California Police Chief- Fall 2013 - Page 9

to a “reasonable” pension. In reaching its conclusion, the First District reviewed the general law relating to pensions, including several California Supreme Court decisions. In quoting these decisions, the Court explained that “‘a public pension system is subject to the implied qualification that the governing body may make reasonable modifications and changes before the pension becomes payable and that until that time the employee does not have a right to any fixed or definite benefits but only to a substantial or reasonable pension.’” After review of the Supreme Court cases noted above, as well as other pension cases, the Court concluded that the Legislature did not act impermissibly by amending Section 31461 to exclude the specified items and categories of compensation from the calculation of pensions for current employees. Noting that an employee has a vested right only to a “reasonable” pension, “not an immutable entitlement to the most optimal formula of calculating the pension,” the Court explained that the Legislature, prior to an employee’s retirement, may alter the formula and reduce the anticipated pension. The Court further stated that “short of actual abol ition, a radical reduction of benefits, or a fiscally unjustifiable increase in employee contributions” reasonable modifications to a pension plan were permissible. Based on these principles, the Court found that neither the statutory change, nor MCERA’s implementation of that change, amounted to an impairment of the employee’s receipt of a “reasonable” pension upon retirement. The California Supreme Court granted review of the Marin Association case in November 2016. However, the Supreme Court stayed any action on the case pending the decision of the First District Court of Appeal in the case entitled Alameda County Deputy Sheriffs’ Association, et al. v. Alameda County Employees’ Retirement Association, et al. Similar to the Marin Association case, the Alameda County case involves consolidated challenges to amendments made to the County Employees Retirement Law of 1937 (“CERL”) by PEPRA. Plaintiffs in the case include various employee associations. The plaintiffs in Alameda County challenged their respective county employee retirement associations’ ability to implement PEPRA as to members hired before January 1, 2013 (referred to as “legacy members”). The Superior Court ruled against the plaintiffs. The Deputy Sheriffs’ Associations appealed. The case is still pending before Court of Appeal. Finally, the First District Court of Appeal issued an opinion in another pension-related case in late 2016 entitled Cal Fire Local 2881 v. California Public Employees’ Retirement System (“Cal Fire”). In Cal Fire, the Court concluded that there was no express vested right to purchase airtime service credits. The California Supreme Court granted review of the Cal Fire case on April 12, 2017. The cases decided by the courts of appeal appear to signal a potential shift in California pension law. Rather than entitling an employee to the pension that was offered at hire, and prohibiting a reduction in such pension unless the reduction is offset by a comparable new benefit, both the Marin Association and Cal Fire cases concluded that public employees are entitled only to “reasonable” pensions, not pensions that provide fixed benefits immune from modification. If the California Supreme Court upholds these decisions, such a ruling may open the door for further pension modifications by the State, as well as local government entities, to reduce pension benefits in an attempt to deal with the alarming pension crisis taking place in California. It will be some time before the high Court rules on these issues. In the interim, many throughout the State anxiously await the Supreme Court’s clarification of the law governing pensions in California. ■ Featuring the Valor ® non-linear, low-profile lightbar SPRING 2017 | California Police Chief 9