Today, the California Supreme Court issued its decision in Cal Fire Local 2881 v. CalPERS, and affirmed the underlying trial court and Court of Appeal decisions. Cal Fire is one of four cases addressing the “California Rule,” which generally provides that employees are forever entitled to the pension benefits that were promised to them on the first day that they began their service. The California Rule poses significant problems for fiscally limited agencies because the rule essentially prevents decreases in an employee’s pension benefit. Although it was initially presumed that Cal Fire would provide the California Supreme Court with an opportunity to address the continued application of the California Rule, the decision makes such an analysis unnecessary as the California Supreme Court determined that the elimination of the opportunity for public employees to purchase additional retirement service (“ARS”) credit was not a vested right; therefore, there was no need to consider the validity of the California Rule.
A new California appellate court decision affirmed the denial of retiree medical benefits and reinforced a 2011 California Supreme Court ruling that absent clear contractual language or convincing extrinsic evidence of intent, the presumption is that a Memorandum of Understanding (“MOU”) does not create rights that survive the term of the contract.
Specifically, the California Court of Appeal ...
On June 5, 2017, the California Court of Appeal published DiCarlo v. County of Monterey, holding that employees’ stipends that depended on both longevity and performance were properly excluded from the calculation of public pension benefits. The Court of Appeal ruled that although the California Code of Regulations separately lists bonus pay and longevity pay as special compensation to be included in pension calculations, it does not list incentive pay that combines bonus pay and longevity pay. Therefore, the stipends at issue did not need to be reported to CalPERS or included in CalPERS’ calculation of retirement benefit. For a more detailed analysis of this case.
Last week, the California Supreme Court agreed to review the California Court of Appeal’s December 2016 ruling in Cal Fire Local 2881 v. California Public Employees’ Retirement System, 7 Cal.App.5th 115 (Cal. Ct. App. 2016), that the Public Employees’ Pension Reform Act of 2013 (PEPRA) lawfully eliminated the right of CalPERS members to purchase up to five years of retirement service credit called ...
Other AALRR Blogs
- “California Rule” Survives (For Now) — But “Airtime” Does Not
- Be Cautious About “DROP” Programs
- California Supreme Court Hears Cal Fire Oral Argument
- Amortization Period for New Debt Shortened to 20 Years
- New CalPERS Compensation Limits, Effective Immediately
- CalPERS Responds to Its Critics
- Senate Bill 525 Amends California Public Pension Laws
- New Stanford University Study Predicts Public Pensions Costs in California to Consume 14-17.5% of Operating Expenses by the Year 2030
- New Law Penalizes Employers Who Fail to Provide Information About Annuitants Working During Retirement
- Appellate Court Holds That MOU Does Not Provide Vested Interest in Retiree Medical Benefits