Pensions of Former San Juan Officials Slashed by County : Retirement: Board may seek thousands of dollars in alleged overpayments to two men. A third ex-employee awaits action on a similar matter.

SANTA ANA —  County retirement officials voted Monday to cut in half the pension checks of two former San Juan Capistrano city officials and said they may seek to recover thousands of dollars the men received in pension overpayments.

While reducing the retirement allowance of former city officials James S. Mocalis and E. Phillip Hale, the nine-member County Board of Retirement also voted to postpone for two weeks the case of a third former San Juan Capistrano employee--James S. Okazaki--whose $20,000 annual pension is being challenged by the board.

Mocalis, 59, and Okazaki, 63, acknowledged last week that officials with the 4,000-member Orange County Employees Retirement System were looking into their retirement payments and had asked them to justify the amounts.

Mocalis, former city manager and general manager of the Capistrano Valley Water District, and Hale, a one-time city administrator and assistant general manager of the water district, were told that they had improperly inflated their last year of pay by using accumulated sick leave and vacation pay, thereby increasing their retirement benefits.

Donald H. Rubin, an attorney for the retirement board, said this was “contrary to the way we do things with others.”

County retirement benefits for public employees are based on years of service, age and the highest annual income, which usually occurs in the last year of a worker’s employment.

Officials said Monday’s unanimous vote would reduce Mocalis’ annual pension of $30,000 and Hale’s annual $23,000 each by half. Mocalis told reporters last week that his annual county pension was $50,000.

Okazaki said retirement officials want to revoke his $20,000-a-year pension and force him to repay $60,000 he has already received, contending that he was improperly classified as a full-time employee when he was with the city and the Capistrano Valley Water District between 1977 and 1987.

Both Mocalis and Okazaki--once officials with the Laguna Niguel Community Services District--are included in an unrelated investigation by the county grand jury of a 1988 land transaction in which the public’s right to 96 acres of Laguna Niguel open space was deeded to a private developer. They are scheduled to appear before the grand jury Wednesday.

In addition to reducing their retirement benefits, the board ordered Rubin to research the possibility of recovering the overpaid portions of retirement benefits paid to Mocalis and Hale over the years. Retirement officials have not said exactly how much has been made in overpayments, but say it could be in the tens of thousands of dollars.

Rubin said Mocalis and Hale can request a formal “evidentiary” hearing if they want to challenge the board’s decision. It would take place before a hearing officer appointed by the retirement board.

He said he would write a letter to Mocalis and Hale informing them of Monday’s actions and letting them know they can appeal the decision to a hearing officer.

Ray Wells, assistant county treasurer and tax collector and alternate Retirement Board member for Treasurer and Tax Collector Robert L. Citron, said Mocalis called during the board meeting asking for more time, but the board voted anyway.

Rubin described the situation with Mocalis and Hale as “very unusual.” He said the board has not dealt with pension reductions of this magnitude during his 12 years as legal counsel.

Mocalis last week defended his retirement arrangement, saying city officials offered him a better retirement package because he had told them he planned to move on and they did not want to lose his service.

In 1981, Mocalis left his post as San Juan Capistrano city manager and signed a four-year contract with the Capistrano Valley Water District as general manager.

One of the points in the contract titled “final employment year” said the employee may, in his last year of employment with the district, “elect to receive as additional base salary the cash equivalent of any or all of the compensations and benefits contained in this agreement.”

San Juan City Councilman Phillip R. Schwartze said he was “‘puzzled” by the retirement board actions.

“I don’t know how the retirement board works,” said Schwartze, who was a member of the council when he negotiated similar retirement packages with half a dozen top city executives. “For all these years they paid the retirement benefits to these men and now all of a sudden they are being challenged.”

“We were told we were doing the right thing,” he said. “It’s not up to us any more--it’s up to the retirement board.”