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League Renews Call on CalPERS to Reexamine Whether Special Pay Categories Remain Pensionable Under the 2012 Pension Reform Bill

August 22, 2014
The League of California Cities on Thursday renewed its strong urging that the CalPERS Board of Administration examine whether the 99 “special pay” categories contained in regulations the Board approved last Tuesday comply with the Public Employees’ Pension Reform Act (PEPRA) of 2012.
That urging came in a letter sent to the board yesterday. The CalPERS Board of Administration on Tuesday approved new regulations that define these types of “special pay” as pensionable for employees hired since the enactment of PEPRA.

In the letter, League Executive Director Chris McKenzie also responded to a comment of a CalPERS director in a committee hearing on August 19 that local agencies were asking CalPERS to make local decisions on whether to create special pay categories. McKenzie clarified that the League was asking instead that each of the special pay categories on the schedule be evaluated by CalPERS for compliance with the 2012 pension reforms, something that has not been done with the exception of “temporary upgrade pay,” with which the Governor and League disagree.
“At a minimum, the passage of PEPRA and its prohibition against ‘ad hoc payments’ suggests every item of special pay on the schedule should be reexamined,” said McKenzie.
The League’s written comments on the draft regulations stressed that some of the 99 special pay categories, including temporary pay upgrade, might not qualify as pensionable under PEPRA.
Chorus of Criticism Grows in Wake of CalPERS Action
This week has brought mounting criticism following CalPERS Board of Administration’s approval on Wednesday of new regulations that retain these 99 special pay categories.
Assembly Member Marc Levine (D-San Rafael), who serves as vice chair of the Assembly Local Government Committee, quickly raised an important concern shared by the League that CalPERS’ decision jeopardizes PEPRA. He also cautioned that this action was taken without thorough analysis of the cost implications. “Before approving this kind of compensation, the Board should have reviewed and considered net cost projections for each and every type of compensation approved.” 
As widely reported, the Governor on Wednesday criticized the board when it failed by a 7 – 5 vote to remove “temporary pay upgrade,” the one category he requested be omitted, from the special pay list.
Several newspapers immediately took issue with CalPERS, criticizing the agency for eroding the historic pension reforms.   

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