The Public Employee Pension Reform Act of 2012 (PEPRA)
Every public entity in the State continues to cope with PEPRA, the Public Employee Pension Reform Act of 2012, trying to figure out just what it means and how it should be implemented for current and new members of public pension systems. It’s difficult to say with any certainty what some of its provisions mean, and consequently, we will see either a “clean up” bill coming from the Legislature, or litigation, or both, as we all try to figure out exactly what it means.
One of the most immediately contentious points raised by PEPRA is just what may be included as “pensionable compensation.” In other words, there is real disagreement as to just what elements of an employee’s pay may go into determining the size of their pension at retirement. For example, there is considerable dispute as to how much of a current (NOT new) member’s sick leave accrual and/or vacation accrual can be included in the compensation calculations for a final pension amount.
Some say that for current members, all accrued vacation and sick leave can be counted, while others say that only what can be accrued in a year can be counted. The issue this raises is whether the law, when interpreted in this latter way, takes away vested rights of current members in violation of the California Constitution.
Stay tuned – we won’t be surprised if there is litigation to address this issue coming very soon – and reading this Newsletter every week will let you know when and if it happens.
Author: Bill Sokol
