City of Fremont v. Board of Administration

The City of Fremont (Fremont) appeals from a judgment denying its petition for a writ of mandate seeking to set aside a determination by the Board of Administration of the Public Employees’ Retirement System (Board) that year-end cash outs of unused compensating time off in lieu of holiday pay for Fremont’s police officers constitute “compensation” within the meaning of the Public Employees’ Retirement Law (Gov. Code, § 20000 et seq.). Finding no error in that determination, we affirm the judgment.

Fremont is a local public agency that has elected to participate in the Public Employees’ Retirement System (PERS). (See Gov. Code, §§ 20009, 20450.) As such, Fremont is subject to the Public Employees’ Retirement Law and must contribute to the PERS retirement fund an amount equal to a certain percentage of the “compensation” it pays its member employees. (See Gov. Code, § 20740 et seq.) Member pensions are computed as a percentage of the employee’s “final compensation” and are derived in part from employer contributions to the retirement fund. (See, e.g., Gov. Code, §§ 21252.01, 21252.5, 21252.6, 21294.) “Final compensation” is defined as “the highest average annual…