County of Orange v. Association of Orange County Deputy Sheriffs
192 Cal. App. 4th 21
| Cal. Ct. App. | 2011Background
- Orange County sued the OCERS Board, claiming the 2001 past-service enhancement to the 3% at 50 formula violated the California Constitution.
- OCERS is a public retirement system governed by CERL; benefits depend on final compensation, years of service, and statutory multipliers, with UAAL as the unfunded component.
- In 2001, after collective bargaining with AOCDS, the County adopted a 3% at 50 formula for all years of service, with employees contributing 1.78% for 15 months toward the cost.
- Resolution 01-410 made the enhanced formula effective June 28, 2002 and applied to all years of service, including prior years; retirees prior to that date did not receive increases.
- In 2008 the County determined the past-service portion was unconstitutional and sought a declaration and injunction; the trial court granted judgment on the pleadings for AOCDS and OCERS, and the County appealed.
- The court held that (i) the past-service UAAL is an actuarial projection, not an enforceable debt under the municipal debt limitation, and (ii) retroactive pension enhancements to active employees are not impermissible extra compensation under article XI, section 10; §31678.2 was not necessary to address for the decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Municipal debt limitation applicability | County: UAAL is debt; past service violates Article XVI §18(a). | AOCDS/OCERS: UAAL is an actuarial projection, not a debt; no violation. | UAAL is not indebtedness; no municipal debt violation. |
| Extra compensation prohibition | Past-service enhancement to AOCDS members constitutes extra compensation for past services. | Retroactive pension enhancements to pensionable status are not extra compensation. | Not unconstitutional extra compensation. |
| Retroactivity and CERL §31678.2 | Statute allows retroactive application of enhanced benefits. | Statute may be unconstitutional or unnecessary to resolve; not central to decision. | Court did not reach constitutional ruling on §31678.2; unnecessary to decide for this result. |
Key Cases Cited
- Sweesy v. Los Angeles County, etc. Retirement Bd., 17 Cal.2d 356 (Cal. 1941) (retroactive pension increases to pensionable status not 'extra compensation')
- Nelson v. City of Los Angeles, 21 Cal.App.3d 916 (Cal. App. 1971) (increases to pension benefits to retired/public pensioners not 'extra compensation')
- American River Fire Protection Dist. v. Brennan, 58 Cal.App.4th 20 (Cal. App. 1997) (sick leave buyout not 'extra compensation' when tied to pensionable status)
- Miller v. State of California, 18 Cal.3d 808 (Cal. 1977) (vesting of pension rights; changes permissible with safeguards)
- Betts v. Board of Administration, 21 Cal.3d 859 (Cal. 1978) (pension rights protected by contract clause; changes must be reasonable)
- Jarvis v. Cory, 28 Cal.3d 562 (Cal. 1980) (narrow view of extra compensation; retroactivity context)
- City of San Diego v. San Diego County Emps. Retirement Assn., 186 Cal.App.4th 69 (Cal. App. 2010) (UAAL and retirement cost considerations in context)
- In re Retirement Cases, 110 Cal.App.4th 426 (Cal. App. 2003) (actuarial assessments and funding methods central to UAAL)
- Starr v. City and County of San Francisco, 72 Cal.App.3d 164 (Cal. App. 1977) (installment obligations and annual income relevance to debt limits)
- Carman v. Alvord, 31 Cal.3d 318 (Cal. 1982) (indebtedness concept depends on context; not every projection creates debt)