County Retirement Association Properly Excluded Particular Compensation From Benefit Calculation

CATEGORY: Client Update for Public Agencies, Fire Watch, Law Enforcement Briefing Room
CLIENT TYPE: Public Employers, Public Safety
DATE: Feb 02, 2024

The Ventura County Employees’ Retirement Association (VCERA) is a public retirement system that provides retirement benefits to County employees.  VCERA is governed by the County Employees Retirement Law of 1937 (CERL) (Gov. Code section 31450 et seq.), and the California Public Employees’ Pension Reform Act of 2013 (PEPRA) (Gov. Code section 7522 et seq.).

A VCERA member may receive compensation for leave cash outs—accrued, but unused, hours of annual leave.  A member’s terms of employment (e.g., a Memorandum of Agreement or the County Management Resolution) limit the number of hours a member may cash out in a calendar year.  The VCERA adopted a resolution excluding compensation for accrued but unused annual leave hours exceeding a calendar year allowance from the calculation of retirement benefits, following a California Supreme Court decision in a similar case (Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn, 9 Cal.5th 1032 (2020), hereafter Alameda).

The California Superior Court granted VCERA’s request for a judicial declaration that its resolution was legal.  Two County employee associations appealed this decision, arguing that the resolution was not mandated by Alameda or the relevant statutes.  The California Court of Appeal affirmed the lower court’s decision.  The Court concluded that VCERA was required to comply with Alameda and the relevant statutes, which were designed to prevent pension spiking.

The Court focused on Government Code section 31461(b) and PEPRA’s goal of eliminating pension spiking.  Thus, the Court interpreted these to limit compensation earnable to reflect pay for work ordinarily performed during the course of a year.  Thus, VCERA was required to comply with section 31461(b) and Alameda and exclude compensation for unused leave that exceeded an employee’s calendar year allowances.

Ventura County Employees Retirement Ass’n v. Criminal Justice Attorneys Ass’n of Ventura County, 2024 Cal.App. Lexis 26.

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