The MCERA Board of Retirement met in a public session on February 8, 2018 to discuss and vote on the implementation of the First District Court of Appeal’s opinion in the case of Alameda County Deputy Sheriff’s Assn. et al v. Alameda County Employees’ Retirement Assn., et al. (2018) 19 Cal.App.5th 61 (the "Alameda Decision"), to which MCERA was a party. The MCERA voted to implement Resolution 2018-1 which states that any member who retired on or after July 12, 2014, shall have included in their final compensation up to 160 hours of additional vacation leave pay out. Also included in Resolution 2018-1, is all active members and deferred members in Tiers 1, 2 and 3 shall be eligible to include up to 160 hours of additional vacation leave payoff to their final compensation upon retirement, and lastly any reciprocal member who joined MCERA (must have established reciprocity from a reciprocal retirement system) on or before February 8, 2018, which is the date the MCERA Board adopted Resolution 2018-1, are eligible to include up to 160 hours of additional vacation leave payout to their final compensation upon retirement.
There are two separate and distinct issues within the Alameda Decision;
• The inclusion of additional vacation leave payout of up to 160 hours in a member’s final compensation period, and
• The inclusion of paycodes for "Stand By" and "On Call" as pensionable compensation.
The First District Court of Appeal was very clear in their direction to MCERA to implement and move forward on the inclusion of up to 160 hours of additional vacation leave payout in a member’s final compensation (often referred to as "terminal vacation leave payout" because this benefit is only applicable at the time of leaving employment such as retirement). Regarding the issue of including "Stand By" and "On Call" paycodes as pensionable compensation, the First District Court of Appeal remanded this issue back to the trial courts in Contra Costa County to determine the constitutionality of considering these paycodes pensionable.
The MCERA Board of Retirement voted on Resolution 2018-1 to implement the vacation leave payout to active employees eligible for the benefit (active in Tiers 1, 2 and 3) and all retirees that have retired since July 14, 2014 who are in tiers 1, 2 and 3 and for reciprocal members who joined MCERA on or before the date the Resolution 2018-1 was passed (February 8, 2018).
The issue of the inclusion of "Stand By" and "On Call" paycodes is still being analyzed both legally and administratively, per the First District Court of Appeal’s Alameda Decision.
If you are a retiree from the Merced Superior Courts or Merced County, and your retirement date is prior to July 12, 2014, the inclusion of the additional 160 hours of vacation leave payout and the inclusion of "Stand By" and "On Call" paycodes (if applicable) to your final compensation already happened.
If you are a retiree of the Merced Superior Court or Merced County and your retirement date is on or after July 12, 2014, then you are impacted by the Alameda Decision. The MCERA staff will be working with MCERA’s Actuary to include the additional up to 160 hours of vacation leave payout to your monthly benefit amount. MCERA will assume that whatever vacation time that was cashed out at the time of your FAQ’s retirement (up to the 160 hours) would have been included in your final compensation upon your retirement. The issue of including "Stand By" and "On Call" paycodes will not be implemented and is currently ‘on hold’, because the Alameda Decision remanded this issue back to the Trail Courts. More information will be forthcoming.
You do not need to do anything at this time. MCERA will address each retiree impacted in date order beginning with those that retired on July 13, 2014 going forward to today. There is nothing that you need to do. MCERA knows who retired and when and what vacation time, if any, a member had cashed out at the time of retirement. In order to make this easier on our members’, any additional retirement contributions plus interest that will be owed to MCERA for the inclusion of the up to 160 hours of additional vacation leave payout will be calculated and removed from your total benefit (also known as your Present Value of Benefits which is your total projected benefit amount over your expected lifetime). This methodology is called "the actuarial equivalent" and is a financially sound methodology that will increase your benefit minus contributions owed to the MCERA. This methodology will increase your monthly benefit amount and account for any contributions owed to MCERA plus interest, but will not require you to pay a lump sum or set up a payment plan.
It is not necessary for you to wait to retire in order to have the up to 160 hours of additional vacation leave payout added to your final compensation. As stated, MCERA will be starting with those members that retired on July 13, 2014 and we will be going in date order and evaluating and adjusting retirees benefits until we are "caught up" and up to date. This will take time, but we will make everyone "whole".
MCERA will assume that any vacation hours cashed out at the time of retirement, up to a 160 hours cap, would have been used to increase your final compensation. Therefore, any hours you had at the time of retirement will be used to recalculate your benefit.
MCERA will move forward with the inclusion of up to 160 hours of vacation leave payout in your final compensation and we will wait on the inclusion of "Stand By" and "On Call" pay codes in your final compensation until we get further direction from the Trial Courts.
• MCERA will begin including up to 160 hours of the additional vacation leave pay out as pensionable compensation for active members who are Tier 1, 2 and 3. Tier 3 reciprocal members who joined MCERA prior to the date the MCERA Board adopted Resolution 2018-1, which is February 8, 2018 will be eligible to include the up to 160 hours of additional vacation pay out to FAQ’s their final compensation. However, if you are a reciprocal member (coming from a reciprocal retirement system) and established reciprocity with MCERA after the date that the MCERA Board of Retirement adopted Resolution 2018-1 on February 8, 2018, then you are not entitled to this benefit.
• If you have refunded your service and contributions with MCERA, you are not impacted by the inclusion of the additional 160 hours of vacation pay out. If you would like to redeposit your contributions and service, the up to 160 hours of vacation leave payout will be included in your redeposit amount owed to MCERA.
If you have left your employee contributions and service on deposit with MCERA but are no longer working for Merced County or Merced Superior Courts, there is no impact to your service or contributions at this time. Upon your retirement, MCERA staff will include the additional vacation leave payoff amount to your final compensation and the same methodology for calculating retirees’ increased benefit amounts will be used by MCERA to calculate your deferred benefit and final compensation. Please note, that other reciprocal retirement systems do not have to accept this pay element as final compensation or pensionable. Each retirement system has the authority to calculate your final compensation based on paycodes that have been approved by their Retirement Board (Stillman v. Board of Retirement of Fresno County).
• If you are a reciprocal member who joined MCERA on or before the date the MCERA Board adopted Resolution 2018-1 (adopted February 8, 2018), you are entitled to this benefit.