By Jon Ortiz
Published: Wednesday, Aug. 20, 2014 – 11:10 am
A divided CalPERS board approved a regulation Wednesday that will allow nearly 100 different types of supplemental pay to count toward pension calculations for state and local government employees.
The 7-5 vote drew a swift rebuke from Gov. Jerry Brown, who signed pension overhaul legislation in 2012 that, in part, attempted to crack down on pension spiking. Specifically, Brown objected to CalPERS’ allowing pension calculations to include “temporary upgrade pay” for workers who briefly fill a higher-paying position to count toward retirement.
“Today CalPERS got it wrong,” Brown said in a statement released shortly after the board’s action. “This vote undermines the pension reforms enacted just two years ago. I’ve asked my staff to determine what actions can be taken to protect the integrity of the Public Employees’ Pension Reform Act.”
That law required pension calculations based on “the normal monthly rate of pay or base pay” of employees who become retirement system members on Jan. 1, 2013, and later. It also disallowed “ad hoc” payments included in retirement benefit calculations, a key provision intended to thwart pension spiking.
Employees already in the system weren’t affected by the law and, if their employers agree, can count everything from streetlight-changing duty premiums to reimbursements paid for maintaining job-required licenses. The board’s Wednesday action interprets the law as recognizing temporary upgrade pay and 98 other supplemental pays for pension purposes for those hired since the beginning of 2013.
Brown’s appointees on the board tried to remove temporary upgrade pay from the list, arguing that such payments are ad hoc compensation specifically banned by the law.
“(Temporary pay) is for limited duration and thus in our view they do not meet the definition of normal monthly pay,” said Department of Human Resources Director Richard Gillihan, during Wednesday’s board debate on the regulation, “because it’s only for specific time and is limited.”
Board member Bill Slaton, Brown’s appointee to represent local governments, agreed with Gillihan and also questioned whether the long list of supplemental payments is outdated and needs thinning.
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