In 1996, the City of Perris dissolved its police department (Perris PD) and contracted with Riverside County to provide law enforcement services through the County Sheriff’s Department (Sheriff’s Department). The former Perris PD officers were hired by the Sheriff’s Department.
Both Perris PD and the Sheriff’s Department contracted with CalPERS to provide pension benefits to their employees. At Perris PD, officers and former officers who retired at age 55 or older were entitled to annual pension payments equal to 2.5% of their final salary multiplied by their years of service. When the Perris PD officers joined the Sheriff’s Department, the County’s formula was called “2% at 50”, which entitled deputies who retired at age 50 or older to draw annual pensions equal to 2% of their final salary multiplied by their years of service. Riverside County changed this formula to 3% at 50 in 2001 and applied it to “credited prior and current service.” But because the Perris PD officers were not County employees before 1996, the pension formula increase did not apply to credits earned with the Perris PD. Rather, CalPERS had consistently calculated Perris PD officers’ pension benefits in two separate segments: 1) one based on service credit with the Perris PD (2.5% at 55), and 2) another based on service credit with the Sheriff’s Department (now 3% at 50).
The former Perris PD officers sued, and asserted that the dissolution of the Perris PD and their subsequent hiring by the Sheriff’s Department constituted a “merger” under Government Code section 20508. They argued this merger required the County and the CalPERS to credit their prior Perris PD service towards more favorable pension formulas. They sought application of the “3% at 50” pension formula retroactive to 2001.
The superior court ruled against the officers, holding that section 20508 applies only if : 1) there is a formal merger of CalPERS contracts between two employing agencies; or 2) when one agency assumes another’s municipal functions. The County did not take over any of the City’s obligations beyond providing law enforcement services under a renewable contract. The former Perris PD officers and Sheriff’s deputies were governed by separate CalPERS contracts, making section 20508 inapplicable. The Perris PD officers appealed.
The California Court of Appeal affirmed. The County was never a “successor agency” to the City and did not assume the City’s functions as required for a merger of contracts under section 20508. Evidence showed that the County simply provided contracted services, while the City retained ultimate responsibility for municipal policing. The County’s contract could also be terminated at any time, underscoring that no municipal functions were permanently transferred.
The Court rejected claims that informal references to the transition as a “merger” and alleged promises made during later pension negotiations could override the requirements in the law. The Court found no evidence of an actual merger of CalPERS contracts, and concluded the County had no obligation to give the enhanced pension benefits retroactively for service at Perris PD.
Petree v. Public Employees Retirement System, 2024 Cal.App. LEXIS 710.