Will I still be able to cash out vacation pay in the final year (or 3 years) prior to retirement and have that count in the calculation of my final average salary and ultimately in my retirement benefit?
Yes; The Alameda Decision did not affect the use of vacation cash outs in the calculation of your final average salary. In fact, Government Code Section 31461 (2) explicitly states that Compensation Earnable (pensionable salary) does not include the following:
“Payments for unused vacation….that exceeds that which may be earned and payable in each 12-month (or 36 month) period during the final average salary period, regardless of when reported or paid”
So, a StanCERA member may continue to cash out vacation pay in their final average salary period so long as it does not exceed that which you can earn in the 12 or 36 month period (whichever is applicable) from which your final average salary will be calculated. Any cash out must adhere to applicable labor/bargaining unit agreements.
If I have made contributions to StanCERA that were attributable to on-call pay, will I be receiving a refund of those contributions?
Yes; Any member contributions made beginning with the first full payroll period from January 2013 to September 1st 2020, and attributable to on-call pay will be refunded to members. StanCERA expects to process these refunds in early 2021.
How will the Alameda Decision affect my future StanCERA retirement benefit?
The answer to this question depends on how much of your final average salary would’ve been attributed to on-call pay. For example, if 3% of your expected final average salary would’ve been attributed to on-call pay, then your expected StanCERA benefit would decrease by approximately 3%. StanCERA staff has found that the average amount of on-call pay used in the past in the calculation of a member’s final average salary is around 4%. However, over 95% of our members do not report on-call pay at all to StanCERA.
Does the Alameda Decision affect my ability to work on-call duty and receive that as compensation?
No; The Decision does not affect your ability to work on-call duty and receive extra compensation for that work. It only affects StanCERA’s ability to use those amounts in the calculation of your final average salary and ultimately, your expected retirement benefit.
Do you anticipate any other pay elements to be excluded from the calculation of final average salary?
No; StanCERA staff has been in consultation with our legal counsel and we believe that on-call pay is the only element that affects StanCERA and addressed in the Alameda Decision.
To All StanCERA Active and Deferred Members Regarding the Alameda Decision:
In late July, the California State Supreme Court handed down its decision in now what is commonly referred to as the “Alameda Decision”. Essentially, the Court has disallowed the use of elements of pay associated with “on-call” duty to be used in the calculation of a member’s final average compensation at retirement. As such, StanCERA will no longer be accepting member contributions on pay elements associated with on-call duty beginning with the first full payroll period in September. The Decision affects all StanCERA members who were active at any point in time between January 1, 2013 and August 31, 2020 and who had on-call pay elements reported in their salary to StanCERA during that period. Accordingly, from this point forward, we will no longer be using these elements in the calculation of final average compensation which ultimately determines a member’s retirement benefit or benefit estimate.
It is also anticipated that StanCERA will be refunding active member contributions made to StanCERA on on-call pay elements between January 1, 2013 and August 31, 2020. The timing of the refunds most likely will not be made until early 2021 and should include refundable interest earnings earned on those contributions through June 30, 2020.
Thank you in advance for your patience in this matter. Please refer back to StanCERA’s website at www.stancera.org for additional information should it become available.
Rick Santos, CFA, ASA, MAAA
Executive Director, StanCERA
In late July, the California State Supreme Court issued its decision in a case generally referred to as the “Alameda Decision”. The case combined several outstanding issues brought by various labor associations around the State regarding the inclusion of certain types of pay elements in the calculation of final average salary. Final average salary ultimately determines the size of a member’s retirement benefit and, the larger the final average salary, the larger the retirement benefit. The issue at hand here is whether these pay elements should have been included in the calculation of final average salary at retirement for certain StanCERA members.
Due to the recent COVID-19 outbreak, StanCERA will be implementing limited service protocol 17th for our members. Beginning March 17 , StanCERA will no longer be allowing customer access onsite. This means that one-on-one counseling sessions will not be available, and you will not have the ability to interact with StanCERA staff or drop off forms and applications in person at our counter. This does NOT mean that StanCERA is ceasing business.
Documents may be submitted via U.S. Mail, email (firstname.lastname@example.org) or dropped off in the lobby at 832 12th Street and will be processed by StanCERA Staff.