This week, the California Public Employees Retirement System (CalPERS) Board of Directors considered an extensive regulatory package aimed at modifying what types of compensation can be included towards a new public employee’s pension. Specifically, the proposed regulations provide for an inclusion of various specialized increases in pay (i.e. marksmanship pay, emergency medical technician pay, bilingual pay, etc.) when calculating an employee’s pension as a CalPERS member. These classifications would be above and beyond the base rate of pay.
Last week, Governor Brown sent a letter to the CalPERS Board indicating his displeasure with one of the components of the proposed regulations – the temporary upgrade pay. This allows an employee who is deemed in an “Acting” capacity to enjoy not only a higher salary for the temporary duration, but to allow that higher salary to be included when calculating pension benefits. CalPERS staff believes temporary upgrade pay is aligned with a more normal monthly rate of pay. This is based on the fact that these temporary assignments are at the control of the employer, and the employee is receiving the normal rate of pay for the actual duties that employee has be assigned. Eric Stern, Analyst with the Department of Finance, also spoke before the CalPERS Board on behalf of the Brown Administration voicing this opposition, indicating that those elevated to a higher position on a temporary basis should not have the increased compensation counted towards their pension. Representatives from the League of California Cities also spoke against the entire proposed regulatory package due to cost pressures and rate increases upon municipalities.
Despite several attempts to remove the ‘temporary upgrade pay’ from the regulatory package, the Board adopted the entire package in a relatively divided vote. A copy of the proposed regulatory package can be accessed here.
Shortly following the vote, the Governor released the following statement:
“Today CalPERS got it wrong. 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.”
It should be noted that these regulations must now be approved in accordance with the regulatory-making process within the Administrative Office of Law. It is expected this regulatory package will go into formal law later this year.