Prentice v. Board of Admin., Pers

• Decision Date: 07 December 2007
• Docket Number: No. D049252.,D049252.
• Citation: 157 Cal.App.4th 983,69 Cal.Rptr.3d 167
• Court: California Court of Appeals Court of Appeals
• Parties: Glenn E. PRENTICE, Plaintiff and Appellant, v. BOARD OF ADMINISTRATION, CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent.

69 Cal.Rptr.3d 167

157 Cal.App.4th 983

Glenn E. PRENTICE, Plaintiff and Appellant, v. BOARD OF ADMINISTRATION, CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent.

No. D049252.

Court of Appeal, Fourth District, Division 1.

December 7, 2007.

Law Office of Michael A. Conger and Michael A. Conger, Rancho Santa Fe, for Plaintiff and Appellant.

Peter H. Mixon, General Counsel, and Wesley E. Kennedy, Senior Staff Counsel, for Defendant and Respondent.

BENKE, J.

The Legislature and the Board of Administration of the Public Employees Retirement System (PERS) have adopted limitations on the salary which may be considered in calculating a public employee's retirement allowance. Among other matters, these limitations exclude from consideration payments which were not available to similarly situated public employees. In this case a local municipality decided to provide the manager of its water and power department with a 10.49 percent salary increase during what turned out to be the last two years of his career. Although the municipality had a salary range for the manager's position which would have applied to anyone else who filled the position, the municipality did not alter the salary range to reflect the increase and it was not otherwise available to other employees in the same class as the manager. In light of these circumstances, PERS did not include the salary increase in calculating the manager's retirement allowance. The manager then challenged PERS's decision by way of a petition for a writ of mandate, which the trial court denied.

On appeal, we affirm. The salary increase was outside the limits of compensation which may be used in calculating a public employee's retirement allowance. Because it was not reflected in the city's published salary range, it was not part of the manager's regular payrate. Moreover, because the increase was not available to other managers, it could not be included in the retirement calculation as "special compensation."

FACTUAL AND PROCEDURAL

BACKGROUND

During his 33-year employment career, plaintiff and appellant Glenn E. Prentice worked in various capacities for a number of water and sewer agencies in Southern California. In his last two jobs he was the Director of Water Utilities for the City of Corona and then the General Manager of the City of Corona's Department of Water and Power.

The City of Corona created its Department of Water and Power in 2001 in order to develop its own energy delivery system and asked Prentice to become its general manager. At the time the city gave Prentice this new responsibility, it also gave him a 10.49 percent pay raise.

The City of Corona recognized that Prentice's raise violated provisions of the Public Employees Retirement Law (PERL) which exclude from calculation of retirement allowances salary increases which exceed the average increase provided to all employees in the same employment classification. (See Gov.Code,¹ § 20636, subd. (e).) Accordingly, in November 2001 an assistant city manager for the City of Corona requested an exemption from those provisions. In response to the request for an exemption, a PERS compensation review analyst asked the assistant manager whether Prentice's successor would receive the same level of compensation. The assistant city manager stated: "Perhaps. It is unknown at this point whether the City would retain this compensation structure or hire a separate Electric Utility Director to lead the operations once it is up and running." In light of this response and other information provided by the city, the PERS compensation review analyst denied the City of Corona's request for an exemption. The analyst found that Prentice's additional pay did not qualify under any of the exceptions provided by applicable statutes and regulations.

Notwithstanding the fact PERS had denied its request for an exemption, the City of Corona paid Prentice the additional salary. Prentice retired from service with the city as of December 30, 2003. After Prentice retired, the city stopped paying the General Manager of the Water and Power Department the 10.49 percent increase Prentice had received.²

Following his retirement, Prentice applied to PERS for a retirement allowance. In applying for a retirement allowance, Prentice claimed his final compensation included the pay raise he received at the time he became manager of the water and power department. After reviewing Prentice's final compensation claim, PERS determined his final compensation did not include the raise.

Prentice filed an administrative appeal of PERS's determination of his final compensation. After a hearing, an administrative law judge issued a proposed decision denying Prentice's appeal. The administrative law judge found the increase was neither included in Prentice's normal payrate nor special compensation. The proposed decision was adopted by the PERS Board of Administration. Prentice sought review of the PERS decision by way of a writ of mandate filed in the trial court. After briefing by the parties, the court denied the petition. Prentice filed a timely notice of appeal.

DISCUSSION

I

Where, as here, an administrative decision "`substantially affects a fundamental vested right, the trial court, in determining under [Code of Civil Procedure] section 1094.5 whether there has been an abuse of discretion because the findings are not supported by the evidence, must exercise its independent judgment on the evidence and find an abuse of discretion if the findings are not supported by the weight of the evidence.' [Citations.]

"If the administrative decision does not substantially affect a fundamental vested right, the trial court considers only whether the findings are supported by substantial evidence in the light of the whole record. [Citation.][¶] ... [¶]

"On appeal, whichever standard was used below, the standard for review of the trial court's factual determinations is whether they are supported by substantial evidence. [Citations.] `[A]n appellate court must uphold administrative findings unless the findings are so lacking in evidentiary support as to render them unreasonable. [Citations.] A reviewing court will not uphold a finding based on evidence which is inherently improbable [citation], or a finding based upon evidence which is irrelevant to the issues. [Citations.]' [Citation.] The reviewing court, like the trial court, may not reweigh the evidence, and is `bound to consider the facts in the light most favorable to the Board, giving it every reasonable inference and resolving all conflicts in its favor. [Citations.]' [Citation.]" (Jaramillo v. State Bd. for Geologists & Geophysicists (2006) 136 Cal. App.4th 880, 888-889, 39 Cal.Rptr.3d 170.)

We of course review questions of law de novo. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888-889, 264 Cal.Rptr. 139, 782 P.2d 278.) However, where our review requires that we interpret the PERL or a PERS regulation, the court accords great weight to PERS interpretation. (City of Sacramento v. Public Employees Retirement System (1991) 229 Cal.App.3d 1470, 1478, 280 Cal.Rptr. 847.)

II

In City of Sacramento v. Public Employees Retirement System, supra, 229 Cal.App.3d at pages 1478-1479, 280 Cal. Rptr. 847, the court summarized the general principles governing determination of a public employee's retirement allowance: "Under the PERL, the determination of what benefits and items of pay constitute `compensation' is crucial to the computation of an employee's ultimate pension benefits. The pension is calculated to equal a certain fraction of the employee's `final compensation' which is multiplied by a fraction based on age and length of service. [Citations.] `Final compensation' is the `highest average annual compensation earnable by a member during the three consecutive years of employment immediately preceding the effective date of his retirement' or other designated consecutive three-year period. [Citation.] Both the employer and the employee are required to make contributions to the system, based on a percentage of `compensation.' "(Fns.omitted.)³

Section 20636, subdivision (a), provides: "`Compensation earnable' by a member means the payrate and special compensation of the member, as defined by subdivisions (b), (c), and (g), and as limited by section 21752.5."

Under section 20636, subdivision (b)(1): "`Payrate' means the normal monthly rate of pay or base pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules. `Payrate,' for a member who is not in a group or class, means the monthly rate of pay or base pay of the member, paid in cash and pursuant to publicly available pay schedules, for services rendered on a full-time basis during normal working hours, subject to the limitations of paragraph (2) of subdivision (e)."⁴

Under section 20636, subdivision (c): "(1) Special compensation of a member includes a payment received for special skills, knowledge, abilities, work assignment, workdays or hours, or other work conditions.

"(2) Special compensation shall be limited to that which is received by a member pursuant to a labor policy or agreement or as otherwise required by state or federal law, to similarly situated members of a group or class of employment that is in addition to payrate. If an individual is not part of a group or class, special compensation shall be limited to that which the board determines is received by similarly situated members in the closest related group or class that is in addition to payrate, subject to the limitations of paragraph (2) of subdivision (e)." (Italics added.)

Section 20636, subdivision (e), in turn provides: "(1) As used in this part, `group or class of employment' means a number of employees considered together because they share similarities...