Bruce Malkenhorst, former administrator of the tiny industrial town of Vernon (population 112), looked like he was headed for Easy Street when he retired in 2005 and prepared to claim the state’s largest public pension, $541,000.
But when Malkenhorst pleaded guilty to misappropriation of public funds in 2011, the California Public Employees’ Retirement System (CalPERS) said it would slash his payout to $115,000. CalPERS determined that officials in the city improperly inflated the salaries of Malkenhorst and two dozen other Vernon employees, which, in turn, boosted their pensions.
Vernon is the state’s tiniest incorporated city. The industrial hub just five miles south of downtown Los Angeles was incorporated in 1905. More than 25 slaughterhouses lined the main street through town as late as the 1960s. Its motto is “Exclusively Industrial.”
In 1989, the Los Angeles Times reported Malkenhorst was the highest paid city official in California, at $162,804, after running Vernon for 14 years. The Times later pegged his final year’s compensation at $911,000.
According to the Orange County Register, which is bird-dogging a swarm of legal actions taken by Malkenhorst, he sued to overturn the CalPERS decision in Orange and Los Angeles Counties and lost both cases. He is appealing those and also suing his former employer, Vernon, under the novel argument that the city is responsible for making up the difference between what his projected pension would be and the CalPERS adjustment.
Last September, state lawmakers passed legislation to short-circuit that legal strategy. They passed Senate Bill 39, otherwise known as Malkenhorst’s Law, which blocks any local public officer who was convicted of a job-related felony from making any claim against his employer for pension benefits.
Last week, Malkenhorst sued Vernon and the state of California in federal court, arguing that the new law is unconstitutional. The Register quoted the suit’s argument that the law “seeks to interfere with the vested property rights of a United States citizen, who pled guilty to a felony charge, even though the property that the government seeks to seize is property unrelated to the facts underlying the felony.”
In the meantime, Malkenhorst has continued to collect his unadulterated $541,000 pension. CalPERS said last week that would finally stop. Malkenhorst's monthly retirement benefit is to be reduced from $45,974.02 to $9,654 on April 1.