Alameda Cnty. Deputy Sheriff's Ass'n v. Alameda Cnty. Employees' Ret. Assn.

In Ventura , the county had argued that it would face practical problems in adequately funding its retirement system if the Supreme Court departed from the certainty of Guelfi's narrow construction of section 31461. (

In re Retirement Cases is also notable for determining whether three specific types of employee-related payments were required to be included in final compensation under CERL. ( In re Retirement Cases , supra , 110 Cal.App.4th at pp. 472-482, 1 Cal.Rptr.3d 790 .) For instance, as we discuss at length below, the appellate court concluded that cash-outs by employees of unused leave upon retirement (terminal pay), did not constitute pensionable compensation because, under the unambiguous language of CERL, a member's final compensation period may extend up to, but does not include, retirement. ( In re Retirement Cases , supra , 110 Cal.App.4th at pp. 473-476, 1 Cal.Rptr.3d 790 .) The court further held that cash payments made by employers to purchase benefits on behalf

Thus, for example, in 1999, Contra Costa County, CCCERA, various cities and districts, and representatives of a class of members who retired on or before September 30, 1997, entered into a court-approved settlement agreement pursuant to which compensation earned by all retired and active members prior to September 30, 1997, would be subject to specific agreed upon inclusions in, and exclusions from, compensation earnable. While the settlement was being negotiated, CCCERA had, by resolution in 1998, applied the same inclusions and exclusions to all active members. Compensation items deemed pensionable included on-call pay; the annual sale of vacation leave; and terminal pay, to the extent accrued in the final compensation period. Thereafter, effective for all new members of CCCERA on or after January 1, 2011, new limitations on compensation earnable were adopted. Specifically, pensionable in-service leave cash-outs and terminal pay were limited to amounts that were both earned

Finally, MCERA, Merced County, a local district, and several employees-"on behalf of all other individuals who are current, future, retired, or deferred retirement members" of MCERA-entered into a court-approved settlement agreement in June 2000 which, among other things, allowed for the inclusion in compensation earnable of a maximum of 160 hours of terminal pay. For a number of years thereafter, MCERA staff included in compensation earnable both terminal pay up to 160 hours and certain annual in-service leave sell backs occurring during members' final compensation periods. MCERA ultimately repudiated this practice, arguing that its settlement agreement capped all pensionable leave cash-outs at 160 hours, whether cashed out in service or at termination. Litigation ensued, and the trial court concluded that, under the terms of the settlement, up to 160 hours of terminal pay was pensionable in addition to any authorized in-service leave sell backs permitted during a member's final compensation period. ( Board of Retirement v. Baker (Super. Ct. Merced County, 2007, No. 149970) ( Baker ).) While it acknowledged the holding in Salus , the court found its construction of the agreement to be consistent with Ventura and the intent of the parties at the time of the settlement. ( Baker , supra , Super. Ct. of Merced County, 2007, at pp. 5-6.)

For purposes of this opinion, we refer to all of the settlements described above as Post- Ventura Settlement Agreements.

B. The Pension Reform Act (PEPRA)

After resolution of the many issues involved in applying the Ventura holding to CERL pension calculations, pension practices in the Three Counties remained essentially stable for over a decade, as the corresponding CERL Boards determined

"(3) Payments for additional services rendered outside of normal working hours, whether paid in a lump sum or otherwise.

"(4) Payments made at the termination of employment, except those payments that do not exceed what is earned and payable in each 12-month period during the final average salary period, regardless of when reported or paid."

2. Implementation by the Boards .

In the wake of PEPRA, the Boards in the Three Counties all took action to conform their retirement systems to the new law, excluding certain previously included pay items from compensation earnable. These changes were made not just for new hires-which no party disputes is permissible-but also for employees retiring after PEPRA's January 1, 2013, effective date. CCCERA, for instance, adopted a new policy excluding from compensation earnable and final compensation-for all members retiring after January 1, 2013-terminal pay that was not both earned and payable during the member's final compensation period. Additionally excluded were payments for being on call or on standby.

Similarly, ACERA adopted a number of exclusions from compensation earnable, including any vacation or sick leave sold back at termination; on-call and call-back pay; pay for performance benefits; recruitment bonuses and other one-time payments; and various in-lieu payments. MCERA determined, based on the new law, that terminal pay could only be included in compensation earnable to the extent it was earned and payable during a

C. Litigation in the Trial Court

Disagreeing with the Boards' application of PEPRA's new rules to the calculation of retirement benefits for legacy members, various employee-members of CERL systems and impacted employee associations in each of the Three Counties (petitioners) filed writs of mandate challenging the Boards' implementation actions as an unlawful impairment of legacy members' constitutionally protected pension rights. States are prohibited by the United States Constitution from passing a law "impairing the obligation of contracts." (U.S. Const., art. I, § 10.) Article I, section 9 of the California Constitution states a parallel proscription: "A ... law impairing the obligation of contracts may not be passed." Thus, petitioners specifically alleged that legacy members had acquired a "vested" right to pension benefits based on the pre-PEPRA state of the law, which could not be altered to their detriment

Notices of Appeal were subsequently filed by a number of the petitioner employee organizations and member-employees representing each of the Three Counties. In addition, both the State and the Central Contra Costa County Sanitary District (Sanitary District) filed their own notices of appeal and cross-appeal. After briefing by these litigants-as well as by CCCERA, ACERA, and MCERA-numerous challenges to the trial court's decision below are now before us for resolution.

A. Standards of Review and Board Discretion

1. Standards of Review .

As a general matter, the many issues presented in this appeal involve questions of law subject to our de novo review. ( Ghirardo v. Antonioli (1994) 8 Cal.4th 791 , 799, 35 Cal.Rptr.2d 418 , 883 P.2d 960 [when "decisive facts" are not disputed, an appellate court is confronted with a question of law]; Mason , supra , 111 Cal.App.4th at p. 1227, 4 Cal.Rptr.3d 619 [issues of statutory interpretation subject to de novo review]; see also Redevelopment Agency v. County of Los Angeles (1999) 75 Cal.App.4th 68 , 74, 89 Cal.Rptr.2d 10 [questions of constitutional and statutory construction subject to de novo review, " 'independent of the trial court's ruling or reasoning' "].) This is true even though we are reviewing the trial court's ruling on a writ of mandate under Code of Civil Procedure section 1085. Under such circumstances, " 'the appellate court is ordinarily confined to an inquiry as to whether the findings and judgment of the trial court are supported by substantial, credible and competent evidence. This limitation, however, does not apply to resolution of questions of law where the facts are undisputed. In such cases, as in other instances involving matters of law, the appellate court is not bound by the trial court's decision, but may make its own determination.' " (

Before we proceed, however, we must also address another issue regarding Board discretion which is fundamental to our resolution of the questions presented in this case-that is, appellants' repeated and strenuous assertion, based on section 31461 and Guelfi , that the Boards have broad discretion to include additional pay items in compensation earnable, over and

Several years later, in 1997, the Ventura court further muddied the waters with respect to the possible existence of Guelfi discretion. In summarizing Guelfi's analysis and holdings regarding the benefits at issue in that case, Ventura expressly referenced the statement in footnote six that "[t]he retirement board was free to include those benefits in its retirement calculation if it elected to do so, but CERL did not require that they be included." ( Ventura , supra , 16 Cal.4th at p. 492, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) The Ventura court then went on to reject the bulk of Guelfi's analysis with respect to the three benefits Guelfi considered (overtime, uniform allowances, and educational incentive pay), especially the appellate court's general conclusion that "an item of compensation must be received by all employees in the applicable grade or class of position if it is to be part of a retiring employee's 'compensation earnable.' " ( Ventura , supra , 16 Cal.4th at pp. 499-500, 505, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) In resolving the case before it, however, the Ventura court did not directly address the continuing validity or import of Guelfi's footnote six. Rather, it stated only that "the premiums in dispute are 'compensation earnable' within

Similarly, the inclusion of overtime in compensation earnable, as suggested by Guelfi's footnote six, would, as all parties seem to agree, run afoul of the express language of section 31461, which bases compensation earnable off of "the average number of days ordinarily worked by persons in the same grade or class of positions during the period." (§ 31461, subd. (a).) And, as a final example, In re Retirement Cases held, based on the unambiguous language of CERL, that terminal pay cannot be deemed compensation earnable because it does not meet the definition of final compensation. ( In re Retirement Cases , supra , 110 Cal.App.4th at pp. 473-476, 1 Cal.Rptr.3d 790 .) If CERL boards nevertheless possessed expanded discretion under Guelfi to include terminal pay in compensation earnable, such discretion would be in direct contravention of the CERL statutes defining final compensation. In short, appellants' position is not supportable under the language of CERL.

Moreover, if CERL boards did possess some undefined discretion to include additional pay items in compensation earnable, it is hard to see where that seemingly limitless discretion would end. Could a board, for instance, decide to include the monetary value of in-kind advantages provided to members in compensation earnable, despite the language of section 31460? Or items of compensation earned many years before the final compensation period just because it wanted to? The answer seems, obviously, to be no. In the end, we believe that the correct understanding of board discretion under CERL lies somewhere

For all of these reasons, we reject appellants' argument that the Boards possess Guelfi discretion-that is, the ability to include additional pay items in compensation earnable, unmoored by the language of CERL. An item of compensation is either includable in compensation, compensation earnable, and final compensation under the CERL statutes, or it is not. If it fails to satisfy any one of these statutory litmus tests, it may not be included in a member's pensionable compensation under CERL.

Cognizant that our appellate review of this matter must necessarily be colored by all of the many standards here articulated, we next turn to the issues of statutory interpretation before us.

B. Interpretation of Section 31461

As all of the parties to this dispute acknowledge, whether the changes to section 31461 effected by AB 197 unconstitutionally impair the vested pension rights of legacy members of CCCERA, ACERA, and MCERA depends, at least as an initial matter, on whether those changes actually modified CERL, or were merely clarifying amendments and thus declarative of existing law. If no substantive changes were made, it is difficult to argue that the legislation impermissibly impacted vested rights. This is the position of both the State and the Sanitary District on appeal. Appellants, in contrast, argue that AB 197 drastically altered the existing CERL landscape. As set forth above, the four statutory amendments at issue are all contained in separate subdivisions of new subsection (b) of section 31461, and each expressly excludes a particular type of employee benefit from compensation earnable. We therefore address the impact of each new exclusion in turn.

1. Leave Cash-Outs Under Subdivision (b)(2) .

We first consider PEPRA's treatment of in-service leave cash-outs as a component of compensation earnable. Under AB 197's amended version of section 31461, compensation earnable expressly excludes "[p]ayments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off, however denominated, whether paid in a lump sum or otherwise, in an amount that exceeds that which may be earned and payable in each 12-month period during the final average salary period, regardless of when reported or paid." (§ 31461, subd. (b)(2).) The State argues, and the trial court below agreed, that the addition of subdivision (b)(2) to section 31461 does not constitute a change in the law because, under the prior version of the

This basic tenet is made even clearer when one considers the wording of the predecessor to section 31461 contained in the original 1937 Act. Section 8.5 of article 1 of CERL as it was enacted in 1937 defines " '[c]ompensation earnable' by a member" to mean: "the compensation as

However, as the Supreme Court made clear in Ventura , CERL anticipates variation in final compensation based on the inclusion of earned premiums and incentives in an individual member's compensation earnable, even when those cash payments are "not earned by all employees in the same grade or class." ( Ventura , supra , 16 Cal.4th at p. 487, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Moreover, many such premiums and incentives-including the in-service leave cash-outs here at issue-can be understood simply as increased salary payments, specially designed by employers to encourage certain employee behaviors, such as longevity, foregoing time away from work, and the development of special employment-enhancing skills. (See Ventura , supra , 16 Cal.4th at pp. 488-489, 498, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Thus, for instance, the Ventura court opined that the longevity incentive at issue in that case-which allowed for the provision to longtime employees of additional cash or vacation days-was "equivalent to increased pay that often accompanies seniority." ( Ventura , supra , 16 Cal.4th at p. 498, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) So too, an annual leave cash-out can be viewed as increased pay-different from the accrual of the vacation time, itself-which compensates long-term employees who sacrifice time off. We further note that there is no evidence in this record that, at least with

In addition, appellants cannot successfully argue that the characterization of terminal pay as compensation earnable pursuant to the Post- Ventura Settlement Agreements created a vested right under those contracts to treat such pay as pensionable. Indeed, it is fairly clear that a contract that attempts to characterize an item of compensation in a manner contrary to statute cannot, itself, create a vested right. Oden v. Board of Administration (1994) 23 Cal.App.4th 194 , 28 Cal.Rptr.2d 388 ( Oden ), for example, dealt with the characterization of employee pension contributions under PERL. In that case, the appellate court agreed with the general position of the PERS board that contributions made as employee-paid salary deductions should be treated as compensation for pension purposes, but contributions made through employer-paid salary additions should not. (

Similarly, in Medina v. Board of Retirement (2003) 112 Cal.App.4th 864 , 5 Cal.Rptr.3d 634 ( Medina ), several employees of a local retirement system were erroneously classified as safety members for many years until the mistake was discovered and corrected. ( Id. at pp. 866-868, 5 Cal.Rptr.3d 634 .) Since safety members are entitled to greater pension benefits than general members, the employees filed a petition for writ of mandate, arguing, among other things, that they had obtained a vested right to continue to be classified as safety members. ( Id at pp. 866-867, 5 Cal.Rptr.3d 634 .) The Medina court rejected this assertion, stating that "[t]he contract clause does not protect expectations that are based upon contracts that are invalid, illegal, unenforceable, or which arise without the giving of consideration." ( Id. at p. 871, 5 Cal.Rptr.3d 634 .) Since "[a]ny purported contract to give appellants the pension benefits of safety members was invalid, ... the vested rights doctrine [did] not apply." ( Id. at p. 872, 5 Cal.Rptr.3d 634 [characterizing the board's mistake as "the equivalent of attempting to form an unauthorized contract"]; see also County of Orange, supra, 52 Cal.4th at p. 1183, 134 Cal.Rptr.3d 779 , 266 P.3d 287 ["[w]here the relationship [is] governed by contract, a county may be bound by an implied contract (or by implied terms of a written contract), as long as there is no statutory prohibition against such an agreement ," (italics added) ]; City of San Diego v. San Diego City Employees' Retirement System (2010) 186 Cal.App.4th 69 , 80, 111 Cal.Rptr.3d 418 [rejecting retirement board's attempt to charge city for underfunding of certain pension liabilities as contrary to the pension system's enabling statutes; "it is not within [the board's] authority to expand pension benefits beyond those afforded by the authorizing legislation"].) In short, precedent dictates that no vested pension rights can be created by contracts that are inconsistent with the governing pension statutes.

3. Pay "Outside of Normal Working Hours" Under Subdivision (b)(3).

The third express exclusion from compensation earnable articulated by the AB 197 amendments is found in subdivision (b)(3) of section 31461, which establishes that "[p]ayments for additional services rendered outside of normal working hours, whether paid in a lump sum or otherwise" may not be included in compensation earnable. No party argues that overtime pay was ever a permissible component of compensation earnable under CERL. However, the parties strongly dispute whether on-call, standby and similar pay items-designed to compensate employees for time outside of their regular working hours during which they must remain

The trial court appears to have concluded that a limited vested right does exist with respect to certain on-call payments, because, although it did not engage in a vested rights analysis, it directed the Boards to continue to include these types of compensation in compensation earnable for legacy members to the extent that: the pay category at issue was previously included in compensation earnable; the amount to be included was both earned and required of the employee during his or her final compensation period; the form of compensation was "regularly applicable to the class of employees"; and the payment was not designed "to 'enhance' the pension." In order to determine the appropriateness of the trial court's order, we must first articulate what was permissible under the prior version of section 31461 with respect to on-call pay. We must then consider whether AB 197 effected a change in that law. As will become apparent, the answer to both of these questions is not entirely clear.

We start with Ventura , as one of the premiums and incentives at issue in that case was a form of on-call pay ($60 biweekly) used to compensate certain deputy sheriffs, senior deputy sheriffs, pilots, and crew chiefs for remaining subject to call during meal periods. ( Ventura , supra , 16 Cal.4th at p. 488 & fn. 5, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) The Ventura parties agreed that this pay was furnished uniformly to all sheriff's pilots and was therefore compensation earnable for that group of employees. Similar pay for the other employee classifications, however, remained in dispute. ( Ibid . ) Presumably, the benefit was not provided uniformly to all of the employees in those classes. The Ventura court described on-call pay as "specified payments in lieu" of overtime pay and concluded that the payments were remuneration for services and thus compensation under CERL. ( Id. at pp. 488 & fn. 5, 498, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) In addition, as discussed above, the court ultimately determined that-with the exception of employer contributions to an employee's deferred compensation plan- all of the disputed premiums at issue in that case were includable in compensation earnable and thus pensionable, even if not earned by all employees in the same grade or class. ( Id . at p. 487, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) However, there is no specific analysis in the opinion regarding on-call pay as a component of compensation earnable. ( Id. at pp. 499-506, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Thus, although it can be inferred from Ventura that the on-call pay at issue in that case-pay for being on call during meal periods-constituted compensation earnable pre-PEPRA, even if it was not

Were we writing on a clean slate, we believe an argument could be made that the "normal working hours" language now contained in both PERL and CERL should be read broadly enough to permit the inclusion of on-call pay that is part of an employee's required work assignment in compensation earnable. Although perhaps rendered outside of a standard 40-hour workweek, on-call pay for services required to be provided as part of a particular job would seem to be akin to additional salary-albeit salary that is calculated at a rate which recognizes that being on-call, while restrictive, is not as onerous as being fully on duty. (But see City of Pleasanton , supra , 211 Cal.App.4th at p. 539, 149 Cal.Rptr.3d 729 [concluding that on-call duty was not part of a normal workweek where the employee was only being compensated "at a small fraction of his base salary"].) Thus, such pay appears analytically similar to the many other premiums found pensionable by Ventura. However, given the historical construction of this language under PERL, it would seem that the Legislature's intent in adding the restriction to CERL was otherwise. Since we conclude that AB 197 meant to exclude from compensation earnable the types of on-call and standby pay here at issue-and because we have also determined that certain of those pay items were includable in pensionable compensation prior to PEPRA-we address below whether legacy members possess a vested right to the calculation of their pension benefits under the prior version of section 31461 with respect to on-call pay.

4. Enhancement Payments Under Subdivision (b)(1) .

The final subdivision of new subsection (b) of section 31461 at issue in this

Having concluded that AB 197 did in fact make some substantive changes to CERL (with respect to on-call pay and so-called pension enhancements), we are faced squarely with the question of whether

The Kern court acknowledged, however, that "pension systems must be kept flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system and carry out its beneficent policy." ( Kern , supra , 29 Cal.2d at pp. 854-855, 179 P.2d 799 .) Although it was unnecessary for the high court to consider the "permissible scope" of changes to pension provisions given the facts of the case before it, it summarized the vested pension rights of public employees generally in the following oft-quoted language: "[A]n employee may

The Allen I court acknowledged that vested contractual pension rights may be modified prior to retirement "to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system." ( Allen I , supra , 45 Cal.2d at p. 131, 287 P.2d 765 .) However, the court opined that any "[s]uch modifications must be reasonable , and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable , alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to

A year later, the high court clarified that a public employee is entitled to the benefits resulting from positive changes to the pension system made at any time during employment-such benefits become a part of the vested rights of employees when conferred. ( Betts v. Board of Administration (1978) 21 Cal.3d 859 , 148 Cal.Rptr. 158 , 582 P.2d 614 .) Thus, "[a]n employee's contractual pension expectations are measured by benefits which are in effect not only when employment commences, but which are thereafter conferred during the employee's subsequent tenure." ( Id. at p. 866, 148 Cal.Rptr. 158 , 582 P.2d 614 .) Given these circumstances, " 'benefits conferred under a pension system by changes which are made from time to time prior to the adoption of an amendment imposing a detriment "have no bearing upon the reasonableness" of the detriment so imposed.' " ( Id. at p. 867, 148 Cal.Rptr. 158 , 582 P.2d 614 .) In making these determinations, the Betts court emphasized that "there is a strict limitation on the conditions which may modify the pension system in effect during employment." ( Id. at pp. 863-864, 148 Cal.Rptr. 158 , 582 P.2d 614 .)

Thereafter, in Legislature v. Eu (1991) 54 Cal.3d 492 , 286 Cal.Rptr. 283 , 816 P.2d 1309 , the Supreme Court elaborated that vested pension benefits include both the right to receive any such benefits upon retirement and the "collateral right to earn future pension benefits through continued service, on terms substantially equivalent" to those offered at the commencement of employment. ( Id. at pp. 528-530, 286 Cal.Rptr. 283 , 816 P.2d 1309 .) Thus, a statewide proposition that purported to terminate the rights of incumbent state legislators to earn additional pension benefits through continued state service, where no comparable new advantage was offered, was found to be an impermissible modification of their vested pension rights. ( Ibid. ) Finally, City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462 , 14 Cal.Rptr.2d 514 , 841 P.2d 1034 ( Huntington Beach ) involved the question of whether detention officers qualified for local safety member status under PERS. ( Id. at p. 464, 14 Cal.Rptr.2d 514 , 841 P.2d 1034 .) The high court concluded that they did not and thereafter considered the argument that the affected employees might nevertheless have a vested right to such status under a prior statutory scheme. ( Id. at pp. 471-472, 14 Cal.Rptr.2d 514 , 841 P.2d 1034 .) After reaching the same result under prior law, the high court rejected the contract clause argument, opining that "the jailers in this case have no vested right in previous erroneous classifications by the PERS Board." ( Id . at p. 472, 14 Cal.Rptr.2d 514 , 841 P.2d 1034 , fn. omitted.)

Before applying these teachings to the case at hand, we consider our colleagues recent vested rights discussion in Marin .

In response to the board's actions, several individual employee members of Marin CERA, together with a number of affected employee organizations, brought suit challenging the retirement board's implementation of PEPRA-in particular, as in this case, its application to legacy members, those employees who were hired prior to January 1, 2013. ( Marin , supra , 2 Cal.App.5th at pp. 679, 687, 689-690, 206 Cal.Rptr.3d 365 .) The complaint appears to have raised many of the same issues we have before us in this case, including whether AB 197 was declarative of existing law; whether wholesale exclusion of certain benefits under subdivision (b)(1) of section 31461 without a determination that they had been paid to enhance a member's pension was improper; and whether application to legacy members of the changes to compensation earnable effected by AB 197 unconstitutionally impaired their vested rights. ( Marin , supra , 2 Cal.App.5th at pp. 688, 691, fn. 14, 206 Cal.Rptr.3d 365 .) After the State intervened to defend the constitutionality of PEPRA, Marin CERA filed a general demurrer, claiming that the plaintiffs had failed to state a cause of action because AB 197 was constitutional and Marin CERA was required by law to implement it. ( Id. at p. 689, 206 Cal.Rptr.3d 365 .)

The trial court ultimately granted Marin CERA's demurrer without leave to amend. ( Marin , supra , 2 Cal.App.5th at p. 689, 206 Cal.Rptr.3d 365 .) "In its entirety, the trial court's order read: 'Respondents' Demurrer to the Verified Writ Petition is sustained without leave to amend. The court finds the Respondents' actions implementing Govt. Code § 31461, as amended effective January 1, 2013, are proper and that the Public Employees' Pension Reform Act of 2013 is constitutional. The Respondent Board of Retirement has the exclusive authority and responsibility to determine its members "compensation earnable," which is used to calculate members' retirement allowance, pursuant to Gov. Code § 31461. (See Howard Jarvis Taxpayers' Ass'n. v. Bd. of Supervisors of Los Angeles County (1996) 41 Cal.App.4th 1363 , 1373 [ 49 Cal.Rptr.2d 157 ], and

Applying this analysis to the facts before it, the Marin court had little difficulty concluding that the changes effected by AB 197 did not unconstitutionally impair the vested rights of Marin CERA's legacy members. ( Marin , supra , 2 Cal.App.5th at pp. 700-709, 206 Cal.Rptr.3d 365 .) Returning repeatedly to the notion that a public employee is entitled only to a " 'reasonable' " pension ( id. at pp. 702, 704, 706-707, 206 Cal.Rptr.3d 365 ), the Marin court highlighted the language of Allen II quoted above that requires consideration of the " ' " 'essential attributes of sovereign power' " ' " when determining whether an impairment of vested rights is constitutionally permitted. ( Marin , supra , 2 Cal.App.5th at p. 700, 206 Cal.Rptr.3d 365 ; see also id. at p. 701, 206 Cal.Rptr.3d 365 [" ' " 'not only is the existing law read into contracts in order to fix their obligations, but the reservation of the essential attributes of continuing governmental power is also read into contracts as a postulate of the legal order' " ' "].) Thereafter-without determining what the changes to section 31461 effected by PEPRA actually are-the court noted that they constitute "only one aspect" of how Marin CERA employee-members are compensated and are "quite modest." ( Marin , supra , 2 Cal.App.5th at p. 704, 206 Cal.Rptr.3d 365 .) In contrast, the court described the catalyst for PEPRA as "dire financial predictions necessitating urgent and fundamental changes to improve the solvency of various pension systems, including CERL." (

As a final matter, we must determine whether the trial court erred in concluding with respect to leave cash-outs that certain legacy members-while failing to prove impairment under a vested rights analysis-nevertheless are entitled to relief based on principles of equitable estoppel. Since we have opined that, even under AB 197, all leave cashed out during the final compensation period must be included in compensation earnable, regardless of when the underlying leave accrued, we need not address the trial court's estoppel treatment of in-service leave-cash-outs. In contrast, we have confirmed that terminal pay was never pensionable under CERL. Thus, the application of estoppel to this type of compensation remains at issue. Below, the trial court generally refused to apply estoppel principles to permit continued treatment of terminal pay as compensation earnable for legacy members because it found that a member's expectation that such pay would be pensionable did not "rise to the level necessary to establish an 'injury' sufficient to bring the doctrine of

Arguments raised on the other side of this balancing analysis, in contrast, are not persuasive. The State and the Sanitary District, for instance, suggest that allowing the continued inclusion of terminal pay in compensation earnable for legacy members constitutes an impermissible gift of public funds. But public agencies are clearly allowed to expend settlement monies without running afoul of this constitutionally-enshrined public policy. (See Cal. Atty. Gen. No. 99-907, 83 Ops.Cal.Atty.Gen. 45, 46-47 (2000) [early retirement annuities offered in exchange for releases of employment-related claims which would allow for litigation expense savings not a gift of public funds].) The State additionally argues that "invoking estoppel would allow for the known and continued spiking of employee pensions, contravening the purpose of CERL." However, all new members will be governed by the restrictions on spiking imposed by AB 197, and we are not convinced that this "anti-spiking" intent was evident in CERL prior to PEPRA. Rather, we think the legislative history before the enactment of AB 197 more reasonably evinces a "long-standing practice of the Legislature of not intruding into the county decisionmaking process regarding compensation determinations with respect to [CERL] retirement systems." (Stats. 1992, ch. 45, § 3(4).) In addition, the terminal pay authorized in the Three Counties by the Post- Ventura Settlement Agreements is fairly circumscribed. As

T

he Judgments are affirmed in part and reversed in part, the related Writs are vacated to the extent inconsistent with this decision, and the matter is remanded for determinations, in accordance with the analysis set forth herein, as to the reasonableness of PEPRA's detrimental changes when applied to the vested rights of legacy members in each of CCCERA, ACERA, and MCERA. Each party to bear its own costs.

We concur:

RUVOLO, P.J.

RIVERA, J.

With the Guelfi decision as a backdrop, the Legislature enacted several statutes in the early 1990s that impacted CERL's definitions of compensation and compensation earnable. First, in 1990, the Legislature added section 31460.1 to CERL, which provided that " '[c]ompensation' shall not include employer payments, including cash payments, made to, or on behalf of, their employees who have elected to participate in a flexible benefits program, where those payments reflect amounts that exceed their employees' salaries." (Stats. 1990, ch. 142, § 1.) The section was only operative for counties in which the board of supervisors resolved to make it applicable. ( Ibid .) Shortly, thereafter, however, in 1992, the Legislature repealed this statute, stating that it had been misconstrued by some retirement boards to require inclusion of flexible benefits in compensation absent a board of supervisors' election to the contrary. (Stats. 1992, ch. 45, § 3.) In making its decision to repeal section 31460.1, the Legislature cited Guelfi , stressed the role of county retirement boards in determining which items of compensation are includable in compensation earnable, and acknowledged the "long-standing practice of the Legislature of not intruding into the county decisionmaking process regarding compensation determinations with respect to those county retirement systems." (Stats. 1992, ch. 45, § 3.)

Next, in 1993, the Legislature made several changes to the definition of compensation earnable applicable only to counties of the first class-i.e., Los Angeles County. (Stats. 1993, ch. 396.) That legislation amended the definition of compensation earnable in section 31461 by including the concept (solely for Los Angeles) that "compensation that has been deferred shall be deemed 'compensation earnable' when earned, rather than when paid." ( Id. , § 3.) It also added section 31461.1 to CERL, which allowed the Los Angeles County Board of Supervisors, at its election, to exclude from compensation and compensation

Finally, in 1995, the Legislature amended section 31461 to make its statement about deferred compensation applicable to all counties. (Stats. 1995, ch. 558, § 1.) As detailed above, this sentence has remained part of section 31461, and applicable to all counties, up to and through the enactment of PEPRA. According to the legislative history, this change was made to ensure proper funding for deferred benefits under CERL by requiring the funding for that benefit to commence when it is first earned by a member. (Sen. Pub. Employees & Retirement Com., Analysis of Sen. Bill No. 226 (1995-1996 Reg. Sess.), p. 3.)

After these relatively minor legislative tweaks, the CERL pension landscape was dramatically altered in 1997 by the Supreme Court's landmark decision in Ventura , supra , 16 Cal.4th 483 , 66 Cal.Rptr.2d 304 , 940 P.2d 891 . The Ventura court considered a challenge made by a county deputy sheriff's association and three retirees to a county retirement board's decision to exclude from final compensation under CERL various payments made over and above the basic salary paid to all employees in the same job classification, including: county contributions to an employee's deferred compensation plan; bilingual premium pay; a uniform maintenance allowance; educational incentive pay; additional compensation for remaining on-call during meal periods for designated employees; pay in lieu of annual leave accrual; holiday pay; a motorcycle bonus; a longevity incentive; and a field training officer bonus. ( Ventura , supra , 16 Cal.4th at pp. 487-489, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Based on the "language and legislative history of the pertinent CERL provisions," the Ventura court first determined that the Legislature did not intend that county contributions to an employee's deferred compensation plan be included in compensation for purposes of CERL. ( Ventura , supra , 16 Cal.4th at p. 487, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) In this regard, the high court found

Because Ventura County was the only county before the Supreme Court, the Ventura decision expressly left open the question of whether its holding applied "retroactively to any other county." ( Ventura , supra , 16 Cal.4th at p. 507, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) After numerous writ petitions were filed statewide on behalf of CERL member-employees seeking a determination that the retroactive application of Ventura was required, the cases were coordinated and the question was squarely addressed and resolved in 2003 by In re Retirement Cases , supra , 110 Cal.App.4th at pp. 434-435, 1 Cal.Rptr.3d 790 . In short-after considering at length issues of fairness and public policy, the hardships imposed on the parties by

2. Post-Ventura Changes to Compensation Earnable in the Three Counties .

In the years after Ventura , and before the appellate court decisions in In re Retirement Cases and Salus , CERL counties scrambled to determine how compensation earnable should be calculated to include the many items of premium pay that had previously been excluded from pensionable compensation under a Guelfi analysis, but were now required to included under Ventura' s construction of CERL. "Retirement boards began to include a variety of cash payments in their computations for 'compensation earnable' that they

"(C) Any payment that is made solely due to the termination of the member's employment, but is received by the member while employed, except those payments that do not exceed what is earned and payable in each 12-month period during the final average salary period regardless of when reported or paid.

"(2) Payments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off, however denominated, whether paid in a lump sum or otherwise, in an amount that exceeds that which may be earned

The second legal issue addressed by the trial court involved the effect on CERL of AB 197's amendment excluding from compensation earnable "[p]ayments for additional services rendered outside of normal working hours, whether paid in a lump sum or otherwise." (§ 31461, subd. (b)(3).) This would, of course, exclude overtime pay from any calculation of compensation earnable, a state of affairs that all seem to agree was in existence prior to PEPRA. ( Ventura , supra , 16 Cal.4th at pp. 487, 500, fn. 20, 66 Cal.Rptr.2d 304 , 940 P.2d 891 ;

On the same day it filed its SOD, the trial court entered judgments specific to each of the Three Counties (Judgments) and ordered issuance of related writs of mandate to CCCERA, ACERA, and MCERA (Writs). Based on the analysis in the SOD, all three Judgments denied petitioners' request to have new section 31461 declared an unconstitutional impairment of the vested

When construing statutes on appeal, our function " 'is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.' " ( Ventura , supra , 16 Cal.4th at p. 492, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Where the language of a statute is ambiguous-as Ventura declared sections 31460 and 31461 to be in many respects-our "primary responsibility" when engaging in judicial construction "is to carry out the intent of the Legislature to the extent possible." ( Id. at p. 493, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) In addition-since the task of statutory interpretation here at hand involves the pension rights of legacy members of CCCERA, ACERA, and MCERA-we must keep in mind that " ' "[p]ension legislation must be liberally construed and applied to the end that the beneficent results of such legislation may be achieved." ' " ( Irvin , supra , 13 Cal.App.5th at p. 170, 220 Cal.Rptr.3d 510 .) Thus, while our judicial construction "must be consistent with the clear language and purpose of the statute," it is also true that "[a]ny ambiguity or uncertainty in the meaning of pension legislation must be resolved in favor of the pensioner." ( Ventura , supra , 16 Cal.4th at p. 490, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .)

On the other hand, since appellants here claim that the application of AB 197 to the calculation of their retirement benefits violates their vested contractual rights under both state and federal contract clauses, they have the burden of " 'mak[ing] out a clear case' " that such a constitutional violation has occurred. ( Deputy Sheriffs' Assn. of San Diego County v. County of San Diego (2015) 233 Cal.App.4th 573 , 578, 182 Cal.Rptr.3d 759 ( San Diego Deputy Sheriffs ).) Moreover, as the State points out, there is also a presumption at play in these proceedings that the amendments to section 31461 effected by AB 197 are constitutional: " ' "If there is any doubt as to the Legislature's power to act in any given case, the doubt should be resolved in favor of the Legislature's action. Such restrictions and limitations [imposed by the Constitution] are to be construed strictly, and are not to be extended to include matters not covered by the language used." ' " ( California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231 , 253, 135 Cal.Rptr.3d 683 , 267 P.3d 580 .)

2. Board Discretion .

As an additional matter, we cannot ignore the fact that the pension determinations here at issue are the result of the implementation of CERL by the Boards, who have been vested with the authority to manage each of their respective pensions systems. (§ 31520; see also Cal. Const., art XVI, § 17

In Irvin , this District recently considered at length the extent to which our review of board decisions interpreting CERL should be deferential. ( Irvin , supra , 13 Cal.App.5th at pp. 171-173, 220 Cal.Rptr.3d 510 .) The Irvin court began with a discussion of Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1 , 78 Cal.Rptr.2d 1 , 960 P.2d 1031 ( Yamaha ), in which the Supreme Court "addressed the weight to be given to the interpretation of a state statute by ' "an administrative agency charged with its enforcement and interpretation." ' " ( Irvin , supra , 13 Cal.App.5th at p. 171, 220 Cal.Rptr.3d 510 , quoting Yamaha .) Applying Yamaha , the Irvin court concluded that the CERL board's statutory interpretation in its case was entitled to " 'due consideration,' " but not deference. ( Id. at p. 172, 220 Cal.Rptr.3d 510 ; see also Lanquist v. Ventura County Employees' Retirement Assn. (2015) 235 Cal.App.4th 186 , 192-193, 185 Cal.Rptr.3d 166 ( Lanquist ) [finding by Second District that a county retirement board's interpretation of a CERL provision is entitled to "due consideration"].)

Importantly, the Irvin Court went on to note that "it is not entirely clear that Yamaha applies at all. That decision was concerned with interpretive annotations in a business tax law guide published by the Board of Equalization, a state agency with exclusive regulatory authority over the laws concerned. The [CERL board], in contrast, does not have an exclusive grant of authority; it is but one of 20 county retirement boards, all of which have responsibility for administering CERL within their jurisdictions." ( Irvin , supra , 13 Cal.App.5th at p. 172, 220 Cal.Rptr.3d 510 ; see also Purifoy v. Howell (2010) 183 Cal.App.4th 166 , 182-183, 107 Cal.Rptr.3d 213 [rejecting use of deference where many local public and private agencies may have inconsistent interpretations]; California Highway Patrol v. Superior Court (2006) 135 Cal.App.4th 488 , 501, 38 Cal.Rptr.3d 16 [rejecting argument that the Legislature should be deemed to have approved a particular statutory interpretation applied by some municipalities for many years because, "[w]hile this principle may apply when a state agency is charged with administering a particular statutory scheme, it has dubious application when numerous cities and counties are

Admittedly, no case or legislative action since Guelfi has expressly debunked this notion. And, indeed, through its language, the Legislature has, at times, encouraged it. Thus, for instance, when the Legislature repealed section 31460.1 in 1992, as discussed above, it noted that, since its enactment in 1937, CERL has "conferred upon the county retirement boards the duty and power to determine which of the items of compensation paid to county employees who are members of the county retirement associations or systems would constitute 'compensation earnable,' which, in turn, generally determines the amounts of the retirement allowances of retiring members." (Stats.

As Guelfi itself acknowledged, CERL "set[s] out a clear sequence for computing retirement benefits, beginning with a fairly broad definition of 'compensation' (§ 31460) and progressing through the narrowing definition of 'compensation earnable' (§ 31461) to arrive at 'final compensation' (§ 31564.1)." ( Guelfi , supra , 145 Cal.App.3d at p. 303, 193 Cal.Rptr. 343 .) Thus, the language of CERL does not suggest a statutory structure setting forth a threshold for compensation earnable, while allowing additions at the discretion of the board beyond those required minimums. Instead, it prescribes a required series of definitional hurdles, all of which must be cleared in order to make a particular pay item pensionable. Thus, for instance, if footnote 6 is interpreted as appellants suggest, the uniform allowance Guelfi held was not compensation (a legal conclusion later reversed by Ventura ) would nevertheless be pensionable at the discretion of the CERL boards. (

As the State argues on appeal, the essential elements of CERL's definition of compensation earnable have remained unchanged since its codification in 1947-that is, that compensation earnable means "the average compensation as determined by the board, for the period under consideration upon the basis of the average number of days ordinarily worked by persons in the same grade or class of positions during the period, and at the same rate of pay." And that "[t]he computation for any absence shall be based on the compensation of the position held by the member at the beginning of the absence." (§ 31461, subd. (a).; cf. § 31461 as added by Stats. 1947, ch. 424, § 1.) In Ventura , our high court interpreted this language to mean "the average pay of the individual retiring employee computed on the basis of the number of hours worked by other employees in the same class and pay rate-that is the average monthly pay, excluding overtime, received by the retiring employee for the average number of days worked in a month by the other employees in the same job classification at the same base pay level." ( Ventura , supra , 16 Cal.4th at p. 504, 66 Cal.Rptr.2d 304 , 940 P.2d 891 , italics added.)

Although the Ventura court described compensation earnable as a narrowing of the broader definition of compensation ( Ventura , supra , 16 Cal.4th at pp. 493-494, 66 Cal.Rptr.2d 304 , 940 P.2d 891 ), its interpretation of the statutory definition shows that the concept is really a legal fiction, with the potential to both expand and contract the actual compensation otherwise earned by the retiring employee. Thus, compensation earnable may narrow a retiring employee's compensation by excluding any overtime pay that he or she earned during the final compensation period, while at the same time expanding such compensation to account for any unpaid absences that the employee may have taken during that same timeframe. Regardless of these possible adjustments, however, the touchstone for calculating compensation earnable is still the compensation

This determination, however, does not end our analysis of the in-service leave cash-outs here at issue. Rather, the question remains whether in-service leave cash-outs are earned when the leave at issue is accrued or when the employee earns the right to sell that leave in return for cash. The trial court below concluded that a leave benefit is earned when the employee accrues the leave time-that is, at the point when the employee earns the right to be paid without work, and the State endorses this position on appeal. Appellants, in contrast, cite both Ventura and In re Retirement Cases for the proposition that such leave cash-outs are only earned for purposes of CERL when an employee earns the right to receive cash in-lieu of accrued time.

As stated above, Ventura holds that, in addition to base pay, premiums paid to employees in cash "even if not earned by all employees in the same grade or class" are items of compensation that must be included in compensation earnable and thus in final compensation under CERL. ( Ventura , supra , 16 Cal.4th at p. 487, 66 Cal.Rptr.2d 304 , 940 P.2d 891 .) Among the various premiums considered by Ventura were cash payments in lieu of annual leave accrual and as longevity

Indeed, although the shoe was essentially on the other foot, the court in In re Retirement Cases considered and rejected a similar argument. In that case, the counties and the CERL boards argued that applying Ventura retroactively would unconstitutionally impair their contract expectations,

The Shelden court concluded that the overtime hours at issue were properly excluded from compensation earnable. The court acknowledged that Shelden performed the work "regularly (once a week) and for a long period of time (about four years)." ( Shelden , supra , 189 Cal.App.4th at p. 464, 116 Cal.Rptr.3d 883 .) Nevertheless, it found the work to be excludable overtime because: Shelden performed the work on what he characterized as his day off; he was not required to perform the work, but instead volunteered to do it; he was not required to take a sick day or vacation leave if he could not complete the shift; he did not pay into the retirement system for the time; and the sheriff considered the work to be outside of regular working hours. ( Ibid . ) While the on-call premiums at issue here are not technically overtime (the Ventura court characterized them as payments "in lieu" of overtime pay), we believe they bear some relationship to an employee's regular work schedule. Thus, while not directly relevant, we find Shelden useful in its articulation of what was and was not considered overtime under pre-PEPRA CERL.

Indeed, our own reading of the pre-PEPRA version of section 31461-as informed by both Ventura and Shelden -leads us to the conclusion that on-call, standby and similar payments were includable in compensation

In fact, the "normal working hours" language of new subdivision (b)(3) was lifted directly from the corresponding definition of compensation earnable under PERL. (See § 20636, subd. (c)(7)(B) [defining special compensation for purposes of compensation earnable as expressly excluding "[p]ayments made for additional services rendered outside of normal working hours, whether paid in lump sum or otherwise"]; see also § id. , subd. (c)(3) [same].) This, at the very least, evinces an intent on the part of the Legislature to treat the two retirement systems similarly with regard to on-call pay. ( Ventura , supra , 16 Cal.4th at p. 504, 66 Cal.Rptr.2d 304 , 940 P.2d 891 [noting that "[t]he Legislature is presumed to be aware of other statutes on the same or analogous subject matter in which the same language is used"].) Indeed, appellants concede as much. Moreover, at the time AB 197 was drafted, PERS apparently took the position that, based on this "normal working hours" language, on-call pay was not reportable compensation for retirement purposes under PERL. (See City of Pleasanton v. Board of Administration (2012) 211 Cal.App.4th 522 , 528-529, 149 Cal.Rptr.3d 729 ( City of Pleasanton ).) And, shortly after AB 197 was approved by the Governor in September 2012 (see Stats. 2012, ch. 297, § 2), this District expressly held that on-call or standby pay was not special compensation under PERL because it was not compensation for services rendered during normal working hours. ( City of Pleasanton , supra , 211 Cal.App.4th at pp. 537-540, 149 Cal.Rptr.3d 729 .) Thereafter, based on

1. Supreme Court Jurisprudence on Vested Pension Rights .

In California, the modern law of public pensions begins with Kern v. City of Long Beach (1947) 29 Cal.2d 848 , 179 P.2d 799 ( Kern ). In that case, the City of Long Beach (Long Beach), pursuant to a provision of its city charter, offered a pension to city employees after 20 years of service in an amount equal to 50 percent of their annual salaries. ( Id. at p. 850, 179 P.2d 799 .) Approximately 32 days before petitioner Kern completed his required 20 years of service, Long Beach amended its charter to eliminate pensions for all persons not then eligible to retire. ( Ibid . ) The Supreme Court concluded that Kern had acquired a vested right to a pension which Long Beach could not abrogate without impairing its contractual obligations, and thus the repeal was ineffective as to Kern. ( Id. at p. 856, 179 P.2d 799 .)

In reaching this conclusion, the Kern court noted that, where services are rendered under a pension statute, " 'the pension provisions become part of the contemplated compensation for those services and so in a sense a part of the contract of employment itself.' " ( Kern , supra , 29 Cal.2d at p. 852, 179 P.2d 799 .) Thus, " '[t]hey are in effect pay withheld to induce long-continued and faithful services.' " ( Ibid . ; see also Id . at p. 856, 179 P.2d 799 [stating that "one of the primary objectives in providing pensions for government employees ... is to induce competent persons to enter and remain in public employment"].) Moreover, although "an employee does not earn the right to a full pension until [he or she] has completed the prescribed period of service," that employee "has actually earned some pension rights as soon as [he or she] has performed substantial services" for the public employer. ( Id. at p. 855, 179 P.2d 799 , italics added.) Under such circumstances, the fact that the pension benefits are deferred and may be dependent on certain contingencies (such as continued

Over the next 60 years, the high court was forced to address the question it had left unanswered regarding the permissible scope of pension modifications. In doing so, it fleshed out its own particular views on the parameters of the vested public pension rights it had recognized in Kern . Thus, for example, in Packer v. Board of Retirement (1950) 35 Cal.2d 212 , 217 P.2d 660 ( Packer ), the Supreme Court found permissible a pension modification which permitted a "widow's pension" only if the husband agreed to take a lesser pension for himself. ( Id. at pp. 213-214, 217 P.2d 660 .) The court was influenced by the fact that the change was part of a "substantial revision" to the retirement law which, under certain circumstances, actually gave county peace officers greater benefits than they had before. ( Id. at pp. 214, 218, 217 P.2d 660 .) In contrast, in Wallace v. City of Fresno (1954) 42 Cal.2d 180 , 265 P.2d 884 ( Wallace ), the Supreme Court rejected a pension modification which gave the pension board discretion to terminate an employee's pension if the recipient was convicted of a felony. ( Id. at pp. 181-182, 265 P.2d 884 .) Wallace was convicted of a felony after he retired as the city's chief of police. ( Id . at p. 181, 265 P.2d 884 .) The change was unreasonable because "[t]he termination of all pension rights upon conviction of a felony after retirement does not appear to have any material relation to the theory of the pension system or to its successful operation." ( Id. at p. 185, 265 P.2d 884 .)

In 1955, the Supreme Court revisited Long Beach's retirement obligations in Allen v. City of Long Beach (1955) 45 Cal.2d 128 , 287 P.2d 765 ( Allen I ).

Abbott v. City of Los Angeles (1958) 50 Cal.2d 438 , 326 P.2d 484 ( Abbott ), thereafter underscored that "it is advantage or disadvantage to the particular employees whose own contractual pension rights, already earned, are involved which are the criteria by which modifications to pension plans must be measured." ( Id. at p. 449, 326 P.2d 484 , italics added, see also id. at p. 453, 326 P.2d 484 .) In finding a change from a fluctuating to a fixed pension system unreasonable, the Abbott court rejected as "speculation" the argument that rising costs might otherwise cause the pension system to cease to exist. Specifically, the court opined: "Rising costs alone will not excuse the city from meeting its contractual obligations, the consideration for which has already been received by it. Moreover, it is not to be assumed that the city would have attempted to abolish its pension system by reason thereof, especially since such systems are almost universally essential in order to attract qualified employees." ( Id. at pp. 445, 455, 326 P.2d 484 .)

As stated above, Division Two recently concluded that the changes to CERL's definition of compensation earnable effected by PEPRA did not amount to an unconstitutional impairment of the vested pension rights of the legacy members of Marin CERA. ( Marin , supra , 2 Cal.App.5th at pp. 693-709, 206 Cal.Rptr.3d 365 .) Shortly after the Legislature enacted PEPRA, Marin CERA adopted a policy implementing the amendments to section 31461, similar to the policies promulgated by CCCERA, ACERA, and MCERA that are at issue in this case. ( Id. at pp. 685-686, 206 Cal.Rptr.3d 365 .) In particular, the board determined that-for members retiring after January 1, 2013-numerous pay items previously included in compensation earnable would be excluded, and Marin CERA would no longer collect retirement contributions based on those items.

In reviewing the trial court's demurrer decision, the Marin court eschewed analysis of the many issues of statutory construction with which we have wrestled here, instead conducting a purely constitutional inquiry into the

Admittedly, total pension system collapse may be a sufficiently weighty concern to meet this standard. However, there is no indication in the Marin decision that, in considering the fiscal justification for application of the pension modifications at issue to legacy members, the court specifically weighed the financial implications for Marin CERA if legacy members were exempted from those modifications, rather than impermissibly focusing on the unfunded pension liability crisis in general. (Cf. Abbott , supra , 50 Cal.2d at pp. 445, 455, 326 P.2d 484 [rejecting as "speculation" a general argument that rising costs might otherwise cause the pension system to cease to exist].) In the end, we simply do not think that it is possible to engage in the individualized balancing test mandated by the Supreme Court's vested rights jurisprudence-and thereby determine whether it is reasonable to apply the pension modifications at issue to legacy members-without a specific analysis of the changes that have been effected by the new law; consideration of the impact of those changes on the legacy members at issue; and an evaluation of the legislative rationale for the change in the context of the facts of each specific CERL system. We therefore decline to follow Marin .

3. Vested Rights in this Case .

We have concluded that AB 197 modified CERL and therefore potentially impacted the vested pension rights of legacy members in two distinct ways-by removing certain on-call and related payments from pensionable compensation and by allowing CERL boards to look to the intent behind particular items of compensation that would otherwise be deemed compensation earnable to determine whether they nevertheless constitute impermissible "enhancement" benefits. Applying our view of the Supreme

When considering whether the vested rights of legacy member in each of CCCERA, ACERA, and MCERA have been unconstitutionally impaired, the trial court should recognize that-since no corresponding new advantages have been provided with respect to the detrimental changes to compensation earnable effected by PEPRA-the application of the detrimental changes to legacy members can only be justified by compelling evidence establishing that the required changes "bear a material relation to the theory ... of a pension system," and its successful operation. ( Allen II , supra , 34 Cal.3d at p. 120, 192 Cal.Rptr. 762 , 665 P.2d 534 ; see Allen I , supra , 45 Cal.2d at p. 131, 287 P.2d 765 ; see also Wallace , supra , 42 Cal.2d at p. 185, 265 P.2d 884 .) Moreover, this analysis must focus on the impacts of the identified disadvantages on the specific legacy members at issue. ( Abbott , supra , 50 Cal.2d at p. 449, 453, 326 P.2d 484 .) And, if the justification for the changes is the financial stability of the specific CERL system, the analysis must consider whether the exemption of legacy members from the identified changes would cause that particular CERL system to have "difficulty meeting its pension obligations" with respect to those members. ( Allen I , supra , 45 Cal.2d at p. 133, 287 P.2d 765 .) In this regard, mere speculation is insufficient. (See Abbott , supra , 50 Cal.2d at pp. 445, 455, 326 P.2d 484 .) Moreover, generally speaking "[r]ising costs alone will not excuse the city from meeting its contractual obligations, the consideration for which has already been received by it." ( Id. at p. 455, 326 P.2d 484 ; see also Ventura , supra , 16 Cal.4th at p. 507, 66 Cal.Rptr.2d 304 , 940 P.2d 891 [noting, in requiring that pension benefits required by CERL be provided retroactively to Ventura pensioners, that "[n]othing in this record suggests that the burden on the county fisc justifies either perpetuation of an erroneous construction of the applicable statutes or denying these plaintiffs the benefit of our decision"].) Under this analysis, and contrary to the holding in Marin , the fact that the modifications here at issue may be relatively modest looking at a system's pension costs as a whole may actually argue in favor of finding an impairment, as the continuation of such benefits solely for legacy members may not have a significant impact on the system, especially if such benefits have been already actuarially accounted for and treated as pensionable.

We recently had occasion to review the law relating to estoppel in the public pension context and summarized it as follows: "The doctrine of equitable estoppel is founded on notions of equity and fair dealing and provides that a person may not deny the existence of a state of facts if that person has intentionally led others to believe a particular circumstance to be true and to rely upon such belief to their detriment. [Citation.] ' "Generally speaking, four elements must be present in order to apply the doctrine of equitable estoppel: (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." ' " ( City of Oakland v. Oakland Police & Fire Retirement System (2014) 224 Cal.App.4th 210 , 239, 169 Cal.Rptr.3d 51 ( City of Oakland ).) "Where, as here, a party seeks to invoke the doctrine of equitable estoppel against a governmental entity, an additional element applies. That is, the government may not be bound by an equitable estoppel in the same manner as a private party unless, 'in the considered view of a court of equity, the injustice which would result from a failure to uphold an estoppel is of sufficient dimension to justify any effect upon public interest or policy which would result from the raising of an estoppel.' " ( Id. at p. 240, 169 Cal.Rptr.3d 51 ;

It is undeniably true, as we have discussed at length, that CERL boards do not have the power to include terminal pay in compensation earnable as a matter of discretion. However, under both statutory and constitutional law, such boards have plenary authority with respect to the administration of their respective CERL systems. (§ 31520 ["the management of the retirement system is vested in the board of retirement"]; Cal. Const., art. XVI, § 17 [retirement board of a public pension system has "plenary authority and fiduciary responsibility for investment of moneys and administration of the system"]; id. , § 17, subd. (a) [retirement board has "sole and exclusive responsibility to administer the system in a manner that will assure prompt delivery of benefits and related services to the participants and their beneficiaries"]; id. , § 17, subd. (b) [members of retirement board shall discharge their duties to, among other things, defray "reasonable expenses of administering the system"].) Surely, this broad administrative mandate must include the power to settle litigation in order to defray legal expenses and ensure the prompt and

Finally, with respect to the specific elements needed to support equitable estoppel, the Sanitary District argues that these requirements have not been proven on an individual basis by each legacy member as required, while the