July 26, 2021 Board of Retirement Resolution Re: Flex Credit
On July 26, 2021, the VCERA Board of Retirement adopted a Resolution regarding the flexible credit benefit amount that may be included in compensation earnable for “Legacy” members (hired before January 1, 2013).
Prior to the 2020 Plan Year, the County of Ventura’s flex credit benefit was provided in the same amount to all eligible employees within each bargaining unit. However, beginning January 1, 2020, employees In many bargaining groups were offered a “three-tiered” flex credit based on the number of dependents they were covering.
( EE Only)
( EE + 1)
(EE + Family)
The July 26 Resolution limits the portion of the flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all members in the same group or class within each bargaining unit have the same amount reported as compensation earnable (and will pay the same amount of retirement contributions), regardless of their personal circumstances. As a reminder, none of the flex credit is pensionable for PEPRA members.
While the tiered approach to flex credit began in 2020, action to limit the pensionable amount to the employee-only tier was delayed by VCERA following the landmark California Supreme Court “Alameda Decision.” This ruling addressed the pensionability of several categories of compensation, one of which was in-kind benefits such as flex credit. The Alameda ruling said that a retirement board does not have the discretion to include in compensation earnable in-kind benefits, which are benefits that cannot be received in cash. In October of 2020, the Board of Retirement adopted a Resolution to implement Alameda, opting to defer any exclusion of flex credit (paragraphs 3, 6 & 9 of the Resolution) and to pursue a declaratory relief action in Court to determine if exclusion of the non-cashable portion of flex credit was mandatory. The County demurred on the flex credit cause of action, asserting that there was no justiciable controversy because the Board had not taken action to exclude. The Court sustained that demurrer without leave to amend.
While the declaratory relief filing was progressing, both the County and the Service Employees International Union (SEIU) made efforts to pursue legislation designed to allow full inclusion of flex credit in Ventura County. An SEIU-sponsored bill, AB 826, is currently in the California legislature.
AB 826 does not address the recent unequal tiered approach of flex, so the Resolution adopted on July 26, 2021, limits the portion of that flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all in the same group or class within each bargaining unit receive the same amount toward their pensions, regardless of how many dependents they have elected to cover through the health care options provided in the County’s Flexible Benefit Plan. This is consistent with the underlying concept of compensation earnable, which is intended to reflect payment for work-related services.
If AB 826 does not pass, the Board will again consider the pensionability of non-cashable flex credit.
To view the July 26 Resolution, click here.