Category: Alameda Decision

On April 10, 2023, VCERA mailed a letter to its entire membership regarding the Alameda Decision’s anticipated impact on different categories of members. The correspondence also summarized the court ruling and notified members about the Board of Retirement’s meeting of April 17, 2023, where the Board was presented with a proposed Resolution to implement the “Alameda Exclusions.” The Board also considered a proposed modification to its original October 12, 2020, Resolution that addressed the “PEPRA Exclusions.” Both Resolutions were approved by the Board of Retirement at its April 17, 2023, meeting.

Pay codes are used by employers to identify and classify types of pay remitted to employees. Some types of pay are includable in retirement earnings,* as determined by CERL and the Board of Retirement, and some are not. In the Alameda Decision, the California Supreme Court clarified for county retirement systems which categories of pay are excluded from a member’s retirement earnings.

The attachments below contain charts reflecting the pensionability of your employer’s pay codes before and after the Alameda Decision:

• The two files labeled “Impacted Pay Codes” list the pay types that were previously included in retirement earnings but that are now (i.e., post-Alameda) included to a limited degree or excluded altogether.
• The two files labeled “All Other Pay Codes” list pay items that, in general, did not see a change in their pensionability due to the Alameda Decision.**

Because the charts are categorized by membership type, and a majority of the members impacted by the Alameda Decision are Legacy members, it is important to first identify yourself as a Legacy or PEPRA member. If you have questions about a particular pay code, please contact your Human Resources or Payroll representative. If you have questions about the pensionability of a specific pay code that are not answered by these charts, please contact VCERA.

COV Impacted Pay Codes
COV All Other Pay Codes
VRSD Impacted Pay Codes
VRSD All Other Pay Codes

(The “COV” files apply to employees of the County of Ventura, Ventura County Superior Court, Ventura Air Pollution Control District, and VCERA.)

* Retirement earnings are known as “pensionable compensation” for PEPRA members and as “compensation earnable” for Legacy members.

** However, a portion of the pay codes in these lists may not be pensionable if they correspond to payments for services rendered outside of normal working hours (also referred to as “situational pay codes”).

At the upcoming March 27, 2023, VCERA Board of Retirement meeting, at 10:00 a.m. Time Certain, the Board will be reviewing a proposed Resolution to implement the exclusion of in-kind benefits per the California Supreme Court’s July 30, 2020, ruling in ALAMEDA COUNTY DEPUTY SHERIFF’S ASSN. v.  ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSN.  The Resolution defines what portion of allowances received under the County’s flexible benefits program may be included in compensation earnable for “Legacy” members (hired before January 1, 2013) if the Resolution is later adopted at the April 17, 2023, meeting.

Historically, for each bargaining unit (i.e. union), the County has provided a Flexible Credit Allowance to all employees in each unit, and deducted an Opt-Out Fee for those employees who chose to opt out of the County-provided medical coverage. More recently (starting in December 2022), some of the units adopted a new Opt-Out Allowance structure. Under this new structure, employees who opt out of health benefits do not receive a Flexible Credit Allowance nor are they charged an Opt-Out Fee; instead they receive an Opt-Out Allowance. The Resolution addresses what portion is pensionable under each of these structures.

These changes would be effective for any Legacy member who retires on or after July 30, 2020.

Stakeholders and members are encouraged to listen in and/or review the materials linked here for a preview of the history and anticipated discussion. VCERA’s fiduciary counsel will be present to review the Resolution in detail with the Board of retirement.

The advance agenda item materials:

Review and Discussion of Proposed Resolution to Implement Changes to Compensation Earnable Resolution in Compliance with the California Supreme Court Decision, Alameda County Sheriff’s Assoc. Et Al., v. Alameda County Employees’ Retirement Assn., Et Al (2020) 9 Cal.5th 1032 (“Alameda”) Following Governor Newsom Veto of Assembly Bill 826, in Advance of Anticipated Action on April 17, 2023.

Staff Letter from Retirement Administrator
Letter from Governor Newsom, Veto of AB 826
Memorandum from General Counsel, dated Jan. 31, 2023
Proposed Resolution for Alameda Exclusions

At the March 27, 2023, Board of Retirement meeting, the Board reviewed the pending proposed Resolution Regarding Correction of Pensionability of Benefits under County of Ventura’s Flexible Benefits Program (“Flex Credit Resolution”) in advance of its formal consideration on April 17, 2023. (Links to the materials reviewed by the Board are available below.) The Resolution is to bring VCERA into compliance with the Alameda Decision (“Alameda”), which was issued by the California Supreme Court on July 30, 2020, regarding the pensionability of in-kind benefits that cannot be received in cash. (The Board of Retirement previously adopted a Resolution on October 12, 2020, to exclude the other areas addressed by Alameda, such as stand-by, callback, and other payments for service outside normal working hours.)

If adopted, the Flex Credit Resolution will exclude the non-cashable portion of the County’s Flexible Benefit Allowance from compensation earnable for Legacy members*. The Resolution addresses the pensionability of the flexible benefit credit for both the historical structure and the new structure recently adopted by the County of Ventura.

The PDFs below were developed to assist the Board and VCERA members to better understand the potential impact of this exclusion, and how members can estimate the calculation difference for themselves.

VCERA staff is working to expand communication efforts to both active and retired members in the coming weeks to promote better understanding of the Alameda Decision and its impact.

* General members in Tier 1 and Tier 2 and Safety members in Tier 1 who joined VCERA prior to January 1, 2013 or who were eligible for a Legacy plan due to reciprocity.

The March 27, 2023, board meeting materials:

Staff Letter from Retirement Administrator
Proposed Resolution for Alameda Exclusions
Estimated Impact Presentation & Examples
Estimated Impact Charts

It has come to VCERA’s attention that the Ventura County Deputy Sheriffs’ Association (VCDSA) recently released a pension calculator application to its members. VCERA disclaims the accuracy of this pension calculator, as none of the calculations generated by this pension calculator have been tested, reviewed or verified by VCERA. An estimate produced by the VCDSA or any other pension calculator does not create any right to receive benefits under VCERA.

For an official retirement benefit estimate, please complete and submit an official request form to VCERA.

On April 19, 2021, the Board of Retirement approved to ratify staff determination on pay codes impacted by the October 12, 2020, Resolution regarding Alameda implementation for compensation earnable and pensionable compensation.

The attached list of pay codes reflects those used for the pay items that are not pensionable under the Resolution’s criteria.

On July 26, 2021, the VCERA Board of Retirement adopted a Resolution regarding the flexible credit benefit amount that may be included in compensation earnable for “Legacy” members (hired before January 1, 2013).

Prior to the 2020 Plan Year, the County of Ventura’s flex credit benefit was provided in the same amount to all eligible employees within each bargaining unit. However, beginning January 1, 2020, employees In many bargaining groups were offered a “three-tiered” flex credit based on the number of dependents they were covering.

SEIU Example

Calendar Year	Flex Credit ( EE Only)	Flex Credit ( EE + 1)	Flex Credit (EE + Family)
2019	$447
2020	$447	$522	$547
2021	$472	$572	$642

The July 26 Resolution limits the portion of the flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all members in the same group or class within each bargaining unit have the same amount reported as compensation earnable (and will pay the same amount of retirement contributions), regardless of their personal circumstances.  As a reminder, none of the flex credit is pensionable for PEPRA members.

While the tiered approach to flex credit began in 2020, action to limit the pensionable amount to the employee-only tier was delayed by VCERA following the landmark California Supreme Court “Alameda Decision.” This ruling addressed the pensionability of several categories of compensation, one of which was in-kind benefits such as flex credit. The Alameda ruling said that a retirement board does not have the discretion to include in compensation earnable in-kind benefits, which are benefits that cannot be received in cash. In October of 2020, the Board of Retirement adopted a Resolution to implement Alameda, opting to defer any exclusion of flex credit (paragraphs 3, 6 & 9 of the Resolution) and to pursue a declaratory relief action in Court to determine if exclusion of the non-cashable portion of flex credit was mandatory. The County demurred on the flex credit cause of action, asserting that there was no justiciable controversy because the Board had not taken action to exclude. The Court sustained that demurrer without leave to amend. 

While the declaratory relief filing was progressing, both the County and the Service Employees International Union (SEIU) made efforts to pursue legislation designed to allow full inclusion of flex credit in Ventura County. An SEIU-sponsored bill, AB 826, is currently in the California legislature.

AB 826 does not address the recent unequal tiered approach of flex, so the Resolution adopted on July 26, 2021, limits the portion of that flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all in the same group or class within each bargaining unit receive the same amount toward their pensions, regardless of how many dependents they have elected to cover through the health care options provided in the County’s Flexible Benefit Plan.   This is consistent with the underlying concept of compensation earnable, which is intended to reflect payment for work-related services.

If AB 826 does not pass, the Board will again consider the pensionability of non-cashable flex credit.

To view the July 26 Resolution, click here.

On October 12, 2020, the VCERA Board of Retirement adopted a Resolution (Redline Version and Clean version), implementing the California Supreme Court’s July 30, 2020, ruling in ALAMEDA COUNTY DEPUTY SHERIFF’S ASSN. v.  ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSN.

In Alameda, the Court addressed two types of exclusions from “compensation earnable”, the amount used to calculate legacy members’ retirement benefits.

1. Payments that were excluded in the PEPRA legislation effective January 1, 2013: (a) “Pay for services outside of normal working hours”, such as standby or call-back pay, and; (b) termination pay (not an issue for VCERA).
2. In-kind benefits, which would be health insurance premiums and other third-party payments not received in cash. This includes leave donations and flex credits not allowed by the employer to be received in cash.

The Resolution includes both types of exclusions. However, for the time being, the Board directed only implementation of the exclusions in the first category. The second category (dealing with flex credit) was not implemented at this time. Rather, the Board took action to seek “declaratory relief” from the courts, in coordination with various stakeholders and their counsels.  

PEPRA EXCLUSIONS

Because the Board adopted the first category of exclusions, VCERA will immediately begin excluding those pay codes from compensation earnable. Members who retire or receive benefit estimates will not see those pay types reflected in their final average compensation (FAC) calculation.

ALAMEDA EXCLUSIONS (Flex Credit)

The most impactful exclusions are the ones the Board did not yet adopt; therefore, VCERA will continue to include these items in retirement benefit calculations for new retirees until further action is taken. Benefit estimates will reflect exclusion of pay components in both categories. However, because future action may exclude flex credit, and that exclusion would be retroactive for any who retired after the date of the Alameda ruling, those retirees who retired on July 30, 2020, or after would be subject to future recalculations of benefit payments and repayment of the portion of their retirement benefits attributable to flex credit. More information will be provided as it becomes available. Visit our Alameda Decision Information page for updates.