For years, Contra Costa's public employee retirement system has skirted the law, allowing workers to egregiously spike their pensions on their way out the door.

The pension system board ignored legal advice in 1997 and 2009 that its overly generous rules conflicted with state Supreme Court and appellate court rulings.

The board, and labor unions that fought vociferously to defend the abusive practice, almost permanently got away with it. Instead, on Thursday, they faced a Superior Court judge who will soon rule whether the sweetheart deal allowing the spiking violates state law.

Judge David Flinn's decision, which he promises by Nov. 12, could also affect similar practices in Merced, Alameda and, possibly, Marin counties. But Contra Costa is the poster child, the home of the greatest sanctioned abuses.

Credit labor political influence for perpetuating the practices for 14 years. Credit, well, this column and two East Bay legislators for forcing the legal showdown.

At issue are local practices allowing workers to save unused vacation and holiday pay during their careers, cash it out during their final year on the job, and then count the extra income toward the salary on which their pensions are calculated.

Currently, in Contra Costa, a union-represented management employee with 30 years' experience can boost his monthly pension payments for the rest of his life by up to 24 percent. That might be cut to 9 percent if the judge ends the abuses. Nonmanagement employees can spike their pensions 15 percent; that might be completely eliminated.


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The practices date back to 1999, when the Contra Costa County Employees' Retirement Association settled a lawsuit with unions over what income should be included in pension calculations.

Two years earlier, the state Supreme Court had issued a ruling on the subject and the unions were pressing for a broad interpretation. The pension board capitulated and their agreement stuck, even though subsequent appellate court rulings made clear that the deal was more generous than state law allowed.

A pension board attorney had warned that it could not allow so much unused leave time to count in pension calculations. Only leave earned in the final year by workers who were entitled to cash out unused time could be counted.

In 2009, another pension law expert told the board the deal violated the court rulings. In 2011, the board curtailed the abusive calculations for new employees, but left them intact for current workers yet to retire.

In 2012, Gov. Jerry Brown and state legislators agreed to state pension law changes. They unveiled their plan on Tuesday Aug. 28, just three days before the end of the legislative session.

The complex bill affected almost all public employee pension systems in California. But it contained a loophole for 20 county-level systems. Because of the omission of one key word, the bill would have legalized Contra Costa's abusive practice for all 20 systems.

The next day, three key administration officials wrongly insisted to me that the bill would actually stop the abusive practices. On Thursday morning, I posted a column online exposing the loophole. The column appeared on this paper's front page the following morning, the day the bill was scheduled for final votes.

Meanwhile, Assemblywoman Joan Buchanan, D-Alamo, and state Sen. Mark DeSaulnier, D-Concord, pushed for changes. The result was a second, last-minute bill that fixed the loophole by saying that county-level pension agencies must follow the appellate court rulings.

Implementation of that bill sparked the current court case. In his upcoming ruling, Flinn will decide whether the 1999 Contra Costa settlement with the unions and similar ones in Merced and Alameda counties were improper.

If he says they were, the next round of court arguments will focus on the remedy. That could affect current employees and some or all of the retirees who benefitted from the abusive calculations.

There's a lot at stake. The Contra Costa system administers pensions for county workers and employees of 16 other local agencies. That's why retired San Ramon Valley fire Chief Craig Bowen gained potentially about $1 million through questionable spiking.

Whatever Flinn decides, the case will almost certainly be appealed.

Daniel Borenstein is a staff columnist and editorial writer. Reach him at 925-943-8248 or dborenstein@bayareanewsgroup.com. Follow him at Twitter.com/borensteindan.