CCCERA filed the suit after the County’s Board of Supervisors imposed a series of changes to the employment terms of County employees who work solely for the retirement fund. According to CCCERA, this occurred after more than a dozen years of the County recognizing the Retirement Board’s authority.
The County’s action came after the Retirement Board told the County it wanted to maintain the status quo for its staff. However, the County imposed a series of changes to the employment terms of County employees who work for CCCERA, which went into effect on October 1, 2011.
“We are seeing an alarming trend across the state of cities and counties attempting to seize control of their employee pension trusts, with an eye towards relieving their fiscal pressures,” said CCCERA’s attorney, Harvey L. Leiderman, a partner in the San Francisco office of Reed Smith LLP. “Twenty years ago, the Governor tried to do the same thing, and the voters amended the California State Constitution to give county pension trustees independent authority to administer these public trust funds without fear of political interference.
“Nothing is more important to the independent administration of these funds than the trustees’ power to appoint and pay the staff that carries out their solemn fiduciary duties,” asserted Leiderman. “Allowing the County to dictate the employment terms of CCCERA staff only politicizes the trust. It violates the Retirement Board’s statutory powers and could seriously impair the professional management of the fund. That could eventually cost the County and its taxpayers millions more in contributions.”
The County’s previous attempt to limit the Retirement Board’s authority over its staff was rejected by the courts. In 1997, a state court of appeals ruled in Corcoran v. Contra Costa County Employees’ Retirement Board that the Retirement Board was the governing body of the employees who work at CCCERA.
According to the most recent suit filed, Contra Costa County’s top legal officer has long agreed that CCCERA should have authority over its staff. In a 2002 Opinion, County Counsel advised: “The Retirement Board …has the authority to set the salaries of the Retirement Board staff members. The Retirement Board is the governing board of its staff members. The Retirement Board’s setting of salaries for its staff members is necessary and integral to it carrying out its fiduciary responsibilities over the retirement system and its assets and funds.”
However, the County’s attitude changed this year as it sought greater control over the pension trust. County officials rebuffed the Retirement Board’s informal attempts to reconcile their differences.
The Retirement Board’s lawsuit seeks to reverse the County’s action as to CCCERA’s staff and allow the Retirement Board to independently determine the personnel, salaries and benefits it believes are necessary to meet the needs of the trust fund.