The opinion
Filed 6/24/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
LOS ANGELES COUNTY B326977
EMPLOYEES RETIREMENT
ASSOCIATION, (Los Angeles County
Super. Ct.
Plaintiff and Appellant, No. 21STCP03475)
v.
COUNTY OF LOS ANGELES et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, James C. Chalfant, Judge. Reversed.
Latham & Watkins, Manuel A. Abascal, Nicholas Rosellini,
and Roman Martinez for Plaintiff and Appellant.
Hanson Bridgett, Raymond F. Lynch, Judith W. Boyette,
and Matthew J. Peck for Board of Retirement of the
San Bernardino County Employees’ Retirement Association as
Amicus Curiae on behalf of Plaintiff and Appellant.
Benedon & Serlin, Judith E. Posner and Wendy S. Albers
for Coalition of County Unions as Amicus Curiae on behalf of
Plaintiff and Appellant.
Law Office of Michael A. Conger and Michael A. Conger for
Retired Employees of Los Angeles County as Amicus Curiae on
behalf of Plaintiff and Appellant.
Jeff Rieger for Board of Retirement of the Alameda County
Employees Retirement Association as Amicus Curiae on behalf of
Plaintiff and Appellant.
Renne Public Law Group, Linda M. Ross, Steve Cikes, and
Ryan P. McGinley-Stempel for Defendants and Respondents.
Jennifer Bacon Henning for California State Association of
Counties as Amicus Curiae on behalf of Defendants and
Respondents.
INTRODUCTION
This appeal presents two questions: First, does the
fiduciary board of a county public employee retirement system
established under the County Employees Retirement Law of 1937
(Gov. Code, § 31450 et seq. (CERL)) 1 have authority under the
California Constitution and relevant statutes to create
employment classifications and set salaries for employees of the
retirement system? Second, does section 31522.1 impose a
ministerial duty on a county board of supervisors to include in
the county’s employment classifications and salary ordinance the
classifications and salaries adopted by the board of a county
public employee retirement system for employees of that system?
It will take some time and space to explain our answers to these
1 Undesignated statutory references are to the Government
Code.
2
questions. In the meantime, here’s the short version: Yes and
yes.
In 1992 the voters gave governing boards of public
employee retirement systems “plenary authority and fiduciary
responsibility for investment of moneys and administration of the
system.” (Cal. Const., art. XVI, § 17, added by initiative,
Gen. Elec. (Nov. 3, 1992), the California Pension Protection Act of
1992, known as Proposition 162 (Proposition 162).) The voters
also required the governing boards of retirement systems “to
maximize the rate of return” while “defraying reasonable
expenses of administering the system.” (Id., subds. (b), (d).)
In enacting Proposition 162 the voters declared that, to “protect
pension systems, retirement board trustees must be free from
political meddling and intimidation.” (Ballot Pamp., Gen. Elec.
(Nov. 3, 1992) text of Prop. 162, p. 70, § 2, subd. (f) (1992 Ballot
Pamp.).) The voters intended Proposition 162 to “give the sole
and exclusive power over the management and investment of
public pension funds to the retirement boards,” to “strictly limit
the Legislature’s power over such funds,” and to “prohibit the
Governor or any executive or legislative body of any political
subdivision of this state from tampering with public pension
funds.” (Id., p. 70, § 3, subd. (e).)
Proposition 162 expanded the authority granted to
governing boards of county retirement systems under CERL to
manage their systems and, for boards that agreed to pay
administrative costs out of retirement system funds, to establish
annual budgets and to appoint their own staff. (See §§ 31522.1,
31580.) Thus, the management of pension fund assets for such
boards includes expenditures for salaries and benefits for
retirement system employees. Following Proposition 162,
3
retirement boards that appoint their own staff may incur only
“reasonable expenses” in fulfilling their “sole and exclusive
fiduciary responsibility over [system] assets” and their duties
“to minimize the risk of loss and to maximize the rate of return.”
(Cal. Const., art. XVI, § 17, subds. (a), (d).)
Under CERL the governing boards of the Los Angeles
County Employees Retirement Association (LACERA) budget and
pay for LACERA’s staff out of system assets. In 1996
Los Angeles County and its Board of Supervisors agreed with
LACERA that Proposition 162 gave LACERA authority to create
employment classifications and set salaries for LACERA
employees. The County also agreed “the Board of Supervisors
has a ministerial duty [under section 31522.1] to adopt an
ordinance implementing classification and compensation changes
adopted by LACERA for its employees.” For two decades
LACERA’s Board of Retirement and its Board of Investments
(collectively, the LACERA Boards) determined which positions
were necessary to satisfy their fiduciary responsibilities under
Proposition 162, created employment classifications to reflect the
requisite qualifications and responsibilities for such positions,
and set salary ranges to recruit and retain persons to fill those
positions, while the Board of Supervisors implemented the
LACERA Boards’ decisions.
In 2018, however, something happened. The Board of
Supervisors began rejecting certain employment classifications
and salaries the LACERA Boards had adopted for LACERA
employees. The Board of Supervisors cited a 15-year-old decision,
Westly v. Board of Administration (2003) 105 Cal.App.4th 1095
(Westly), which held the broad authority Proposition 162 granted
to retirement boards was not broad enough to give the governing
4
board of the state public employees retirement system the power
to establish employment classifications and set salaries for its
employees. The Board of Supervisors also cited the need “for
alignment with the existing LACERA and County organizational
structure.”
The standoff between the Board of Supervisors and the
LACERA Boards prevented LACERA from hiring and
compensating certain employees the LACERA Boards deemed
necessary to fulfill their fiduciary duties under Proposition 162
and ultimately caused LACERA to file this action for declaratory
relief and a writ of mandate. Following Westly, the trial court
denied LACERA’s request for declaratory relief and its petition
for a writ of mandate to require the Board of Supervisors to adopt
the LACERA Boards’ employment classifications and salaries for
LACERA employees.
Unlike the trial court, we are not bound by the court’s
decision in Westly. Which is a good thing, because we conclude
that decision is inconsistent with the language, purpose, and
intent of Proposition 162. We also conclude section 31522.1
imposes on a county board of supervisors a ministerial duty to
include in “eligible lists created in accordance with the civil
service or merit system rules of the county in which the
retirement system governed by the boards is situated” the
employment classifications adopted by a board of retirement or
board of investment and to include in the county salary ordinance
or resolution the salaries adopted by a board of retirement or
board of investment. Without that mandate, a political
subdivision such as a county can elevate its political priorities
over the fiduciary duty of a retirement board to administer its
system for the “exclusive purposes of providing benefits to
5
participants . . . and their beneficiaries and defraying reasonable
expenses of administering the system.” (See Cal. Const.,
art. XVI, § 17, subd. (b).) Because Proposition 162 does not allow
that, we reverse the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Constitution Authorizes the Board of Supervisors
To Govern the County Under a County Charter
Let’s start at the beginning. The California Constitution
divides the state into counties and allows the governing bodies of
those counties to adopt a charter for their governance. (Cal.
Const., art. XI, §§ 1, 3; see Dibb v. County of San Diego (1994)
8 Cal.4th 1200, 1206.) Los Angeles County is a “charter county”
(Dimon v. County of Los Angeles (2008) 166 Cal.App.4th 1276,
1281 & fn. 7) governed by the Los Angeles County Board of
Supervisors (L.A. County Charter, art. I, § 2; id., art. II, § 4).
Article XI, section 4 of the California Constitution
addresses the structure and operation of charter counties and
grants charter counties a degree of “‘home rule,’ i.e., the authority
of the people to create and operate their own local government
and define the powers of that government, within the limits set
out by the Constitution.” (Dibb v. County of San Diego, supra,
8 Cal.4th at p. 1206.) “Consequently, ‘[w]hen a California County
[such as Los Angeles County] adopts a charter, its provisions “are
the law of the State and have the force and effect of legislative
enactments.”’” (Dimon v. County of Los Angeles, supra,
166 Cal.App.4th at p. 1281-1282; accord, Holmgren v. County of
Los Angeles (2008) 159 Cal.App.4th 593, 601; see County of
Riverside v. Superior Court (2003) 30 Cal.4th 278, 285.)
6
Article XI, section 4 states county charters “shall provide
for,” among other things, the “fixing and regulation by governing
bodies, by ordinance, of the appointment and number of
assistants, deputies, clerks, attachés, and other persons to be
employed, and for the prescribing and regulating by such bodies
of the powers, duties, qualifications, and compensation of such
persons, the times at which, and terms for which they shall be
appointed, and the manner of their appointment and removal.”
(Cal. Const., art. XI, § 4, subd. (f).) Under the home rule doctrine,
“county charter provisions concerning the operation of the county,
and specifically including the County’s right to provide ‘for the
number, compensation, tenure, and appointment of employees’
(that is, a county’s core operations) trump conflicting state laws.”
(Holmgren v. County of Los Angeles, supra, 159 Cal.App.4th at
p. 601; see Dimon v. County of Los Angeles, supra,
166 Cal.App.4th at p. 1281.)
Similarly, under the Charter of the County of Los Angeles,
the Board of Supervisors has authority to “appoint all County
officers other than elective officers, and all officers, assistants,
deputies, clerks, attaches and employees whose appointment is
not provided for by this Charter. . . . The Board shall provide, by
ordinance, for the compensation of elective officers and of its
appointees, unless such compensation is otherwise fixed by this
Charter.” (L.A. County Charter, art. III, § 11(1); see § 25300.)
The Charter further provides the Board of Supervisors has the
duty to “provide, by ordinance, for the number of assistants,
deputies, clerks, attaches and other persons to be employed from
time to time in the several offices and institutions of the County,
and for their compensation and the times at which they shall be
appointed.” (L.A. County Charter, art. III, § 11(3).)
7
Under the County Charter, the Board of Supervisors
established the Civil Service Rules, which include a classification
plan and a mechanism for setting salaries for County employees.
(L.A. County Charter, art. IX, § 35; L.A. County Civ. Service
Rules, L.A. County Code, tit. 5, appen. 1, rules 5.01(A), 5.03(D).) 2
According to the County, a “classification” is “‘a set of individual
positions, suitable for similar treatment with respect to pay,
examination procedures, and work assignments that are
clustered or grouped by virtue of the similarity of the nature of
work performed, the level of job complexity and responsibility
required, the knowledge, skill and ability requirements, and the
working conditions.’” The County’s chief executive officer, who is
responsible for classifying all positions in the County, has issued
policies regarding classification and compensation that, according
to the County, “emphasiz[e] the civil service principle of ‘equal
pay for equal work.’” Regarding compensation, the County’s chief
executive officer submits any proposed changes to the Board of
Supervisors to approve and include in its salary ordinance.
(Rule 5.03(D).) “In fixing compensation to be paid to persons
under the classified civil service, the Board of Supervisors shall
be governed by applicable State statutes and County ordinances.”
(L.A. County Charter, art. X, § 47.)
B. The Board of Supervisors Creates the Los Angeles
County Retirement System
CERL established “an optional employee pension system
for county adoption.” (Alameda County Deputy Sheriff’s Assn. v.
Alameda County Employees’ Retirement Assn. (2020) 9 Cal.5th
1032, 1055; see § 31500 [a board of supervisors may establish a
2 References to rules are to the County Civil Service Rules.
8
retirement system under CERL by a four-fifths vote].) The Board
of Supervisors adopted the provisions of CERL shortly after it
became law. 3 (L.A. County Code, § 5.20.010.) Los Angeles
County established LACERA in 1947. (Howard Jarvis
Taxpayers’ Assn. v. Board of Supervisors (1996) 41 Cal.App.4th
1363, 1373.)
CERL vests the management of a county employee
retirement system in a board of retirement. (§ 31520; Alameda
County Deputy Sheriff’s Assn. v. Alameda County Employees’
Retirement Assn., supra, 9 Cal.5th at p. 1066.) The county
treasurer is one of five members of the board of retirement, the
county board of supervisors selects two more members, and the
remaining two are elected by the retirement association. (See
§ 31530.) In counties with retirement system assets that exceed
$800,000,000, like Los Angeles County, the board of supervisors
may establish a board of investments to manage investments of
the retirement system. (See § 31520.2.) According to LACERA,
its Board of Retirement generally administers and manages the
retirement system, while its Board of Investments develops and
implements LACERA’s investment and actuarial policies and
objectives. Together the LACERA Boards develop and approve
LACERA’s budget, including the classification and salaries of its
employees.
3 As of 2020, 20 of California’s 58 counties had chosen to
implement pension plans under CERL. (Alameda County Deputy
Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn.,
supra, 9 Cal.5th at p. 1055.) “The remaining counties either
operate an independent retirement system or contract with the
state’s pension plan, the Public Employees’ Retirement System.”
(Ibid.)
9
“A county retirement board . . . does not act as agent for the
county, but as administrator of the county retirement system, an
independent entity.” (Traub v. Board of Retirement (1983)
34 Cal.3d 793, 798; see Hudson v. County of Los Angeles (2014)
232 Cal.App.4th 392, 396, fn. 2 [“LACERA is a public retirement
system independent from the County of Los Angeles”]; Howard
Jarvis Taxpayers’ Assn. v. Board of Supervisors, supra,
41 Cal.App.4th at p. 1373 [a “county Board of Retirement does
not act as an agent for the county, but as an independent entity
established pursuant to CERL”]; Santa Barbara County
Taxpayers Assn. v. County of Santa Barbara (1987)
194 Cal.App.3d 674, 682 [“retirement boards . . . are independent
from counties”].) “The task of a county retirement board is not to
design the county’s pension plan but to implement the design
enacted by the Legislature through CERL. . . . Although CERL
grants to retirement boards the power to make regulations, those
regulations must be consistent with the provisions of CERL.”
(Alameda County Deputy Sheriff’s Assn. v. Alameda County
Employees’ Retirement Assn., supra, 9 Cal.5th at pp. 1066-1067;
see § 31525 [“[t]he board may make regulations not inconsistent
with this chapter”].)
C. The Statutory and Constitutional Framework for the
Retirement System’s Management
1. CERL Gives Retirement Boards Responsibility
for Managing County Retirement Systems
County retirement associations like LACERA “hold and
invest the pensions and administer the benefits to the employees
of the County . . . who are its members,” and their retirement
10
boards are “charged with the responsibility of ascertaining the
eligibility for and paying pension benefits to eligible employees
under CERL.” (Weber v. Board of Retirement (1998)
62 Cal.App.4th 1440, 1442; see Alameda County Deputy Sheriff’s
Assn. v. Alameda County Employees’ Retirement Assn., supra,
9 Cal.5th at p. 1066 [“[a]s a practical matter, the retirement
boards’ responsibilities generally involve management of the
system’s financial assets [citation] and the processing and
payment of claims for benefits under the plan”].) “Accordingly
[CERL] makes the retirement board the body responsible for
managing the retirement system.” (Corcoran v. Contra Costa
County Employees Retirement Bd. (1997) 60 Cal.App.4th 89, 94
(Corcoran); see § 31520).
Before 1973 county boards of supervisors and county
treasurers supervised retirement board staff, and boards of
supervisors appropriated county funds “to offset the
administrative cost of the county’s retirement system.” (Assem.
Retirement Com., Analysis of Assem. Bill No. 470 (1973-1974
Reg. Sess.), as introduced.) In 1973 the Legislature enacted
Assembly Bill No. 470 (AB 470), which added two provisions to
CERL “to permit the retirement board and the board of
investment to appoint its own administrative, technical and
clerical staff” and, in turn, to charge “the administrative cost of
the retirement system . . . against the earnings of the retirement
fund.” (Assem. Retirement Com., Analysis of Assem. Bill
No. 470.) One of those 1973 provisions, section 31522.1, along
with Proposition 162, is at the heart of this action.
Section 31522.1 states: “The board of retirement and both the
board of retirement and the board of investment may appoint
such administrative, technical, and clerical staff personnel as are
11
required to accomplish the necessary work of the boards. The
appointments shall be made from eligible lists created in
accordance with the civil service or merit system rules of the
county in which the retirement system governed by the boards is
situated. The personnel shall be county employees[4] and shall be
subject to the county civil service or merit system rules and shall
be included in the salary ordinance or resolution adopted by the
board of supervisors for the compensation of county officers and
employees.”
The corollary to section 31522.1, section 31580.2, provides,
as amended: “In counties in which the board of retirement, or the
board of retirement and the board of investment, have appointed
personnel pursuant to Section 31522.1 [and other sections
applying to specific counties that were enacted after 1973], the
respective board or boards shall annually adopt a budget covering
the entire expense of administration of the retirement system,
which expense shall be charged against the earnings of the
retirement fund.” (§ 31580.2, subd. (a).) Section 31580.2 limits
LACERA’s annual expenses to .021 percent of the accrued
actuarial liability of the retirement system. (§ 31580.2,
subd. (a)(1).) 5
4 The Legislature added the language stating board of
retirement personnel “shall be county employees” as a
“nonsubstantive amendment” in 1984. (Off. of Employee
Relations, Enrolled Bill Rep. on Assem. Bill No. 132 (1979-1980
Reg. Sess.) prepared for Governor Brown (May 8, 1979) p. 1.)
5 The cap on annual expenses was originally one-tenth of one
percent of the total assets of the retirement system. (Stats. 1973,
ch. 269, § 2.) The cap is now the greater of .021 percent of the
12
LACERA creates its budget and “covers” the administrative
costs from revenues on the assets it manages (see § 31580.2), but
LACERA “does not maintain a bank account independent of the
county treasurer’s office.” (Corcoran, supra, 60 Cal.App.4th at
p. 94.) Instead, “[c]hecks drawn on the retirement system require
the signature of the county auditor or his [or her] designee.”
(Ibid.; see § 31590.)
“Funding for the system comes both from the governmental
employers and from the employees on an actuarial basis, so that
any adjudication of a claim for benefits may have economic
impact upon the membership of the association as well as upon
the treasury of the county and participating political entities.”
(Traub v. Board of Retirement, supra, 34 Cal.3d at p. 798; see
Alameda County Deputy Sheriff’s Assn. v. Alameda County
Employees’ Retirement Assn., supra, 9 Cal.5th at pp. 1055-1056
[“Both the county and its employees must make regular
contributions to their plan’s pension fund in amounts determined
by the county board of supervisors, upon recommendation of the
retirement board.”]; see also §§ 31453-31454.6.) Section 31595,
enacted in 1984, provides that the assets of a public pension or
retirement system are “trust funds” held “for the exclusive
purposes of providing benefits to participants in the pension or
retirement system and their beneficiaries and defraying
reasonable expenses of administering the system.” Section 31595
further requires boards of retirement and their officers and
employees to discharge their duties to the retirement system
“[s]olely in the interest of, and for the exclusive purposes of
accrued actuarial liability of the retirement system and
$2,000,000, as adjusted by the annual cost-of-living adjustment.
(§ 31580.2, subd. (a).)
13
providing benefits to, participants and their beneficiaries,
minimizing employer contributions thereto, and defraying
reasonable expenses of administering the system,” and “[w]ith
the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity
and familiar with these matters would use in the conduct of an
enterprise of a like character and with like aims.” (§ 31595,
subds. (a)-(b).)
2. Proposition 162 Gives Retirement Boards
“Plenary Authority” over the “Administration of
the System”
In response to state budget shortfalls in the early 1990’s,
the Legislature enacted several measures to delay state-paid
employer contributions to the California Public Employees’
Retirement System (CalPERS or PERS) for state employees. (See
Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109,
1119-1120; Westly, supra, 105 Cal.App.4th at p. 1100.) As the
court in Westly summarized: “Until 1990, the state paid
employer contributions on a monthly basis. [Citation.] In 1990,
the Legislature changed the payment schedule from monthly to
quarterly. In 1991, the Legislature temporarily changed the
payment schedule from quarterly to semiannually. In 1992
legislation ‘changed the schedule to “semiannually, six months in
arrears.” Legislation in 1993 changed the schedule to “annually,
12 months in arrears.”’ [Citation.] In 1991, legislation was
passed to repeal statutes providing for cost of living benefits to
retirees, and to use these funds to meet the state’s employer
contribution requirement. [Citation.] Also in 1991, legislation
was passed transferring the actuarial function to the Governor.”
14
(Westly, at p. 1100; see Wilson, at pp. 1117-1119.) Against this
backdrop, the voters enacted Proposition 162 to amend
Article XVI, section 17 of the California Constitution, which
concerns public pension funds. (See Mijares v. Orange County
Employees Retirement System (2019) 32 Cal.App.5th 316, 331
[the voters enacted Proposition 162 “after the Legislature and
Governor raided the county’s retirement funds for other budget
shortfalls”]; City of San Diego v. San Diego City Employees’
Retirement System (2010) 186 Cal.App.4th 69, 79
[Proposition 162 “was intended to protect [retirement] boards
from ‘political meddling and intimidation’ and to ‘strictly limit
the Legislature’s power over such funds’”].)
Article XVI, section 17, “reached [its] current form through
two ballot initiatives. The first, Proposition 21, passed in 1984 in
an apparent response to the emerging financial markets of the
1980’s.” (O’Neal v. Stanislaus County Employees’ Retirement
Assn. (2017) 8 Cal.App.5th 1184, 1202 (O’Neal).) “Proposition 21
introduced the principle that ‘assets of a public pension or
retirement system are trust funds’ that ‘shall be held for the
exclusive purposes of providing benefits to participants in the
pension or retirement system and their beneficiaries and
defraying reasonable expenses of administering the system.’ In
addition, it identified several ways in which the fiduciary of those
trust funds must act. These included that the fiduciary shall
discharge his or her duties with respect to the system ‘solely in
the interest of, and for the exclusive purposes of providing
benefits to, participants and their beneficiaries, minimizing
employer contributions thereto, and defraying reasonable
expenses of administering the system,’ and ‘with the care, skill,
prudence, and diligence under the circumstances then prevailing
15
that a prudent person acting in a like capacity and familiar with
these matters would use in the conduct of an enterprise of a like
character and with like aims.’” (O’Neal, at p. 1202; see Ballot
Pamp., Primary Elec. (June 5, 1984) text of Prop. 21, p. 25.)
The second, Proposition 162 (enacted in 1992) expanded the
constitutional authority of retirement boards by granting them
“plenary authority and fiduciary responsibility for investment of
moneys and administration of the system.” Proposition 162 made
that authority “subject to” conditions listed in subdivisions (a)
through (h) of that initiative, which incorporated and added to
the duties and responsibilities of retirement boards set forth in
Proposition 21. For example, Proposition 162, subdivision (a), in
addition to retaining the language from Proposition 21 that the
assets of a retirement system are “trust funds” held “for the
exclusive purposes of providing benefits to participants . . . and
their beneficiaries and defraying reasonable expenses of
administering the system,” added that retirement boards “shall
have the sole and exclusive fiduciary responsibility over the
assets” of the retirement system and the “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.” (Cal. Const., art. XVI, § 17,
subd. (a); id., former art. XVI, § 17.)
Like Proposition 21, subdivision (b) of Proposition 162
provides that members of a retirement board must discharge
their duties “solely in the interest of, and for the exclusive
purposes of providing benefits to, participants and their
beneficiaries, minimizing employer contributions thereto, and
defraying reasonable expenses of administering the system.”
(Cal. Const., art. XVI, § 17, subd. (b).) But Proposition 162 added
16
a requirement that a board’s duty to participants and their
beneficiaries “shall take precedence over any other duty.” (Ibid.)
Also like Proposition 21, Proposition 162 requires retirement
board members exercising a board’s plenary authority to
discharge their duties “with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with these matters
would use in the conduct of an enterprise of a like character and
with like aims.” (Id., subd. (c).) And under Proposition 162
members of a retirement board must still “diversify the
investments of the system so as to minimize the risk of loss and
to maximize the rate of return, unless under the circumstances it
is clearly not prudent to do so.” (Id., subd. (d).)
Proposition 162 added other new conditions. Those
conditions included that retirement boards, “consistent with the
exclusive fiduciary responsibilities vested in [them], shall have
the sole and exclusive power to provide for actuarial services in
order to assure the competency of the assets of the public pension
or retirement system” (Cal. Const., art. XVI, § 17, subd. (e)); that
“the number, terms, and method of selection or removal of
members of the retirement board . . . shall not be changed,
amended, or modified by the Legislature” except in certain
circumstances (id., subd. (f)); that the “Legislature may by
statute continue to prohibit certain investments by a retirement
board where it is in the public interest to do so, and provided that
the prohibition satisfies the standards of fiduciary care and
loyalty required of a retirement board pursuant to this section”
(id., subd. (g)); and that “the term ‘retirement board’ shall mean
the board of administration, board of trustees, board of directors,
or other governing body or board of a public employees’ pension
17
or retirement system; provided, however, that the term
‘retirement board’ shall not be interpreted to mean or include a
governing body or board created after July 1, 1991 which does not
administer pension or retirement benefits, or the elected
legislative body of a jurisdiction which employs participants in a
public employees’ pension or retirement system” (id., subd. (h)).
D. The LACERA Boards and the Board of Supervisors
Agree Proposition 162 and CERL Give the LACERA
Boards Authority To Establish Employment
Classifications and Salaries for LACERA Employees
The LACERA Boards began appointing their own staff and
preparing and adopting LACERA’s budget under sections 31522.1
and 31580.2 in 1978. It is unclear from the record whether the
Boards established employment classifications and salaries for
LACERA employees at that time.
In 1996 LACERA’s Board of Investments requested a legal
opinion from a law firm on the issue the parties in this case are
now, almost 30 years later, litigating: whether section 31522.1
imposed a mandate on the Board of Supervisors to incorporate
into the County eligibility list and salary ordinance the
employment classifications and salaries adopted by the LACERA
Boards. The law firm concluded section 31522.1 created that
mandate, which Proposition 162 “re-emphasized” in 1992 by
granting the Boards plenary authority over the administration of
the retirement system. The law firm based its conclusion on the
language of sections 31522.1 and 31580.2, the legislative history
of AB 470, and LACERA’s independence from the County.
Regarding the statutory text, the law firm observed that “the
independent budgetary authority given to the retirement boards
18
under [section 31580.2] would have little meaning if the boards
could not control the compensation levels for its appointees.”
Regarding the legislative history of AB 470, the law firm
concluded the committee reports showed the purpose of AB 470
was “to allow the retirement boards to hire their own staff, rather
than continue to have to rely on staff responsible to the County
Treasurer and the County Board of Supervisors.” The law firm
also cited the County’s opposition to AB 470, which argued
AB 470 “‘would create two new units of county government [the
Board of Retirement and the Board of Investments] with no cost
controls as we now know them in county operations.’” The law
firm explained the Legislature later amended section 31522.1 to
specify that employees appointed by the Boards are “county
employees” for the limited purpose of protecting retirement
system employees under the Civil Service Rules.
The Board of Supervisors agreed with the law firm’s
assessment. In a letter to the County’s chief administrative
officer, County counsel stated “the Board of Supervisors has a
ministerial duty to adopt an ordinance implementing
classification and compensation changes adopted by LACERA for
its employees.” County counsel explained: “LACERA employees
are subject to the civil service provisions of the County Charter
and to the County’s Civil Service Rules. They are not subject to
the classification system maintained by the County for its
employees, nor are classification actions affecting LACERA
employees subject to the approval of the [County] Director of
Personnel.” County counsel stated that the Board of Supervisors
had no “direct control” over the classification or pay rates for
retirement system employees, but that the Board of Supervisors
could seek judicial review if it believed the LACERA Boards had
19
abused their discretion. County counsel agreed with the law
firm’s conclusion section 31522.1 designated retirement system
employees as “county employees” to protect them under the Civil
Service Rules and to allow them to participate in the retirement
system and receive “County fringe benefits.”
After 1996 the LACERA Boards approved employment
classifications and salaries for LACERA employees and provided
them to the Board of Supervisors, which, in turn, included the
classifications and salaries in the County’s eligibility list and
salary ordinance. It appears the LACERA Boards and the Board
of Supervisors generally collaborated in these efforts to ensure
LACERA’s positions complied with civil service and other
applicable rules. For example, correspondence from LACERA to
the Board of Supervisors in 2001 “requested” that the Board of
Supervisors amend the County Code to include revised salary
ranges for certain positions. In 1999 the County removed
retirement system employees from County bargaining units,
recognizing “the LACERA Board of Retirement has sole authority
to appoint and set salaries for [its] employees.” Following that
action, LACERA formed new bargaining units and now bargains
directly with its employees. Employment classifications for
LACERA employees in the Civil Service Rules are also separate
from the classifications for County employees. (L.A. County
Code, ch. 6.127.)
But, after two decades of cooperation, something changed.
E. The Board of Supervisors Reverses Course in 2018
As early as 2001 LACERA informed the Board of
Supervisors that it faced a challenging recruiting environment for
personnel who were qualified to oversee sophisticated
20
investments and maximize returns for members and their
beneficiaries. A letter from the assistant chief executive officer of
LACERA to a member of the Board of Supervisors explained that
LACERA intended to increase salaries for certain investment and
management positions that were not comparable to any County
positions and that LACERA competed to fill these positions with
other public pension funds and private sector investment and law
firms.
In 2016 and 2017 LACERA conducted a personnel review
and concluded several new positions and salary adjustments were
necessary to achieve LACERA’s strategic priorities and fulfill its
fiduciary duties to its members and beneficiaries. Since the early
2000’s, the assets LACERA managed had increased by 57 percent
to $48 billion, and its staff had increased by 35 percent to almost
400 positions. 6 Among the new positions proposed in 2017 were
five new management classifications, including a deputy chief
investment officer; a principal staff counsel; and six new
information technology classifications. LACERA advised the
Board of Supervisors the new classifications would “provide the
leadership necessary to support the development,
implementation, and management of the organization’s business
processes and future requirements.” Based on its prior practice
and expectation the Board of Supervisors would implement
LACERA’s personnel decisions, LACERA asked the Board of
Supervisors to amend the salary ordinance to include the new
positions and salary ranges.
But this time the Board of Supervisors refused to adopt the
requested amendments to the salary ordinance. In April 2018
6 According to LACERA, it managed over $72 billion in
assets in 2023.
21
County counsel sent a letter to LACERA stating the California
Constitution, relevant statutes, and the County Charter gave the
Board of Supervisors, not LACERA, authority to establish
salaries for LACERA’s staff as “county employees.” Despite
15 years of history to the contrary, County counsel informed
LACERA Proposition 162 never took “salary-setting authority
. . . from the [Board of Supervisors] in the first instance.”
The County’s change of position was based on Westly,
supra, 105 Cal.App.4th 1095, which held in 2003 the “plenary
authority” granted to retirement boards by Proposition 162 did
not give the governing board of CalPERS authority to create
classifications and establish salaries for its staff that violated
certain relevant statutes. (Westly, at p. 1112.) The dispute in
Westly arose when the CalPERS board, among other actions,
sought to exempt portfolio managers from the state civil service
system, despite statutes prohibiting those actions. (Id. at
p. 1103.) Similar to the situation here, where from 1996 to 2018
the LACERA Boards and the Board of Supervisors agreed that
the LACERA Boards had authority to establish employment
classifications and compensation for LACERA employees, in
Westly the CalPERS board and the Department of Personnel
Administration agreed from 1992 (when Proposition 162 was
enacted) to 2000 the CalPERS board had plenary authority under
Proposition 162 “to appoint . . . exempt employees.” (Assem.
Com. on Public Employees and Retirement, 3d reading analysis
of Sen. Bill No. 269 (2003-2004 Reg. Sess.) Sept. 9, 2003.) In
2000, however, the Department of Personnel Administration
denied the CalPERS board’s request to increase compensation for
certain portfolio managers. (See ibid.) The court in Westly held
that the CalPERS board’s authority under Proposition 162 did
22
not include “the administration of personnel matters,” such as
compensation for CalPERS’ employees, and that the authority
Proposition 162 gave retirement boards was “limited to actuarial
services and to the protection and delivery of the assets, benefits,
and services for which the Board has a fiduciary responsibility.”
(Westly, at pp. 1110, 1112.)
Following the County counsel’s position, the County chief
executive officer stated in a May 2018 letter to the Board of
Supervisors that she had evaluated the new positions proposed
by LACERA “for alignment with the existing LACERA and
County organizational structure.” Based on that review, the
County chief executive officer determined that numerous
proposed positions were “not necessary” and that others merited
lower salaries than those adopted by LACERA. In June 2018 the
County drafted and adopted a salary ordinance for LACERA
employees.
F. LACERA Sues the County and Board of Supervisors
For several years LACERA attempted to negotiate with the
County over the positions the LACERA Boards approved in 2017
but could not fund without the Board of Supervisors amending
the County’s salary ordinance. In 2020 LACERA’s chief
executive officer sent a report to the County chief executive
officer detailing LACERA’s need for certain organizational and
management changes to address strategic priorities, including
accelerating LACERA’s performance, enhancing efficiency and
productivity, and improving member services. The report again
recommended many of the personnel changes adopted by the
LACERA Boards in 2017 but rejected by the Board of
Supervisors.
23
Based on the 2020 report, the LACERA Boards approved
and submitted to the Board of Supervisors to include in the 2021
County salary ordinance 11 classifications and salaries, including
several originally deemed necessary in 2017. LACERA based the
salary ranges on industry data, including salary comparisons
with comparable positions for County employees, CalPERS, and
other retirement systems in Southern California. The County
chief executive officer approved the position for a deputy chief
investment officer, but she recommended the Board of
Supervisors reject most of the other positions, again citing the
need to “maintain[ ] alignment and consistency with the County’s
compensation and classification plan.” The Board of Supervisors
followed the County chief executive officer’s recommendations,
rejected eight of the 11 proposed positions, and lowered the
salaries for two of the three approved positions.
LACERA filed this action in October 2021 against the
County and the Board of Supervisors, seeking a writ of mandate
directing the Board of Supervisors to comply with section 31522.1
by adopting the salary ordinance proposed by LACERA.
LACERA also sought a declaration that the LACERA Boards
“have authority over LACERA’s management and
administration, which includes the authority to appoint and set
classifications, titles, and salaries for the personnel LACERA
needs to administer the retirement system, and that the County
is obligated, and has a ministerial duty, to implement such
personnel and salary decisions by including them in County
salary ordinances.”
LACERA alleged the “power to ‘manage’ the retirement
system and to ‘appoint’ the personnel ‘required to accomplish the
necessary work’” granted by Proposition 162 and CERL
24
“inherently includes the power to determine which employee
classifications will be created including the qualifications and
duties of the persons employed in those classes, which employees
report to whom, the salaries for those employees, and other terms
and conditions of employment; otherwise, the power to appoint
and to manage would be meaningless.” LACERA alleged
“deciding which staff are needed, how those staff should be
organized, and what salaries are necessary to recruit and
incentivize those staff are all inherent to the power to manage
and appoint personnel.” LACERA further alleged “[e]stablishing
classifications and setting salaries is inherent to LACERA’s
ability to recruit, hire, and manage the staff necessary to
administer the system.” LACERA’s petition and complaint
excerpted a letter from LACERA’s chief executive officer to the
Board of Supervisors stating the Board of Supervisors’ refusal to
amend the County salary ordinance as requested by the LACERA
Boards “adversely affected the administration of the LACERA
retirement system” by “limiting LACERA’s ability to strategize,
monitor and manage its investment portfolio, impairing
LACERA’s ability to support and provide services across all
divisions of the fund, harming staff retention and morale, and
making it difficult for LACERA to hire permanent staff who could
assist with improving and ensuring information system security.”
LACERA also alleged that the cost of salaries for LACERA
employees is one of LACERA’s largest budget items and that the
County was “usurping the budget-making authority”
section 31580.2 granted to the LACERA Boards by exerting
control over the salaries of LACERA personnel. LACERA further
alleged such interference “forces” the LACERA Boards “to seek
permission, and to take instruction, from the county before
25
making any classification and salary decisions,” which conflicted
with LACERA’s fiduciary duty under Proposition 162 to
administer the retirement system solely in the interests of
participants and their beneficiaries. As alleged by LACERA, its
“Boards cannot simultaneously owe an exclusive duty solely to
participants and beneficiaries while being subordinate to County
executives, who have duties to the general population and elected
officials.”
G. Following (and Bound by) Westly, the Trial Court
Enters Judgment for the County and the Board of
Supervisors
The trial court ruled against LACERA. Citing Westly, the
court ruled the plenary authority of LACERA’s Boards is limited
to managing the retirement system’s “assets and their delivery to
members and beneficiaries.” As a result, the court concluded, the
LACERA Boards did not have authority under Proposition 162 to
“classify its employees and set their salaries.”
The trial court also ruled the Board of Supervisors “has
constitutional, statutory, and Charter authority to set salaries for
County employees.” The court found section 31522.1 was
ambiguous regarding which body—the retirement board or the
board of supervisors—“decides the job classification and
compensation of [retirement system] personnel.” The court
interpreted that ambiguity consistent with the court’s
interpretation of Proposition 162 in Westly and with the scope of
authority the Board of Supervisors argued it had under the
California Constitution and the County Charter. Thus, the trial
court concluded, “the proper construction of section 31522.1
permits LACERA to make recommendations to the Board of
26
Supervisors for job classification and employee compensation, but
the Board of Supervisors does not have a ministerial duty to
rubber stamp those requests in a salary ordinance.” Instead, the
court ruled, “LACERA’s appointment power remains subject to
the Board of Supervisors’ constitutional and statutory authority
to establish classifications and to fix compensation.”
The trial court denied LACERA’s petition for writ of
mandate on December 22, 2022 and entered judgment for the
County and the Board of Supervisors on January 23, 2023. As we
discuss, LACERA timely appealed.
DISCUSSION
A. LACERA’s Notice of Appeal Was Timely
The County and Board of Supervisors state that they feel
“obligated to raise one wrinkle regarding appealability” and that
LACERA’s appeal may be untimely because LACERA’s notice of
appeal identified only the judgment and not the order denying
the petition for writ of mandate. (See Meinhardt v. City of
Sunnyvale (2022) 76 Cal.App.5th 43, review granted June 15,
2022, S274147.) The trial court’s order denying the petition for
writ of mandate, however, directed the County to prepare the
proposed judgment, serve it on counsel for LACERA, meet and
confer over any objections, and submit the proposed judgment to
the court with a declaration stating whether there were any
unresolved objections. The court in Meinhardt acknowledged an
order denying a petition for writ of mandate conclusively resolves
an action and becomes appealable only where “such order
contemplates the taking of no further action in the case.” (Id. at
p. 66.) Because the order in this case contemplated further
action, it did not resolve all issues between the parties and was
27
not appealable. (Ibid.; see Dhillon v. John Muir Health (2017)
2 Cal.5th 1109, 1115 [order denying a petition for writ of
mandate is interlocutory where additional judicial action is
required for a final determination of the rights of the parties];
Laraway v. Pasadena Unified School Dist. (2002) 98 Cal.App.4th
579, 583 [an order denying a petition for writ of mandate is not
appealable if it contemplated further action, “such as the
preparation of another order or judgment”].)
Moreover, even if the order denying the petition for writ of
mandate were appealable, we would liberally construe the notice
of appeal to include the order denying the petition for writ of
mandate “‘to protect the right of appeal if it is reasonably clear
what appellant was trying to appeal from, and where the
respondent could not possibly have been misled or prejudiced.’”
(Verceles v. Los Angeles Unified School Dist. (2021)
63 Cal.App.5th 776, 783; see Brown v. Municipal Court (1978)
86 Cal.App.3d 357, 360, fn. 1 [liberally construing a notice of
appeal to include a judgment following a minute order denying
petition for writ of mandate but “authorizing a subsequent
judgment”].) The County and Board of Supervisors do not claim
they were misled or suffered prejudice from LACERA’s arguably
incomplete notice of appeal.
B. Applicable Law and Standard of Review
“A writ of mandate under Code of Civil Procedure
section 1085 is a legal tool to compel a public agency to perform a
legal, typically ministerial, duty.” (California Privacy Protection
Agency v. Superior Court (2024) 99 Cal.App.5th 705, 721,
fn. omitted; see Alameda Health System v. Alameda County
Employees’ Retirement Assn. (2024) 100 Cal.App.5th 1159, 1176-
28
1177; Los Angeles Waterkeeper v. State Water Resources Control
Bd. (2023) 92 Cal.App.5th 230, 265.) “A ministerial duty is an act
that a public agency is required to perform in a prescribed
manner under the mandate of legal authority without the
exercise of judgment or opinion concerning the propriety of the
act. [Citation.] Put another way, a ministerial act is one [w]here
a statute or ordinance clearly defines the specific duties or course
of conduct that a governing body must take, thus eliminat[ing]
any element of discretion.” (California Privacy Protection Agency,
at p. 721, internal quotation marks omitted; see Alameda Health
System, at p. 1177; Los Angeles Waterkeeper, at pp. 265-266.)
“The writ will issue against a county, city, or other public body, or
against a public officer.” (Ochoa v. Anaheim City School Dist.
(2017) 11 Cal.App.5th 209, 223.)
“To obtain a writ of mandate, ‘“the petitioner must show
there is no other plain, speedy, and adequate remedy; the
respondent has a clear, present, and ministerial duty to act in a
particular way; and the petitioner has a clear, present and
beneficial right to performance of that duty.”’” (California
Privacy Protection Agency v. Superior Court, supra,
99 Cal.App.5th at p. 721; see Ochoa v. Anaheim City School Dist.,
supra, 11 Cal.App.5th at p. 223.) The County and the Board of
Supervisors did not argue in the trial court and do not argue on
appeal that, even if the court adopted LACERA’s interpretation
of Proposition 162 and section 31522.1, LACERA failed to make
the requisite showing to meet this standard. (See Schecter v.
Los Angeles County (1968) 258 Cal.App.2d 391, 393 [affirming a
judgment granting a writ of mandate ordering the Board of
Supervisors to amend a salary ordinance to implement an
employment reclassification].)
29
“‘“In reviewing a judgment granting a writ of mandate, we
apply the substantial evidence standard of review to the court’s
factual findings, but independently review its findings on legal
issues. [Citation.]” [Citation.] “Where, as here, the facts are
undisputed and the issue involves statutory interpretation, we
exercise our independent judgment and review the matter
de novo.”’” (California Privacy Protection Agency v. Superior
Court, supra, 99 Cal.App.5th at pp. 721-722; see Ochoa v.
Anaheim City School Dist., supra, 11 Cal.App.5th at pp. 223-224;
see also Greene v. Marin County Flood Control & Water
Conservation Dist. (2010) 49 Cal.4th 277, 287 [interpretation of a
ballot initiative is reviewed de novo]; City of San Diego v.
San Diego City Employees’ Retirement System, supra,
186 Cal.App.4th at p. 78 [“[i]nterpretation of statutes, including
local ordinances and municipal codes, is subject to de novo
review”].)
C. Proposition 162’s Grant of Plenary Authority Includes
the Authority for Retirement Boards To Adopt
Employment Classifications and Employee Salaries
1. The Language, Purposes, and Intent of
Proposition 162 All Show Retirement Boards
Have Authority To Adopt Employment
Classifications and Salaries for Their
Employees
While the trial court was bound by the court’s holding in
Westly, we are not. (Copenbarger v. Morris Cerullo World
Evangelism, Inc. (2018) 29 Cal.App.5th 1, 11; see Sarti v. Salt
Creek Ltd. (2008) 167 Cal.App.4th 1187, 1193-1194 [“there is no
30
horizontal stare decisis in the California Court of Appeal”].)
Contrary to the court’s decision in Westly, we conclude the plain
language, purposes, and intent of Proposition 162 make clear a
retirement board must have authority to hire the personnel the
board deems necessary or appropriate to fulfill the board’s
“fiduciary responsibility for investment of moneys and
administration of the system.” (Cal. Const., art. XVI, § 17.) That
authority includes determining the number and type of personnel
required to do the job, as well as their compensation, which
according to LACERA comprises more than 70 percent of its
annual operating budget. 7
a. The Plain Language of Proposition 162
We begin with the text of Proposition 162, which states:
“Notwithstanding any other provisions of law or this Constitution
to the contrary, the retirement board of a public pension or
retirement system shall have plenary authority and fiduciary
7 We do not address the specific issue decided by the court in
Westly, which was whether the Board of Administration of
CalPERS had authority to “exempt its employees from civil
service, to bypass the Controller’s duty to issue warrants for the
pay of employees, and to issue stipends, salaries, and other
payments in excess of the amounts permitted by the Government
Code.” (Westly, supra, 105 Cal.App.4th at p. 1099.) The parties
in Westly agreed those actions violated certain provisions of the
California Constitution and Government Code governing
CalPERS (see Westly, at p. 1103), and the court in Westly
considered whether Proposition 162 gave the CalPERS board
authority to take those actions anyway (see id. at p. 1100). The
County and Board of Supervisors do not argue the LACERA
Boards’ proposed salary ordinances the Board of Supervisors
rejected would have violated CERL.
31
responsibility for investment of moneys and administration of the
system, subject to all of the following . . . .” (Cal. Const., art. XVI,
§ 17.) In interpreting a constitutional provision, “‘“our
paramount task is to ascertain the intent of those who enacted it.
[Citation.] To determine that intent, we ‘look first to the
language of the constitutional text, giving the words their
ordinary meaning.’ [Citation.] If the language is clear, there is
no need for construction. [Citation.] If the language is
ambiguous, however, we consider extrinsic evidence of the
enacting body’s intent.”’” (Greene v. Marin County Flood Control
& Water Conservation Dist., supra, 49 Cal.4th at p. 290; accord,
Professional Engineers in California Government v. Kempton
(2007) 40 Cal.4th 1016, 1037; Tos v. State (2021) 72 Cal.App.5th
184, 196; see California Privacy Protection Agency v.
Superior Court, supra, 99 Cal.App.5th at pp. 722-723
[interpreting a statute enacted by ballot proposition].)
“To determine the scope and purpose of the provision we are
interpreting, we look to the entire substance of the voter-enacted
[measure], that is, we construe the words in question in context,
keeping in mind the nature and purpose of the statute. . . . The
statements of purpose and intent in . . . an initiative measure
may properly be utilized as an aid in construing the measure, but
they do not confer power, determine rights, or enlarge the scope
of the measure.” (California Privacy Protection Agency, at p. 723;
see Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 261-262
[citing as an interpretive aid the “findings and declarations” of an
initiative that amended the California Constitution].)
If the language of a voter initiative is susceptible of more
than one reasonable meaning, “‘we may consider the ballot
summaries and arguments to determine how the voters
32
understood the ballot measure and what they intended in
enacting it.’” (People v. Gonzales (2017) 2 Cal.5th 858, 868; see
City and County of San Francisco v. County of San Mateo (1995)
10 Cal.4th 554, 563.) “In cases of ambiguity we also may consult
any contemporaneous constructions of the constitutional
provision made by the Legislature or by administrative agencies.”
(City and County of San Francisco, at p. 563; see Greene v. Marin
County Flood Control & Water Conservation Dist., supra,
49 Cal.4th at p. 290.) In construing constitutional provisions
enacted by initiative, the voters’ intent “‘is the paramount
consideration.’” (Gonzales, at p. 868; see Hill v. National
Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 16-18 [the voters’
intent is entitled to great weight].)
The phrases “plenary authority,” “administration of the
system,” and “subject to” in the first paragraph of Proposition 162
describe the scope of the power granted to retirement boards.
The “fiduciary responsibility” retirement boards have “for . . .
administration of the system” also informs the interpretation of
Proposition 162.
First, “plenary” in Proposition 162 means “‘[f]ull, entire,
complete, absolute, perfect, unqualified.’” (Singh v. Board of
Retirement (1996) 41 Cal.App.4th 1180, 1190, fn. 9; see Webster’s
3d New Internat. Dict. (2002) p. 1739 [“plenary” means “complete
in every respect: absolute, perfect, unqualified”]; see also
Haaland v. Brackeen (2023) 599 U.S. 255, 374 (dis. opn. of
Alito, J.) [“The term ‘plenary’ is defined in one dictionary after
another as ‘absolute.’”].) Courts have interpreted “plenary
authority” and “plenary power” to confer “complete, absolute, and
unqualified power.” (Velasquez v. Workers’ Comp. Appeals Bd.
(2023) 97 Cal.App.5th 844, 855; see Stevens v. Workers’
33
Comp. Appeals Bd. (2015) 241 Cal.App.4th 1074, 1094-1095;
Bautista v. State of California (2011) 201 Cal.App.4th 716, 725;
see also City of Redondo Beach v. Padilla (2020) 46 Cal.App.5th
902, 918 [constitutional provision granting charter cities “plenary
authority” to set the timing of their elections may not be
contravened without “explicit guidance from the Legislature”].)
Thus, the plenary authority Proposition 162 grants to retirement
boards for “administration of the system” is complete and
absolute, subject only to the terms of Proposition 162 and judicial
review. (See Board of Retirement v. Santa Barbara County
Grand Jury (1997) 58 Cal.App.4th 1185, 1193 [“[p]lenary power
does not mean unreviewable power”]; Singh, at pp. 1190, fn. 9,
1191 [same]; see also Singh, at p. 1192 [“the word ‘plenary’ was
intended to mean that retirement boards would have the sole and
complete power to invest their funds and to administer their
systems, as opposed to being subject to direction from state and
local legislative and executive bodies in these matters”].)
In addition, a county retirement board must “administer CERL
as enacted by the Legislature; the boards have no authority to act
inconsistently with CERL.” (Alameda County Deputy Sheriff’s
Assn. v. Alameda County Employees’ Retirement Assn., supra,
9 Cal.5th at p. 1069.)
Second, we construe “administration of the system” within
the context of Proposition 162 and consistently with the same or
similar phrases in CERL. (See People v. Tran (2015) 61 Cal.4th
1160, 1168 [courts should construe similar statutes in light of one
another, and when statutes are in pari materia 8 similar phrases
8 “Statutes are considered to be in pari materia when they
relate to the same person or thing, or class of persons or things,
34
appearing in each should be given like meanings]; GRFCO, Inc. v.
Superior Court (2023) 89 Cal.App.5th 1295, 1310 [same]; see also
Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [“words must
be construed in context, and provisions relating to the same
subject matter must be harmonized to the extent possible”].)
Subdivisions (a) and (b) of Proposition 162 both refer to the duty
of retirement boards to use the assets of a retirement system to
“defray[ ] reasonable expenses of administering the system.” (Cal.
Const., art. XVI, § 17, subds. (a), (b), italics added.) This phrase
also appears in section 31595, which states the assets of a
retirement fund must be held for the exclusive purposes of
providing benefits and “defraying reasonable expenses of
administering the system.” (§ 31595, subd. (a).) Similarly,
section 31580.2 requires retirement boards that appoint their
own personnel to adopt annual budgets “covering the entire
expense of administration of the retirement system.” (§ 31580.2,
subd. (a).) The Legislature enacted these statutory provisions
before the voters enacted Proposition 162, and we presume the
voters were aware of them. (See Ruelas v. County of Alameda
(2024) 15 Cal.5th 968, 979 [the voters are “presumed to be aware
of existing laws” when they enact an initiative]; People v. Perez
(2018) 4 Cal.5th 1055, 1067-1068 [“[w]e presume the electorate,
when it enacts an initiative, is ‘“aware of existing laws”’”];
Professional Engineers in California Government v. Kempton,
or have the same purpose or object. [Citation.] Such statutes
should ‘be construed together so that all parts of the statutory
scheme are given effect.’ [Citation.] ‘Identical language
appearing in separate provisions dealing with the same subject
matter should be accorded the same interpretation.’” (Kaanaana
v. Barrett Business Services, Inc. (2021) 11 Cal.5th 158, 175.)
35
supra, 40 Cal.4th at p. 1048 [“voters are presumed to have been
aware of existing laws at the time the initiative was enacted”];
Brookside Investments, Ltd. v. City of El Monte (2016)
5 Cal.App.5th 540, 555 [voters who enact “constitutional
amendments are presumed to have been aware” of existing
statutes].)
The costs of “administering the [retirement] system” under
CERL include the costs of compensating retirement system
personnel. (See § 31522.5, subd. (c) [“the compensation of
personnel appointed pursuant to this section [governing the
retirement system of San Bernardino County] shall be an
expense of administration of the retirement system”]; § 31522.9,
subd. (d) [same for Contra Costa County]; § 31522.10, subd. (c)
[same for Ventura County]; § 31522.11, subd. (c) [same for
Orange County]; Corcoran, supra, 60 Cal.App.4th at p. 94
[“[s]alaries of the officers and employees appointed by the
Retirement Board are costs of administering the Contra Costa
retirement system which the system itself bears”].) And the
LACERA Boards include this expense in LACERA’s annual
budget “covering the entire expense of administration of the
retirement system” (§ 31580.2, subd. (a)). Indeed, the County
and Board of Supervisors acknowledge CERL requires LACERA
to budget and pay for its employees’ compensation. Because the
phrase “expenses of administering the system” in Proposition 162
includes expenses for compensation, the phrase “administration
of the system” must also include the management of
compensation-related matters, such as fixing compensation for
system employees. (See Gilb v. Chiang (2010) 186 Cal.App.4th
444, 465, 467 [statute granting authority to an agency to
“administ[er]” state employees’ salaries delegated authority to
36
that agency “‘to manage or supervise the execution, use, or
conduct’” of “‘the state’s financial relationship with its
employees’”]; Webster’s 3d New Internat. Dict., supra, at p. 27
[“administer” means “to manage the affairs of”]; id. at p. 28
[“administration” means “performance of executive duties:
management”].) Otherwise, “administering” the system would
mean something different under Proposition 162 and CERL. (See
Ruelas v. County of Alameda, supra, 15 Cal.5th at p. 979 [“we
must ‘try to harmonize constitutional language with that of
existing statutes if possible’”].)
Finally, we interpret the phrase “subject to all of the
following” as it applies to Proposition 162’s subdivisions, which
qualify the scope of a retirement board’s plenary authority. “The
phrase ‘subject to’ is not synonymous with ‘according to’ or
‘consistent with’; it means conditioned upon, limited by, or
subordinate to.” (Swan Magnetics, Inc. v. Superior Court (1997)
56 Cal.App.4th 1504, 1510; see Erickson v. Aetna Health Plans of
California, Inc. (1999) 71 Cal.App.4th 646, 657.) Thus, the
subdivisions of Proposition 162 do “not necessarily denote a clash
of provisions,” and instead “merely show[ ] which provision
prevails in the event of a clash.” (Scalia and Garner, Reading
Law: The Interpretation of Legal Texts (2012) p. 126; see Garner,
Dict. of Legal Usage (3rd ed. 2011) p. 616 [“subject to” introduces
a “subordinate provision”].) A retirement board’s plenary
authority is “subject to” the conditions enumerated in
Proposition 162’s subdivisions in that such authority is limited by
those conditions, but not (as the court in Westly stated) defined by
them. (See Westly, supra, 105 Cal.App.4th at p. 1109.) For
example, subdivision (e) of Proposition 162 states in part the
“retirement board of a public pension or retirement system,
37
. . . shall have the sole and exclusive power to provide for
actuarial services in order to assure the competency of the assets
of the public pension or retirement system.” (Cal. Const., art.
XVI, § 17, subd. (e).) This provision does not limit the retirement
board’s plenary authority to provide actuarial services, but
instead requires a board exercising that authority to assure the
competency of system assets. (See O’Neal, supra, 8 Cal.App.5th
at p. 1213 [retirement board “has been granted plenary authority
over administration and investment decisions concerning the
retirement system, subject to its fiduciary duties”].) Read
together, these phrases (a retirement board’s “plenary authority”
for “administration of the system” that is “subject to” the
conditions enumerated in Proposition 162’s subdivisions) mean a
retirement board’s authority to manage the retirement system
includes establishing employment classifications and
compensation, so long as that authority does not contradict the
enumerated conditions.
This interpretation is further supported by the fiduciary
responsibility Proposition 162 places on retirement boards to
administer their systems. Before Proposition 162, article XVI,
section 17 of the California Constitution provided only that the
“assets” of a retirement system were “trust funds” and that the
“fiduciary of the public pension or retirement system” (in other
words, trustees of the retirement boards) had certain duties to
participants and their beneficiaries and had to discharge those
duties prudently. (Cal. Const., former art. XVI, § 17,
subds. (a)-(d).) Based on the law of trusts, the court in City of
Sacramento v. Public Employees Retirement System (1991)
229 Cal.App.3d 1470 held a retirement board’s fiduciary duty
under Proposition 21 included an “‘unwavering’” duty of loyalty to
38
the beneficiaries of the assets held in trust that the retirement
board must exercise “‘to the exclusion of the interest of all other
parties.’” (City of Sacramento, at p. 1494.) That duty outweighed
other duties of retirement boards, such as the duty to minimize
employer contributions to the retirement system. (Ibid.; see Cal.
Const., art. XVI, § 17, subd. (b).) The court stated this inferior
duty “cannot be construed to require [the retirement board] to
manage the retirement system in a way which would favor an
employer over the beneficiaries to whom it owes a fiduciary duty.”
(City of Sacramento, at p. 1493.)
The amendments to article XVI, section 17 enacted by
Proposition 162 made explicit the retirement board’s “fiduciary
responsibility” for both the “investment of moneys” and the
“administration of the system.” (Cal. Const., art. XVI, § 17.)
Subdivision (a) of Proposition 162 more fully describes an aspect
of that responsibility as the “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. (a).) The court in O’Neal
stated the duties of loyalty and prudence under the law of trusts
“strongly parallel[ ]” provisions enacted through Propositions 21
and 162 and “protect against improper influence generally.”
(O’Neal, supra, 8 Cal.App.5th at p. 1209; see City of Sacramento
v. Public Employees Retirement System, supra, 229 Cal.App.3d at
p. 1494 [“‘The trustee is under a duty to the beneficiary to
administer the trust solely in the interest of the beneficiary.’”].)
This protection ensures a retirement board places the interests of
the system’s members and beneficiaries above all others,
including the interests of the relevant executive branch and the
39
employers who contribute to the system. (See Cal. Const.,
art. XVI, § 17, subd. (b).)
Although Proposition 162 did not expressly grant
retirement boards authority to establish employment
classifications and compensation for retirement system
employees, section 5 of Proposition 162 states that the “provisions
of this act shall be liberally interpreted to effect their purposes.”
(1992 Ballot Pamp., supra, text of Prop. 162, p. 71, § 5.) And it is
hard to see how a retirement board can fulfill its fiduciary
responsibilities to “administer the system” and “over the assets of
the . . . system” (Cal. Const., art. XVI, § 17, subd. (a)) without
having authority to determine how those assets are used,
including by determining the number and types of employees and
the compensation required. (See Gilb v. Chiang, supra,
186 Cal.App.4th at p. 463 [“‘“[p]ublic agencies possess not only
expressly granted powers but also such implied powers as are
necessary or reasonably appropriate to the accomplishment of
their express powers”’”]; Cox v. Kern County Civil Service Com.
(1984) 156 Cal.App.3d 867, 873 [same]; see also Mijares v. Orange
County Employees Retirement System, supra, 32 Cal.App.5th at
p. 331 [interpreting Proposition 162 broadly to give a retirement
board authority “to take whatever measures needed” to comply
with its duty].) For example, subdivision (d) of Proposition 162
requires the members of a retirement board to “diversify the
investments of the system so as to minimize the risk of loss and
to maximize the rate of return.” (Cal. Const., art. XVI, § 17,
subd. (d); see Flethez v. San Bernardino County Employees
Retirement Assn. (2017) 2 Cal.5th 630, 636 [“a county retirement
board is ‘required to administer the retirement system “in a
manner to best provide benefits to the participants of the
40
plan”’”].) To fulfill this duty, members of retirement boards must
have authority to recruit, hire, incentivize, and reward employees
with the requisite investment knowledge and experience to
maximize returns for the participants and their beneficiaries and
to create management structures to “efficiently and promptly
provid[e] benefits and services to participants.” (1992 Ballot
Pamp., supra, text of Prop. 162, p. 70, § 3, subd. (d).)
Proposition 162 also requires a retirement board to use system
assets and to discharge its duties for limited purposes, including
“defraying reasonable expenses of administering the system.”
(Cal. Const., art. XVI, § 17, subds. (a), (b).) Again, it is difficult to
see how a retirement board can fulfill those duties without
having control over all the expenses of administering the system,
including the number and types of employees, as well as their
compensation. 9
Allowing a board of supervisors with very different
responsibilities, priorities, and agendas to veto the employment
classifications and compensation adopted by a retirement board
frustrates the board’s ability to fulfill its duties under
Proposition 162 and undermines the fiduciary relationship
between the retirement board and the system’s participants and
their beneficiaries. The Legislature acknowledged as much in
amending section 20098, which governs CalPERS and the State
9 Citing a 1987 Attorney General opinion, the County and
Board of Supervisors argue retirement boards can set a budget
“that accounts for costs that are not within their control.” That
opinion, however, concerned the “cost of services provided [to a
retirement system] by other county offices and departments for
the benefit of the retirement system,” not the salaries of a
system’s employees, which, according to LACERA, is one of its
largest budget items. (See 70 Ops.Cal.Atty.Gen. 277 (1987).)
41
Teachers’ Retirement System (STRS), after the court’s decision in
Westly. Less than three weeks after that decision, a member of
the Legislature introduced Senate Bill No. 269 to authorize the
boards of CalPERS and STRS “to appoint and fix the
compensation” for management-level employees. (Legis.
Counsel’s Dig., Sen. Bill No. 269 (2003-2004 Reg. Sess.)
4 Stats. 2003, Summary Dig., p. 434.) In enacting Senate Bill
No. 269, the Legislature found and declared the ability of the
boards governing CalPERS and STRS “to meet their fiduciary
obligation [under Proposition 162] to their members requires that
they be able to attract and retain employees in key senior
executive and investment management positions with
compensation that is consistent with the compensation paid to
employees in other public retirement and financial service
organizations.” (Stats. 2003, ch. 856, § 1, subd. (d).) The
Legislature also found and declared: “The express purpose of this
act is to enable the Board[s] of [CalPERS and STRS] to attract
and retain key personnel by empowering those boards to
establish both appropriate classifications within the civil service
for its senior executive and investment management employees
and the compensation paid to those employees, competitive with
the compensation paid to employees in other retirement and
financial service entities, consistent with the holding of Westly v.
Board of Administration, and notwithstanding the provisions of
the Government Code that provide the State Personnel Board
and the Department of Personnel Administration that authority.”
(Stats. 2003, ch. 856, § 1, subd. (e).)
The court in Corcoran, supra, 60 Cal.App.4th 89 applied
the same reasoning in concluding a retirement board (and not the
board of supervisors) was the “governing body” for the employees
42
the retirement board appointed under section 31522.1 for
purposes of determining the level of retirement benefits for those
employees. (Corcoran, at pp. 91-95.) The court stated: “Unless
the [r]etirement [b]oard is the governing body as to its officers
and employees it cannot ensure that it defrays only reasonable
expenses of administration [as required by article XVI,
section 17]. . . . The [r]etirement [b]oard is the governing body as
to the officers and employees that it appoints, otherwise it would
have abdicated its obligation to make administrative cost
decisions consistent with its primary duty to the fund’s
participants and to their beneficiaries.” (Corcoran, at pp. 94-95.)
The County and Board of Supervisors suggest that
interpreting Proposition 162 as LACERA proposes (an
interpretation we adopt) will allow a board to administer a
retirement system “in any way it likes, free from the constraints
of other laws.” Such a concern is unwarranted. A retirement
board’s duties to maximize the rate of return and to incur only
“reasonable” expenses, along with judicial review of its actions,
ensure that boards will not over-compensate their employees.
(Cal. Const., art. VXI, § 17, subds. (a), (d); see Board of
Retirement v. Santa Barbara County Grand Jury, supra,
58 Cal.App.4th at p. 1193 [“Proposition 162 did not insulate
pension boards from judicial oversight.”]; see also City of
San Diego v. San Diego City Employees’ Retirement System,
supra, 186 Cal.App.4th at p. 79; Singh v. Board of Retirement,
supra, 41 Cal.App.4th at p. 1191.) Moreover, retirement boards
that appoint classified personnel under section 31522.1 remain
bound by the county’s civil service or merit system rules. (See
§ 31522.1.)
43
b. The Voters’ Intent and the Purposes of
Proposition 162
Our interpretation of Proposition 162 is also consistent
with the voters’ intent and the stated purposes of
Proposition 162. One reason the voters enacted Proposition 162
was “to preclude the legislative and executive branches from
‘raiding’ pension funds to balance the state budget.” (Board of
Retirement v. Santa Barbara County Grand Jury, supra,
58 Cal.App.4th at p. 1193; see Singh v. Board of Retirement,
supra, 41 Cal.App.4th at p. 1192.) But voters more broadly
intended Proposition 162 “to ‘insulate the administration of
retirement systems from oversight and control by legislative and
executive authorities.’” (City of San Diego v. San Diego City
Employees’ Retirement System, supra, 186 Cal.App.4th at p. 79;
see Singh, at p. 1192.) For example, one of Proposition 162’s
“Findings and Declarations” was that, “[t]o protect pension
systems, retirement board trustees must be free from political
meddling and intimidation.” (1992 Ballot Pamp., supra, text of
Prop. 162, p. 70, § 2, subd. (f).) And the “Purpose and Intent” of
the initiative included giving “the sole and exclusive power over
the management . . . of public pension funds to the retirement
boards.” (Id., § 3, subd. (e).) Because retirement boards like the
LACERA Boards already budgeted and paid for the salaries of
their employees from those funds under section 31580.2, the
voters intended Proposition 162 to give retirement boards “sole
and exclusive power” over the amount paid to retirement system
employees from public pension funds. Allowing a board of
supervisors to encroach on that power by directing how many,
what kind of, and how much a retirement board can compensate
system employees could lead to precisely the type of “meddling”
44
Proposition 162 sought to prevent. (See State Board of
Education v. Levit (1959) 52 Cal.2d 441, 462-463 [the Legislature
improperly usurped the constitutional authority of the State
Board of Education to select textbooks by imposing budget
restrictions on the use of funds to purchase two selected
textbooks].)
2. The County and Board of Supervisors’
Arguments, Which Rely Primarily on Westly,
Are Not Persuasive
Relying on Westly, a selective reading of Proposition 162’s
legislative history, and several distinguishable cases, the County
and Board of Supervisors argue Proposition 162 granted
retirement boards plenary authority over only “investment and
actuarial services,” which is what the court in Westly held. (See
Westly, supra, 105 Cal.App.4th at pp. 1109, 1110.) The Westly
court’s interpretation of Proposition 162, however, was flawed,
and as the ballot pamphlet for Proposition 162 shows, the voters
intended to give retirement boards authority over how to spend
all system assets, including on employee compensation. There
are several reasons why this is so.
First, the court in Westly erred in interpreting the phrase
“subject to all of the following” in the introductory paragraph of
Proposition 162, an error the County and Board of Supervisors
repeat. As discussed, that phrase indicates that, where a
retirement board’s plenary authority conflicts with a condition
listed in one of Proposition 162’s subdivisions, the subdivision
controls. (See Scalia and Garner, Reading Law: The
Interpretation of Legal Texts, supra, p. 126 [“subject to often
introduces a provision that contradicts some applications of what
45
it modifies”].) But the court in Westly stated, contrary to the
meaning of “subject to,” that “[t]he subdivisions serve to limit and
define the authority and responsibility granted in the initial
paragraph” of Proposition 162. (Westly, supra, 105 Cal.App.4th
at p. 1109, italics added.) That reading makes the introductory
paragraph’s reference to “plenary authority” superfluous. There
would be no need for Proposition 162 to give retirement boards
plenary authority over anything if the subdivisions defined the
full scope of the retirement boards’ authority. Because we must
“strive to give meaning to every word in a statute [or initiative]
and to avoid constructions that render words, phrases, or clauses
superfluous” (Klein v. United States of America (2010) 50 Cal.4th
68, 80; see T-Mobile West LLC v. City and County of San
Francisco (2016) 3 Cal.App.5th 334, 351), the Wesley court’s (and
the County and Board of Supervisors’) interpretation of “subject
to” cannot be correct.
Construing a retirement board’s authority to extend only to
“investment and actuarial services” also renders superfluous the
language in Proposition 162 that gives boards fiduciary
responsibility for “administration of the system” and “exclusive
responsibility to administer the system.” (Cal. Const., art. XVI,
§ 17, subd. (a).) As stated, “administration of the system”
encompasses paying salaries to employees of the retirement
system; if it did not, retirement system salaries would be
excluded from “the entire expense of administration of the
retirement system” under section 31580.2, and counties where
retirement systems appointed their own staff would have to pay
salaries of retirement system employees out of their general
funds. Moreover, Proposition 162 refers separately to
“investment of monies,” “actuarial services,” and “administration
46
of the system” in several provisions (Cal. Const. art. XVI, § 17,
subds. (a), (d), (e), (g)), and those phrases “‘are presumed to have
different meanings.’” (City of Palo Alto v. Public Employment
Relations Bd. (2016) 5 Cal.App.5th 1271, 1294; see Walt Disney
Parks & Resorts U.S., Inc. v. Superior Court (2018)
21 Cal.App.5th 872, 879 [“it is our obligation to interpret
different terms used by the Legislature in the same statutory
scheme to have different meanings”]; Campbell v. Zolin (1995)
33 Cal.App.4th 489, 497 [“where the Legislature uses a different
word or phrase in one part of a statute than it does in other
sections or in a similar statute concerning a related subject, it
must be presumed that the Legislature intended a different
meaning”].) 10
Second, the County and Board of Supervisors argue their
interpretation of Proposition 162 is consistent with the history of
Proposition 162. The County and Board of Supervisors again cite
Westly, where the court stated that “the voter intent, evidenced
by the published ballot materials, is that [Proposition 162] would
give the [retirement boards] the authority to administer the
10 The court in Westly concluded that, “with regard to
administration of the system, [a retirement board’s] authority is
limited to actuarial services and to the protection and delivery of
the assets, benefits, and services for which the Board has a
fiduciary responsibility.” (Westly, supra, 105 Cal.App.4th at
p. 1110.) Even under this (incorrect) interpretation of
Proposition 162, the phrase “protection . . . of the assets,” from
which salaries for retirement system employees are paid, would
readily encompass hiring and compensating the staff necessary to
maximize the rate of return and ensure the prompt delivery of
benefits to members and their beneficiaries. (See Cal. Const.,
art. XVI, § 17, subds. (a), (d).)
47
investments, payments, and other services of CalPERS, but not
the compensation of [its] employees.” (Westly, supra,
105 Cal.App.4th at p. 1112.) But that’s not correct. The
argument against Proposition 162 in the ballot pamphlet stated:
“PROPOSITION 162 ENDS TAXPAYER OVERSIGHT OF
STATE RETIREMENT BOARDS. Last year, in the middle of a
recession and a budget crisis, the PERS board voted to pay its top
bureaucrat $110,000 a year. The State controller blocked this
pay increase, but would have no authority to stop other
outrageous salary hikes if Proposition 162 becomes law.”
(1992 Ballot Pamp., supra, argument against Prop. 162, p. 39.)
The majority of voters who cast their ballots for Proposition 162
in spite of this argument must have believed the initiative gave
retirement boards authority to establish the salaries of
retirement system employees. (See People v. Galambos (2002)
104 Cal.App.4th 1147, 1162 [ballot arguments indicate the voters’
beliefs and understandings about an initiative measure];
McLaughlin v. State Bd. of Education (1999) 75 Cal.App.4th 196,
218 [“the substance of the ballot arguments leads unwaveringly
to the conclusion that voters believed” an initiative measure
would have the described effects]; see also California Medical
Assn. v. Aetna Health of California Inc. (2023) 14 Cal.5th 1075,
1087 [“[t]o the extent there are ambiguities in [an] initiative’s
language affecting its application to the case, we turn to ‘extrinsic
sources such as ballot summaries and arguments for insight into
the voters’ intent’”]; Hi-Voltage Wire Works, Inc. v. City of San
Jose (2000) 24 Cal.4th 537, 596 (conc. opn. of George, C. J.) [ballot
pamphlet analysis of an initiative measure indicated what “the
voters reasonably would have believed” about the initiative].)
48
The court in Westly acknowledged the argument against
Proposition 162, stating the argument “claims the Controller has
blocked the pay increase of a ‘bureaucrat,’ but would not have the
authority to ‘stop other outrageous salary hikes if Proposition 162
[became] law.’” (Westly, supra, 105 Cal.App.4th at p. 1111.) The
court, however, gave no weight to the effect of that argument on
the voters’ understanding of Proposition 162 and pointed to the
rebuttal argument in favor of Proposition 162 stating “the
proposition’s opponents [were] ‘trying to mislead the voters.’”
(Ibid.) But this statement appeared at the beginning of the
rebuttal and said everything the opponents argued was
“mislead[ing]”; the rebuttal never responded directly to the
opponents’ argument Proposition 162 would remove the
Controller’s authority to stop “outrageous salary hikes.” (See
1992 Ballot Pamp., supra, rebuttal to argument against
Prop. 162, p. 39.) The rebuttal to the argument against
Proposition 162 does nothing to negate the voters’ belief
Proposition 162 gave retirement boards authority to set salaries
for retirement system employees.
The analysis of Proposition 162 by the Legislative Analyst
in the ballot pamphlet confirms the voters intended to give
retirement boards authority to determine how to spend system
assets, including on employee compensation. The Legislative
Analyst stated Proposition 162 would continue the retirement
boards’ existing obligation to “pay reasonable administrative
costs” of the retirement system and explained Proposition 162
would give the boards “complete authority for administration of
the system’s assets and for the actuarial function.” (1992 Ballot
Pamp., supra, analysis of Prop. 162 by the legislative analyst,
p. 37.) The Legislative Analyst further stated “[g]iving complete
49
authority for administration of public retirement system assets to
the governing boards could reduce oversight of these activities by
state or local government.” (Ibid.) As discussed, we presume the
voters were aware section 31580.2 required retirement boards
that appointed their own personnel to budget and pay for those
salaries from system assets. (See People v. Gonzales, supra,
2 Cal.5th at p. 869.) Thus, giving complete authority over such
assets to retirement boards also gave retirement boards authority
to determine how to spend system assets, including for salaries
and other “reasonable administrative costs.” (See 1992 Ballot
Pamp., supra, analysis of Prop. 162 by the legislative analyst,
p. 37.)
Finally, the County and Board of Supervisors cite several
cases they contend support their constrained interpretation of
Proposition 162. These include Board of Retirement v. Santa
Barbara County Grand Jury, supra, 58 Cal.App.4th 1185, which
considered whether a retirement board’s “plenary authority”
enabled it to evade a grand jury investigation (id. at p. 1193), and
O’Neal, supra, 8 Cal.App.5th 1184, which addressed whether “the
adoption of an amortization rate for unfunded liabilities which
included a period of negative amortization violated state law and
constitutional mandates” (id. at p. 1192). Neither of these cases
cited Westly or addressed the scope of Proposition 162 in the
context of a retirement board’s authority to establish employment
classifications or allocate system assets for employee
compensation.
The County and Board of Supervisors also claim City of
San Diego v. San Diego City Employees’ Retirement System,
supra, 186 Cal.App.4th 69 is “in accord” with Westly. It isn’t.
The court in City of San Diego considered only whether the
50
San Diego City Employees’ Retirement System could charge the
city for the cost of pension service credits, even though the
municipal ordinance that created the “purchase of service credit
program” required employees to pay the full cost of any service
credits they purchased. (Id. at p. 73.) The court cited Westly for
the proposition retirement boards do not have authority “‘to
evade the law’” or over “matters within the purview of other
branches of government,” such as the “granting of retirement
benefits,” which was the “exclusive jurisdiction of the City.” (City
of San Diego, at p. 79.) Although the court in City of San Diego
restated Westly’s holding “the board’s plenary authority to
administer the pension system was ‘limited to actuarial services
and to the protection and delivery of the assets, benefits, and
services for which the Board has a fiduciary responsibility’” (City
of San Diego, at p. 79), that restatement was not necessary to the
court’s holding.
3. Proposition 162 Does Not Conflict with the
County’s Home Rule Authority
The County and Board of Supervisors argue that the
County has exclusive authority under article XI of the California
Constitution to establish classifications and fix compensation for
county employees and that interpreting Proposition 162 to give
retirement boards that authority for retirement system
employees conflicts with the County’s authority. As stated way
back in Section A of the Factual and Procedural Background,
article XI, section 4 of the California Constitution provides county
charters “shall provide for . . . [t]he fixing and regulation by
governing bodies, by ordinance, of the appointment and number
of assistants, deputies, clerks, attachés, and other persons to be
51
employed, and for the prescribing and regulating by such bodies
of the powers, duties, qualifications, and compensation of such
persons, the times at which, and terms for which they shall be
appointed, and the manner of their appointment and removal.”
(Cal. Const., art. XI, § 4, subd. (f).) Similarly, article XI,
section 1, which applies to general law counties, 11 states that “an
elected governing body in each county . . . shall provide for the
number, compensation, tenure, and appointment of employees.”
(Id., § 1, subd. (b).) As also stated, section 31522.1 provides that
staff appointed by a retirement board under that statute are
“county employees.” Thus, the County and Board of Supervisors
contend, LACERA’s (and now our) interpretation of
Proposition 162 “would amount to an implied repeal” of these
sections of article XI and that such implied repeals are
disfavored. (See Tuolumne Jobs & Small Business Alliance v.
Superior Court (2014) 59 Cal.4th 1029, 1039.)
But the voters who enacted Proposition 162 anticipated
potential conflicts with other constitutional provisions, and the
voters intended Proposition 162 to prevail. Proposition 162
begins with the words, “[n]otwithstanding any other provisions of
law or this Constitution to the contrary.” (Cal. Const., art. XVI,
§ 17.) By using this phrase, the voters expressed their intent to
have Proposition 162 “‘“control despite the existence of other law
which might otherwise govern.”’” (Klajic v. Castaic Lake Water
Agency (2004) 121 Cal.App.4th 5, 13; see Arias v. Superior Court
(2009) 46 Cal.4th 969, 983 [“‘The statutory phrase
“notwithstanding any other provision of law” has been called a
11 The parties debate whether Article XI, section 1 applies to
both general law and charter counties. We need not resolve that
issue.
52
“‘term of art’” [citation] that declares the legislative intent to
override all contrary law.’”]; Golden Door Properties, LLC v.
Superior Court (2020) 53 Cal.App.5th 733, 762 [same]; Scalia and
Garner, Reading Law: The Interpretation of Legal Texts, supra,
p. 127 [the provision to which a “notwithstanding phrase[ ]”
accords priority prevails], italics omitted.) Thus, to the extent
article XI, sections 1 and 4, might have encompassed employees
appointed by a retirement board before the voters approved
Proposition 162, the authority and independence the voters gave
retirement boards in that initiative to establish employment
classifications and salaries for their employees prevails.
Ordinary principles of constitutional interpretation support
this conclusion. “‘[W]hen constitutional provisions can
reasonably be construed so as to avoid conflict, such a
construction should be adopted. [Citations.] As a means of
avoiding conflict, a recent, specific provision is deemed to carve
out an exception to and thereby limit an older, general
provision.’” (Greene v. Marin County Flood Control & Water
Conservation Dist., supra, 49 Cal.4th at p. 290; see Miller v.
Superior Court (1999) 21 Cal.4th 883, 892 [constitutional
provisions “must be harmonized if possible”]; San Francisco
Taxpayers Assn. v. Board of Supervisors (1992) 2 Cal.4th 571, 577
[“‘a general provision is controlled by one that is special, the
latter being treated as an exception to the former’”].)
The simplest way to harmonize Proposition 162 (i.e.,
article XVI, section 17) and article XI, sections 1 and 4, is to
construe Proposition 162 to “carve out an exception” to article XI,
sections 1 and 4, for the administration of retirement
systems. (Greene v. Marin County Flood Control & Water
Conservation Dist., supra, 49 Cal.4th at p. 290.) Proposition 162
53
specifically addresses the administration of retirement systems
and postdates Article XI, sections 1 and 4, by decades. The last
sentence of article XI, section 1, which states a county governing
body “shall provide for the number, compensation, tenure, and
appointment of employees,” originated in 1933, before the
Legislature enacted CERL. (Cal. Const., former art. XI, § 5,
added by initiative, Spec. Elec. (June 27, 1933), commonly known
as Prop. 8.) Similarly, the substance of article XI, section 4, dates
from a 1911 amendment that “authorized for the first time the
framing of freeholders’ charters for counties.” (Anderson v. Lewis
(1915) 29 Cal.App. 24, 27; see Cal. Const., former art. XI, § 7 1/2,
subd. (5), now art. XI, § 4, subd. (f); Dibb v. County of San Diego,
supra, 8 Cal.4th at p. 1207, fn. 3.) Thus, the much later and more
specific constitutional provisions of Proposition 162 regarding the
plenary authority and fiduciary responsibility of retirement
boards over the administration of a retirement system limit the
application of article XI, sections 1 and 4, to employees appointed
by a county board of supervisors and not by a retirement
board. (See San Francisco Taxpayers Assn. v. Board of
Supervisors, supra, 2 Cal.4th at pp. 576-577 [more specific
constitutional provision regarding limits on contributions to
“‘retirement’ funds” took precedence over a more general
provision regarding limits on “‘debt service,’” even though “‘the
latter, standing alone, would be broad enough to include the
subject to which the more particular provision relates’”]; Izazaga
v. Superior Court (1991) 54 Cal.3d 356, 372 [voter-initiated
amendment abrogated prior interpretations of the constitutional
right against self-incrimination].) “Such an interpretation gives
effect to the intent of the voters in passing” the initiative.
(Izazaga, at p. 372.)
54
Proposition 162’s exception or carve-out to article XI,
sections 1 and 4, is consistent with the scope of a charter county’s
home rule authority. Article XI, section 4, gives the people in
such counties authority “to create and operate their own local
government and define the powers of that government, within the
limits set out by the Constitution.” (Dibb v. County of San Diego,
supra, 8 Cal.4th at p. 1206, italics added; accord, San Bernardino
County Board of Supervisors v. Monell (2023) 91 Cal.App.5th
1248, 1275.) Our interpretation applies the limits set out in
Proposition 162 to the authority of charter counties to establish
classifications and salaries for employees appointed by a
retirement board.
Moreover, “charter county ‘home rule’ authority is limited
to matters concerning the structure and operation of local
government.” (Dibb v. County of San Diego, supra, 8 Cal.4th at
p. 1207; see Coalition of County Unions v. Los Angeles County Bd.
Of Supervisors (2023) 93 Cal.App.5th 1367, 1388 [“the exercise of
self-governance must be ‘properly grounded on the county’s
authority to provide for the “powers and duties” of its local
officers and the operation of local government’”].) Although a
county may create a retirement system by a vote of its board of
supervisors (§ 31500), retirement systems are not county
operations; they are independent entities established by state
legislation and managed and administered by their boards, not
by county boards of supervisors or any other county entity.
Indeed, a retirement board’s constituency “is not limited to
county employees, but may include employees of various political
subdivisions and districts within the county.” (Traub v. Board of
Retirement, supra, 34 Cal.3d at p. 798; see § 31469 [defining
“employee” for purposes of CERL].) For example, LACERA
55
administers benefits and manages retirement funds for
employees of the South Coast Air Quality Management District,
whose jurisdiction covers multiple counties. (See Rialto Citizens
for Responsible Growth v. City of Rialto (2012) 208 Cal.App.4th
899, 933, fn. 15.) Thus, LACERA’s operations exceed the
operation of the County. (See Dimon v. County of Los Angeles,
supra, 166 Cal.App.4th at p. 1282 [under the “home rule”
doctrine, county charter provisions “‘concerning the operation of
the county’” prevail over conflicting state laws]; Holmgren v.
County of Los Angeles, supra, 159 Cal.App.4th at p. 601 [same].)
Cases cited by the County and Board of Supervisors for the
proposition that “the county, not the state, not someone else, shall
provide for the compensation of its employees” (County of
Riverside v. Superior Court, supra, 30 Cal.4th at p. 285) are
inapplicable because they do not involve employees appointed by
a retirement board. (See, e.g., ibid. [county probation
department employees]; Dimon, at p. 1281 [same].)
If, as the County and Board of Supervisors argue,
article XI, sections 1 and 4, gave counties exclusive authority to
establish the terms and conditions of employment for employees
of retirement systems, several provisions of CERL would be
constitutionally suspect because an “express grant of authority to
the county necessarily implies the Legislature does not have that
authority.” (County of Riverside v. Superior Court, supra,
30 Cal.4th at p. 285; see Dimon v. County of Los Angeles, supra,
166 Cal.App.4th at p. 1281 [“The state constitution’s express
grant of authority to charter counties necessarily implies that the
Legislature lacks the authority to provide for compensation of the
County employees.”].) Article XI, sections 1 and 4, give county
governing bodies authority to provide for the “appointment,”
56
“number,” and “compensation” of county employees. (Cal. Const.,
art. XI, § 1, subd. (b); id., § 4, subd. (f).) Article XI, section 1, also
requires governing bodies to provide for the “tenure” of such
employees, and article XI, section 4, requires governing bodies to
provide for their “powers, duties, qualifications,” “times at which,
and terms for which they shall be appointed,” and “the manner of
their appointment and removal.” (Id., § 1, subd. (b); id., § 4,
subd. (f).)
Adopting the County and Board of Supervisors’
interpretation would create conflicts with various legislative
grants of authority to retirement boards. Such statutory conflicts
would include (1) section 31522.1, which expressly gives
retirement boards authority to “appoint” staff “as are required to
accomplish the necessary work of the boards,” and therefore
impliedly gives them authority to determine the “number,”
“powers,” “duties,” and “qualifications” of their staff;
(2) section 31522.3, which gives retirement boards in certain
counties authority to “appoint” an assistant administrator and
chief investment officer and to determine their “tenure” and
“manner of . . . removal” by stating those employees “shall serve
at the pleasure of, and may be dismissed at the will of, the
appointing board or boards”; (3) section 31522.4, which gives
LACERA authority to “appoint” certain staff members and to
exempt them from “county charter, civil service, or merit system
rules,” thus affecting their “tenure,” “terms for which they shall
be appointed,” and “the manner of their appointment and
removal”; and (4) section 31580.2, which acknowledges
retirement boards have authority to appoint their personnel
57
under section 31522.1. 12 And regarding conflict (4), if retirement
boards do not have authority to “appoint” staff under
section 31522.1, the legislative bargain struck in AB 470 to give
retirement boards this option in exchange for funding the
administration of retirement systems from system assets would
be nullified. 13
The County and Board of Supervisors’ reliance on
section 31522.1, which states retirement board appointees shall
be “county employees,” is misplaced. Several provisions of CERL
12 If the County and Board of Supervisors’ interpretation of
article XI, sections 1 and 4, were correct, section 25300, which
mirrors those constitutional provisions, would also conflict with
CERL. (See § 25300 [“The board of supervisors . . . shall provide
for the number, compensation, tenure, appointment, and
conditions of employment of county employees.”].)
13 For the same reasons, Proposition 162 does not interfere
with the County Charter, which states the Board of Supervisors
shall “appoint all . . . officers, assistants, deputies, clerks,
attaches and employees whose appointment is not provided for by
this Charter” and shall “provide, by ordinance, for the
compensation of elective officers and of its appointees.”
(L.A. County Charter, art. III, § 11, subd. (1), italics added.) The
Charter also states the Board of Supervisors shall “provide, by
ordinance, for the number of assistants, deputies, clerks, attaches
and other persons to be employed from time to time in the several
offices and institutions of the County, and for their compensation
and the times at which they shall be appointed.” (Id., § 11,
subd. (3).) Employees appointed by a retirement board are not
appointees of the Board of Supervisors, and LACERA is not an
“office or institution” of the County. (See Traub v. Board of
Retirement, supra, 34 Cal.3d at p. 798; Hudson v. County of
Los Angeles, supra, 232 Cal.App.4th at p. 396, fn. 2.)
58
make clear retirement system appointees are not “county
employees” for all purposes. Instead, CERL gives retirement
systems authority over their employees in a variety of
employment contexts. Moreover, courts have found “county
employees” who worked for a retirement system were also
employees of that system. For example, as discussed, the court in
Corcoran, supra, 60 Cal.App.4th 89 held a retirement board was
the “governing body” for the employees it appointed for purposes
of determining the level of retirement benefits for those
employees. (Id. at p. 95.) Like LACERA, the retirement board in
Corcoran appointed, promoted, and discharged its employees.
(Id. at pp. 94-95.) As a result, the court in Corcoran held, that
“those employees are members of the county civil service and
paid according to county salary schedules with paychecks issued
by the county is immaterial.” (Id. at p. 95.)
For different reasons, the court in Kern County Employees’
Retirement Assn. v. Bellino (2005) 126 Cal.App.4th 781 (Kern
County) held an employee was employed by both the Kern County
Employees’ Retirement Association and its governing board, on
one hand, and Kern County (by virtue of section 31522.1), on the
other. (See Kern County, at pp. 787-790.) In that case a
retirement association employee was elected to the board of the
retirement association, but a statute precluded such employees
from becoming board members without first resigning their
position with the retirement association. (See id. at p. 786;
§ 53227, subd. (a).) The employee challenged application of that
law to him, arguing that under section 31522.1 he was a “County
employee” and not an employee of the retirement association.
(Kern County, at p. 785.) The court disagreed and held under the
common law test for employment—“[t]he right to control and
59
direct the activities of the alleged employee or the manner and
method in which the work is performed”—the employee was also
employed by the retirement association. (Id. at p. 790.) “Such a
conclusion,” the court stated, “would in no way undermine the
role of counties as employers of retirement association personnel
under section 31522.1.” (Id. at p. 790; see also Metropolitan
Water Dist. v. Superior Court (2004) 32 Cal.4th 491, 500
[employees on a private contractor’s payroll were also water
district employees for purposes of enrolling in CalPERS].) Thus,
that CERL defines employees of a retirement system as “county
employees” for limited purposes does not mean they are
employees of the county for purposes of article XI.
D. CERL Requires the Board of Supervisors To Include
the LACERA Boards’ Employment Classifications
and Salaries in the County’s Eligibility List and
Salary Ordinance
Consistent with its plenary authority over the
administration of the retirement system, LACERA argues
section 31522.1 requires the Board of Supervisors to include in
the County eligibility list and salary ordinance the employment
classifications and salaries adopted by the LACERA Boards, just
as the Board of Supervisors did from 1996 to 2018. We agree
with LACERA’s interpretation of section 31522.1 and that this
mandate is necessary to fulfill the purpose and intent of
Proposition 162.
60
1. Sections 31522.1 and 31580.2 Give Retirement
Boards Authority To Establish Employment
Classifications and Salaries for System
Employees and Require Boards of Supervisors
To Approve Them
As with an initiative approved by the voters, our goal in
interpreting a statute is to adopt a construction that “‘best gives
effect to the Legislature’s intended purpose.’ [Citation.] In
determining that intended purpose, we . . . ‘consider first the
words of a statute, as the most reliable indicator of legislative
intent.’ [Citation.] In doing so, we give the words ‘their usual
and ordinary meaning,’ viewed in the context of the statute as a
whole.” (Union of Medical Marijuana Patients, Inc. v. City of
San Diego (2019) 7 Cal.5th 1171, 1183-1184; see Kim v. Reins
Internat. California, Inc. (2020) 9 Cal.5th 73, 83; Myasnyankin v.
Nationwide Mut. Ins. Co. (2024) 99 Cal.App.5th 283, 290.)
“‘We must harmonize the statute’s various parts by considering it
in the context of the statutory framework as a whole. [Citation.]
If the statutory language is unambiguous, then its plain meaning
controls. If, however, the language supports more than one
reasonable construction, then we may look to extrinsic aids,
including the ostensible objects to be achieved and the legislative
history.’” (Myasnyankin, at p. 290; see Kim, at p. 83.)
As stated, section 31522.1 provides that retirement boards
“may appoint such administrative, technical, and clerical staff
personnel as are required to accomplish the necessary work of the
boards. The appointments shall be made from eligible lists
created in accordance with the civil service or merit system rules
of the county in which the retirement system governed by the
boards is situated. The personnel shall be county employees and
61
shall be subject to the county civil service or merit system rules
and shall be included in the salary ordinance or resolution
adopted by the board of supervisors for the compensation of
county officers and employees.” (§ 31522.1, italics added.)
LACERA argues the italicized language creates a ministerial
duty on boards of supervisors to include in county employment
classifications and the salary ordinance the classifications and
salaries adopted by retirement boards. We agree with the trial
court’s assessment this language is ambiguous regarding who
creates the “eligible lists” from which a retirement board may
appoint personnel and regarding whether “personnel . . . shall be
included in the salary ordinance” creates a ministerial duty. And
the language stating “personnel shall be county employees”
further complicates the meaning of section 31522.1.
Reading the contested language in its context, in the
context of CERL as a whole, and in light of the relevant
legislative history, we conclude section 31522.1 requires the
Board of Supervisors to include in County classifications and the
salary ordinance the employment classes and compensation
adopted by the LACERA Boards. First, section 31522.1 gives
LACERA Boards authority to “appoint” staff who are “required to
accomplish the necessary work of the boards.” 14 Because
retirement boards manage their retirement systems (§ 31520),
they must have authority to determine what work is “necessary.”
Appointing staff to accomplish the necessary work must include,
at a minimum, authority to determine job responsibilities and
reporting relationships of the appointed employees. It follows
that the language in section 31522.1 stating “[t]he appointments
shall be made from eligible lists” must mean lists made by the
14 CERL does not define the scope of the appointment power.
62
retirement boards because boards of supervisors have no
knowledge of or supervisory authority over the necessary work of
retirement boards. Moreover, if the Legislature had intended
retirement boards to make appointments from eligible lists
created by boards of supervisors for county employees, the
Legislature could have omitted the reference to such lists in
section 31522.1. (See San Diego Police Officers Assn. v. City of
San Diego Civil Service Com. (2002) 104 Cal.App.4th 275, 284
[rejecting the construction of a statute “merely to restate” the
status quo].)
Similarly, the language of section 31522.1, that personnel
appointed by a retirement board “shall be included in the salary
ordinance or resolution adopted by the board of supervisors for
the compensation of county officers and employees,” creates a
mandatory duty for boards of supervisors to include in the
relevant county’s salary ordinance the salaries adopted by a
retirement board for its appointees. The alternative
interpretation proposed by the County and Board of Supervisors,
that this language merely reflected the status quo for every
county employee at the time the Legislature enacted
section 31522.1, would render that language meaningless. (See
Kemp v. Superior Court (2022) 86 Cal.App.5th 981, 994-995
[“‘In construing a statute we are required to give independent
meaning and significance to each word, phrase, and sentence in a
statute and to avoid an interpretation that makes any part of a
statute meaningless.’”]; San Diego Police Officers Assn. v. City of
San Diego Civil Service Com., supra, 104 Cal.App.4th at p. 284
[same].)
The County and Board of Supervisors also argue the use of
“shall” in section 31522.1 is permissive and not mandatory
63
because “the duty is discretionary if the entity must exercise
significant discretion to perform the duty.” But the duty
LACERA identifies does not involve any discretion. Indeed, the
whole point of LACERA’s argument is the Board of Supervisors
does not have discretion to fix the compensation for LACERA
employees and must include in the eligible list and salary
ordinance the classifications and salaries adopted by the
LACERA Boards for their employees. (See Schecter v.
Los Angeles County, supra, 258 Cal.App.2d at p. 393 [affirming
an order granting a petition for writ of mandate ordering the
Board of Supervisors to amend its salary ordinance to implement
classifications adopted by the Civil Service Commission].) The
County and Board of Supervisors’ argument rests on the incorrect
premise that the Board of Supervisors retains some authority to
establish or reject these terms of employment.
Second, reading section 31522.1 to require boards of
supervisors to adopt the classifications and salaries adopted by
retirement boards makes sense in light of section 31580.2, which
gives retirement boards authority to create their own budgets
and to charge administrative expenses, including compensation,
against their earnings. LACERA cannot create an accurate
budget without knowing what it can and will pay the staff it
appoints. (Cf. Hicks v. Board of Supervisors (1977) 69 Cal.App.3d
228, 235 [“[t]he fixing of the number of employees, the salaries
and employee benefits is an integral part of the statutory
procedure for the adoption of the county budget”].)
Moreover, because the funds to pay LACERA’s staff come
from retirement system assets and not County funds (and
because the LACERA Boards and not the Board of Supervisors
have fiduciary duties to LACERA members and their
64
beneficiaries), LACERA Boards must have control over
LACERA’s budget, including compensation. (See Corcoran,
supra, 60 Cal.App.4th at p. 95 [a retirement board is the
“governing body” for its employees, “otherwise it would have
abdicated its obligation to make administrative cost decisions
consistent with its primary duty to the fund’s participants and to
their beneficiaries”].) 15 The County and Board of Supervisors’
position that the Legislature gave retirement boards authority to
set their own budgets and hire their own employees so long as
they paid those employees from system assets, yet silently
reserved for county administrators the right to veto the vast
majority of that spending, is inconsistent with retirement boards
having the ability to create, fund, and control their own budgets.
(See Jackpot Harvesting Co., Inc. v. Superior Court (2018)
26 Cal.App.5th 125, 141 [“we ‘select the construction that
comports most closely with the apparent intent of the Legislature
[or the voters], with a view to promoting rather than defeating
the general purpose of the statute, and avoid an interpretation
that would lead to absurd consequences’”]; see also Wasatch
15 Citing a 1987 Attorney General opinion, the County and
Board of Supervisors argue the budgetary power section 31580.2
confers does not give retirement boards authority over personnel
decisions. The Attorney General’s opinion, however, was not
contemporaneous with the enactment of AB 470 and addressed
whether “the entire expense of administration of the retirement
system” under section 31580.2 included certain costs
(not including employee compensation) over which a retirement
board has no control. (See 70 Ops.Cal.Atty.Gen. 277 (1987).) The
opinion did not address whether retirement boards have
authority over employee compensation under sections 31522.1
and 31580.2.
65
Property Management v. Degrate (2005) 35 Cal.4th 1111, 1122
[“[t]he court will apply common sense to the language at hand
and interpret the statute to make it workable and reasonable”].) 16
Third, the legislative history of AB 470, though somewhat
thin on which body fixes compensation for retirement system
employees, generally confirms our interpretation. As discussed,
AB 470, which enacted section 31522.1, represented a tradeoff
that allowed retirement boards to appoint their own staff, so long
as they paid staff expenses, including salaries, from system
assets. The Legislative Counsel’s Digest describes the bill as
permitting “personnel appointments by the board of retirement
and board of investment and provides that the expense of
administration of the retirement system up to a specified amount
shall be charged against the earnings of the retirement fund if
such appointments are made.” (Legis. Counsel’s Dig., Assem. Bill
No. 470 (1973-1974 Reg. Sess.) 1 Stats. 1973, Summary Dig.,
p. 39.) The Assembly Retirement Committee’s bill analysis
observed that the Treasurer and Tax Collector of Los Angeles
County opposed AB 470. (Assem. Retirement Com., Analysis of
Assem. Bill No. 470 (1973-1974 Reg. Sess.).) Indeed, the
Treasurer and Tax Collector sent a letter to the Assembly
Retirement Committee stating the State Association of
Retirement Systems Administrators opposed AB 470 because it
would “remove[ ] budgetary responsibilities from the chief
administrative officer and the Board of Supervisors” and create
16 Though we conclude the County has a ministerial duty to
approve LACERA salaries, we do not decide whether that duty
arises from the County’s delegation of its salary-setting authority
after it voluntarily opted into CERL or from the displacement by
Proposition 162 of the County’s home rule authority.
66
new units of county government (boards of retirement and
investment) “with no cost controls as we now know them in
county operations.” (Treasurer and Tax Collector Harold J.
Ostly, letter to Assemblyman Bob Wilson, Apr. 17, 1973.) The
“cost controls as we now know them” apparently referred to the
Board of Supervisors’ control over LACERA’s budget before the
Legislature enacted AB 470. And the loss of that control was why
the Treasurer and Tax Collector opposed the measure, which the
Legislature enacted anyway.
The County and Board of Supervisors point to other
excerpts of AB 470’s legislative history to support their position
section 31522.1 merely acknowledged the status quo for all
county employees, i.e., that appointments must be made from
existing eligibility lists and the County’s salary ordinance.
In particular, they point to the enrolled bill report prepared by an
executive agency for the Governor before he decided whether to
sign the bill. The enrolled bill report stated AB 470 would vest
authority to appoint employees for the retirement system in
retirement and investment boards, “subject however, to county
civil service and salary fixing authority.” (Agriculture and
Services Agency, Enrolled Bill Rep. on Assem. Bill No. 470 (1973-
1974 Reg. Sess.) prepared for Governor Reagan (July 5, 1973).)
Enrolled bill reports, however, are not particularly probative of
legislative intent because they are drafted after the Assembly
and Senate have passed the legislation. (In re Lucas (2012)
53 Cal.4th 839, 856; Kaufman & Broad Communities, Inc. v.
Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 40-41.)
As a result, enrolled bill reports may be “instructive,” but they
are not entitled to “great weight.” (Elsner v. Uveges (2004)
34 Cal.4th 915, 934, fn. 19; see Conservatorship of Whitley (2010)
67
50 Cal.4th 1206, 1218, fn. 3.) In any event, as the trial court
observed, the enrolled bill report is “weak evidence of legislative
intent” because it did not provide any analysis to support its
reading of AB 470. Moreover, at the time, the Board of
Supervisors made clear in its letter urging the Governor to veto
AB 470 the Board believed the bill would remove the “cost
controls” boards of supervisors had over retirement boards. (L.A.
County Bd. of Supervisors, letter to Governor Reagan regarding
Assem. Bill No. 470 (1973-1974 Reg. Sess.) July 10, 1973.) Thus,
contemporaneous administrative analyses of AB 470 are
essentially a wash and do not shed much light on the
Legislature’s intent. (See Nolan v. City of Anaheim (2004)
33 Cal.4th 335, 340 [extrinsic aids for interpreting an ambiguous
statute include contemporaneous administrative constructions];
Los Angeles Unified School Dist. v. Office of Administrative
Hearings (2023) 91 Cal.App.5th 208, 214-215 [same].)
Finally, and contrary to the County and Board of
Supervisors’ argument, the language of section 31522.1 stating
retirement board appointments “shall be county employees” does
not determine whether retirement boards or boards of
supervisors have authority to classify and establish salaries for
retirement system employees. The Legislature added this
language to section 31522.1 in 1979, along with an amendment
that increased the statutory limit on expenses for administration
of the retirement system. (See Stats. 1979, ch. 55, § 1.) The
latter amendment received most of the attention in the
Legislature. Indeed, the Senate Public Employment and
Retirement Committee report on Assembly Bill No. 132, which
enacted the 1979 amendments, refers to the addition of “shall be
county employees” to section 31522.1 as a “technical, clarifying
68
amendment[ ].” (Sen. Com. on Public Employment and
Retirement, Rep. on Assem. Bill No. 132 (1979-1980 Reg. Sess.)
Mar. 19, 1979, p. 2.) This is consistent with a letter from Contra
Costa County (which sponsored the bill) 17 stating the addition of
“[c]ounty employees” “makes it clear that the staff of [retirement
systems] continues to be county employees.” (Contra Costa
County Treasurer Alfred P. Lomeli, letter to Assemblyman
Daniel E. Boatwright, Mar. 12, 1979, italics added.) An enrolled
bill report, which “reflect[ed] the same understanding” (Elsner v.
Uveges, supra, 34 Cal.4th at p. 934), similarly stated “[t]he
language regarding retirement board employees is
nonsubstantive and is only intended to clarify their status.”
(Off. of Employee Relations, Enrolled Bill Rep. on Assem. Bill
No. 132 (1979-1980 Reg. Sess.) prepared for Governor Brown
(May 8, 1979) p. 1.) 18
Designating retirement system employees as county
employees ensured such employees received the protections of the
civil service and could participate in the retirement system. As
17 See Sen. Com. on Public Employment and Retirement,
analysis of Assem. Bill No. 132 (1979-1980 Reg. Sess.) Mar. 1,
1979, p. 1.
18 The County and Board of Supervisors also cite Board of
Retirement v. Santa Barbara County Grand Jury, supra,
58 Cal.App.4th 1185 for the proposition retirement system
employees are “county employees.” The status of retirement
system employees, however, was not at issue in that case, and the
court merely paraphrased sections 31522.1 and 31580 in stating,
“The [retirement] Board’s staff are county employees, although
management of the system is vested in the Board.” (Board of
Retirement, at p. 1191.)
69
the County counsel explained to the County chief administrative
officer in 1996, “LACERA employees are made County employees
by statute for rather limited purposes primarily relating to the
manner of their appointment and their tenue. Being County
employees also allows them to participate in the retirement
system and to receive county fringe benefits unless other benefits
are established by the LACERA boards.” (See Holmgren v.
County of Los Angeles, supra, 159 Cal.App.4th at p. 603 [subject
to a few exceptions, “all classified County employees are
automatically enrolled” in LACERA].) 19 And as discussed, it is
not unusual for a county employee to have two employers for
different purposes. (See Kern County, supra, 126 Cal.App.4th at
pp. 787-790; Corcoran, supra, 60 Cal.App.4th at p. 95.)
2. County-specific Legislation Stating Retirement
System Employees Are Not County Employees
Does Not Undermine This Result
The County and Board of Supervisors argue legislation
enacted between 2002 and 2021 providing that certain or all
employees of the retirement systems in Orange, San Bernardino,
Contra Costa, and Ventura Counties are employees of their
respective retirement systems shows the Legislature intended
employees of retirement systems in other counties to be treated
as “county employees” for all purposes. This argument fails.
First, the Legislature enacted these statutes in response to
or following the decision in Westly that wrongly interpreted
19 See also §§ 31468, subd. (l), 31522.5, 31522.7, 31522.9,
31522.11 (designating certain retirement systems “districts”
under CERL for purposes of making their employees eligible to
participate in the retirement association).
70
Proposition 162 and left retirement boards unable to
independently manage their retirement systems. The legislative
history of these statutes shows that problems recruiting and
retaining retirement board staff led the retirement systems to
seek this legislation. Second, that the Legislature enacted
statutes redesignating certain “county employees” as employees
of a retirement system indicates the Legislature never believed
they were “county employees” under article XI of the California
Constitution for all purposes in the first place. As discussed, the
County and Board of Supervisors argue that article XI gives them
exclusive authority over the terms and conditions of employment
for county employees and that the Legislature cannot encroach
on or delegate this authority. That the Legislature enacted
legislation making retirement systems the employers for certain
employees appointed under section 31522.1 suggests such
persons were never “county employees” for all purposes under
article XI. (See County of Riverside v. Superior Court, supra,
30 Cal.4th at p. 285; Dimon v. County of Los Angeles, supra,
166 Cal.App.4th at p. 1281.)
The relevant legislative landscape begins in 2001, when the
Legislature enacted section 31522.4, which applies only to
LACERA. That statute allowed LACERA boards to hire senior
managers as at-will employees who are not “subject to county
charter, civil service, or merit system rules.” (§ 31522.4,
subd. (a).) Such persons are still “county employees” whose
positions “shall be included in the salary ordinance or salary
resolution adopted by the board of supervisors for the
compensation of county officers and employees.” (Ibid.)
According to the legislative history, the Legislature enacted
section 31522.4 after the voters of Los Angeles County amended
71
the County Charter to exempt “the top two layers of management
of all county departments from the county civil service system.”
(Sen. Public Employment and Retirement Com., Analysis of
Sen. Bill No. 1132 (2001-2002 Reg. Sess.) as amended Apr. 18,
2001.) Because “LACERA is an independent governmental
agency separate from the county,” it was not “included” in the
scope of the Charter amendment. (Ibid.) At the time, LACERA,
which sponsored the legislation (see ibid.), had no need to ask the
Legislature to state explicitly that employees appointed by
LACERA Boards were employees of LACERA or that the
LACERA Boards could establish their employment classifications
and salaries because LACERA and the County agreed
Proposition 162 gave LACERA that authority.
In 2002 the Legislature added section 31522.5, which made
certain senior management employees of the Orange County
retirement system at-will employees subject to “terms and
conditions of employment established by the board of retirement.”
(Former § 31522.5, subd. (b).) 20 Although the legislative history
does not state what prompted section 31522.5 at that time, the
Orange County Employees Retirement System (OCERS)
sponsored the legislation to ensure “the flexibility needed to
recruit and retain specially trained pension professionals to
assist them in carrying out their fiduciary responsibility of
managing employee retirement funds.” (See Assembly Com. on
20 Since 2002 the Legislature has amended section 31522.5
several times, including to add the retirement system of
San Bernardino County and to remove the retirement system of
Orange County. (See Stats. 2006, ch. 369, § 5; Stats. 2021, ch. 26,
§ 1.) Section 31522.11 now applies to the retirement system of
Orange County.
72
Public Employees, Retirement and Social Security, Analysis of
Assem. Bill No. 1992 (2001-2002 Reg. Sess.) as amended Apr. 22,
2002, p. 1.) Indeed, a letter from the OCERS chief executive
officer explained OCERS had “recently lost its chief investment
officer to a larger system when it was unable to create a flexible
incentive program in a timely manner.” (Chief Executive Officer
of OCERS Keith Bozarth, letter to Assembly Member Lou Correa,
Apr. 23, 2002; see also Chief Executive Officer of OCERS Keith
Bozarth, letter to Senate Member Nell Soto, June 3, 2002.)
Moreover, the trial court in Westly issued its decision against
CalPERS in October 2001, and the bill that became
section 31522.5 was introduced in the Assembly in February
2002. (Cf. Scott v. City of San Diego (2019) 38 Cal.App.5th 228,
240-241 [appellate court decisions preceding a statutory
amendment were relevant in determining the Legislature’s
intent].) (As stated, in 2002 LACERA and the County agreed
LACERA had the authority it needed to recruit and retain its
staff by establishing employment classifications and salaries.)
In 2006 the Legislature applied section 31522.5 to the
retirement system of San Bernardino County as part of “an
omnibus technical bill,” without much comment about that
particular amendment. (See Sen. Rules Com., Analysis of
Sen. Bill No. 777 (2005-2006 Reg. Sess.) as amended June 15,
2006, p. 3.) An enrolled bill report, however, stated the county
was having “difficulty retaining and recruiting upper-level
managers for the county retirement board because board
employees are subject to civil-service salary restrictions. Many
managers leave the county once they obtain higher education or
certification because the private sector often offers more lucrative
salaries.” (Off. of Planning and Research, Enrolled Bill Rep. on
73
Sen. Bill No. 777 (2005-2006 Reg. Sess.) prepared for Governor
Schwarzenegger (Aug. 23, 2006) p. 1; see id. at p. 2 [explaining
the need for retirement systems “to offer competitive salaries to
the employees that manage these crucial public retirement
investments”].) This concern was echoed in the legislative
history of a 2009 statute that expanded the authority of the
retirement system of San Bernardino County to additional
categories of employees in section 31522.7. (See § 31522.7,
subds. (a)-(b) [giving the board of retirement of San Bernardino
County authority to appoint a variety of employees who “shall be
employees of the retirement system”].) A Senate Rules
Committee analysis stated employees of the San Bernardino
County Employees’ Retirement Association (SBCERA) were
“obtain[ing] training and expertise at the expense of the Board of
Retirement and then leav[ing] to take a better paying position
with the counties.” (Sen. Rules Com., Off. of Sen. Floor Analyses,
3d reading analysis of Assem. Bill No. 1406 (2009-2010 Reg.
Sess.) as amended May 21, 2009.) The analysis said giving
SBCERA authority to hire employees outside the county civil
service system and classifying them as at-will employees would
allow SBCERA “to better recruit qualified employees for these
positions in a timelier manner.” (Ibid.)
In 2014 the Legislature enacted section 31522.9, which
applies to Contra Costa County. (§ 31522.9, subd. (h).) Unlike
the other county-specific legislation, section 31522.9 applies to all
employees of the Contra Costa County Employees Retirement
Association (CCCERA) “as are required to accomplish the
necessary work of the board.” (Id., subd. (a).) Section 31522.9
followed a settlement agreement between CCCERA and Contra
Costa County resolving a dispute that arose after the controller of
74
Contra Costa County refused to follow the CCCERA Board’s
direction to pay CCCERA employees, as the controller had in the
past. (Sen. Public Employment and Retirement Com., Analysis of
Sen. Bill No. 673 (2013-2014 Reg. Sess.) as amended Jan. 6, 2014,
p. 3.) Before the dispute, CCCERA and Contra Costa County
appear to have agreed, as LACERA and the County had agreed at
one time, section 31522.1 gave retirement boards authority to set
salaries for their employees. The legislative history of
section 31522.9 states: “Under existing law, the CCCERA Board
has authority to establish compensation for retirement system
employees, the Board of Supervisors has responsibility to
establish civil service rules and enter MOUs for all county
employees, and the Auditor-Controller provides payroll and
oversight services.” (Sen. Public Employment and Retirement
Com., Analysis of Sen. Bill No. 673, supra, p. 3.) But after Contra
Costa County’s board of supervisors reduced the pay for county
employees to reflect furloughs imposed on them, the controller
“indicated that issuing full pay warrants to the CCCERA
employees”—as the CCCERA Board directed—“would cause
Contra Costa County to violate MOUs that prohibited disparate
treatment among employees in the same class.” (Ibid.) (As
stated, LACERA’s employees are classified separately from
County employees.) CCCERA and Contra Costa County resolved
their dispute through litigation and subsequent legislation that
makes clear CCCERA employees are employees of the retirement
system.
Finally, in 2015 the Legislature enacted section 31522.10,
which gives the retirement system of Ventura County authority
to appoint certain senior level managers as employees of the
retirement system who are not subject to Civil Service Rules.
75
(§ 31522.10, subds. (a)-(b)(1).) It appears from the legislative
history the Ventura County Employees’ Retirement Association
(VCERA) was concerned about its ability to comply with its
fiduciary duties under Proposition 162 following 2013 legislation
that imposed new obligations on pension systems. (See
Sen. Com. on Public Employment and Retirement, analysis of
Assem. Bill No. 1291 (2015-2016 Reg. Sess.) as amended May 27,
2015, p. 2.) Thus, VCERA sponsored legislation to, among other
things, “better equip[ ]” the VCERA boards “to carry out their
fiduciary responsibility of managing employee retirement funds”
by improving their “ability to recruit and retain specially trained
staff with compensation that’s competitive with the private
sector.” (Id. at p. 4.) The legislative history also includes a
statement in support from the State Association of County
Retirement Systems that the bill will create “a line of separation
from the county administrative staff” to “ensure that the
retirement system will have the unfettered ability to enforce [the
new legislation].” (Id. at p. 5.)
Each of these county-specific statutes followed or likely was
precipitated by the litigation in Westly. If the court in that case
had decided that case differently, the county-specific legislation
would not have been necessary because the “‘administrative
issues [that] continued to arise concerning terms and conditions
of employment’” for retirement system employees would not have
arisen. (See Sen. Rules Com., Off. of Sen. Floor Analyses,
3d reading analysis of Sen. Bill No. 673 (2013-2014 Reg. Sess.) as
amended Jan. 6, 2014, p. 4.) Indeed, such issues did not arise
between LACERA and the County until 2018, so that until then
LACERA had no need for specific legislation to resolve any such
issues.
76
Since 2018, the only new county-specific legislation is
section 31522.11, which the Legislature enacted in 2021 to
expand the categories of personnel OCERS can appoint as
retirement system employees outside the civil service system.
(See § 31522.11, subd. (a).) The legislative history of
section 31522.11 demonstrates how Westly has led to legislative
micromanagement of retirement systems, precisely what the
voters intended to prevent by adopting Proposition 162. The
Senate Committee on Labor, Public Employment and Retirement
analysis of Assembly Bill No. 761 (which became
section 31522.11) explained that existing law (then
section 31522.5) limited OCERS to appointing as non-civil service
employees “only one assistant administrator and require[d] all
personnel of the OCERS investment Division to report directly to
the OCERS Chief Investment Officer.” (Sen. Com. on Labor,
Public Employment and Retirement, Analysis of Assem. Bill
No. 761 (2021-2022 Reg. Sess.) as amended Mar. 18, 2021, p. 2.)
The analysis explained that OCERS believed that the scope of
authority no longer met its “organizational needs” and that the
bill “would ‘allow for more efficient use of existing personnel’ by
allowing the OCERS board to appoint ‘two assistant
administrators . . . and to appoint a level of management
personnel between the OCERS Chief Investment Officer and the
other personnel in the OCERS Investment Division.’” (Ibid.)
This admittedly long and detailed detour into several
rounds of legislative history shows how Westly has eroded the
“plenary authority” of retirement boards to administer and
manage their retirement systems. That OCERS had to seek a
legislative amendment before it could restructure its
management to be more efficient is contrary to the voters’ intent
77
to free the administration of retirement systems from legislative
and executive oversight. (See 1992 Ballot Pamp., supra, text of
Prop. 162, p. 70, § 3, subd. (e).)
In light of the court’s holding in Westly and the difficulties
retirement boards have had in recruiting and retaining staff
under the constraints of county employment classifications and
salary ordinances, that some retirement systems sought
legislation to give them greater authority and flexibility is not
indicative of the original intent of section 31522.1 or of its
interpretation in light of Proposition 162. The bureaucratic
delays and disputes OCERS and other retirement systems
experienced in attempting to manage their systems for the
benefit of their members and beneficiaries are what led to this
litigation. Proposition 162 gave retirement boards authority and
discretion to fulfill their fiduciary duties to maximize system
assets and to charge against those assets reasonable
administrative costs. We must reconcile the language of
section 31522.1 with Proposition 162, if possible (Citizens Assn. of
Sunset Beach v. Orange County Local Agency Formation Com.
(2012) 209 Cal.App.4th 1182, 1192), while acknowledging that, “if
there is a conflict between the California Constitution and a law
adopted by the Legislature, the California Constitution prevails”
(City and County of San Francisco v. Regents of University of
California (2019) 7 Cal.5th 536, 558). The language and intent of
section 31522.1 and Proposition 162 are reconciled by
interpreting section 31522.1 to create a ministerial duty on the
Board of Supervisors to include in the civil service classifications
the positions adopted by the LACERA Boards and to include in
the County salary ordinance or resolution the salaries for
retirement system employees adopted by the LACERA Boards.
78
DISPOSITION
The judgment is reversed. The request for judicial notice is
denied as unnecessary. LACERA is to recover its costs on appeal.
SEGAL, J.
We concur:
MARTINEZ, P. J.
FEUER, J.
79