CalPERS got it right when it voted last week to affirm the existing practice of counting temporary out-of-classification assignments toward retirement.
This issue was specifically discussed in negotiations over Assembly Bill 340, and the Legislature agreed that this compensation should continue to count towards retirement and wrote the Public Employees Pension Reform Act (PEPRA) consistent with this decision.
We made this decision based on a thorough assessment of the facts, including:
• When a temporary out-of-classification assignment is made, both the employee and employer pay into CalPERS based on the higher salary.
• The vast majority of such assignments do not occur in the final years of employment, meaning most employees never receive higher pension benefits as a result of these assignments. Therefore, rescinding these benefits not only would harm those few employees who legitimately perform the work in these assignments, pay higher contributions and receive slightly increased pensions, it would also eliminate the cost savings that result from those employees who don’t get higher pensions. Repealing this provision would probably end up increasing CalPERS’ costs.
• The decision on whether to grant a temporary out-of-classification assignment is 100 percent under the control of management. No employee can receive this assignment or increase their pension unless management decides to fill a temporary vacancy with that particular employee.
• The temporary out-of-classification assignment provision existed prior to PEPRA. Repeal of these provisions was considered and rejected for the above reasons.
Repealing the benefit would not save money, it would cost money. Also, it would harm employees who legitimately perform work at management’s request and pay out of their own check to fund the benefit.
Former Assemblyman Warren Furutani is the author of the Public Employees Pension Reform Act.