S.F. City College retiree pension error S.F. CITY COLLEGE

Students are seen on campus between classes at City College of San Francisco. Students are seen on campus between classes at City College of San Francisco. Photo: Michael Short, Special To The Chronicle Photo: Michael Short, Special To The Chronicle Image 1 of / 1 Caption Close S.F. City College retiree pension error 1 / 1 Back to Gallery

On Aug. 10, 70-year-old Martha Olchowy opened what appeared to be a routine letter from the California State Teachers' Retirement System and couldn't believe what she read.

She'll be kicked out of her pension plan in December, the letter said, because her former employer, City College of San Francisco, made a mistake 17 years earlier when it placed her with the teachers' system.

Not only will her benefits end, but the retirement agency wants City College to pay back the $289,920 that she and two other retired administrators have already received. The agency also says the college owes it another $95,580 because of accounting irregularities - including at least one instance of pension spiking, in which the college allegedly overstated compensation to fatten a retiring worker's pension.

"I haven't slept. This has really hit me hard," said Olchowy, of San Francisco, who retired two years ago as the college's dean of marketing and public information. The position is nonacademic, which is the reason given for her sudden disqualification.

Olchowy's lawyer calls her an innocent victim caught up in a battle between City College and the teachers' retirement system, which audited five years of college records and didn't like what it found.

Nonacademic functions

The retirement agency says the college erroneously placed 10 administrators with nonacademic functions into the teachers' system - three retirees and seven employees - who went on to contribute a total of nearly $1.5 million into their pensions. That money will be returned to City College, said Ricardo Duran, spokesman for the teachers' retirement agency.

An additional 13 positions, from the college's chief legal counsel to its chief of police, are potentially ineligible for membership in the teachers' retirement system and are being evaluated, according to the audit, which also said the college made a range of other errors resulting in pension overpayments to employees.

The audit's findings are based on a 1995 state law that says employees eligible to join the California State Teachers' Retirement System have to perform an academic function, such as teaching, advising, planning curriculum or something similar. Nearly 1,600 college and school districts are covered by the teachers' retirement agency, and the City College audit is one of 30 to 50 conducted each year, Duran said.

"The primary finding is that City College of San Francisco did not consistently comply with the Teachers' Retirement Law regarding eligible membership and properly reported compensation," he said. "As a result, (the teachers' retirement agency) is in the process of recovering benefits inappropriately paid to City College employees totaling approximately $385,000."

Because the errors lie with the college, not the employees, Duran said, the retirement agency will try to recover the money from City College rather than directly from Olchowy and the others. City College disagrees with the audit findings and will meet with the retirement agency on Tuesday to try to negotiate a resolution, said Larry Kamer, a consultant hired to speak for the college during a tumultuous year.

Financial mess

The trouble comes as City College faces the potential loss of its accreditation, which could result in closure next year. The college of 85,000 students - one of the largest in the country - has to fix its entrenched financial and managerial problems by March 15, or the Accrediting Commission for Community and Junior Colleges could yank its seal of approval in June and the college would close.

Staying open is the college's top priority. But Kamer said City College is taking the audit report seriously.

"It's our hope to avoid having to take this to a formal appeal," he said. "But unless we reach an agreement, we will."

In their response to the audit's preliminary findings in March, attorneys hired by the college said it was "unconscionable for (the retirement agency) to suddenly threaten the retirement of persons who served for decades."

They also said state law allows them to describe the employees in question as having academic responsibilities, which, in turn, makes them eligible for the teachers' retirement system.

In addition, the school never improperly reported anyone's compensation, said attorneys for the college. They said the agency had "not provided any evidence that the increases were intended to 'spike' the retirement benefits of the affected employees."

Affected employees say they are skeptical that the college will do anything to help them, other than advise them to get a lawyer, which some have done.

The retirement agency "is doing a very bad thing, and the college is in a weak position to push back," said one, who declined to be identified. "This is really serious."

No alternative offered

Part of the problem for the employees and retirees is that they have been told only that they will be cut off, and they haven't been offered an alternative to the teachers' retirement system.

The college has been talking quietly with the San Francisco Employees Retirement System, the plan that covers the city's employees, but no deal has been made.

Some employees expressed concern that the city's plan is less generous than the teachers' plan they've been a part of for years. Jay Huish, executive director of the city's plan, did not return a call.

Some of the affected employees suggested that the teachers' retirement system is pursuing City College because of a soaring, unfunded pension liability that reached $65 billion this year, and it's trying to reduce its obligations.

The retirement system's Duran said the amount to be recovered from City College is far too small to make a difference. City College is the only employer in the retirement system where ineligible employees were found, Duran said.

'Totally crazy'

Olchowy, meanwhile, plans to fight to reinstate the pension she's been paying into since Aug. 15, 1995 - three days after the retirement agency says the law took effect limiting membership to academic employees.

Her lawyer, Phillip Crawford, says it wasn't actually enacted until a year later.

"This is totally crazy," Crawford said. "It's the kind of thing that causes some people to jump off a bridge. And legally, they have it wrong."

Olchowy said she's not only worried about herself, but her family's future.

"I adopted a child, and she's a student at City College," Olchowy said. "I have a concern to cover my child's education.

"I'm frightened."