Final Compensation

Please​​​​CLICK HERE for the Contra Costa County Employees Retirement Association. Their telephone number is (925) 521-3960.
            
CCCERA FINAL COMPENSATION POLICY AND
LITIGATION OVER THAT POLICY
Douglas Pipes, Esq., RSG House Counsel
Updated December 12, 2018

Your retirement annuity was computed using a formula that considered your years of public service and your “Final Compensation.” CCCERA’s system for computing an employee’s “Final Compensation” was established in its “Final Compensation Policy,” which was originally adopted by the CCCERA Board on December 5, 1997, and which was technically amended on January 13, 1998. 

In 2010 there was an effort to change the way “Final Compensation” was computed by CCCERA. On March 10, 2010, the CCCERA Retirement Board voted to change its “Final Compensation Policy” for new employees hired on or after January 1, 2011. The Retirement Board voted on March 10, 2010, to retain its existing “Final Compensation Policy” for all persons who had already retired and for all current County and District employees hired prior to January 1, 2011. The Retirement Board’s decision meant that no person who had already retired faced a reduction in his or her pension that would have been caused by a retroactive change to the “Final Compensation Policy.”

On September 12, 2012, the Governor signed into law the Public Employees’ Pension Reform Act of 2013 (PEPRA). PEPRA, which went into effect on January 1, 2013, made numerous changes in the way that retirement systems are allowed to compute public employees’ “Final Compensation.”

On October 30, 2012, the CCCERA Board of Retirement voted 7-2 to amend its “Final Compensation Policy” to conform its provisions to the provisions of PEPRA for current County and District employees who did not retire prior to January 1, 2013, and for deferred retirees who did not begin to draw their retirement allowances prior to January 1, 2013. At that meeting the Retirement Board stated that it would not apply these changes to existing retirees.

On November 28, 2012, the Deputy Sheriff’s’ Association and the United Professional Firefighters of Contra Costa County, Local 1230, filed a civil action in the Contra Costa Superior Court entitled Deputy Sheriff’s Association et al. v. Contra Costa County Employees Retirement Association. This civil action challenged the constitutionality of PEPRA as applied to current employees and deferred retirees. That suit resulted in a consolidated legal battle in the Superior Court of Contra Costa County involving current employees in four jurisdictions (Contra Costa, Alameda, Marin, and Merced Counties) and their respective retirement systems. The legal battle in the Contra Costa Superior Court over the application of PEPRA to current Contra Costa County employees ended on May 11, 2014, when Contra Costa Superior Court Judge David Flinn issued a final judgment and order covering three subjects that are important to active Contra Costa County employees:

Vacation Sale.   The Court held that an active Contra Costa employee member of CCCERA who retires after December 31, 2012, may include the monetary compensation for the sale of vacation that was accumulated prior to January 1, 2013, that could have been taken, and that exceeded the amount that he or she could have earned during the final compensation period.

In lay terms, Judge Flinn ruled that any current employee member of CCCERA who accumulated vacation prior to January 1, 2013, that was beyond the amount that the employee might earn during the employee’s final compensation year may count the cash received for selling that accumulated vacation as “compensation earnable” in determining the employee's final compensation upon retirement.  

Terminal Pay.   The Court held that no active employee member of CCCERA who retires after December 31, 2012, may count in his or her final compensation leave time cash outs receivable as terminal pay.

On-Call, Standby, Call Back Pay.   The Court held that an active Contra Costa employee who retires after December 31, 2012,  may include the monetary compensation received for on-call, standby, or call back pay that was earned and required of the employee during his or her final compensation period, that was not the result of “swapped time,” and that was regularly applicable to the class of employees of which the employee is a member.

In lay terms, Judge Flinn ruled that any current employee member of CCCERA who has accumulated vacation prior to January 1, 2013, that was beyond the amount that the employee might earn during the employee’s final compensation year may count the cash received for selling that accumulated vacation as “compensation earnable” in determining the employee's final compensation upon retirement.  

Numerous appeals challenging Judge Flinn’s final judgment and order were quickly filed in the California First District Court of Appeal. Those appeals ultimately resulted in a Court of Appeal judgment and opinion issued on January 9, 2018, by Division Four of the Court of Appeal in Alameda County Deputy Sheriff’s Association et al. v. Alameda County Employees’ Retirement Assn. and Bd. of the Alameda County Employees Retirement Assn. et al., A141913 [Alameda DSA].   On February 9, 2018, the Court of Appeal made minor modifications to its January 9th opinion that did not affect the judgment.

In Alameda DSA the Court of Appeal held that some pay items included in computing employees’ final compensation were vested and protected by the “California Rule,” but other pay items – notably leave cash outs provided at the time of retirement, also known as terminal pay - were not vested pension rights.   However, the Court of Appeal concluded that principles of equity “tip decidedly in favor” of legacy employees who had been promised and credited with terminal pay in the calculation of their pension benefits, and that equitable estoppel prevents County governments and retirement systems from reneging on the promises they had made to those employees to include those pay items in calculating final compensation upon retirement. The Court of Appeal held that all “legacy employees” are entitled to include terminal pay in calculating their pensions, as long as that terminal pay had been designated as pensionable by relevant Post Ventura Settlement Agreements.

Finally, the Court of Appeal in Alameda DSA declined to follow the decision of Division Two of the First District Court of Appeal in a similar case arising out of Marin County, MAPE (Marin Association of Public Employees) v. Marin County Employees Retirement Association, No. A139610, 2 Cal.App.5th 674 (August 17, 2016), had reached a contrary result, holding that the State Legislature could lawfully enact PEPRA to retroactively reduce promised pension benefits for public service employees who had not retired prior to January 1, 2013.  

On March 29, 2018, the California Supreme Court granted review of Alameda DSA [Assigned Supreme Court case number S247095] and ordered that briefing be deferred in MAPE v. Marin [Assigned Supreme Court case number S237460].  The Court further denied the request by the State of California that the published opinion of the Court of Appeal in Alameda DSA be depublished.   Briefing in Alameda DSA has been ongoing throughout 2018.   Numerous amicus briefs were filed in the Supreme Court in October of 2018, and the parties to the case filed responses to the amicus briefs in November of 2018.

The expected next step in the case will be for the Supreme Court to set a date for oral argument in Alameda DSA.   There is no time deadline for the Court to hear oral argument in the case.  

However, on December 5, 2018, the Supreme Court heard oral argument in another case, Cal Fire Local 2882 v. CalPERS.  The Court of Appeal in Cal Fire held that the Legislature had the lawful power to enact in PEPRA a provision that eliminated the option of state public employees to purchase up to five years of nonqualifying service credit.

Cal Fire presents the following issues in the California Supreme Court: (1) Was the option to purchase additional service credits pursuant to Government Code Section 20909 (known as "airtime service credits") a vested pension benefit of public employees enrolled in CalPERS? (2) If so, did the Legislature's withdrawal of this right through the enactment of PEPRA violate the contracts clauses of the federal and state Constitutions?

The Supreme Court is expected to issue its opinion in Cal Fire within 90 days of December 5, 2018.   Because the Cal Fire opinion could enable the Supreme Court to resolve issues about PEPRA that are closely related to the issues presented in Alameda DSA and Mape v. Marin, it is likely that the Supreme Court will not set the Alameda DSA case for oral argument until after March 5, 2019.    This means that the Supreme Court could resolve the holdings of Alameda DSA and MAPE v. Marin later in 2019.

A Comprehensive History of the CCCERA “Final Compensation Policy” and the DSA v. CCCERA civil action entitled “The Chronological History of DSA v. CCCERA” can be found in the FINAL COMPENSATION link of this web site.   The history of DSA v. CCCERA posted on this web site will be periodically updated.
    
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The Chronological History of DSA v. CCCERA 
   
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