Ventura County Deputy Sheriffs' Assn. v. Board of Retirement

• Decision Date: 14 August 1997
• Docket Number: No. S055682,S055682
• Citation: 66 Cal.Rptr.2d 304,16 Cal.4th 483,940 P.2d 891
• Court: California Supreme Court
• Parties: , 940 P.2d 891, 97 Cal. Daily Op. Serv. 6466, 97 Daily Journal D.A.R. 10,557 VENTURA COUNTY DEPUTY SHERIFFS' ASSOCIATION et al., Plaintiffs and Appellants, v. BOARD OF RETIREMENT OF VENTURA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION, Defendant and Respondent; COUNTY OF VENTURA, Real Party in Interest and Respondent.

Page 304

66 Cal.Rptr.2d 304

16 Cal.4th 483, 940 P.2d 891, 97 Cal. Daily Op. Serv. 6466,

97 Daily Journal D.A.R. 10,557

VENTURA COUNTY DEPUTY SHERIFFS' ASSOCIATION et al., Plaintiffs and Appellants, v. BOARD OF RETIREMENT OF VENTURA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION, Defendant and Respondent;

COUNTY OF VENTURA, Real Party in Interest and Respondent.

No. S055682.

Supreme Court of California.

Aug. 14, 1997.

Rehearing Denied Oct. 1, 1997.

Silver, Shaeffer & Hadden, Stephen H. Silver and Susan Silver, Santa Monica, for Plaintiffs and Appellants.

Carrol, Burdick & McDonough and Christopher D. Burdick, San Francisco, as amici curiae on behalf of Plaintiffs and Appellants.

James L. McBride, County Counsel, and Dennis L. Slivinski and Andrew B. Gustafson, Assistant County Counsel, for Defendant and Respondent and for Real Party in Interest and Respondent.

BAXTER, Justice.

Ventura County employees receive retirement benefits (pensions) under a retirement system established pursuant to the County Employees Retirement Law of 1937 (CERL) as codified in 1947. (Gov.Code, § 31450 et seq.) ¹ The amount of a pension is based in part on the earnings of the retiree during a selected three-year period or one-year period prior to retirement. In Ventura County the one-year period is used in calculating pensions. We are asked to decide whether various payments by the county over and above the basic salary paid to all employees in the same job classification are "compensation" within the meaning of the statute which defines compensation (§ 31460), and, if so, whether those payments are also "compensation earnable" (§ 31461) and thus part of a retiring employee's "final compensation" (§ 31462 or 31462.1) for purposes of calculating the amount of a pension.

Plaintiffs, an employee association and three retired employees, contend that the Court of Appeal erred in holding that only those bonuses, incentives, and other forms of compensation that are paid uniformly to all employees in a job classification are "compensation earnable." Defendant retirement board and real party in interest Ventura County (hereafter referred to jointly as the county) disagree and also contend that the Court of Appeal erred in holding that the county's contribution to an employee's deferred compensation plan is "compensation earnable."

After considering the language and legislative history of the pertinent CERL provisions, we conclude that the Legislature did not intend to require that a county include its contributions to an employee's deferred compensation plan in "compensation" as defined in CERL. We also conclude, however, that the other disputed premiums are "compensation." With 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.

We shall, therefore, reverse the judgment of the Court of Appeal.

I Background

Pursuant to a 1992 memorandum of agreement with plaintiff association, from July 19, 1992, to July 15, 1995, the relevant time period, the county paid qualifying members of the association, in cash, bilingual premium pay, ² a uniform maintenance allowance, ³ educational incentive pay, ⁴ additional compensation for scheduled meal periods for designated employees, ⁵ pay in lieu of annual leave accrual, ⁶ holiday pay, ⁷ a motorcycle bonus, ⁸ and a field training officer bonus. ⁹ During the same period, the three individual plaintiffs were subject to a resolution fixing the wages, hours, and terms of employment of management, confidential clerical, and other unrepresented employees. As such they were entitled to cash payments for a uniform maintenance allowance, ¹⁰ a longevity incentive, ¹¹ pay in lieu of annual leave accrual, ¹² and matching deferred compensation payments. ¹³

When the county refused to include the cash payments agreed to in the memorandum of agreement and the resolution in computing employees' "final compensation" upon which their pensions were based, plaintiffs initiated this mandamus proceeding (Code Civ. Proc., § 1085) by which they sought to compel recalculation of their pension rights based on a computation of "compensation," "compensation earnable," and "final compensation" which did include these cash payments. The superior court denied the petition without a statement of decision, none having been requested, and plaintiffs appealed.

The Court of Appeal, relying in part on Guelfi v. Marin County Employees' Retirement Assn. (1983) 145 Cal.App.3d 297, 193 Cal.Rptr. 343 (Guelfi ), agreed with the implicit conclusion of the trial court that none of the premiums identified by the association constituted compensation that had to be included in calculating pensions, but held that the county's matching deferred compensation payments were includable compensation. It therefore "affirmed" the judgment of the superior court and "remanded" the matter to the retirement board for recalculation of the retirement benefits of the three individual plaintiffs. ¹⁴

This court granted petitions for review by both plaintiffs and defendants.

The county argues that the Court of Appeal erred in reading a 1995 amendment of section 31461 which provided that deferred compensation was to be deemed "compensation earnable" in the year earned rather than the year paid as recognition that matching contributions to an employee's deferred compensation plan constituted "compensation earnable." The parties had agreed that the amendment did not change the law, but the county contends that matching funds were never "compensation earnable" under section 31461.

Plaintiffs contend that both the Guelfi court and the Court of Appeal in this case erred in their construction of sections 31460 and 31461, and in doing so ignored legislative history which reflects intent that all of the claimed cash payments be included in the "final compensation" on which county employee pensions are calculated under CERL.

II Statutory Definitions and the Guelfi Construction

The payments required by CERL to be included in the calculation of the pension of an employee whose county employer has elected to establish a retirement system governed by CERL presents a question of statutory construction, and thus legislative intent. Under CERL an employee's pension is a combination of a retirement annuity based on the employee's accumulated contributions supplemented by a pension established with county contributions sufficient to equal a specified fraction of the employee's "final compensation." (See, e.g., §§ 31664, 31676.1.) Other provisions of CERL limit the amount of employee pensions to a percentage of (see, e.g., § 31664.5) or not more than (see, e.g., § 31676.1) the employee's "final compensation."

Which payments to a county employee other than base pay must be included when determining an employee's final compensation is a question crucial to the proper administration of a CERL pension system, including the ability of the county to anticipate and meet its funding obligation. We necessarily begin our analysis with the definitions in CERL, as those definitions govern construction of CERL unless the context otherwise requires. (§ 31455.) Any ambiguity or uncertainty in the meaning of pension legislation must be resolved in favor of the pensioner, but such construction must be consistent with the clear language and purpose of the statute. (Guelfi, supra, 145 Cal.App.3d at p. 303, 193 Cal.Rptr. 343; Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 940, 179 Cal.Rptr. 287; Neeley v. Board of Retirement (1974) 36 Cal.App.3d 815, 822, 111 Cal.Rptr. 841.)

A. "Compensation"

Section 31460 defines "compensation" as "the remuneration paid in cash out of county or district funds, plus any amount deducted from a member's wages for participation in a deferred compensation plan ... but does not include the monetary value of board, lodging, fuel, laundry, or other advantages furnished to a member."

B. "Compensation earnable"

Under section 31461, " '[c]ompensation earnable' by a member means the average compensation as determined by the board, for the period under consideration upon the basis of the average number of days ordinarily worked by persons in the same grade or class of positions during the period, and at the same rate of pay. The computation for any absence shall be based on the compensation of the position held by the member at the beginning of the absence...."

Amendments to section 31461 in 1993 and 1995, which the parties agree were not intended to make any substantive change in that definition added: "Compensation, as defined in Section 31460, that has been deferred shall be deemed 'compensation earnable' when earned, rather than when paid."

C. "Final compensation"

Section 31462.1, which applies in Ventura County, defines "final compensation" as "the average annual compensation earnable by a member during any year elected by a member at or before the time he files an application for retirement, or, if he fails to elect during the year immediately preceding his retirement."

These definitions were construed and applied by the Court of Appeal in Guelfi, in which two retired peace officers claimed that their disability retirement pensions should be calculated on the basis of preretirement earnings including overtime, educational incentive pay, and a uniform allowance. Pursuant to section 31727.4, the amount of a peace officer's service-connected disability retirement, like a longevity retirement, is based on the employee's "final compensation."

The Guelfi court first concluded that a uniform allowance is among the "other advantages furnished to a member" which are excluded from "compensation" by section 31460. (145 Cal.App.3d at p. 304, 193 Cal.Rptr. 343.) The court noted that a uniform allowance had been held to fall within the term "other advantages" as used in...