OCERS staff continue to make progress on implementing the Alameda Decision. Benefit recalculations are ongoing, with approximately 220 (out of 616) remaining. Additionally, 328 are on hold pending the review of the County Resolution that could impact the retirement benefit calculations for several specialized law enforcement units.

All active and deferred contributions and interest refunds have been processed.

Background

On July 30, 2020, the California Supreme Court issued a unanimous decision in Alameda County Deputy Sheriff’s Assoc. et al., v. Alameda County Employees’ Retirement Assn., et al. (Alameda). The decision resolved a series of legal challenges which sought to prevent county retirement boards’ implementation of amendments, commonly known as PEPRA, to the County Employees Retirement Law of 1937 (“CERL”), Govt. Code §31450 et seq. that went into effect on January 1, 2013.  The decision clarified exclusions from “compensation earnable” including on-call and stand-by pay received for additional services rendered outside of normal working hours, based on the same number of hours of work in a year for all employees in the same grade or class.

Based on the Court’s ruling, OCERS stopped collecting employee and employer contributions on excluded pay items in September 2020 and excluded those pay items from compensation earnable for payees whose benefits commenced on or after October 1, 2020.

On March 15, 2021, the Board adopted OCERS staff’s recommendation to:

1. Adopt a test for the purpose of determining whether certain items of pay can be included in compensation earnable or pensionable compensation under the terms of the OCERS’ plan document, and
2. Adopt a definition of normal working hours.

On June 21, 2021, the Board adopted several staff recommendations to implement the Alameda decision. The Board’s actions included designating certain pay items as not pensionable, revising the Compensation Earnable and Pensionable Compensation Policies to exclude those pay items as “compensation earnable” or “pensionable compensation” after January 1, 2013, and directing staff to make benefit corrections retroactively and prospectively for members impacted by the Alameda decision.

On December 12, 2022, the Board approved changes to the implementation of the Alameda plan for payees with a monthly benefit impact of $100 or less. OCERS will recalculate the monthly benefit of all payees including those with a monthly benefit impact of $100 per month or less, as previously directed;however, OCERS will recover overpayments from the employer (through the UAAL valuation process) and not directly from the payee.

OCERS staff has completed the following corrections to implement the Alameda decision:

• Removed excluded pay items from members’ Participant Accounts in OCERS’ pension administration system so they will not be included as compensation when calculating or re-calculating a member’s retirement allowance.
• Refunded overpaid employee contributions, plus interest, to 2,798 active and deferred members in November and December 2022. OCERS processed a total 1,917 refunds, including rollovers to tax-qualified retirement plans, such as a 457 or 401(k). Refunds with an amount of $75 or less to 881 active members were issued by the Employers, pursuant to the Board’s approval on August 15, 2022. 
• Refunded overpaid employee contributions, plus interest, to 231 members who retired on or after October 1, 2020, in December 2022. Those members did not require benefit recalculations as Alameda-pay items had already been excluded.
• Identified approximately 616 (this total excludes payees with less than $1/month benefit impact) payees whose retirement allowance must be recalculated excluding Alameda-pay items.  Out of the 616, 328 are on hold pending the review of the County Resolution that could impact the retirement benefit calculations for several specialized units of law enforcement. Through May 2023, of the remaining 288, 68 have been recalculated and adjusted, 145 have been recalculated and are pending final quality assurance review, and 75 are still to be recalculated. Staff estimates that these recalculations will be completed by the first quarter of 2024.
• Continued working with employers regarding classifications that may be eligible to have prohibited pay considered pensionable.

County Board of Supervisors Resolution (Alameda II)

On December 20, 2022, the County Board of Supervisors passed a Resolution potentially affecting members’ retirement allowances subject to OCERS’ Compensation Earnable and Pensionable Compensation Policies. The Resolution applies to on-call and canine maintenance pay for Association of Orange County Deputy Sheriffs (AOCDS) members of the Peace Officer and Supervising Peace Officer units who served in certain job assignments within the Orange County Sheriff’s Department and District Attorney’s Office.

The Resolution established that the enumerated specialized assignments (“Resolution assignments”) were considered unique job grades, each of which requires all the employees serving in those assignments to provide on-call or canine handler maintenance service as part of their normal working hours.

The Resolution job assignments include the following:

1. Homicide Detail
2. Hazard Devices Squad – Explosive Detection Squad
3. Statewide Transportation
4. Special Victims Detail
5. Special Weapons and Tactics Team (SWAT)
6. Tactical Support Team – Crisis Negotiator
7. Major Accidents Reconstruction Team
8. DA Special Assignment Unit
9. DA Homicide Unit
10. Canine Handlers

On January 17, 2023, the OCERS Board directed staff to confer with the County administration, Sheriff’s Department and AOCDS to obtain the necessary data to enable OCERS to reexamine whether affected law enforcement retirees and employees may now qualify for the inclusion of their on-call and canine handler maintenance pay as part of the “compensation earnable or pensionable compensation” on which their retirement allowances are calculated.

On March 20, 2023, staff reported on progress and actions taken for members in the Peace Officers and Supervising Peace Officers Units pending our analysis of the Resolution.

Staff Progress Update:

• OCERS staff has been meeting with the District Attorney’s Office and Sheriff’s Department and to obtain pertinent data to identify retired and active members of the affected Resolution assignments and to determine whether the on-call hours served by those members since January 1, 2013 may be considered pensionable for their particular job grade.                                                                                                                                  
• OCERS staff has analyzed the following documents and data:

1. OCERS’ Compensation Earnable and Pensionable Compensation Policies
2. Orange County Resolution NO. 22-162 dated December 20, 2022
3. Peace Officer Unit (PO) and Supervising Peace Officer Unit (SP) Memoranda of Understanding, dated 2012-2016, 2016-2019 and 2019-2023
4. OCDA PO/SP Assignment Designations, Special Assignment Unit on-call pay policy, OCDA Bureau of Investigation Organizational Chart, as well as the Job Bulletins for District Attorney Investigator and Supervising Attorney’s Investigator, letter to Frank Kim dated June 14, 2021 from Assistant Chief Seman regarding the assignment of on- call hours provided by the County of Orange Executive Office.
5. Payroll data (assignments, hours and earnings) and on-call schedules provided by the District Attorneys’ Office for the individuals serving in the affected job grade
6. Letter to Frank Kim dated June 15, 2021 from Undersheriff Jeff Hallock summarizing the methods by which on-call hours are assigned and the frequency the on-call hours are required, Recruitment and Rotational Opportunities Memorandums, Summary of Assigned Officers who claimed on-call hours during FY 2019-2020.
7. Payroll data (assignment and hours) for two pay periods in 2023 and assignment descriptions provided by Undersheriff Jeff Hallock.

• Based upon the foregoing review, OCERS staff has determined that the on-call hours served by the retired and active members of the Special Assignment job grade in the District Attorney’s Office for the period reviewed were required be served as part of their normal working hours during those periods, were regularly scheduled, were not voluntarily served, and were ordinarily served by all members of that job grade.  Accordingly, OCERS staff will consider pay received for on-call hours served be included in calculating the affected members’ retirement allowances; and that past and future retirement allowances of affected members be calculated (or recalculated, as the case may be), subject to OCERS’ Compensation Earnable and Pensionable Compensation Policies.

Unless and until the applicable MOUs, policies and procedures and duties change from those currently in force, OCERS staff will request that on-call pay received by members of DA Special Assignment job grade continue to be reported to OCERS biweekly on the transmittal file as pensionable pay codes, with appropriate employer and employee contributions collected on such pay.

OCERS’ General Counsel and Fiduciary Counsel concur in these determinations.

• Staff is finalizing its analysis of the DA Homicide Unit to determine if on-call served by  active and retired members of the Homicide Unit job grade in the Orange County District Attorney’s Office since January 1, 2013 may be considered pensionable.
• OCERS staff has been working with Sheriff’s Department to identify active and retired members of the Resolution assignments. The Sheriff’s Department was able to provide current payroll data including assignment and on-call hours. However, the Department is unable to provide historical job assignment information from their payroll system and would have to manually research pay logs to identify retired members of the Resolution assignments. As a result, staff is working with IT and Legal on a process for retired members who claimed on-call service in the Sheriff’s Department to self-certify their job assignments during their measuring period.
• OCERS staff will also work with the AOCDS for assistance with providing job assignment  information for members of the Sheriff’s Department.
• OCERS staff will complete its analysis of individual members of the Resolution\assignments in the Sheriff’s Department after all pertinent data have been; provided.
• OCERS staff consulted with OCERS’ General Counsel and Tax Counsel on what OCERS  is required to do with refunded employee contributions if or when Alameda-excluded  pay items are considered pensionable under OCERS Compensation Earnable or; Pensionable Compensation Policies.