John R. Chella earns a base salary of $85,800 as the city's police superintendent -- a post he has held with many accolades for eight years.
But it's the $39,000 in additional overtime and benefits he collects as the city's top cop that is at the center of his retirement discrepancy with the state.
Chella said Wednesday he pulled his retirement papers Tuesday because the state questioned whether extra allowances such as uniform, holiday and overtime pay should be used to calculate a pension.
"The city has been giving me some things that have allowed me to increase the base [salary], and that's what they're questioning," said Chella, who planned to retire last week after eight years as chief and nearly 40 years on the city's force.
Chella's final gross salary of $125,000 was reported to state retirement fund administrators, including more than $39,000 for the extra allowances, city officials said. His pension is calculated from his final year's salary.
"Unbeknownst to us, there might have been a stipulation in executive law that says those types of benefits for exempt employees have to be a written agreement, and I had a verbal agreement," Chella said. "That's the issue."
The state's general municipal law states that overtime amounts "shall be regarded as salary or compensation for any of the purposes of any pension or retirement system of which the officer or employee receiving the same is a member."
But the State Comptroller's Office rendered a previous opinion stating "a local government may provide neither monetary compensation nor compensatory time off for overtime in the absence of a pre-existing overtime plan."
The City Council could authorize an agreement with Chella in writing going forward, but it could not approve an agreement retroactively, city officials said.
Though exempt employees generally do not receive overtime, Chella received more than $23,000 in 2011 that was funded by grants, officials said.
"This was something we saw as a great benefit to the City of Niagara Falls because we were paying part of money we were giving to our chief from money other than a property-tax funded source," said Mayor Paul A. Dyster. "We think he's a fantastic chief. He's been wonderful. This came as a complete surprise to everybody."
Chella wasn't optimistic Wednesday that the overtime money would be counted toward his pension after talking to a city legal auditor.
"His interpretation is, they're gonna be right and I'm gonna be wrong," he said.
Chella hasn't received the state's final retirement figure, which most likely will be released next week. He pulled his retirement papers to give himself the option of returning to the force.
"Obviously, if I hadn't have pulled my papers, their final decision -- I wouldn't have any options or recourse, I'd have to accept it," he said.
For now, Chella remains at the head of the Falls police.
"Right now I'm superintendent," Chella said. "I'm making decisions as superintendent, and I'll continue to do so until the mayor and I sit down and figure out what we're gonna do. He's giving me the liberty of continuing in my position until a final determination is made."
Chella previously said the mix-up was "devastating" and came after a series of farewell tributes from city and law enforcement officials who heralded his handling of a series of department changes.