Compliance attorney discusses stipend compensation ruling by California California Sixth District Court of Appeal

By Angela Underwood | Jun 8, 2017

SAN JOSE — Reportable retirement benefits are not necessarily special compensation, according to Braden Perry, a government investigations attorney at Kennyhertz Perry in Kansas City, Mo.

Discussing the May 24 ruling by the California Sixth District Court of Appeal, Perry explained how not every stipend is considered reportable to the California Public Employees Retirement System (CalPERS) as seen in John DiCarlo v. County of Monterey.

“It is alleged that CalPERS advised the county that the longevity performance stipend should have been reported, but for whatever reason, it wasn’t and thus CalPERS never included it in calculating the retirement benefits of the sheriffs association, leaving an unanticipated funding hole,” Perry told the Northern California Record.

The dispute started after John DiCarlo, a Monterey County peace officer, noticed that less experienced peers were receiving a retirement stipend. He claimed that Monterey County should consider the stipends to be special recompense that would encourage CalPERS to include them in its respective retirement packages.

“This likely comes down to funding and the well-documented issues of massive deficits within retirement and pension benefit plans, impacting the hard working members it was designed to protect,” Perry said.

In the ruling, the panel said the "longevity performance stipend does not qualify as an item of special compensation that must be reported to CalPERS and included in the calculation of plaintiffs’ retirement benefits," ruling in favor of the county and CalPERS.

“The entire process seems mismanaged as the court noted Government Code Section 20023 and its successor statute, Government Code Section 20636, would combat pension spiking by, among other things, preventing local agency employers from adding to the items reportable as special compensation,” Perry said.

Perry said if CalPERS were to allow combination incentives, it would add more “uncertainty and confusion” to the already inexact and unclear funding matter. 

“While the merits are valid, it is an unfortunate result for the sheriff’s association and its members, who appear to have no recourse against those charged with overseeing their pension,” Perry said.

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