In Prentice v. Board of Admin., Cal. Employees’ Retirement System, (— Cal.Rptr.3d —, 2007 WL 4278006, Cal.App. 4 Dist., Dec. 7, 2007), a California Court of Appeal considered a retired city employee’s challenge to a ruling by the California Public Employees Retirement System (“PERS”) that salary he earned above the published salary range for his position could not be used to calculate a higher pension benefit.
The court ruled that the Public Employees Retirement Law (“PERL”) excludes from calculation of retirement benefits earnings which are not part of the employee’s regular pay rate, and therefore affirmed the PERS judgment.
Facts
Glenn Prentice ended a long career with various public water and sewer agencies as General Manager of the City of Corona’s Department of Water and Power. When hired for that position in 2001, Prentice was immediately given a 10.49 percent pay increase, not given to other city department managers. Although the published salary range for Prentice’s position was $10,134 per month to $12,371, Prentice was paid $13,669. After he retired in 2003, the City stopped paying the General Manager of its Water and Power Department that increase.
Following his retirement, Prentice applied to PERS for a retirement allowance, and included his 10.49 percent raise in the calculation of his benefits. PERS, however, determined that the raise should not be considered in Prentice’s benefit calculation, thus lowering his benefit amount. Prentice filed an administrative appeal, which an administrative law judge denied. A trial court upheld that denial, and Prentice again appealed.
Decision
PERL, in Government Code Section 20636 (b)(1) defines the “payrate” used to calculate retirement benefits as “the normal monthly rate of pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules.”
The extra pay Prentice earned, the court said, was not paid to “similarly situated” employees, nor was it in accordance with publicly available pay schedules. In fact, the purpose of that part of PERL was to prevent local agencies from boosting employees’ retirement benefits through artificial increases designed for that purpose. Allowing Prentice’s higher pay to be used to calculate his benefits would have defeated that purpose, the court said.
“Because it was not reflected in the city’s published salary range, it was not part of the manager’s regular payrate,” the court concluded. “Moreover, because the increase was not available to other managers, it could not be included in the retirement calculation as ‘special compensation.’ “
The trial court’s judgment, denying Prentice’s appeal, was affirmed.