The Alameda Health System (AHS) and two of its employees have filed an appeal against the Alameda County Employees’ Retirement Association (ACERA), ACERA’s Board, and its Chief Executive Officer. The case was lodged in the Court of Appeal of the State of California, First Appellate District, Division Two, under the court case ID A165587 on March 27, 2024. The dispute revolves around ACERA's method for determining annual contributions that participating employers must make towards unfunded liabilities to ensure the retirement system will be able to fund promised pensions.
AHS has been a participant in ACERA's multi-employer retirement system since 1999. In 2015, AHS raised concerns about ACERA's "Percentage of Payroll" method for determining employer contributions. A study conducted by ACERA’s actuary at AHS’s request suggested that if a different method, known as “Percentage of Liability,” had been used instead, AHS might have contributed considerably less to ACERA in 2014.
Based on this study, AHS claimed it had subsidized other plan members' participation costs in the retirement system for over a decade without any measurable benefit. It argued that switching to the Percentage of Liability method would result in it paying $12 million less annually and retrospectively reallocate approximately $65 million (before adjustments for investment earnings) it had previously made to other participating employers.
In their lawsuit, AHS is seeking a writ under Code of Civil Procedure section 1085 commanding ACERA to set aside its decisions to deny AHS’s request for a further actuarial study and demand for a change in the Percentage of Payroll methodology. They also want ACERA to conduct another study and determine the unfunded liability attributable to AHS under their preferred Percentage of Liability methodology.