Dana Point to Begin Search for New City Manager : Government: Council members vote to seek a replacement for William O. Talley. He says state officials are effectively forcing him out of his job over a pension dispute.

SACRAMENTO — Dana Point City Council members have decided to begin searching for a replacement for City Manager William O. Talley, who said Wednesday that he is effectively being forced out of his job by state authorities because of a dispute over his pension.

Mayor Mike Eggers said council members voted in closed session late Tuesday to conduct the replacement search because efforts have failed to secure an exemption in California law allowing Talley to collect his $90,600-a-year state pension while holding down his $99,500-a-year Dana Point job.

“This is a contingency plan we’ve had since incorporation,” Eggers said about finding a new city manager. He added that details of the search will be discussed at the next council meeting Jan. 28.

Asked what bearing, if any, Talley’s involvement in the recent “pension-spiking” controversy had in the decision by council members to seek a replacement, Eggers said: “None, in my opinion.”

Talley and his retirement payments have figured prominently in a controversy that developed last month with the release of a state controller’s audit of Anaheim, Huntington Beach and six Los Angeles County cities.

The audit found that Talley and a number of former high-ranking administrators artificially inflated their last years’ salaries, upon which pension payments are based, by counting a number of disputed expenses such as car allowances, unused vacation days and expense accounts.

In Talley’s case, his salary was increased from $97,390 to $159,109 shortly before he resigned as Anaheim city manager in 1987. Last week, Controller Gray Davis cited this as an example while blasting administrators who manipulated the pension system to “pig out” at public expense.

The Times reported Tuesday that Talley’s current employer tried unsuccessfully last year to get legislation passed that would have allowed the city manager to continue collecting his $7,558-a-month pension while taking home his Dana Point pay. The lawmaker who helped kill the legislation said it was an attempt to circumvent a law preventing “double-dipping” by public employees.

The law allows Talley to collect both checks only for six months after Dana Point becomes a member of the state’s $67.3-billion Public Employees Retirement System (PERS). The city was accepted into PERS on Dec. 21, giving Talley until June to decide whether to keep his pension or quit his job.

When the city failed to get legislation passed extending the grace period to two years, both Talley’s personal attorney and Dana Point’s city attorney filed appeals with PERS asking for an administrative waiver. But the PERS governing board has yet to consider the case, and Talley informed the council that he has decided to go rather than forfeit his retirement.

On Wednesday, Eggers said the silence from PERS has left the council no other alternative than to begin the search.

“PERS has moved rather slowly on this,” he said. “That is coupled with the fact that hiring a new city manager is not an overnight assignment. In the best-case scenario, it usually takes at least 90 days to bring a new city manager on board from the date you initiate the advertising.”

Talley accused PERS officials of “stonewalling on what I think is my legitimate right to appeal and the city’s legitimate right to appeal. Rather than stay any of their rules, which would be done in a court, they’re proceeding merrily along.”

Talley said he intends to keep fighting PERS and will not slow down his activities for Dana Point.

“I don’t intend to wind down until they have a successor selected and a transition takes place,” Talley said. “I’m a city manager here and I’m not paid to wind down.”

The veteran administrator said that Dana Point officials hired him as an “independent contract” employee through a management firm operated by his wife.

While Talley declined to comment when asked if he is working for anyone other than Dana Point, The Times learned Wednesday that he is receiving $115 an hour as a “subcontracting consultant” to the infant city of Chino Hills. Dan Miller, interim city manager for the San Bernardino County municipality, said he hired Talley in mid-November to help draw up an organizational plan and give advice on insurance matters.

So far, Miller said, the Dana Point city manager has worked about 60 hours for the city of 42,000 people, which incorporated on Dec. 1 and must have its own functioning government by July 1.

“Most of that’s done on weekends,” Miller said. “Usually one day a week he’s working on our stuff down at City Hall or at his office at his home.”

Miller said the money Talley receives from Chino Hills does not fall under the state “double-dipping” statute because the new city is covered under San Bernardino County’s pension plan and is not a member of PERS.