Appeals Court Ruling Will Likely Not Affect ACERA Members for Some Time

On January 8, 2018, a panel of California’s First District Court of Appeal issued a 70-page decision in litigation that started in 2012 over changes in the state pension law affecting “legacy members” of ACERA and two other county retirement systems—legacy members are those who have entry dates into ACERA membership prior to the January 1, 2013 commencement of the California Public Employees’ Pension Reform Act (PEPRA).

The PEPRA and related laws that passed in 2012 ordered county retirement boards to stop counting certain cash received during service and at termination of employment in a retiree’s benefit calculation. Some of the items to no longer be counted were cash-outs of accumulated leave—“on-call” and “standby” pay, and other one-time payments made during the final compensation period.  ACERA and other county systems were prepared to follow the new law starting January 1, 2013, but the trial court stopped ACERA and others from implementing the new law until July 11, 2014. After July 11, 2014, ACERA began excluding those items from final compensation. Therefore, the only employees potentially affected by this lawsuit are legacy (non-PEPRA) employees retiring after July 11, 2014.

The court of appeals has now directed that some of the changes ACERA implemented since July 11, 2014 may have to be changed back to the method we used for calculating benefits before the new law passed. That court decision will not be final until mid-February and may be appealed to the California Supreme Court, in which case everything will be put on hold pending a decision by the Supreme Court, which will likely take a significant period of time. If the case is not appealed to the Supreme Court, it has to return back to the trial court for further proceedings that will likely take a long time to resolve.

In the meantime, there are no changes—ACERA will continue to follow its current practices for calculating benefits. Members should continue to consult our website and speak directly with retirement staff about their individual retirement situations. ACERA will continue to monitor the pending cases and will communicate any prospective changes on this news page and to our email news subscribers. In the future, if a final court order requires ACERA to change any of its practices, ACERA will make those changes at that time and may make adjustments in monthly benefit payments paid both before and after the changes are implemented.