auditing firm Eric Hall & Associates, according to the company’s website.
• The issue: Despite her consultant contract, state officials say “Dianne Russo was a common law employee of the district and not an independent contractor” from July 2011 through January 2014. Retirees wanting to keep their pension and work for a CalPERS employer must work fewer than 960 hours a year or meet a variety of other requirements that Russo didn’t meet.
• The result: CalPERS is ordering Russo to repay about $200,000 in pension benefits, plus two and a half years of missing employee contributions, plus interest. The district also must pay missed employer contributions, likely totaling more than $40,000.
• What’s new: Effective Jan. 1, 2013, retirees must wait 180 days before returning to work for a CalPERS employer. Some exceptions apply, but the rule is firm for those like Russo who take an early retirement incentive.