Judge James C. Chalfant, Case Number: 23STCP00625, Date: 2023-11-28 Tentative Ruling

Petitioner Betty Forrester (“Forrester”) seeks a writ of mandate compelling Respondent California State Teachers’ Retirement System (“CalSTRS”) to vacate its decision to uphold the reduction of her retirement benefits.

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

Petitioner Forrester commenced this proceeding on February 28, 2023. The verified Petition alleges in pertinent part as follows.

Forrester was a teacher for the Los Angeles Unified School District (“LAUSD”) for 40 years. For the last nine years, she was an officer for United Teachers Los Angeles (“UTLA”), a labor organization with a collective bargaining agreement with the LAUSD. UTLA officers receive full release from teaching duties, work 12 months instead of the ten-month school year, and receive a higher pay rate.

Forrester consulted with a CalSTRS Benefits Counselor to learn about her projected retirement benefits. The counselor told her that CalSTRS would use her highest earning years, the years she was a UTLA officer, to calculate her retirement benefits. Based on this representation, Forrester retired on November 1, 2017.

When she first retired, Forrester received benefits at the rate promised. In 2019, CalSTRS notified her that it had overpaid her benefits and would reduce them by about 20%. CalSTRS did not initially allow her to appeal this decision. In June 2021, Department 86 (Hon. Mitchell Beckloff) granted a writ of mandate compelling CalSTRS to grant an administrative hearing to contest the reduction.

The appeal hearing occurred on October 13, 2022. On December 11, 2022, the administrative law judge (“ALJ”) issued a Proposed Decision denying Forrester’s appeal. On January 25, 2023, CalSTRS’ Teachers' Retirement Board (“Board”) adopted the ALJ’s Proposed Decision with minor changes.

Forrester seeks a writ of mandate compelling CalSTRS to vacate the Decision, find that LAUSD properly reported her compensation to CalSTRS, refund any reductions in benefits with interest at the legal rate, file a Return within 90 days showing compliance with the court’s mandamus decision, and award Forrester her costs.

On March 27, 2023, Forrester served CalSTRS with the Petition and Summons by mail.

CCP section 1094.5 is the administrative mandamus provision which structures the procedure for judicial review of adjudicatory decisions rendered by administrative agencies. Topanga Ass’n for a Scenic Community v. County of Los Angeles, (“Topanga”) (1974) 11 Cal.3d 506, 514-15.

CCP section 1094.5 does not in its face specify which cases are subject to independent review, leaving that issue to the courts. Fukuda v. City of Angels, (“Fukuda”) (1999) 20 Cal.4th 805, 811. In cases reviewing decisions which affect a vested, fundamental right the trial court exercises independent judgment on the evidence. Bixby v. Pierno, (“Bixby”) (1971) 4 Cal.3d 130, 143. See CCP §1094.5(c). Public employees have fundamental vested rights in their pension fund, which accrues on acceptance of employment. Strumsky v. San Diego County Employees Retirement Association, (1974) 11 Cal.3d 28, 44. Therefore, the independent judgement standard applies to the court’s review of facts.

Under the independent judgment test, “the trial court not only examines the administrative record for errors of law but also exercises its independent judgment upon the evidence disclosed in a limited trial de novo.” Id. at 143. The court must draw its own reasonable inferences from the evidence and make its own credibility determinations. Morrison v. Housing Authority of the City of Los Angeles Board of Commissioners, (2003) 107 Cal.App.4th 860, 868. In short, the court substitutes its judgment for the agency’s regarding the basic facts of what happened, when, why, and the credibility of witnesses. Guymon v. Board of Accountancy, (1976) 55 Cal.App.3d 1010, 1013-16.

“In exercising its independent judgment, a trial court must afford a strong presumption of correctness concerning the administrative findings, and the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence.” Fukuda, supra, 20 Cal.4th at 817. Unless it can be demonstrated by petitioner that the agency’s actions are not grounded upon any reasonable basis in law or any substantial basis in fact, the courts should not interfere with the agency’s discretion or substitute their wisdom for that of the agency. Bixby, supra, 4 Cal.3d 130, 150-51; Bank of America v. State Water Resources Control Board, (1974) 42 Cal.App.3d 198, 208.

The agency’s decision must be based on a preponderance of the evidence presented at the hearing. Board of Medical Quality Assurance v. Superior Court, (1977) 73 Cal.App.3d 860, 862. The hearing officer is only required to issue findings that give enough explanation so that parties may determine whether, and upon what basis, to review the decision. Topanga, supra, 11 Cal.3d 506, 514-15. Implicit in CCP section 1094.5 is a requirement that the agency set forth findings to bridge the analytic gap between the raw evidence and ultimate decision or order. Id. at 115.

An agency is presumed to have regularly performed its official duties (Evid. Code §664), and the petitioner therefore has the burden of proof. Steele v. Los Angeles County Civil Service Commission, (1958) 166 Cal.App.2d 129, 137. “[T]he burden of proof falls upon the party attacking the administrative decision to demonstrate wherein the proceedings were unfair, in excess of jurisdiction or showed prejudicial abuse of discretion. Afford v. Pierno, (1972) 27 Cal.App.3d 682, 691.

The Teachers’ Retirement Law (Education Code[1] §22000 et seq.) principally governs this case. CalSTRS is the state agency charged with “plenary authority and fiduciary responsibility” “to provide a financially sound plan for the retirement…of teachers in the public schools of this state…” Cal. Const., art. XIV, § 17; §22001. CalSTRS is governed by the Teachers’ Retirement Law and overseen by the Board, which administers the Teachers’ Retirement Fund, a special trust fund established by law that holds the assets of the plan. §22000 et seq; §22400.

CalSTRS is charged with determining “the appropriate crediting of contributions between the Defined Benefit Program and the Defined Benefit Supplement Program” according to “sound principles that support the integrity of the retirement fund.” §22119.2(g). CalSTRS is required to administer its authority to ensure that members receive their earned benefits but is restricted from conferring any benefits that they would not be entitled to under the Teachers’ Retirement Law. Duarte v. CalSTRS, (2014) 232 Cal.App.4th 370, 385. The Board has “the sole power and authority to…determine all facts pertaining to application for benefits under the plan or any matters pertaining to administration of the plan and the system.” §22219(d).

The governing board of a school district shall grant to any employee, upon request, a leave of absence without loss of compensation for the purpose of enabling the employee to serve as an elected officer of any local school district public employee organization, or any statewide or national public employee organization with which the local organization is affiliated. §44987(a)(1).

The employee granted such leave is entitled to service credit, compensation earnable, interest, and additional earnings credits if (a) the member was employed and performed creditable service subject to coverage under the Defined Benefit Program in the month before commencement of the leave of absence; (b) the member makes contributions to the Teachers’ Retirement Fund in the amount that the member would have contributed had the member performed creditable service during the period the member served as an elected officer of the employee organization; and (c) the member’s employer contributes to the Teachers’ Retirement Fund at a rate adopted by the board as a plan amendment with respect to the Defined Benefit Program an amount based upon the creditable compensation that would have been paid to the member had the member performed creditable service during the period the member served as an elected officer of the employee organization. §22711.[2]

“Creditable compensation” is defined as “remuneration that is paid in cash… to all persons in the same class of employees…” and, “shall include [s]alary or wages paid in accordance with a publicly available written contractual agreement, including, but not limited to, a salary schedule or employment agreement.” §22119.2(a)(1). It does not include remuneration paid for service that is not creditable service. §22119.2(d)(2); §22119.2(c)(2) (2011).

“Creditable service” includes (1) the work of teachers, instructors, district interns, and academic employees employed in the instructional program for pupils, including special programs such as adult education, regional occupation programs, child care centers, and prekindergarten programs; (2) education or vocational counseling, guidance, and placement services; (3) the work of employees who plan courses of study to be used in California public schools, or research connected with the evaluation or efficiency of the instructional program; (4) the selection, collection, preparation, classification, demonstration, or evaluation of instructional materials of any course of study for use in the development of the instructional program in California public schools, or other services related to California public school curriculum; and (5) the examination, selection, in-service training, mentoring, or assignment of teachers, principals, or other similar personnel involved in the instructional program. §22119.5(b).

Such activities qualify as creditable services when performed for (1) a pre-kindergarten through Grade 12 employer in a position with certification qualifications authorized by the Commission on Teacher Credentialing; (2) a community college employer by a faculty member in an academic position, or by an educational administrator, subject to the appropriate minimum standards adopted by the Board of Governors of the California Community Colleges; or (3) a charter school employer under the provisions of an approved charter for the operation of a charter school for which the charter school is eligible to receive state apportionment. §22119.5(a). Alternatively, such activities qualify as creditable services when performed by (1) superintendents of California public schools, and presidents and chancellors of community college employers; (2) consulting teachers employed by an employer to participate in the California Peer Assistance and Review Program for Teachers; or (3) audiometrists who hold a certificate of registration issued by the State Department of Health Care Services. §22119.5(c).

In 1974, the legislature passed Assembly Bill (“AB”) 2790. AR 407, 1237. AB 2790 enacted amendments to then-section 14006, the predecessor of section 22711. AR 407, 1237. Comments to AB 2790 explained that a member’s contributions should be based on the salary of that member, with normal increments of increase, had he or she remained in his teaching position. AR 407.

In 1980, the legislature passed AR 2658. AR 527, 1238. AB 2658 added then-section 22706.5 to allow employees of school districts with less than 50,000 employees to receive service credit while serving as elected officials on leaves of absences. AR 527, 1238. The employee is required to pay specific contributions to the Teachers’ Retirement Fund based on the employee’s salary at the time the leave of absence was granted. AR 527, 1238.

No action may be commenced by or against the Board, CalSTRS, or the plan more than three years after all obligations to or on behalf of the member, former member, beneficiary, or annuity beneficiary have been discharged. §22008(a).

If the system makes an error that results in incorrect payment to a member, former member, beneficiary, or annuity beneficiary, the system’s right to commence recovery shall expire three years from the date the incorrect payment was made. §22008(b).

If an incorrect payment is made due to lack of information or inaccurate information regarding the eligibility of a member, former member, beneficiary, or annuity beneficiary to receive benefits under the Defined Benefit Program, the period of limitation shall commence with the discovery of the incorrect payment. §22008(c). For such purposes, a claim accrues when the claimant has actual or inquiry notice of the incorrect payment. Baxter v. State Teachers’ Retirement System, (“Baxter”) (2017) 18 Cal.App.5^th 340, 360-61. Therefore, the three-year limitations period for asserting a claim relating to an incorrect payment due to a lack of accurate information under section 22008(c) begins when the claimant discovers, or in the exercise of reasonable diligence, should have discovered, the incorrect payment. Id. at 363.

CalSTRS is the state agency charged with overseeing the pension fund for its members, public teachers and educators throughout the state. AR 1147 (Joint Stipulation of Facts (“JSF”) (¶4).

UTLA is a labor union and the exclusive representative of a bargaining unit of certificated teachers within LAUSD. AR 1148 (JSF ¶6).

Forrester is a CalSTRS member who worked as a certified teacher for LAUSD until her retirement in 2017. AR 1147-48 (JSF ¶5). Forrester was a member of the bargaining unit represented by UTLA. AR 1147-48 (JSF ¶6). From the 2008-2009 school year until her retirement, Forrester was on a leave of absence from her teacher position to serve as an elected officer for the UTLA. AR 1148 (JSF ¶5).

In 2011, CalSTRS issued Employer Directive 2011-04 (“Directive”), a notice to employers about section 22711. AR 368. The Directive was intended to remind employers how to report service for employees granted a compensated leave of absence to serve as elected officials of an employee organization. AR 368.

If a member receives a compensated leave of absence to serve as elected officials of an employee organization, the member will accumulate service credit as if they were working on a full-time basis if certain conditions are met, including that (a) the member makes contributions to the Teachers’ Retirement Fund in the same amount as if they he or she were still performing creditable service on a full-time basis in the position from which they are on a compensated leave of absence and (b) the employer makes contributions as if the member were performing creditable services on a full-time basis in the position from which the member has taken a leave of absence. AR 368-69. The employer must report the member’s service and contribution and continue to report the member’s earnings and contributions as if the member was working full-time in the position from which he or she is on a compensated leave of absence. AR 369.

In 2015 and 2016, CalSTRS performed an audit of LAUSD based on two sampled members, Warren Fletcher (“Fletcher”) and Michael Caputo-Pearl (“Caputo-Pearl”). AR 1149 (JSF ¶15). Both members served as UTLA officers. AR 1149 (JSF ¶15).

On February 1, 2016, CalSTRS issued a draft audit report finding that LAUSD has incorrectly reported creditable compensation for elected UTLA officers. AR 179-80, 1149 (JSF ¶15). Under section 22711, an elected officer of an employee organization receives service credit for the time spent in that capacity. AR 179. However, the member and employer must make retirement contributions based on the creditable compensation that the member would have been paid for creditable service on a full-time basis during that period. AR 179. LAUSD did not report what that creditable compensation would have been. AR 179.

The two sample UTLA officers, Fletcher and Caputo-Pearl, were certified teachers prior to their election and their compensation was based on a certificated teacher’s C-Basis salary schedule. AR 179. When they were elected as UTLA officers, LAUSD reclassified them to an A-Basis salary schedule and reported their salaries to CalSTRS based on the A-Basis schedule. AR 179-80, 1149 (JSF ¶15). Because elected union officer duties do not meet the definition of creditable service, the last positions for which they performed creditable service was based on the C-Basis schedule. AR 179, 1149 (JSF ¶15). This resulted in overpayment of retirement benefits to both employees. AR 179-80.

On February 1, 2016, LAUSD, Fletcher, and Caputo-Pearl objected to CalSTRS’ draft audit report. AR 1149-50 (JSF ¶¶ 17-18). On April 8, 2016, CalSTRS issued a final audit report reiterating the finding of overpayment. AR 206, 1150 (JSF ¶20). CalSTRS directed LAUSD to re-report the C-Basis creditable compensation for Fletcher and Caputo-Pearl. AR 209. CalSTRS also directed LAUSD to review all elected UTLA officers beginning with the 2013-2014 school year to identify members who served as elected union officers and for whom LAUSD had misreported creditable compensation. AR 209-10.

LAUSD, Fletcher, and Caputo-Pearl appealed the final audit. AR 1150 (JSF ¶21). An ALJ heard the appeal on September 26, 2018. AR 238. On December 17, 2018, the ALJ issued a proposed decision denying the appeal. AR 249, 1150 (JSF ¶25). On January 31, 2019, the Board’s Appeals Committee affirmed the proposed decision with one typographical change, served it on the appellants, and posted it on CalSTRS’ website. AR 1150 (JSF ¶25).

On or about May 2017, Forrester met with a CalSTRS benefits counsellor and advised him that she was planning to retire. AR 1150 (JSF ¶30). She told him that she had been on a leave of absence to work full-time as a UTLA officer for many years. AR 1150 (JSF ¶30). According to Forrester, she was not told that CalSTRS was challenging LAUSD’s method of reporting the compensation of UTLA officers. AR 1150 (JSF ¶30).

At that time, Forrester received from CalSTRS a Defined Benefit Supplement Annuity Calculation Estimates (“Estimate”). AR 262, 1150 (JSF ¶30). The Estimate showed her final compensation as $8,365, based on a highest average 12-month earnable salary of $100,380. AR 264. The Estimate multiplied this final compensation by Forrester’s 42.791 years of service credit and a 2.4% age factor and added a $400 Longevity Bonus. AR 264. Based on this math, Forrester would receive a monthly benefit of $8,991 if she chose the member-only benefit option. AR 264.

The Estimate warned Forrester that the estimate was based on assumptions and data supplied by her employer, which were subject to change. AR 264. The Estimate stated that it is not binding on Forrester or CalSTRS and Forrester was responsible for making sure this information is accurate. AR 264. Forrester’s Planning Session Summary also stated that if a conflict arises between information provided by CalSTRS and the Teachers Retirement Law, the law would take precedence. AR 265.

Forrester submitted her application to retire from service effective June 30, 2017 and began receiving retirement benefits thereafter. AR 1150 (JSF ¶31). On November 27, 2018, CalSTRS sent Forrester a Verification of Benefits which listed her gross retirement benefit payments with an end date of “Lifetime.” AR 266.

On August 17, 2019, CalSTRS sent Forrester notice of an adjustment to her monthly benefits. AR 267. It explained that CalSTRS had used a Final Compensation of $8,365 per month to calculate her benefits but should have used $6,393.92 per month. AR 267. This decreased her monthly benefit from $8,988.71 to $6,965.38 before any cost-of-living increases. AR 267. CalSTRS had overpaid $43,129.31 to Forrester and would reduce future monthly payments by an additional 5% until it had recouped this amount. AR 268.

CalSTRS refused to provide Forrester an administrative hearing to contest her benefits reduction. Forrester filed a petition for a writ of mandate compelling CalSTRS to grant her a hearing. AR 272-83, 1152 (JSF ¶35). The declarations filed by the parties stated in pertinent part as follows.

When she worked for LAUSD, Forrester knew that LAUSD personnel reported her compensation to CalSTRS, but she did not know how LAUSD was characterizing her compensation. AR 344 (Forrester Decl., ¶8). Quarterly bulletins that she received from CalSTRS directed her to consult a CalSTRS Benefits Counselor for any questions about her retirement benefits. AR 344 (Forrester Decl., ¶9).

On or about May 1, 2017, Forrester met with CalSTRS Benefits Counselor Jim Allen (“Allen”) because she was thinking about retiring in 2017. AR 344 (Forrester Decl., ¶10). She brought a LAUSD pay stub listing her salary, deductions, and vacation and illness days. AR 344 (Forrester Decl., ¶10).

At this meeting, they fixed her optimal retirement date. AR 344 (Forrester Decl., ¶10). Forrester told Allen that she had been on a leave of absence from LAUSD to work as a full-time UTLA officer. AR 344 (Forrester Decl., ¶11). She never heard -- either during the meetings with Allen or while she planned for retirement -- that CalSTRS was challenging LAUSD’s method of calculating and reporting the compensation of UTLA officers on leave from LAUSD. AR 345 (Forrester Decl., ¶12).

Forrester submitted her retirement application on June 30, 2017, and requested benefits beginning the next month. AR 345 (Forrester Decl., ¶14). She soon began receiving benefits in the amount Allen told her she would receive. AR 344-45 (Forrester Decl., ¶¶10, 14). Forrester also received a November 27, 2017 final Verification of Benefits letter stating the monthly benefit she would receive during her lifetime. AR 345 (Forrester Decl., ¶14).

On or around August 1, 2019, Forrester received a CalSTRS letter informing her that her monthly benefit was being reduced by $2023 per month and that she owed an overpayment of $43,129. AR 345 (Forrester Decl., ¶15). This letter came as a complete surprise to Forrester. AR 345 (Forrester Decl., ¶16).

Rick Duran (“Duran”) is LAUSD’s Payroll Administration Manager. AR 349 (Duran Decl., ¶1). The LAUSD employees he supervises answer questions and provide payroll information to CalSTRS Audit Services on a daily basis. AR 350 (Duran Decl., ¶7). These questions concern the status of individual employees or groups of employees. AR 350 (Duran Decl., ¶7).

Since the 1988-1989 school year, LAUSD has allowed employees elected as UTLA officers to take a year away from their LAUSD duties and perform UTLA functions on a full-time basis. AR 350 (Duran Decl., ¶8). When they do, LAUSD uses a different account code, “36”, in CalSTRS payroll reports to reflect the increased employer contribution paid by LAUSD. AR 350 (Duran Decl., ¶9). As a result of this separate coding, CalSTRS Audit Services can readily identify any elected UTLA officer/employee, of which there are typically ten at any given time. AR 350 (Duran Decl., ¶10).

During the 2015-2016 and 2016-2017 school years, an issue arose concerning the reporting of UTLA officer compensation to CalSTRS. AR 350 (Duran Decl., ¶11). During this dispute, Duran received a request from CalSTRS for a list of all LAUSD employees with account code 36. AR 350-51 (Duran Decl., ¶11). Duran had no reason to believe his office did not comply with the request. AR 351 (Duran Decl., ¶12).

Tom Gong (“Gong”) is a CalSTRS Senior Management Auditor and worked in Audit Services for 21 years. AR 353 (Gong Decl., ¶2).

An average employer audit takes six months to complete. AR 357 (Gong Decl., ¶14). The employer must then re-report data based on the audit’s issued findings. AR 357 (Gong Decl., ¶14). How long that takes depends on the employer. AR 357 (Gong Decl., ¶14). CalSTRS must then independently verify the accuracy of the reporting of each member’s data. AR 357 (Gong Decl., ¶14).

As some audits can impact several thousand members, this review would take many years if CalSTRS audited every member who worked for an employer. AR 357 (Gong Decl., ¶14). CalSTRS could take years to discover and correct a single employer’s error in reporting retirement compensation data. AR 357 (Gong Decl., ¶15). CalSTRS therefore relies on employers to correct any systemic reporting issues after a CalSTRS audit identifies them in a sample audit. AR 357 (Gong Decl., ¶16).

Jeff Zimmer (“Zimmer”) is a CalSTRS Director of Employer Services. AR 360 (Zimmer Decl., ¶2).

To protect the integrity of the CalSTRS Defined Benefit Plan’s fund, CalSTRS periodically audits employers’ membership and compensation reporting procedures. AR 361-62 (Zimmer Decl., ¶10). These audits confirm whether the employers have submitted data in accordance with applicable law and whether members receive correct retirement benefits. AR 362 (Zimmer Decl., ¶10).

CalSTRS check the accuracy of the data in sample set of member files to identify any systemic reporting errors or anomalies. AR 362 (Zimmer Decl., ¶10). If this sample audit reveals reporting errors, CalSTRS asks the employer to review its data for other members and re-report any necessary corrected compensation data. AR 362 (Zimmer Decl., ¶13).

A CalSTRS audit of every member is impossible because of the number of members in any school district and the time and expense involved in reviewing the data for even one member. AR 362, 365 (Zimmer Decl., ¶¶ 10, 29). Until the employer re-reports the compensation data for a given member, CalSTRS does not know that member’s data is incorrect. AR 362 (Zimmer Decl., ¶15). It can only inform the members identified in the sample audit of the mistake. AR 362 (Zimmer Decl., ¶15).

CalSTRS receives about 900,000 reporting lines of data per month from about 1,800 employers. AR 365 (Zimmer Decl., ¶31). Employers report this data through a direct reporting portal for the Secure Employer Website system (“SEW”), which automatically calculates the benefit based on this. AR 361, 365 (Zimmer Decl., ¶¶ 6, 31). Until a manual review occurs, CalSTRS does not know the nature of the service that member performed. AR 365 (Zimmer Decl., ¶31).

LAUSD is the largest reporting employer and has about 36,000 CalSTRS members. AR 365 (Zimmer Decl., ¶34). CalSTRS conducted an audit of LAUSD for the period from July 2013 through June 2015. AR 365 (Zimmer Decl., ¶34). The 2016 audit report advised LAUSD to re-report retirement compensation data for the two sampled UTLA officers. AR 366 (Zimmer Decl., ¶35). It also asked LAUSD to re-report for any other current or former UTLA officer for whom LAUSD had similarly misreported retirement compensation data. AR 366 (Zimmer Decl., ¶35).

LAUSD submitted this information to CalSTRS in August 2019 through SEW, which automatically recalculated the benefits each member should have received. AR 366 (Zimmer Decl., ¶¶ 36, 38). Aside from the sampled members, this August 2019 report was the first time that CalSTRS knew that other members’ benefits were misreported based on incorrectly reported elected union officer earnings, including Forrester. AR 366 (Zimmer Decl., ¶37).

On August 9, 2021, Department 86 granted Forrester’s petition. AR 329. The writ compelled CalSTRS to provide Forrester an administrative hearing to contest the 2016 CalSTRS audit report that directly caused a reduction in her monthly retirement benefits. AR 330.

On March 21, 2022, CalSTRS filed a Statement of Issues for Forrester’s administrative hearing. AR 152-61. On April 4, 2022, Forrester filed a Special Notice of Affirmative Defenses. AR 166-69. She asserted the retirement reduction was barred by the statute of limitations under section 22008. AR 167. The Special Notice of Affirmative Defenses did not allege equitable estoppel. See AR 166-69.

On October 5, 2022, CalSTRS and Forrester signed the JSF for the hearing. AR 1147-54. They agreed that at all relevant times, LAUSD paid certificated teachers at a C-Basis rate based on 204 days of work, or approximately ten months, per year. AR 1148 (JSF ¶10). Forrester’s salary was paid on this schedule through June 2008, at which time she went on leave to work full-time as a UTLA officer. AR 1148 (JSF ¶10).

In the summer of 2019, pursuant to the 2016 CalSTRS final audit, LAUSD re-reported compensation for all its UTLA officers to reflect compensation based on the C-Basis rate. AR 1151 (JSF ¶28). Forrester was one of these members. AR 1151 (JSF ¶29). CalSTRS used the corrected information to recalculate and adjust her benefits from $8,988.71 to $6,965.38, not including cost of living increases. AR 1151-52 (JSF ¶32). It also determined that Forrester was overpaid benefits by $43,129 from her 2017 retirement to the 2019 re-reporting. AR 1152 (JSF ¶32). Per section 24617(a), CalSTRS reduced Forrester’s adjusted benefit by 5% to begin collecting the overpayment. AR 1152 (JSF ¶32).

The ALJ held the appeal hearing on October 12, 2022. HT 45. Forrester’s pertinent testimony is as follows.

Forrester was a long-term substitute from 1974 to 1978, at which time she signed her contract and became a permanent LAUSD employee. HT 19. As a teacher, she had a schedule of 180 days, or ten months. HT 22.

UTLA has about 32,000 current members. HT 20. The membership covers 770 square miles, which UTLA divides into eight geographic sections with its own elected officers. HT 20. There are seven elected positions, with an election occurring every three years. AR 21-22, 24.

In 2008, Forrester ran for the LAUSD-wide position of UTLA secretary. HT 21. She served one three-year term as secretary and two more three-year terms as vice-president. AR 24.

As a UTLA officer, Forrester no longer taught in a classroom. HT 25. She had to apply to LAUSD for a release from classroom assignment every year. HT 25. Her schedule also moved to A-Basis, or 12 months. HT 26, 30. Because teachers cannot contact UTLA when with their students, UTLA officers and staff were subject to work at any point in time. HT 26. This included weekends, evenings, and holidays. HT 26.

UTLA officers engaged in negotiations with LAUSD almost every month. HT 27. In the seven years that Forrester chaired the bargaining team, she had to negotiate academic work, academic freedom, ethnic studies, classes offered, and teacher evaluations. HT 27-28. For four of those years, she helped draft plans for community educator groups that sought to take advantage of the Public School Choice program. HT 28. She also helped set the school calendar and set up a UTLA professional development hub. HT 29.

When her salary increased to an A-Basis when she became a UTLA officer, she made a larger contribution to CalSTRS as well. HT 30.

Sometime during her third term as an officer, Forrester chose not to run again. HT 32-33. Although staying as a teacher was an option, she also decided to assess her retirement options. HT 33.

CalSTRS had sent yearly communications advising her to make an appointment with her CalSTRS counselor to see what her retirement options were. HT 33. She met with this counselor in the CalSTRS Costa Mesa Office. HT 33. Together, they reviewed her LAUSD employment history and current assignment. HT 34. Forrester disclosed that she was currently working on an A-Basis year-round schedule. HT 34. The counselor told her she would receive a tentative retirement amount after she retired on July 1 and she then would receive a permanent amount in the fall. HT 34. He then gave Forrester an estimate that she believed she could rely on. HT 34.

Forrester retired on June 30, 2017, and received her first benefit the next day in approximately the amount the counselor had told her. HT 34-35. She believed this amount was based on her total compensation, illness time, and vacation time. HT 35. She knew Caputo-Pearl and Fletcher, who were UTLA presidents, but she did not know about CalSTRS’s audit of LAUSD reporting practices at the time. HT 35-36. Fletcher was no longer a UTLA officer, and union meetings never involved discussions of personal finance anyway. HT 36.

In October 2017, Forrester received a letter listing her “lifetime benefits.” HT 34. She believed that it set forth the correct amount of her lifetime retirement benefits, as CalSTRS had six months to verify her information. HT 35. She bought a house and applied for a house loan in reliance on her stated benefits. HT 35.

Two years later, CalSTRS sent notice that Forrester’s monthly benefits would decrease by 25%. HT 36. It also stated that it had overpaid $48,000 in benefits and would be taking that back. HT 36.

After the hearing, both parties filed briefs. AR 1155-85, 1204-13, 1186-1203, 1213-17.

On December 11, 2022, the ALJ issued the Proposed Decision denying Forrester’s appeal. AR 1218-41.

In 2015 and 2016, CalSTRS Audit Services conducted an audit of LAUSD using two sample members, Fletcher and Caputo-Pearl. AR 1223. The 2016 audit report found that LAUSD had misreported the creditable compensation for Fletcher and Caputo-Pearl. AR 1223. LAUSD reported their contributions based on a 12-month pay schedule when it should have reported based on the ten-month pay schedule applicable before they went on leave. AR 1223. CalSTRS directed LAUSD to identify additional members who served as elected UTLA officers for whom LAUSD had reported incorrect creditable compensation. AR 1223.

The ALJ’s 2019 proposed decision had denied the parties’ appeal from the final audit report. AR 1223-24. The ALJ had relied on CalSTRS’ interpretation of section 22711, which grants service credit for tenure as an elected union officer only for members making contributions in the amount they would have contributed had they performed creditable service on a full-time basis. AR 1224. The ALJ found that this interpretation was not clearly erroneous and was entitled to deference. AR 1224. LAUSD, Fletcher, and Caputo-Pearl failed to establish by a preponderance of evidence that the audit report should be overturned. AR 1224.

The ALJ’s proposed decision was adopted by the Board and was final, but CalSTRS had not designated it as precedential. AR 1224.

Pursuant to the 2016 audit report and the Board’s decision, in August 2019 LAUSD re-reported Forrester’s compensation as an elected UTLA officer on a ten-month (C-Basis) schedule. AR 1224. CalSTRS did not know the re-reporting that Forrester’s compensation had been reported based on a 12-month (A-Basis) pay schedule. AR 1224-25. In a letter dated August 17, 2019, CalSTRS notified Forrester of the adjustment to her benefits, the overpayment of benefits to her, and the additional reduction of benefits to recover the overpayment. AR 1225.

When Forrester requested a hearing to challenge this decision, CalSTRS Assistant General Counsel Reina Minaya replied that the 2019 decision had decided that LAUSD must report compensation based on a ten-month pay schedule. AR 1225. An administrative hearing was therefore not available to Forrester. AR 1225.

Forrester filed a petition for a writ of mandate to compel an administrative hearing. AR 1225-26. In opposition to the petition, CalSTRS argued that collateral estoppel prevented re-litigation of the issue decided in the 2019 decision. AR 1226. When Department 86 granted the 2021 Writ, it declined to rule on the collateral estoppel argument. It was not an issue requiring resolution because Forrester only challenged her right to an administrative appeal. AR 1226.

During the administrative hearing, Forrester testified that she no longer taught in classrooms after her election as a UTLA officer in 2008. AR 1226. She applied for release from classroom assignment, which LAUSD granted. AR 1226. Forrester worked 12 months a year as a UTLA officer and was paid on the A-Basis schedule. AR 1226.

When Forrester was considering retirement, she met with a CalSTRS representative who gave her an estimate based on the A-Basis schedule. AR 1226-27. She relied on this estimate when she decided to retire. AR 1227. When she began receiving benefits on July 1, 2017, she was not aware of CalSTRS’s 2016 audit. AR 1227.

She would be placed under financial hardship if CalSTRS’s decision to reduce her benefit were affirmed. AR 1227. Returning to work would subject her to a penalty, and she would have difficulty finding other work because she has lost connection with administrators who could offer work. AR 1227.

CalSTRS’ argument that the 2019 decision is binding fails. AR 1228. Under Govt. Code section 11519(f), a non-party cannot be bound to a decision unless either the agency has made it available for public inspection and copying or the non-party has actual knowledge of the decision. AR 1228-29. Forrester is not a non-party who must abide by a decision in another litigation. AR 1229. Govt. Code section 11425.60(b) allows an agency to designate a prior decision or part thereof as precedential. AR 1230. CalSTRS never did so for the 2019 decision and Forrester is not bound by it. AR 1230.

Department 86 did not implicitly reject CalSTRS’ collateral estoppel argument as Forrester argued. AR 1230. Rather, the court explicitly chose not to make a finding on the issue. AR 1230. The collateral estoppel doctrine generally applies to administrative hearings. AR 1230. Collateral estoppel only applies after (1) final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party. AR 1231.

Three collateral estoppel elements were satisfied but the question was whether Forrester was in privity with either party to the 2019 decision. AR 1231. Privity hinges on whether a non-party was sufficiently close to an unsuccessful party in a prior action as to justify estoppel. AR 1231. Forrester has a common interest with Fletcher and Caputo-Pearl because all three obtained higher retirement benefits based on the A-Basis pay schedule. AR 1232.

However, collateral estoppel requires satisfaction of due process requirements, which requires that the party to be estopped must have an identity or community of interest with, and adequate representation by, the losing party. AR 1232. The circumstances also must have been such that the current party should reasonably have expected to be bound by the prior adjudication. AR 1232. This means that the party to be estopped had a proprietary interest in and control of the prior action or may fairly be treated as represented by the losing party in the prior litigation. AR 1232.

Forrester had no proprietary interest in the 2019 decision because her retirement benefits were not at issue. AR 1232. Forrester did not even know about those proceedings while they were ongoing, and she had no incentive to intervene. AR 1233. No evidence suggests that Fletcher and Caputo-Pearl served as Forrester’s representatives, and she had no reason to expect the 2019 decision would bind her. AR 1233.

CalSTRS asserted that section 22711 required LAUSD to report Forrester’s compensation based on the ten-month pay schedule salary she had as a teacher, not the 12-month schedule of UTLA elected officers. AR 1233-34. Forrester asserted that the plain language of the statute allows her to receive retirement benefits based on the 12-month pay schedule. AR 1234. Forrester’s contention was not compelling. AR 1234.

Under the plain language of section 22711, when Forrester retired in 2017 a member could only to receive credit for time served as an elected officer of an employee organization while on a compensated leave of absence. AR 1234. The member must make contributions to the Teachers Retirement Fund in the amount that the member would have contributed had the member performed creditable service on a full-time basis during that leave of absence. AR 1234. Based on section 21119.5, creditable service does not include the work of elected union officers. AR 1235. Because Forrester’s UTLA work was not creditable, she could only make contributions to CalSTRS in the amount she would have made based on her earlier ten-month pay schedule as a teacher. AR 1235-36.

The interpretation of the statutory scheme supports this. AR 1236. Under section 24202.5(a)(1), a member is entitled to retirement benefits based on the percentage of the final compensation of that member. AR 1236. For members like Forrester, section 22134.5 defines “final compensation” to mean the highest average annual compensation earnable, as defined by section 22115, by a member during any 12-month period of service. AR 1236. Section 22115 defines “compensation earnable” as the creditable compensation a person could earn in a school year for creditable service performed on a full-time basis. AR 1236. Section 22119.2(a) defines “creditable compensation” as remuneration an employer pays to all persons in the same class of employees for performing creditable service. AR 1236. Section 22119.2(c) excludes remuneration for non-creditable services from this definition of creditable compensation. AR 1236.

The statutory scheme shows that creditable service is a crucial element of creditable compensation, earnable compensation, and thus final compensation. AR 1236. Work as a teacher is a creditable service but work as an elected union officer is not. AR 1236-37. Compensation for union work is not creditable compensation, earnable compensation, or final compensation. AR 1237. Section 44987 allows a school district to grant a leave of absence without loss of compensation to perform union work. AR 1237. Section 22711 allows these union official teachers to receive service credit, but only if they contribute to the Defined Benefit Program in the amount that they would have contributed if still performing creditable service. AR 1237. To hold otherwise would add the work of elected union officers to the definition of creditable service. AR 1237.

Legislative history supports this conclusion. AR 1237. AB 2790 added section 22711’s predecessor, section 14006. AR 1237. Then-section 14006(b) authorized members to receive service credit for the time they served as elected union officers. AR 1237. They must make contributions to CalSTRS based on the salary they would have earned had they not been excused from teaching duties. AR 1237.

The purpose of this bill was to prevent teachers who serve as elected union officers from having their benefits reduced, not to convert the work of elected union officers to creditable service. AR 1237-38. The contributions therefore reflect the salary they would have earned as teachers, not their actual salary as union officers. AR 1238.

In 1980, AB 2658 added then-section 22706.5, which allowed employees of school districts with less than 50,000 employees to receive service credit while serving as elected officials on leaves of absences. AR 1238. Subdivision (b) required the employee to contribute to CalSTRS in the amount the employee would have made if still employed full time. AR 1238. The pre-existing law required the employee to make contributions based on the employee’s salary at the time the leave of absence was granted. AR 1238. Both before and after the bill, the contribution was based on the employee’s salary before they became an elected union official, not while they were one. AR 1238. No evidence suggested that subsequent changes to section 22711 changed the legislative intent. AR 1239.

As the agency responsible for enforcing section 22711, CalSTRS’s interpretation was entitled to deference unless clearly erroneous. AR 1239. Employer Directive 2011-04 construes section 22711 as requiring the member to make contributions in the amount they would have if they were still performing creditable service on a full-time basis in the position from which they are on a compensated leave of absence. AR 1239. CalSTRS directed employers to report the elected union officer’s earnings and contributions as if the member is still working full-time in the position from which he or she has taken a leave of absence. AR 1239.

Forrester asserted that the three-year statute of limitations barred the reduction of her benefits and recovery of overpaid benefits. AR 1240. Under section 22008(c), the statute of limitations begins to run with the discovery of the incorrect payment. AR 1240. CalSTRS discovered the overpayment in August 2019 and filed its Statement of Issues in this action on March 21, 2022. AR 1240. Forrester provided no evidence that CalSTRS knew about the overpayment before August 2019. AR 1240. CalSTRS’ action fell within the statute of limitations. AR 1240.

CalSTRS correctly found that Forrester’s retirement benefits must be recalculated based on her ten-month schedule as a teacher, not her 12-month schedule as an elected UTLA officer. AR 1240.

On January 26, 2023, the Board’s Appeals Committee adopted the ALJ’s Proposed Decision with typographical and minor changes. AR 1243-44. Notice of the Final Decision was issued on January 26, 2023. AR 1242.

Petitioner Forrester argues that the Board’s Final Decision is barred by the statute of limitations and the doctrine of equitable estoppel.

As a preliminary matter, Forrester’s briefs do not challenge the Board’s decision that section 22711 required LAUSD to report Forrester’s compensation based on the ten-month (C-Basis) pay schedule salary she had as a teacher, not the 12-month (A-Basis) schedule of UTLA elected officers. As a result, this issue is waived.

Moreover, the court agrees with the Board on the proper interpretation of section 22711. As CalSTRS’ opposition argues, a school district is required to grant an employee a leave of absence without loss of compensation for the purpose of enabling the employee to serve as an elected officer for any local school district public employee organization. §44987. A member is granted “service credit” for the time the member is on leave to serve as an elected officer if, inter alia, both the member and the employer make contributions to the Teachers’ Retirement Fund in the amount that each would have contributed had the member performed creditable service on a full-time basis during the period the member served as an elected officer of the employee organization. § 22711(a). The plain language of the statute requires contributions to be based on the amount of creditable compensation the member “would have” earned had they continued to perform creditable service as a teacher on a full-time basis, not the amount they actually earned as an elected union officer.

Additionally, the reference in section 22711(a) to the amount of “creditable compensation” that a member would have earned had they performed “creditable service” must be read in conformity with sections 22119.2 (“creditable compensation”) and 22119.5 (“creditable service”). “Creditable service” is defined as certain work activities related to education such as teaching, counseling and administrative work for schools, community colleges and charter schools. §22119.5(a) -(e). Working as an elected officer for a teachers’ union does not fall within the statutory definition of “creditable service.” See §22119.5(a)-(e). “Creditable compensation” is also defined by statute and refers to “remuneration that is paid in cash by an employer to all persons in the same class of employees for performing creditable service in that position.” §22119.2(a). “[C]reditable compensation does not mean and shall not include…[r]emuneration that is paid for service that is not creditable service.…” §22119.2(c)(2). Thus, creditable compensation does not include pay for work that is not creditable service, and creditable service does not include serving as an elected union officer.

The term “full-time” is also defined to mean the days or hours of creditable service the employer requires to be performed by a particular class of employees in a school year in order to earn the compensation earnable… and specified in the collective bargaining agreement.” §22138.5. For Forrester, the only creditable service she performed on a full-time basis was as a ten-month certificated teacher, not a 12-month UTLA elected officer position.

In sum, LAUSD was required to report contributions to CalSTRS based on what the elected UTLA officers would have earned had they continued to work as full-time as teachers for the District (C-Basis), not the increased amount that they were paid for their work performing non-creditable service as elected officers while on a leave of absence from their teaching duties (A-Basis).

Forrester contends that CalSTRS is equitably estopped from reducing her retirement benefits. Equitable estoppel applies in circumstances where a party has induced another into forbearing to act. Lantzy v. Centex Homes, (2003) 31 Cal.App.4th 363, 383. The elements of equitable estoppel are: (1) the party to be estopped must be appraised of the facts; (2) he must intend that his conduct shall be acted upon; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. Driscoll v. City of Los Angeles, (1967) 67 Cal.2d 297, 305. The doctrine applies to a public entity in the same manner as a private party when the elements of equitable estoppel have been shown, and when the injustice which would result from a failure to estop the agency is sufficient to justify any adverse effect upon public interest or policy which would result. City of Long Beach v. Mansell, (1970) 3 Cal.3d 462, 496-97.

Forrester notes that she inquired about her retirement benefits from a CalSTRS benefits counselor. HT 32-33; AR 192-96. She was unfamiliar with her retirement benefit entitlement (AR 193) but informed the counselor that she had been working on a 12-month “A-Basis. HT 34. She received a retirement estimate based on her actual earnings and actual work years. Forrester did not recall any discussion with the counselor about the CalSTRS audit involving other UTLA officers paid on an A-Basis. HT 35. Based on the estimate given by the counselor, Forrester elected to retire and receive a lifetime benefit, buying a new home in reliance on the amount of benefit. HT 35. Pet. Op. Br. at 6.

Forrester argues that these facts meet all the elements of equitable estoppel. CalSTRS repeatedly urged its members to seek advice from retirement benefits counselors before making retirement decisions, and the counselors knew that CalSTRS members are in an inferior position to know the amount of expected retirement benefits. The counselors give retirement advice that members rely upon. When that advice is plainly wrong as CalSTRS now asserts, why should not equitable relief be warranted? Both CalSTRS and the ALJ spent considerable effort to show that section 22711 should be read, since its adoption in 1974, to preclude an elected union official from obtaining retirement benefits based on his or her A-Basis compensation. During those 45 years, why was there no disclosure of this fact when CalSTRS’ agents were in daily contact with LAUSD payroll employees who were misreporting the income of A-Basis employees such as Forrester? Pet. Op. Br. at 6-7.

Forrester argues that the detriment from this deception is manifest. She was deprived of a meaningful decision about her level of benefits and bought a new home in reliance on the expected benefits. Despite its knowledge of LAUSD’s practices, CalSTRS made no effort to notify LAUSD of the reporting error and Forrester is now being penalized. Pet. Op. Br. at 7.

CalSTRS argues that Forester failed to exhaust the equitable estoppel issue. Opp. at 14-15. As a general rule, a court will not issue a writ of mandate unless a petitioner has first exhausted its available administrative remedies. See, e.g., Alta Loma School Dist. v. San Bernardino County Com. On School Dist. Reorganization, (1981) 124 Cal.App.3d 542, 554. Under this rule, an administrative remedy is exhausted only upon termination of all available, non-duplicative administrative review procedures. Coachella Valley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd., (2005) 35 Cal.4th 1072, 1080. The exhaustion doctrine has been described as “a jurisdictional prerequisite to resort to the courts.” Abelleira v. District Court of Appeal, (1941) 17 Cal.2d 280, 291-93.

The exhaustion doctrine includes issue exhaustion as well as exhaustion of administrative remedies. The agency must be given the opportunity to reach a reasoned and final conclusion on each and every issue upon which it has jurisdiction to act before it is raised in a judicial forum. Hill RHF Housing Partners, L.P. v. City of Los Angeles, (“Hill”) (2021), 12 Cal.5th 458, 479 (citation omitted). “Exhaustion requires ‘a full presentation to the administrative agency upon all issues of the case and at all prescribed stages of the administrative proceedings.’” City of San Jose v. Operating Engineers Local Union No. 3, (2010) 49 Cal.4^th 597, 609 (citations omitted). “The exhaustion doctrine contemplates that the real issues in controversy be presented to the administrative body, which must be given the opportunity to apply its special expertise to correct any errors and reach a final decision, thereby saving the already overworked courts from intervening into an administrative dispute unless absolutely necessary.” Farmers Ins. Exchange v. Superior Court, (1992) 2 Cal.4^th 377, 391. The exact issue raised in the lawsuit must have been presented to the administrative agency. Tahoe Vista Concerned Citizens v. County of Placer, (2000) 81 Cal.App.4^th 577, 594. Otherwise, a litigant could present narrow arguments or even omit them before the final administrative authority in hopes of obtaining a more favorable decision from a trial court. Id.

As CalSTRS argues (Opp. at 14-15), Forrester filed a Special Notice of Affirmative Defenses for her administrative appeal which relied on the statute of limitations but did not allege equitable estoppel as an affirmative defense. AR 166-69. Although Forrester testified about her reliance on the CalSTRS counselor’s estimate of her retirement benefit and on the verification of benefits letter, she did not argue equitable estoppel either in her oral argument or closing briefs. See AR 1204-13, 1214-17. As a result, the ALJ did not address equitable estoppel in his Proposed Decision. See AR 1218-41. Since Forrester never raised an issue of equitable estoppel in her administrative appeal, she failed to exhaust her administrative remedies on the issue and is barred from doing so now. See Hill, supra, 12 Cal.5th at 479.

Even if, arguendo, the court should consider Forrester’s equitable estoppel argument, it fails on the merits. As CalSTRS argues (Opp. at 16), Forrester seeks to invoke equitable estoppel as a means of obtaining a larger retirement benefit than allowed by section 22711. She cannot do so.

Equitable estoppel is typically imposed against an administrative agency to avoid passage of the statute of limitations. However, equitable estoppel cannot be used to obtain a larger pension than the Education Code allows. Blaser v. State Teachers’ Retirement System, (“Blaser II”) (2022) 86 Cal.App.5th 507, 536-37 (retired teachers could not rely on common law doctrine of equitable estoppel to prevent CalSTRS from correcting errors in the reporting of their compensation; estoppel does not authorize the court to rewrite the Education Code and allowing an overpayment of retirement benefits based on an erroneous calculation of retirement funds would contravene the Constitutional prohibition against a gift of public funds). See also Fleice v. Chualar Union Elementary School Dist., (1988) 206 Cal.App.3d 886, 893 (“estoppel cannot expand a public agency’s powers; Medina v. Board of Retirement, (2003) 112 Cal.App.4th 864, 870 (employees who received higher retirement benefits than allowed based on error in classification could not rely on estoppel when benefits contravened statute); City of Pleasanton v. Board of Administration, (2012) 211 Cal.App.4th 522, 543 (“we hold any award of [retirement] benefits … based on estoppel is barred as a matter of law”). This is true even where members take actions to their detriment in reliance on erroneous promises. McGlynn v. State of California, (2018) 21 Cal.App.5th 548, 560.

Without citation to statute or case authority, CalSTRS argues that Forrester’s Petition does not make a claim of error based on the statute of limitations and the claim is not at issue. Opp. at 16.

Forrester admits her inadvertence in failing to plead the statute of limitations. She argues that there is no question that the issue was briefed and argued in her administrative appeal and that the ALJ’s Proposed Decision specifically found that there was “… no evidence showing that CalSTRS was aware of District’s reporting error prior [to] August 2019…” AR 1240. Forrester contends that waiver of this claim is too severe a sanction for a dispute that has been ongoing since 2019 and involves a retiree’s survival. Reply at 2.

The court can grant leave to amend a complaint to conform to proof at trial so long as the defendant will suffer no prejudice. CCP §§ 469, 576. CalSTRS has long known that Forrester relied on the statute of limitations as an affirmative defense and will suffer no surprise or prejudice from amending the Petition to conform to proof on the issue. The court will not deny Forrester’s Petition based on her failure to plead the statute of limitations. The Petition is deemed amended to allege the statute of limitations issue without the need for written motion.

b. The Reduction in Forrester’s Benefits Is Not Barred by the Statute of Limitations

Section 22008’s three-year period does not accrue when CalSTRS has knowledge about incorrect employer contributions for a member, it runs from the date of discovery an “incorrect payment” was made to the member. See Baxter, supra, 18 Cal.App.5th 340, 355 (“the three-year period of limitation for adjustment of errors with respect to the Defined Benefit Program shall commence with the discovery of the incorrect payment” to the member). Under the continuous accrual doctrine, the statute of limitations accrues anew with each overpayment to the member. §22008(a), supra, 18 Cal.App.5th at 382; Blaser v. State Teachers’ Retirement System, (“Blaser I”) (2018) 37 Cal.App.5th 349, 375.

Thus, CalSTRS is not barred from reducing Forrester future retirement benefits because the three-year statute accrues each time a retirement payment is made.

If an incorrect payment is made due to lack of information or inaccurate information regarding the eligibility of a member, former member, beneficiary, or annuity beneficiary to receive benefits under the Defined Benefit Program, the period of limitation shall commence with the discovery of the incorrect payment. §22008(c). For such purposes, a claim accrues when the claimant has actual or inquiry notice of the incorrect payment. Baxter, supra, 18 Cal.App.5^th at 360. The three-year limitations period for asserting a claim relating to an incorrect payment due to a lack of accurate information begins when the claimant discovers, or in the exercise of reasonable diligence, should have discovered, the incorrect payment. Id. at 363.

When did section 22008’s three-year statute of limitations accrue and begin to run? Forrester argues that the Board erred in finding that she “offered no evidence showing that CalSTRS was aware of [LAUSD’s] reporting error prior [sic.] August 2019”. AR 1240. The declaration of LAUSD District Payroll Administration Manager Duran (AR 198-201) was offered in Forrester’s Dept. 86 mandamus case in anticipation of a “we didn’t know” argument by CalSTRS. The declaration states that, for at least 25 years prior to 2021, there had been virtually daily interaction between CalSTRS personnel and LAUSD Payroll staff in which the participation of employees paid on the 12-month A-Basis schedule was discussed. How the Board could have arrived at the conclusion that CalSTRS was unaware of the participation of Forrester and others until August 2018 is unfathomable. Pet. Op. Br. at 5-6.

CalSTRS responds that the weight of evidence shows that it learned of the incorrect reporting of Forrester’s compensation in August 2019. Forrester was one of 36,000 CalSTRS members in LAUSD and her sole argument that CalSTRS knew about her incorrect retirement payments is based on pure speculation from the fact that LAUSD and CalSTRS communicated often that there must have been some prior communication about how Forrester’s contributions were being reported. There is no evidence of such a communication. Opp. at 16.

CalSTRS argues that, while Forrester relies on the Duran declaration that there was daily interaction between CalSTRS personnel and LAUSD payroll staff for 25 years, Duran provides no evidence that information was ever provided to CalSTRS about the manner in which Forrester’s salary as an elected officer was reported by LAUSD. See AR 349-52. Duran did not provide any evidence concerning the reporting of Forrester’s compensation. See id. His statement that CalSTRS may have received a code that would identify LAUSD employees who served as union officers (AR 350 (¶¶ 9-10)), does not equate to CalSTRS’ knowledge that LAUSD misreported the compensation of elected UTLA employees not sampled in the 2016 audit. Thus, the Board’s finding is correct that there is no evidence that CalSTRS knew prior to August 2019 that Forrester’s compensation had been misreported by LAUSD. Opp. at 16-17.

CalSTRS further contends that the declarations of Zimmer and Gong support the conclusion that CalSTRS did not discover that LAUSD had incorrectly reported Forrester’s compensation until LAUSD re-reported it in August 2019. As noted by Zimmer, employers submit contribution data to CalSTRS through an automated system that receives approximately 900,000 reporting lines of data each month from approximately 1800 employers. AR 365 (¶31). The District is the largest reporting employer, employing 36,000 CalSTRS members. AR 365 (¶34). CalSTRS does not know the nature of the services performed by an employee based on the data the employer provides; it only knows the compensation paid and associated contributions. AR 365 (¶31). Opp. at 17.

Both Zimmer and Gong stated that CalSTRS’ audit process does not address the reported compensation for every employee of a school district. AR 357 (¶¶ 14-15); AR 361, 365 (¶¶ 10, 29). The audit process uses sample employees and when an audit sampling identifies reporting issues, CalSTRS directs the employer to review its reporting of similarly situated members for the same error and to re-report as necessary any corrected compensation to CalSTRS. AR 361-62 (¶13). CalSTRS has no knowledge of the identities of the additional members whose compensation data is incorrect unless and until the employer re-reports the compensation data for those members. AR 362 (¶15). Opp. at 17-18.

Consistent with this practice, following the 2016 audit for the two sampled members, Fletcher and Caputo-Pearl, CalSTRS directed LAUSD to re-report compensation for any other current or former union officer for whom it had similarly reported data. AR 366 (¶35). In August 2019, LAUSD submitted re-coded compensation for the members whom it had incorrectly reported elected union officer’s earnings, including Forrester. AR 366 (¶36). It was not until this 2019 reporting that CalSTRS learned that Forrester’s compensation had been misreported. AR 366 (¶¶ 36-37). CalSTRS is entitled to rely on employers to report compensation accurately. Moreno v. CalSTRS, (“Moreno”) (2020) 52 Cal.App.5th 547, 552 (discrepancy between the lower salary reported by school district to CalSTRS and the higher amount petitioner believed was correct did not put CalSTRS on inquiry notice that the district's reporting was incorrect; district had duty to report accurately and CalSTRS was entitled to rely on that reporting to determine retirement benefit). Opp. at 18.

In reply, Forrester does not dispute that CalSTRS receives thousands of coded records each month regarding employer earnings reports. But Duran’s declaration pertained only to a group of typically ten members who were coded “36” on LAUSD reports. AR 351 (¶10). These were employees who, since School Year 1988-89, have taken turns as elected UTLA officers serving in the same special assignment that Forrester began in 2008. As Duran declared (AR 350-51 (¶¶ 8-10), for 20 years representatives of CalSTRS had daily communication with Duran’s staff not about thousands of employees, but about the ten identified persons holding the 12-month assignments at that time. While it is true that Duran did not identify a specific conversation with a CalSTRS representative pertaining to Forrester, it does not diminish the likelihood that CalSTRS and its staff knew about Forrester and her special assignment colleagues. Reply at 2.

Forrester overstates the value of the Duran declaration. Duran did not declare that for 20 years representatives of CalSTRS had daily communication with Duran’s staff not about thousands of employees, but about the ten identified persons holding the 12-month assignments at that time. He only declared that that certain LAUSD employees who were elected UTLA officials were permitted to take a leave and perform union duties on a full-time basis (AR 350 (¶8), LAUSD identified those employees by a separate code 36 on payroll reports submitted to CalSTRS (AR 350 (¶9), and that CALSTRS Audit Services and its agents would have been able to identify the typically ten employees who were elected UTLA officials by this code (AR 350 (¶10). Duran did not say that LAUSD employees ever discussed the ten elected UTLA officials and LAUSD’s incorrect reporting of their compensation for retirement purposes.

The weight of evidence supports the finding that CalSTRS did not have actual notice that Forrester’s compensation had been misreported until it was re-reported in August 2019. Although both CalSTRS and LAUSD were aware of the improper reporting issue in 2016, there is no evidence that CalSTRS actually knew that Forrester was similarly situated to Fletcher and Caputo-Pearl. It was not until August 2019 that CalSTRS learned of the overpayment to her. The fact that CalSTRS directed LAUSD to review its records for similarly situated union officers demonstrates that it did not have actual knowledge of Forrester’s incorrectly reported income.

There remains the issue of inquiry notice. Forrester contends that CalSTRS fails to note Baxter’s holding that inquiry notice is sufficient to trigger the statute of limitations. 18 Cal.App.5th at 360. That ruling prevents CalSTRS from allowing employees to work for years under the assumption that their benefits are secure until CalSTRS gets around to an audit. The circumstances described by Duran lead to an unmistakable inference that CalSTRS knew Forrester’s compensation system but chose to treat the information with indifference, thereby placing it on inquiry notice. Reply at 3.

It is obvious that both CalSTRS and LAUSD knew about the issue of improper reporting for UTLA officials. LAUSD failed to comply with CalSTRS’ 2011 Directive and, in 2015 and 2016, CalSTRS performed an audit of LAUSD using Fletcher and Caputo-Pearl as the sampled members. AR 1149 (JSF ¶15). On April 8, 2016, CalSTRS’ final audit found that Fletcher and Caputo-Pearl were elected UTLA officers whose duties do not meet the definition of creditable service, resulting in an overpayment of both employees. AR 206, 1150 (JSF ¶20). CalSTRS directed LAUSD to re-report the C-Basis creditable compensation for the two employees and also ordered LAUSD to review all elected UTLA officers beginning with the 2013-2014 school year to identify members who served as elected union officers and for whom LAUSD had misreported creditable compensation. AR 209-10.

Was CalSTRS on inquiry notice once it decided that Fletcher and Caputo-Pearl had been overpaid? As Forrester argues, CalSTRS could easily have searched the code 36 employees to find Forrester’s incorrectly reported compensation. In Baxter, a memorandum sent to an ostensible agent of CalSTRS stated that there were some questions regarding how the school district reported the compensation of teachers who have a sixth period class as creditable for retirement purposes (five periods were all that were required). 18 Cal.App.5^th at 367. The memorandum stated that 40-50 teachers had worked the longer days involving a sixth period and that a separate schedule had been created for such teachers. Id. The memorandum implied that these teachers were entitled to a higher retirement base by working a sixth period but stated that there may have been reporting errors. Id. at 368. This memorandum was sufficient to place CalSTRS on inquiry notice and trigger the section 20008 three-year limitations period for overpayment of retirement benefits. Id.

CalSTRs relies on Moreno, supra, 52 Cal.App.5th at 552. There, the court rejected petitioner Moreno’s argument that CalSTRs was on inquiry notice for statute of limitations purposes. Moreno met with a benefits counselor employed by the school district but trained by CalSTRS who declined to include a $50,000 one-time payment for additional work in his final one-year compensation reported to CalSTRS. Id. at 550. The benefits counselor subsequently learned that the district’s reported compensation for Moreno to CalSTRS was $50,000 more than she thought. Id. CalSTRS later received a report from its IT unit containing a report of 10,000 retired members with high salaries, high salary increases, or high special compensation. Id. at 550. CalSTRS selected Moreno for an audit and determined that the $50,000 he received had been incorrectly reported and made necessary adjustments. Id. This determination was upheld after an administrative hearing. Id. at 550-51.

Moreno filed suit and argued that CalSTRS was on inquiry notice that the district's reporting was incorrect when he met with the district and CalSTRS counselors. Id. at 552. The court disagreed, holding that the district had a duty to report accurately and CalSTRS was entitled to rely on that reporting to determine the petitioner’s retirement benefit. Id. at 552.

CalSTRS argues that this case is similar to Moreno because there is no evidence that it was told that Forrester’s compensation was incorrectly reported until LAUSD re-reported it in August 2019. Opp. at 18.

The court believes that this case is more similar to Baxter than Moreno. Moreno concerned the accuracy of a school district’s report but CalSTRS knew at some point that LAUSD’s report for UTLA elected officers was inaccurate. Baxter also suggests that public policy and CalSTRS’ fiduciary duty does not permit it to allow years to go by after inquiry notice of an overpayment. 18 Cal.App.5^th at 361. This policy is supported by requiring an inquiry once CalSTRS had reason to know about the existence of other LAUSD employees in the class similar to Fletcher and Caputo-Pearl.

Despite the reasonableness of CalSTRS’ inquiry,[4] inquiry notice triggering the statute of limitations occurred either when CalSTRS’ draft audit showing overpayments to Fletcher and Caputo-Pearl was issued on February 1, 2016 or when the appeal of LAUSD, Fletcher, and Caputo-Pearl was denied by the Board on January 31, 2019. The court concludes that the latter date is appropriate because CalSTRS could not have acted to recover any overpayment from Forrester until the appeal was denied.

Pursuant to section 22008(c) and Baxter, no benefits may be recovered from Forrester more than three years after CalSTRS was placed on inquiry notice. CalSTRS may commence an administrative proceeding by filing a statement of issues – the equivalent to an action under section 22008(a). Baxter, supra, 18 Cal.App.5^th at 348, 375. Where there is no administrative hearing and the CalSTRS member sues CalSTRS, the statute of limitations is suspended for any claims that were not time-barred. Blaser I, supra, 37 Cal.App.5th at 377-78. In such a case, CalSTRS is deemed to have commenced an action on the date the member filed suit. Id.

CalSTRS filed its Statement of Issues for Forrester’s administrative hearing (the deemed equivalent of filing an action) on March 21, 2022. AR 152-61. This date is almost two months more than three years after the January 31, 2019 inquiry notice date. Thus, Forrester’s retirement benefits from February 1 to March 20, 2019 ordinarily would be outside the three-year limitations period for recovery of an overpayment.

However, the statute of limitations was suspended for a portion of that period. Where there is no administrative hearing and the CalSTRS member sues CalSTRS, the statute of limitations is suspended for any claims that were not time-barred. Blaser I, supra, 37 Cal.App.5th at 377-78. This is because CalSTRS is deemed to have commenced an action on the date the member filed suit. Id.[5] Forrester filed her Department 86 mandamus petition demanding an administrative hearing on May 1, 2020. As of that May 1, 2020 date, no overpayment claims were time-barred. CalSTRS could hardly be tasked with commencing an action by filing a statement of issues while Forrester was suing it for an administrative hearing. Hence, the approximately year and a half period from May 1, 2020 until Department 86 granted Forrester’s petition on August 9, 2021 (AR 329-30) is suspended for purposes of calculating the three-year limitations period. Given this suspended period, all overpayments to Forrester fall within the three-year statute of limitations.

The statute of limitations does not bar CalSTRS’ claim for overpayment of $43,12.31.

The Petition is denied. CalSTRS’ counsel is ordered to prepare a proposed judgment, serve it on Forrester’s counsel for approval as to form, wait ten days after service for any objections, meet and confer if there are objections, and then submit the proposed judgment along with a declaration stating the existence/non-existence of any unresolved objections. An OSC re: judgment is set for January 11, 2023 at 9:30 a.m.

[1] All further statutory references are to the Education Code unless otherwise stated.

[2] Section 27711 previously stated that the member and employer’s contributions to the Teachers Retirement Fund must equal the amount they would have contributed had the member performed creditable service “on a full-time basis.” §§ 22711(a)(2)-(3) (2011). “Full time” means the days or hours of creditable service the employer requires a class of employees to perform in a school term to earn the annualized pay rate as defined in Section 22104.8 and specified under the terms of a collective bargaining agreement or employment agreement. §22138.5(a)(1).

[3] The parties failed to bates-stamp the hearing transcript (“HT”) consecutively as part of the Administrative Record. They also failed to include a bates-stamped version of the ALJ’s Proposed Decision in the trial notebook. For future administrative mandamus cases, counsel are admonished to bates stamp hearing transcripts in the lower right hand corner of the page consecutively with other pages of the Administrative Record and comply with the court’s direction for the trial notebook.

[4] CalSTRS made the inquiry by contacting LAUSD after the final audit was completed on April 8, 2016, directing LAUSD to review all elected UTLA officers beginning with the 2013-2014 school year to identify members who served as elected union officers and for whom LAUSD had misreported creditable compensation. AR 209-10. This direction was delayed while LAUSD, Fletcher, and Caputo-Pearl appealed the final audit (AR 1150 (JSF ¶21) and not completed until the Board denied the appeal on January 31, 2019. AR 1150 (JSF ¶25). CalSTRS received LAUSD’s re-report sometime in 2019 and sent Forrester notice of an adjustment to her monthly benefits and recovery of the overpayment on August 17, 2019, CalSTRS. AR 267. The declarations of Zimmer and Gong rebut Forrester’s suggestion that CalSTRS’ inquiry was unreasonable because it easily could have found Forrester’s name in account 36.

CalSTRS cannot be required to review an employer’s account codes to look for similarly situated employees, even when those codes are segregated in an account that could be easily searched. In any event, the reasonableness of CalSTRS’ inquiry is irrelevant because the three-year limitations period was triggered by the inquiry notice.

[5] This concept is similar to the equitable tolling of a statute of limitations while a plaintiff with multiple available remedies pursues one in a timely manner. See McDonald v. Antelope Valley Community College Dist., (2008) 45 Cal.4th 88, 100, 102.