California Appeals Court Affirms LACERA’s Authority to Set Employment Classifications and Salaries, Overrules County Board’s Rejection
June 25 2024 - 5:36PM
In a landmark 79-page decision, the California 2nd District Court
of Appeals has affirmed that the Los Angeles County Employees
Retirement Association (LACERA) possesses the authority under both
the California Constitution and state statutes to establish
employment classifications and set salaries for its employees. The
ruling further clarifies that the Los Angeles County Board of
Supervisors (BOS) must accept and incorporate these classifications
and salaries into the County’s employment classifications and
salary ordinance without modification.
In 2016 and 2017, LACERA conducted comprehensive personnel
reviews, identifying the need for several new positions and salary
adjustments to meet its strategic priorities and uphold its
fiduciary duties to its members and beneficiaries. In 2018, the BOS
ignored 15 years of its own precedent of implementing such changes
without hesitation, and instead refused to adopt the necessary
changes to the salary ordinance. The BOS cited a decades-old case
from a different Appellate District, claiming it provided them the
authority to block the new classifications and salaries proposed by
LACERA.
LACERA made several attempts to negotiate with the County to
resolve the dispute, but these efforts were ultimately
unsuccessful. In 2021, LACERA filed for a writ of mandate,
directing the BOS to comply with the law and adopt the proposed
salary ordinance. The trial court was bound to follow the
decades-old case and ruled in favor of the County, but LACERA
appealed the decision, which has resulted in the recent favorable
ruling by the 2nd District.
The detailed opinion from the 2nd District Court of Appeals is
an exhaustive review of the California Constitution, state
statutes, and relevant ballot initiatives pertaining to the 1937
Act, which governs LACERA and nineteen other California counties.
The Court relied on Proposition 162, which passed in 1992 and
explicitly conferred fiduciary responsibility on retirement boards
for both the investment of funds and the administration of the
system. The court stated that the proposition gave retirement
boards like LACERA plenary authority to adopt employment
classifications and set employee salaries. The Court noted that
fulfilling these responsibilities would be challenging if
retirement boards lacked control over all system expenses,
including employee classifications and salaries.
The Court emphasized that allowing a board of supervisors, which
may have differing responsibilities, priorities, and agendas, to
veto the employment classifications and compensation set by a
retirement board would undermine the board’s ability to fulfill its
duties under Proposition 162. Such a veto power would also erode
the fiduciary relationship between the retirement board and system
participants and beneficiaries.
The 2nd District Court concluded that the Los Angeles County
Board of Supervisors has a “ministerial duty” to include the
positions adopted by the LACERA Boards in the civil service
classifications and to incorporate the salaries for retirement
system employees into the County salary ordinance or resolution as
adopted by the LACERA Boards.
“This ruling is a significant victory for LACERA, reinforcing
its autonomy and authority to manage its personnel and financial
responsibilities effectively, ensuring that it can fulfill its
fiduciary duties to its members and beneficiaries,” said Santos
Kreimann, Chief Executive Officer of LACERA.
The case is Los Angeles County Employees Retirement Association
v. County of Los Angeles. Case Number 21STCP03475. To view a copy
of the ruling, click here.
About LACERALACERA is a public retirement plan
created and operating under the County Employees Retirement Law of
1937 (CERL) and is subject to the California Constitution, CERL,
and the Public Employees’ Pensions Reform Act of 2013 (PEPRA). Two
boards govern LACERA. Both boards are composed of elected and
appointed members and one ex-officio member. The Board of
Retirement is responsible for the overall management of the
retirement system and the LACERA-administered Retiree Healthcare
Benefits Program. The Board of Investments is responsible for
establishing LACERA’s investment policies, strategies, and
objectives, as well as exercising authority and control over the
fund’s investment management and actuarial matters relating to
setting contributions and estimating fund liabilities.
Media Contact: Eric W. Rose,
eric@ekapr.com