Judge Mary H. Strobel, Case 22STCP02345 2023-03-14 Tentative Ruling

Judge: Mary H. Strobel, Case: 22STCP02345, Date: 2023-03-14 Tentative Ruling

Case Number: 22STCP02345 Hearing Date: March 14, 2023 Dept: 82

James B. Morell,

Board of Retirement, Orange County, Employees Retirement System,

Judge Mary Strobel

Hearing: March 14, 2023

22STCP02345

Tentative Decision on Petition for Writ of Mandate

Petitioner James B. Morell, in pro per (“Petitioner”) petitions for a writ of administrative mandate directing Respondent Board of Retirement, Orange County Employees Retirement System (“Respondent” or “Board”) to set aside its final administrative decision excluding Optional Benefit Plan (“OBP”) benefits from the calculation of Petitioner’s pension. In a prior writ proceeding, the court granted a writ and directed Board to set aside a decision that excluded the OBP benefits based solely on a 2002 settlement agreement. After remand, Board again excluded the OBP benefits from Petitioner’s pension calculation but on different grounds. Petitioner contends that the Board erred in its second decision and that his OBP benefits are pensionable.

Judicial Notice

Respondent’s Request for Judicial Notice (“RJN”) Exhibits 1-3 – Granted.

Factual and Procedural Background

OCERS Excludes Optional Benefit Plan Payments from Petitioner’s “Final Compensation”

Orange County Employees Retirement System (“OCERS”) is the retirement association for Orange County, administering retirement and other post-employment benefits for employees of Orange County and several participating public agencies within the County. (See County Employees Retirement Law of 1937 (“CERL”); Gov. Code § 31451; AR 2208-2215.)

Petitioner was employed as a research attorney at the Orange County Superior Court from August 1992 to February 2014. (AR 264, 955, 971.) Petitioner became a member of OCERS on October 14, 1994, and retired on February 21, 2014. (AR 17-22, 23, 2160.)

Upon receipt of Petitioner’s retirement application, OCERS multiplied his years of service, the applicable statutory formula rate, and final compensation for the measuring period of three years prior to his retirement to calculate his pension benefits. (AR 6, 2160.) In calculating Petitioner’s pension, OCERS’ staff did not include as “pensionable” $3,500 in Optional Benefit Plan (“OBP”) payments paid to him annually as flexible benefits. (AR 1115.) The OCERS staff determined that a 2002 settlement agreement applied to him and that the agreement required that item of compensation to be excluded from the benefit calculation. (AR 49-51, 1115.)

Legal Background: Government Code Section 31460.1, Orange County Resolution 90-1551, Senate Bill 193, and OCERS’ Resolution 98-001

In 1990, the Legislature modified CERL by enacting Government Code section 31460.1, effective January 1, 1991, which provided in full:

"Compensatio shall not include employer payments, including cash payments, made to, or on behalf of, their employees who have elected to participate in a flexible benefits program, where those payments reflect amounts that exceeds [sic] their employees' salaries.

This section shall not be operative in any county until the time the board of supervisors shall, by resolution adopted by a majority vote, makes [sic] this section applicable in the county. (AR 390.)

In December 1990, the Orange County Board of Supervisors passed Resolution 90-1551 to elect such exclusion pursuant to then-existing Government Code section 31460.1. (AR 372, 1269.) Resolution 90-1551 states: “BE IT RESOLVED this Board does hereby adopt the provisions of Government Code Section 31460.1 pertaining to the definition of Compensation [in CERL] effective January 1, 1991.” (AR 372.)

In May 1992, the Legislature repealed section 31460.1 in Senate Bill 193. Section 2 of SB 193 provides: “Nothing in this act is intended to, or shall be construed to, affect the validity of any action taken by a county pursuant to Section 31460.1 of the Government Code, prior to the effective date of this act.” SB 193 took effect immediately and was approved by the Governor on May 8, 1992. (AR 395-396.)

In 1997, the California Supreme Court issued a landmark decision affecting public employee pension calculations, Ventura County Deputy Sheriffs’ Association v. Board of Retirement (1997) 16 Cal.4th 483 (“Ventura”). Ventura held that “[w]ith the exception of overtime pay, items of ‘compensation’ paid in cash, even if not earned by all employees in the same grade or class, must be included in the ‘compensation earnable’ and ‘final compensation’ on which an employee's pension is based.” (Ventura, supra at 487.)

In 1998, in response to Ventura, Respondent (OCERS’ Board) adopted a policy (“Resolution 98-001”) that specifies what items of an employee’s compensation are to be included and excluded from the compensation base on which pension benefits are calculated. (AR 281-285, 1274-78.) As relevant here, Resolution 98-001 included as compensation earnable “Flexible Benefits (‘Cafeteria Plan’) to the Extent paid in Cash (applicable to members retiring before January 1, 1991).” However, Resolution 98-001 excluded as compensation earnable “Flexible Benefits (‘Cafeteria Plan’) provided in-kind” and “Flexible Benefits (‘Cafeteria Plan’) paid in cash to the extent paid to members retiring on and after January 1, 1991.” (AR 282-283; see also AR 1057-58.)

2002 Settlement Agreement

The 2002 settlement agreement, upon which OCERS first relied to exclude OBP benefits, has a complicated history not directly relevant to this second writ action. A full discussion of the 2002 settlement agreement was presented in the court’s decision on the first petition, which is found in the record and incorporated here by reference. (See AR 2221-2223.)

Petitioner’s Administrative Appeal; and Board’s First Decision

Petitioner appealed OCERS’ staff’s determination that OBP benefits were excluded from “compensation earnable.” (AR 43-47.) Among other things, Petitioner contended that the settlement agreement was not valid because it conflicted with CERL and Ventura. (AR 2090-2110.) OCERS referred the appeal to an administrative hearing officer.

In his Proposed Findings of Fact, Conclusions of Law, & Recommended Decision, the administrative hearing officer found, inter alia, that the court-approved settlement agreement is final and binding on Petitioner, and that paragraph 3 excluded from pensionable compensation Petitioner’s OBP benefits. (AR 1068-72.) However, the hearing officer also recommended that the Board “reexamine the portion of the settlement agreement that excludes from pensionability flexible benefits received by employees as taxable cash, and that the Board consider pursuing an amendment of the Superior Court judgment ….” (AR 1072.)

Respondent thereafter decided pursuant to Government Code section 31534(b) to set aside the hearing officer's findings and recommendations and to "limit its consideration" solely to the issues of (1) whether Respondent and Petitioner were bound by the 2002 settlement agreement and the judgment entered thereon, and (2) whether Petitioner's retirement allowance had been calculated in accordance with the settlement agreement and judgment. (AR 2209.) Following presentation of evidence and argument, the Board determined by unanimous vote that OCERS and Petitioner are bound by the settlement agreement and judgment, and that OCERS accurately calculated Petitioner’s retirement allowance in accordance with the settlement agreement and judgment. (AR 2209-2214.)

The Prior Writ Proceeding

On January 15, 2019, Petitioner filed his first petition for writ of mandate pursuant to CCP section 1094.5 and 1094.6. Respondent answered.

After briefing and oral argument, the court initially denied the petition on the grounds that the terms of the settlement agreement that excluded OBP payments from pensionable treatment applied to Petitioner. Petitioner timely moved for reconsideration of the court’s ruling on the writ petition, based on new case authority Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032, which held that a county retirement board’s settlement agreement must comport with the terms of the CERL. On reconsideration, this court granted, in part, the writ petition due to the fact that the Board had only determined Petitioner’s OBP payments were not pensionable under the settlement agreement, but had not evaluated whether the OBP payments were pensionable under CERL. (AR 2230.) The court issued a writ directing the Board to set aside its 2018 decision and to reconsider the case on remand. (AR 2231-32.)

In its May 20, 2021, ruling, the court stated: “Respondent contends that the court already decided the pensionability of Petitioner’s OBP benefits separate from the Settlement Agreement in its August 21, 2020, minute order…. Given that Board limited its [first] decision to the enforceability of the Settlement Agreement, the issues that could be ruled upon by the court were necessarily limited in scope as well…. Nonetheless, some statements in the August 21, 2020, ruling could be construed as opining on the pensionability of Petitioner’s OBP benefits. The court expressly ordered reconsideration of that part of its ruling in light of Alameda…. Having granted reconsideration, the court withdraws its prior statements concerning the pensionability of OBP benefits and expressly states no opinion about that issue.” (AR 2229.)

Board’s Decision on Remand

On December 13, 2021, Board set aside its October 18, 2018, decision and proceeded to reconsider the matter. Petitioner and OCERS’ staff counsel presented argument and evidence on the issue of whether Petitioner’s OBP benefits were pensionable under the CERL and related laws at the time Petitioner retired in 2014 without regard to the 2002 settlement agreement. (AR 3574-3653.) At the conclusion of the hearing, the Board voted unanimously to deny Petitioner’s appeal and directed staff to prepare proposed findings and conclusions of law. (Ibid. at AR 3739.)

On or about January 20, 2022, the Board adopted the proposed findings and conclusions of law as its final decision. Board found that “[t]he OCERS staff properly excluded Applicant’s OBP benefits under the CERL at the time of his retirement and properly applied the OCERS Board’s Resolution 98-001 in its calculation of the Applicant’s retirement allowance.” (AR 3742.) As relevant to this writ petition, Board made the following findings of fact and conclusions of law:

VI. FINDINGS OF FACT

….[¶]

8. During his employment as a research attorney, Appellant participated in the Orange County Superior Court’s IRS 125 Plan that provided for flexible benefits under the OBP program.

….[¶]

18. Pursuant to Government Code section 31462, subd. (a), the Applicant’s three year measuring period for the purpose of calculating his retirement allowance is February 7, 2011 to February 6, 2014.

…. [¶]

19. During his measuring period, i.e., February 7, 2011 to February 6, 2014, the Applicant elected to allocate his OBP Dollars to a Health Care Reimbursement Account and to taxable lump sum cash payments.

20. During his measuring period, i.e., February 7, 2011 to February 6, 2014, Applicant elected to allocate a portion of the $3,500.00 OBP Dollars to the non-taxable Health Care Reimbursement Account in the following amounts: $2,500.00 in 2011, $700.00 in 2012, $2,500.00 in 2013, and $1,100.00 in early 2014.

21. The Applicant provided evidence of his elected allocation of his OBP Dollars during his measuring period, but he failed to submit documentary evidence to establish that he actually received any reimbursement from the Health Care Reimbursement Account. He also failed to present evidence of the date(s) and amount(s) of any alleged reimbursements during the relevant measuring period. Thus, he has failed to establish that the OBP Dollars he allocated to the Health Care Reimbursement Account were not forfeited.

22. During his measuring period, i.e., February 7, 2011 to February 6, 2014, Applicant elected to allocate a portion of the $3,500.00 OBP Dollars to a taxable lump sum payment in the following amounts: $1,000.00 in 2011, $2,800.00 in 2012, $1,000.00 in 2013, and $2,400.00 in 2014.

23. Applicant did not pay any employee contributions to fund the cost of paying for that portion of his retirement allowance that would be derived from receipt of his claimed OBP benefits.

….[¶

VII. CONCLUSIONS OF LAW

1. The Orange County Board of Supervisor’s Resolution 90-1551 made CERL section 31460.1 operative as a carve-out effective in Orange County as of January 1, 1991, thereby excluding from the definition of “compensation” (under Government Code § 31460) payments made by an employer to an employee or on behalf of an employee, for that employee’s participation in a flexible benefit plan, such as the OBP, regardless of whether paid in cash.

2. The savings clause in SB 193 is part of the CERL, and was and continues to be valid and enforceable.

3. In including the saving clause in SB 193, the Legislature intended to preserve Section 31460.1 in counties where the Board of Supervisors adopted that carve-out by resolution adopted by a majority vote.

4. Pursuant to SB 193’s saving clause, the Orange County Board of Supervisor’s Resolution 90-1551, as action taken by the county prior to May 11, 1992, remains valid and continues the validity of Section 31460.1 currently in the County of Orange.

5. By adopting Section 31460.1 by Resolution 90-1551, the County precluded the OCERS Board from including flexible benefit payments such as OBP benefits in a member’s compensation, compensation earnable and final average salary.

6. The Applicant elected to participate in the OBP program by allocating the $ 3,500 OBP Dollars to the Health Care Reimbursement Account and to lump sum taxable cash payments each year during his measuring period, i.e., between February 7, 2011 and February 6, 2014.

7. OCERS’ staff’s exclusion of OBP benefits (both for health and dental reimbursements and taxable cash payments within the three year measuring period) from the Applicant’s compensation and compensation earnable complied with the CERL at the time the Applicant retired in 2014, according to Section 31460.1, the County’s Resolution 90- 1551, SB 193’s savings clause, and the Board’s Resolution 98-001 (which is based in part on County’s Resolution 90-1551), notwithstanding the 2002 Settlement Agreement.

(AR 3740-3743.)

These Writ Proceeding

On April 18, 2022, Petitioner filed this (second) petition for writ of mandate. Respondent has answered the petition.

On January 13, 2023, Petitioner filed his opening brief in support of the petition. The court has received Respondent’s opposition, Petitioner’s reply, the administrative record, and the joint appendix.

Standard of Review

Under CCP section 1094.5(b), the pertinent issues are whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the agency has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (CCP § 1094.5(b).)

Because Petitioner’s public pension benefits concern a fundamental vested right, the court exercises its independent judgment on the record. (See Bixby v. Pierno (1971) 4 Cal.3d 130, 143 (Bixby); Dickey v. Retirement Board (1976) 16 Cal.3d 745, 748-51.) 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.” (Bixby, supra, 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 (Morrison).) “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 v. City of Angels (1999) 20 Cal.4th 805, 817.)

“‘On questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.’ …. Interpretation of a statute or regulation is a question of law subject to independent review.” (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.)

Analysis

Absent a Valid Exception, CERL Requires Flexible Cash Benefit Payments to an Employee to be Included in the Calculation of a Retirement Benefit Allowance

Petitioner contends that pursuant to Ventura, CERL generally requires cash flexible benefit payments to be included in the calculation of a retirement benefit allowance. (Opening Brief (“OB”) 4.)

In 1997, the California Supreme Court issued a landmark decision affecting public employee pension calculations, Ventura County Deputy Sheriffs’ Association v. Board of Retirement (1997) 16 Cal.4th 483. Ventura addressed what items of compensation paid to employees in counties subject to CERL should be counted towards calculating a public employee’s retirement. Specifically, Ventura involved claims of deputy sheriffs and management employees that the following cash payments should be included in the pension calculation: overtime pay, cash payments of bilingual premium pay, a uniform maintenance allowance, educational incentive pay, additional compensation for scheduled meal periods for designated employees, pay in lieu of annual leave accrual, holiday pay, a motorcycle bonus, a longevity incentive, and a field training officer bonus. (Ventura, supra at 488-489.) Ventura held that “[w]ith the exception of overtime pay, items of ‘compensation’ paid in cash, even if not earned by all employees in the same grade or class, must be included in the ‘compensation earnable’ and ‘final compensation’ on which an employee's pension is based.” (Ventura, supra at 487.)

Although Ventura did not specifically consider flexible cash payments like the OBP benefits in this case, the Court’s decision has been interpreted broadly and is reasonably interpreted to apply to flexible cash benefits. “The court in Ventura emphasized that while only cash payments received by an employee qualify as compensation within the meaning section 31640, when cash is paid in lieu of other in-kind benefits, those payments qualify as compensation.” (Salus v. San Diego County Employees Retirement Ass'n (2004) 117 Cal.App.4th 734, 739; see also In re Retirement Cases (2003) 110 Cal.App.4th 426, 440 [“the Ventura court held, when the advantages are paid in cash, and not in kind, they are not excluded… [and] with the exception of overtime, all of the premiums that it had determined were remuneration must be included as ‘compensation earnable’”].)

As Petitioner points out, Board made no finding on remand that Petitioner’s OBP cash benefits are not compensation earnable pursuant to the general definition set forth in Ventura. Rather, Board found a statutory “carve-out” in section 31460.1 remained valid in Orange County (OB 6.) In its opposition brief, Respondent has largely not responded to Petitioner’s argument that, except for the alleged “carve-out,” Petitioner’s OBP cash benefits should be included in his pension calculation.

Respondent does argue that “if flexible benefits were required as pensionable pay items under Ventura, the Legislature would not have attempted to pass a bill in 2021 (Assembly Bill 826 (‘AB 826’)) to apply only to Ventura County to provide that ‘compensation’ and ‘compensation earnable’ include flexible benefit plan allowances, such as IRS 125 ‘cafeteria plans.’” (Oppo. 12.) AB 826 was vetoed by the Governor. (RJN Exh. 2, 3.) Respondent cites no case stating that a bill vetoed by the Governor should be viewed as persuasive legislative history. Also, as Petitioner point out, AB 826 only referred to benefits paid “on behalf of” employees and it only would have applied in Ventura County. (Reply 6.) Thus, even if the failed legislation has relevance in the interpretation of CERL, it does not support a conclusion that flexible cash benefits paid to an employee are not pensionable.

The court concludes that, unless a statutory exception applies or there is some other factual basis for the pension decision (e.g., benefits were not actually paid in cash), Petitioner’s OBP benefits constitute compensation earnable under CERL and Ventura.

Did SB 193’s Saving Clause Continue the Validity of Resolution 90-1551 and Section 31460.1 in County of Orange?

On remand, Board concluded that “[p]ursuant to SB 193’s saving clause, the Orange County Board of Supervisor’s Resolution 90-1551, as action taken by the county prior to May 11, 1992, remains valid and continues the validity of Section 31460.1 currently in the County of Orange.” (AR 3743.) Based on that statutory interpretation, Board found that “OCERS’ staff’s exclusion of OBP benefits … complied with the CERL at the time the Applicant retired in 2014, according to Section 31460.1, the County’s Resolution 90- 1551, SB 193’s savings clause, and the Board’s Resolution 98-001 (which is based in part on County’s Resolution 90-1551).” (Ibid.)

Petitioner challenges these legal conclusions and findings. Petitioner contends that “outright repeal of an enabling statute such as former section 31460.1 renders inoperative not only the statute itself but also the power of local agencies to take any further action pursuant to the repealed statute.” (OB 9.) Petitioner contends that “the saving clause in Section 2 of SB193 validated ‘actions’ taken by a ‘county’ prior to May 11, 1992” and “could not validate actions taken after that date which were inconsistent with the CERL.” (OB 9.) Petitioner argues that “Resolution 90-1551 is not self-executing. By its terms, the resolution simply ‘adopt[ed] the provisions of Government Code section 31460.1,’ a statute which ceased to exist upon its 1992 repeal.” (Reply 1.)

Respondent asserts a different interpretation of SB 193. Respondent contends that, as a result of the savings clause in SB 193, County Resolution 90-1551 became a valid “carve-out” CERL provision specific to Orange County, similar to other carve-outs that are codified in CERL. (Oppo. 8.)

The parties raise an issue of statutory construction. “The rules governing statutory construction are well settled. We begin with the fundamental premise that the objective of statutory interpretation is to ascertain and effectuate legislative intent. [Citations.] To determine legislative intent, we turn first to the words of the statute, giving them their usual and ordinary meaning. [Citations.] When the language of a statute is clear, we need go no further. However, when the language is susceptible of more than one reasonable interpretation, we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part.” (Nolan v. City of Anaheim (2004) 33 Cal.4th 335, 340.)

Preliminarily, it is important to consider how section 31460.1 operated before repeal. Section 31460.1 provided a specific definition of “compensation” under CERL that excluded “employer payments, including cash payments, made to, or on behalf of, their employees who have elected to participate in a flexible benefits program, where those payments reflect amounts that exceeds [sic] their employees' salaries.” The statute was not operative in any county “until the time the board of supervisors shall, by resolution adopted by a majority vote, makes [sic] this section applicable in the county.” (AR 390.)

In December 1990, the Orange County Board of Supervisors passed Resolution 90-1551 to elect the exclusion pursuant to section 31460.1. (AR 372, 1269.) Resolution 90-1551 states: “BE IT RESOLVED this Board does hereby adopt the provisions of Government Code Section 31460.1 pertaining to the definition of Compensation [in CERL] effective January 1, 1991.” (AR 372.)

In May 1992, the Legislature passed Senate Bill 193. Section 1 of SB 193 states: “Section 31460.1 of the Government Code is repealed.” (AR 395.) Section 2 of SB 193 provides: “Nothing in this act is intended to, or shall be construed to, affect the validity of any action taken by a county pursuant to Section 31460.1 of the Government Code, prior to the effective date of this act.” (AR 395-396.)

Full repeal of section 31460.1 would have clearly invalidated the definition of “compensation” in section 31460.1, which was adopted by Resolution 90-1551. (See Thomason v. Ruggles (1886) 69 Cal. 465, 470 [a repealed act is “abrogated” and “done away with”]; In re D.B. (2018) 24 Cal.App.5th 252, 263 [“a repeal of such a statute without a saving clause will terminate all pending actions based thereon”].) Further, Resolution 90-1551, as a local ordinance, could not modify a definition of “compensation” under CERL separate from section 31460.1 and SB 193. (See Alameda, supra, 9 Cal.5th at 1067 [“it is the Legislature that has final authority to establish the provisions governing the award of pension benefits under CERL”]; see also Ransome-Crummey Co. v. Bennett (1918) 177 Cal. 560, 567 [“the legislative repeal of section 20 of the Vrooman Act operated to repeal the power conferred upon the city.”].) Respondent develops no argument to the contrary. Rather, Respondent contends that, despite its repeal, section 31460.1 “remains valid” in Orange County via Resolution 90-1551 and the savings clause of SB 193. (Oppo. 8:19.)

Section 2 of SB 193 preserves the validity of “any action taken by a county pursuant to Section 31460.1” prior to the effective date of SB 193. Petitioner argues that “action taken” refers to administrative actions and not the adoption of resolution 90-1551. Respondent argues that the saving clause means Resolution 90-1551 allows Orange County to continue to exclude cash benefits from earnings compensable.

As a preliminary matter, had the legislature intended to allow any Resolution adopting the definition of earnings compensable to remain valid on a prospective basis, it certainly could have done so more clearly. The Legislature could have stated, but did not state, that section 31460.1 remained valid with respect to any county that adopted its definition of “compensation” prior to the effective date of SB 193. Nonetheless, the court considers whether the savings clause could apply to a resolution by a county board of supervisors, like Resolution 90-1551.

The court must interpret and harmonize the term “any action taken by a county pursuant to Section 31460.1” in context of the other sections of SB 193 and also the statutory scheme, i.e. CERL, of which they are a part. (People v. Hull (1991) 1 Cal. 4th 266, 272.) The court also “must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.” (People v. Jenkins (1995) 10 Cal.4th 234, 246.)

Language in section 31460.1 and Resolution 90-1551 makes Board’s interpretation of the savings clause problematic. Section 31460.1 provided a specific definition of “compensation” under CERL that could be adopted by counties. For a county to adopt the definition of “compensation” in section 31460.1, the county was required to adopt a resolution expressly making section 31460.1 applicable in the county, as Orange did in Resolution 90-1551. However, as Petitioner points out, Resolution 90-1551 is not self-executing and depended on a definition of “compensation” in section 31460.1. SB 193, including the savings clause, did not state that section 31460.1 or the definition of “compensation” in it would remain operative in counties that had adopted a resolution making section 31460.1 applicable in that county. Thus, if Board’s interpretation of the savings clause is correct, Resolution 90-1551 adopts a definition from a statute that has been repealed and no longer exists in California’s statutes. As OCERs’ attorney admitted at the Board hearing, a construction of SB 193 to operate in this fashion is “very unusual.” (AR 3638.) Indeed, Respondent does not cite any provision of CERL or any other statute that operates similarly to SB 193, as interpreted by OCERS and by the Board.

As Petitioner argues, section 3 of SB 193 also suggests “county actions” refer to “administrative and clerical actions involving the processing of retirement applications rather than to resolutions of county boards of supervisors adopting section 31460.1.” (OB 9-10.) Respondent has declined to address the argument in opposition and may concede it. (See Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc. (2003) 111 Cal.App.4th 1328, 1345, fn. 16 [failure to address point is “equivalent to a concession”].)

The Legislature provided the following relevant findings and declarations in section 3 of SB 193:

SEC. 3. The Legislature hereby finds and declares that:

(3) Section 31460.1 has been erroneously construed as implicitly requiring counties maintaining retirement systems under the 1937 act to include in “compensation” those flexible benefits payments until the board of supervisors elect pursuant to that section to exclude those flexible benefits payments from “compensation.”

(4) That interpretation was not intended by the Legislature when it enacted that section….

[¶]

(6) It was the intent of Assembly Bill 3146 merely to accord to each county board of supervisors, at its option, the power either to preclude its county retirement board from including those flexible benefits payments in “compensation,” if the county retirement board had not previously taken such action, or to supersede any previous decision of their county retirement board to include those flexible benefits payments in “compensation.”

(7) In order that the source of misconstruction of legislative intent regarding the enactment of Section 31460.1 … may be eliminated at the earliest possible time, and that any county actions on the basis of that misconstruction may be reversed or terminated at the earliest possible time, the Legislature finds that it is necessary to repeal Section 31460.1….

(8) Any reversal or termination, on or after the effective date of this act, of county actions taken on the basis of misconstruction of the intent and meaning of Section 31460.1 of the Government Code would merely restrict county employees to those gains reasonably to be expected from their county retirement contracts and withhold unforeseen and windfall advantages which bear no relation to the fundamental theory and objective of the county retirement systems maintained pursuant to the County Employees Retirement Law of 1937 and would, therefore, not constitute an unconstitutional impairment of the county retirement contract (see Allen v. Board of Administration, 34 Cal.3d 114, at pages 119-120, 122, and 124).

(AR 396 [bold italics added].)

When read in full, section 3 shows that the Legislature equated “county actions,” at least in some circumstances, with the processing and payment of retirement benefits. In particular, subdivisions (1), (7), and (8) show that the Legislature’s intent in SB 193 was to give counties the option to reverse or terminate “county actions” related to the administration of the pension system that were taken “on the basis of misconstruction of the intent and meaning of Section 31460.1.” While not dispositive, section 3 suggests that the Legislature intended the similar phrase “action taken by a county” in section 2 to refer to administrative actions related to the processing and payment of retirement benefits.

Respondent points out that “CERL contains a collection of alternative pension provisions tailored to individual counties and subsets of workers within those counties. (See, e.g., §§ 31486, 31487, 31496, 31499, 31511, 31676.01-31676.19.)” (Oppo. 8, citing Alameda, supra, 9 Cal.5th at 1055.) While true, all of these alternative pension provisions are codified in state law. There is no similar codified provision in CERL stating that the definition of “compensation” in section 31460.1 remains valid in Orange County or any other county that adopted section 31460.1 before it was repealed.

Respondent also cites Government Code section 25300 and apparently suggests that optional CERL provisions “may be taken by resolution of the board of supervisors as well as by ordinance.” (Oppo. 9:12-20, citing § 25300.) Section 25300 is not part of CERL. To the extent Respondent argues that CERL provisions may be enacted by local resolution, its argument is not supported. (See Alameda, supra, 9 Cal.5th at 1067 [state Legislature “has final authority to establish the provisions governing the award of pension benefits under CERL”].)

In summary, the plain language of SB 193 more strongly supports Petitioner’s interpretation that the Legislature did not intend to retain the validity of section 31460.1 with respect to Orange County when it repealed the statute. While there may be some ambiguity in SB 193, Respondent has not cited any legislative history that supports its contrary interpretation. “Any ambiguity or uncertainty in the meaning of pension legislation must be resolved in favor of the pensioner.” (Ventura, supra, 16 Cal.4th at 490.)

Finally, as noted, the Legislature has amended CERL at various times to create “alternative pension provisions tailored to individual counties.” (Alameda, supra, 9 Cal.5th at 1055.) When the Legislature has done so, those pension provisions have been codified in the CERL statutory scheme. (See, e.g., §§ 31486, 31487, 31496, 31499, 31511, 31676.01-31676.19.) Here, in contrast, the Legislature repealed the statute that created a specific definition of “compensation” that could be applied in Orange County (§ 31460.1) and it has not since enacted a similar provision. The authority to enact exceptions to CERL’s definition of “compensation” lies with the Legislature. Accordingly, once section 31460.1 was repealed, Board lacked authority to adopt a definition of compensation inconsistent with CERL. Thus, Board’s Resolution 98-001 has no effect on this writ petition. “[T]he duty of a county retirement board is to administer CERL as enacted by the Legislature; the boards have no authority to act inconsistently with CERL. Accordingly, the county boards must comply with any changes to CERL enacted by the Legislature. They have no authority to disregard such amendments by continuing to pursue a practice that is contrary to CERL.” (Alameda, supra, 9 Cal.5th at 1055.)

Based on the foregoing, Board prejudicially abused its discretion in concluding that “Resolution 90-1551, as action taken by the county prior to May 11, 1992, remains valid and continues the validity of Section 31460.1 currently in the County of Orange.” (AR 3743.) As a result, Board also prejudicially abused its discretion in finding that “OCERS’ staff’s exclusion of OBP benefits … complied with the CERL at the time the Applicant retired in 2014, according to Section 31460.1, the County’s Resolution 90- 1551, SB 193’s savings clause, and the Board’s Resolution 98-001 (which is based in part on County’s Resolution 90-1551).” (Ibid.) The court will grant the petition and issue a writ directing the Board to set aside its decision.

In light of this conclusion, the court need not reach Respondent’s arguments that Board did not abuse its discretion in finding that Petitioner elected to participate in the OBP Program. (See Oppo. 14.) That finding is only relevant if section 31460.1 remains operative in Orange County, and the court concludes that it does not.

Respondent’s “Unfair Windfall” Argument

Respondent argues, in the alternative, that “[d]uring his career, neither Petitioner nor his employer made any employee or employer contributions to fund the pensionable treatment of his OBP payments.” (Oppo. 14, citing AR 3621 at 55:15-19.) Board made a similar fact finding below. (AR 3742 ¶ 23.) Respondent also states, without citation to authority, that “to grant Petitioner the ability to spike his pension now by including his OBP payments in calculating his pension would grant him a free windfall.” (Oppo. 15:1-3.)

The court is not persuaded by Respondent’s windfall argument. First, “[t]he courts review the findings and decision of the administrative agency ….” (NBS Imaging Systems, Inc. v. State Bd. of Control (Polaroid Corp.) (1997) 60 Cal.App.4th 328, 335.) Board did not conclude that OCERS properly excluded Petitioner’s OBP benefits on the basis that pension contributions were not made related to such cash benefits, or that any purported windfall to Petitioner would be a basis to deny him a proper calculation of his pension under CERL. (See AR 3743.)

Second, Respondent cites no authority that a purported “windfall” to an employee is a basis to deny an employee a proper calculation of his pension under CERL.

Finally, in Ventura, the Supreme Court rejected a similar argument concerning alleged actuarial shortfalls in a pension system, stating:

Finally, the county asserts that the 20 CERL counties whose actuarial calculations, and thus whose contributions to the retirement system, are based on the Guelfi construction of section 31461 would face practical problems if we depart from Guelfi…. There may be unanticipated costs to Ventura County if the pensions of the individual plaintiffs and the employees the association represents must be recalculated and adjusted upward. If so, to comply with the financial provisions of CERL (§ 31580 et seq.) and accommodate future increases, the county may have to make a supplemental appropriation and adjust the future annual appropriation for its contribution to the pension fund to cover the increase in future retiree pensions that results from inclusion of additional items of “compensation” in “compensation earnable.” Past experience should enable the county to anticipate the number of employees who will receive premium pay, however, and adjustments of this nature are contemplated by CERL. (See §§ 31453, 31454.) Nothing in this record suggests that the burden on the county fisc justifies either perpetuation of an erroneous construction of the applicable statutes or denying these plaintiffs the benefit of our decision.

(Ventura, supra, 16 Cal.4th at 507.)

The same reasoning applies here. The alleged failure to make pension contributions for Petitioner’s OBP cash benefits does not absolve Respondent of the legal duty to properly calculate Petitioner’s pension benefits pursuant to CERL. Furthermore, this case involves a OBP cash benefit of a maximum of $3,500 per year. Respondent cites no evidence that “that the burden on the county fisc justifies either perpetuation of an erroneous construction of the applicable statutes or denying [plaintiff] the benefit of [the court’s] decision.” (Ibid.)

Remedy

In their legal briefs, the parties do not sufficiently address the scope of any writ to be issued by this court. Petitioner seeks a writ directing Board “to perform its duty to include all cash OBP payments in ‘compensation earnable’ and ‘final compensation,’ and to recalculate Petitioner’s retirement allowance accordingly.” (Pet. Prayer ¶ 1.) However, Petitioner does not address the following findings made by Board in its decision after remand:

(AR 3742.)

Paragraph 21, in particular, suggests that Petitioner did not prove that he received cash OBP benefits related to the Health Care Reimbursement Account. The parties should address that issue at the hearing. The parties should also address whether cash OBP benefits related to the Health Care Reimbursement Account are pensionable in light of the court’s ruling.

The court concludes that CERL, Ventura, and subsequent decisions required OCERS to include the cash OBP benefits reflected in paragraph 22 of Board’s decision in the calculation of Petitioner’s compensation earnable and final compensation. The court presently sees no reason for additional proceedings on remand with respect to those cash benefits. Subject to argument, the court will issue a writ directing Board to include all cash OBP payments reflected in paragraph 22 of its decision in Petitioner’s “compensation earnable” and “final compensation,” and to recalculate Petitioner’s retirement allowance accordingly.

Conclusion

The petition is GRANTED. The court will issue a writ directing Board to set aside its final decision dated January 20, 2022, and to reconsider that decision in light of this court’s ruling. (CCP § 1094.5(f).) On reconsideration, Board shall not rely on repealed Government Code section 31460.1, County Resolution 90-1551, or Board Resolution 98-001 in its calculation of Petitioner’s “compensation” and “compensation earnable.” Board shall recalculate Petitioner’s retirement allowance in conformance with the definitions of “compensation earnable” and “final compensation” in CERL, as interpreted in Ventura County Deputy Sheriffs’ Association v. Board of Retirement (1997) 16 Cal.4th 483, and in a manner not inconsistent with this court’s ruling.

Subject to argument, the court will issue a writ directing Board to include all cash OBP payments reflected in paragraph 22 of its January 20, 2022, decision in Petitioner’s “compensation earnable” and “final compensation,” and to recalculate Petitioner’s retirement allowance accordingly. (See AR 3742.)

The court requires further argument from the parties with respect to the scope of the writ for Petitioner’s cash OBP benefits related to the Health Care Reimbursement Account. (See AR 3742 ¶¶ 20-21.)