LACERA Wins Court Decision Backing Its Authority Over Employee Compensation, Classification

The state appellate court ruling reversed a 2018 decision by the Los Angeles Board of Supervisors to reject the retirement system’s proposed changes.

California’s 2nd District Court of Appeal ruled that the Los Angeles County Employees Retirement Association has the authority to set salaries and employment classifications for its employees, authority which had been called into question by the Los Angeles County Board of Supervisors.

“The decision was a major win for LACERA, and any pension fund in the 2nd District Court of Appeal would be covered by this ruling,” a LACERA spokesperson tells CIO.

LACERA, with $75 billion in assets under management the largest county employee retirement system int the country, sued Los Angeles County in 2021 to confirm its right to oversee its retirement system administration—including staff salaries—under the Constitution of California.

In 2016 and 2017, LACERA identified the need to recruit new positions and increase salaries for certain employees. In 2018, the pension fund attempted to make such changes, but the Los Angeles Board of Supervisors rejected the move, claiming a decades-old decision, Westly v. Board of Administration, gave it the authority to deny the proposals.

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LACERA appealed the action in 2021, arguing that LACERA cannot fulfill its fiduciary duties to its 190,000 beneficiaries without control over these decisions. The 2nd District Court of Appeal decision in the case, Los Angeles County Employees Retirement Association v. County of Los Angeles, can be viewed here.

“This ruling is a significant victory for LACERA, reinforcing its autonomy and authority to manage its personnel and financial responsibilities effectively, ensuring that it can fulfill its fiduciary duties to its members and beneficiaries,” said LACERA CEO Santos Kreimann in a statement.

The decision cited California Proposition 162, which states that the board of a public pension fund has the sole ability to make decisions over the system.