CONCORD -- Contra Costa County's retirement system board will comply with a new state pension rule and apply an anti-spiking provision to potentially thousands of current public employees.
In a tortured 7-2 vote Tuesday, the Contra Costa Employees' Retirement Association board officially recognized legislation that starting Jan. 1, 2013, bans the inclusion in retirement calculations of so-called "terminal pay" -- unused vacation, holiday, administrative or sick leave -- in excess of what workers would normally earn in a single year.
The retirement board already eliminated the perk for new employees hired after Jan. 1, 2011.
The state legislation is one of the few pension reform provisions signed into law in September that targets current employees' benefits. Most of the reductions apply only to new workers.
AFSCME Local 512 President Richard Cabral and former Contra Costa probation supervisor Jerry Telles cast the two no votes. Their opposition came despite the association attorney's admonition that flouting state law would jeopardize members' nontaxable Internal Revenue Service status.
Public employee union leaders immediately after the vote declared plans to seek a court injunction blocking local implementation, pending the outcome of expected litigation.
"We will file a lawsuit as soon as practicable," said Contra Costa Deputy Sheriffs Association President Ken Westermann, who estimates his members would lose 15 percent or more of their retirement income if the law goes into effect. "These are vested rights and the courts have consistently said they cannot be taken away once promised."
The twist in the nearly three-hour public hearing came when three retirement board members openly welcomed a legal challenge as the fastest path to resolution.
Ignoring the new law would put members' retirement at risk if courts later uphold the legislation, said Brian Hast, a Contra Costa deputy district attorney elected to the association board by the retirement system's general members.
"It is a distasteful move but a necessary move," Hast said. "We need to get this before a judge. A judge is the only one with the power to make a final and binding decision that will guarantee this vested right to our members."
Hast's stance was unpopular among the several hundred mostly public employees who packed the hotel conference meeting room and urged the association to reject the new law and fight on their behalf.
"This is unconscionable," said a Contra Costa social worker with 21 years on the job. "We have already suffered 9 percent cuts in salary in benefits. We've had no cost of living increase for years ... I'm shocked this would even be considered."
The sole nonpublic employee speaker was retired business executive Dennis Fitzpatrick, of Orinda, who warned of unsustainable pension debts.
"I feel like I am in an anteroom on the Titanic three days before the iceberg," he said. "You have all been deceived by the politicians who have run our county into this position."
Contra Costa is one of three county retirement systems in California that include terminal pay in the pension formula. Alameda and Merced counties have already moved to comply with state law and eliminate the perk.
It permits a worker to accumulate unused vacation, holiday and sick leave, convert the value to cash at the time of retirement and boost his or her final pension check.
Analysts put the value of terminal pay at a range of $4 to $24 out of every $100 in final average wage, one of three factors used to calculate workers' retirement benefit amount. The most generous amount goes to those who retire from the Contra Costa Central Sanitary District, according to the association's 2011 actuarial valuation.
But it is unclear how many of the pension system's 8,629 working members and the 2,214 people who have deferred their retirements will see pension income losses as a result of the rule change.
Not every current public employee is eligible for terminal pay. For vested employees, the perk varies depending on labor contracts negotiated between the agency and each union. Contra Costa County, which is more than 80 percent of the retirement system's rolls, has 15 employee unions.
Other member agencies include the San Ramon, Moraga-Orinda and East Contra Costa fire districts, Central Contra Costa Sanitary District and Superior Court.
Contact Lisa Vorderbrueggen at 925-945-4773, Twitter /lvorderbrueggen or Facebook/lvorderbrueggen.
The Contra Costa Employees' Retirement Association governing board consists of nine members plus three alternates.
Source: Contra Costa Employees' Retirement Association website and Times research
contra costa impacts
Most provisions in the California Public Employees Pension Reform Act of 2013 apply to new workers hired as of Jan. 1, 2013. But a handful of clauses cut benefits for current employees:
Source: Contra Costa County Employees' Retirement Association