Preliminary Opinion in Pension Reform Suit

In December 2012, employee groups filed suit over ACERA’s implementation of the 2012 California Public Employees’ Pension Reform Act (AB 197), and the parties agreed to a stay on the implementation. On November 8, 2013, the Honorable Judge Flinn, Contra Costa County Superior Court issued his preliminary determination in the first phase of the lawsuit. There remain many questions, and many issues left to resolve in the next hearing to be held on December 10, 2013, but ACERA is reporting on the initial determination here to keep members informed:

Judge Flinn’s Preliminary Opinion was issued on the primary Phase One question posed in this litigation: Were the accrued leave cash-out practices of the retirement boards authorized by the law defining “compensation earnable” before the passage of AB 197? Essentially, the question is, should ACERA have been including Vacation Payoff in the salary calculation for the retirement formula that determines member’s lifetime monthly retirement allowance since the Ventura decision in 1997; and should ACERA have included vacation sell from member’s straddling vacation sell in multiple fiscal years in the same calendar year? (Vacation Payoff is where a member still has earned vacation on the books when they retire or terminate employment, and they receive monetary compensation for it.) Judge Flinn’s Preliminary Opinion concludes that the answer to the question is “no.”

Judge Flinn will make a determination on the impact of this decision on ACERA after the next hearing on December 10.

The Court also observed that although the issues associated with various pay codes had not been briefed by the parties and analyzed by the court, at this preliminary stage, he is inclined to conclude that judicial intervention on the issues with various pay codes being included in the retirement calculation would “only be appropriate on a case by case basis and not by a general and sweeping writ of mandate.”

For more information, review the attached documents.