LOS ANGELES, June 25, 2024 (GLOBE NEWSWIRE) — 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 LACERA
LACERA 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
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