7 Cal. App. 5th 115
Cal. Ct. App.2016Background
- CalPERS administered a 2003 statutory option (Gov. Code § 20909) allowing active state members with ≥5 years service to purchase up to five years of nonqualifying "airtime" service credit at member cost.
- Airtime increased pension calculation service credit but did not reflect actual work; costs were paid entirely by the member and were intended to be cost-neutral to employers.
- In 2012 the Legislature enacted PEPRA, which barred purchase of nonqualified service credit effective January 1, 2013, but allowed applications received before that date to be approved. (§ 7522.46; § 20909(g)).
- Cal Fire Local 2881 and members sued CalPERS seeking a writ to compel continued enforcement of § 20909, arguing the 2013 amendments violated the California Constitution’s Contracts Clause by impairing a vested contractual pension right.
- The trial court denied the writ, finding no clear legislative intent that § 20909 created an unmodifiable vested contract right and that the PEPRA changes were reasonably related to pension-system integrity and solvency. The Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 20909 created a vested contractual right to purchase airtime immune from legislative repeal | §20909 was part of the statutory retirement plan; members relied on it as a term of compensation, creating an express vested right | Statutory benefits are presumed not to create private contractual rights; no clear legislative intent to vest an unalterable right; CalPERS cannot expand statutory benefits | No express vested contractual right; plaintiff failed to overcome presumption against creating vested rights in statute |
| Whether repeal/amendment by PEPRA violated the Contracts Clause even if a vested right existed | Eliminating the option removed a valuable benefit without a comparable advantage, thus impairing contracts | Legislature may reasonably modify pension benefits prior to retirement to protect solvency; changes were materially related to pension theory and system integrity | No Contracts Clause violation: modifications were reasonable, materially related to pension purpose, and members had a final window to elect airtime before repeal |
| Whether CalPERS must administer airtime purchases contrary to current statute | CalPERS must enforce members’ contractual rights and accept applications | CalPERS has no ministerial duty to apply or enforce an unconstitutional or repealed statute | Mandamus denied; CalPERS has no duty to act contrary to the statute as amended |
| Whether plaintiffs were entitled to injunctive or mandamus relief | Plaintiffs sought writ and injunction compelling CalPERS to accept airtime purchases | Defendants argued relief would require administering an action contrary to current law and public policy | Relief denied; plaintiffs did not meet heavy burden to show constitutional violation and ministerial duty to act |
Key Cases Cited
- Miller v. State of California, 18 Cal.3d 808 (1977) (public employment pension rights are statutory, and governing body may make reasonable pre-retirement modifications)
- Kern v. City of Long Beach, 29 Cal.2d 848 (1947) (pension systems must remain flexible; vested pensions are subject to reasonable modification before payment)
- Betts v. Board of Administration of Public Employees' Retirement System, 21 Cal.3d 859 (1978) (employee has only a right to a substantial or reasonable pension; modifications before retirement permissible if reasonable)
- Retired Employees Assn. of Orange County v. County of Orange, 52 Cal.4th 1171 (2011) (presumption that statutes do not create private contractual rights; heavy burden to show legislative intent to vest)
- CalPERS Bd. of Admin. v. Wilson, 52 Cal.App.4th 1109 (1997) (analysis requires inquiry into nature of contractual obligation and scope of legislative modification power)