(Super. Ct. No. 3420080002231CUPAGDS) APPEAL from a judgment of the Superior Court of Sacramento County, Shelleyanne W.L. Chang, Judge.
The opinion of the court was delivered by: Scotland,j.*
CERTIFIED FOR PUBLICATION
Reversed in part and affirmed in part.
Many millions of dollars are at stake in this case. At issue is the process by which a public employee labor union and the Governor negotiate benefits for state employees and then present their collective bargaining agreement to the Legislature for approval and funding. Such agreements, which have been under the public's radar in the past, are now coming to light due to the massive budget deficit the State is facing.
California's collective bargaining system for state employees provides an enhanced pension benefit for what are known as "safety members." The "common thread" that has made employees eligible for safety member retirement status is that their principal duties expose them "to potentially hazardous activity" (Glover v. Board of Retirement (1989) 214 Cal.App.3d 1327, 1333) and "'the risk of injury from the necessity of being able to cope with potential dangers inherent in [the principal duties of the job].' [Citations.]" (City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 469; see also City of Oakland v. Public Employees' Retirement System (2002) 95 Cal.App.4th 29, 63.) Hence, peace officers, firefighters, and correctional officers are safety members. (See, e.g., Gov. Code, §§ 20390, subd. (a) ["principal duties consist of active law enforcement service"], 20398, subd. (a)(10) ["principal duties consist of active firefighting/fire suppression"], 20403 [duties performed in prisons and by parole agents].)
Safety members receive a more generous retirement formula, and thus more generous pensions, than do other state employees who are known as "miscellaneous members." Consequently, some state employee collective bargaining units have, over the years, sought safety member status for their members. This litigation involves one such successful effort.
The California Statewide Law Enforcement Association (CSLEA) represents State Bargaining Unit 7.*fn1 The President of CSLEA described Unit 7 as follows: "It's about half and half, half sworn [peace officers] and half regulatory. Obviously everyone knows what the sworn officers do. The regulatory folks are assigned to, you know, all the different departments [of state government]. [For example,] DMV has sworn investigators, and they have licensing reps that go out. And you know, those reps go out to all the different businesses that sell cars, and many of the times they're in shady areas, things like that. [¶] You've got cosmetology people who go out and who work investigating the different hair salons for cleanliness those sorts of things. They issue citations. [¶] . . . DMV [has] licensing registration examiners, those folks . . . [who] do the licensing of the drive tests. [¶] [Also in Unit 7 are] criminalists . . . [who] have an extremely important and dangerous job by going out to the different crime labs and working with extremely volatile chemicals . . . ."
In March 2002, CSLEA reached agreement with the Department of Personnel Administration (DPA) to reclassify employees of Unit 7 from miscellaneous member retirement status to safety member status, thus increasing their pension benefits. A memorandum of understanding (MOU) was approved by the Legislature in Senate Bill No. 183 (SB 183), codified in part in Government Code section 19816.21, subdivision (a)(1). (Stats. 2002, ch. 56.)
An arbitrator found that DPA and CSLEA agreed to confer safety member status retroactively and thereby to include in that status all prior service of Unit 7 employees while they were in miscellaneous member status. Stated another way, even though their prior years of service were as miscellaneous members, those years would be converted into safety member status to provide Unit 7 employees with more generous retirement service credit for the years of service they worked as miscellaneous members.
Over DPA's objection, a Sacramento County Superior Court judge confirmed the arbitration award.
On appeal, DPA contends the arbitrator's decision must be vacated on the ground that the award violates the public policy embodied in the Ralph C. Dills Act (Dills Act) (Gov. Code, § 3512 et. seq.; further section references are to the Government Code unless otherwise specified) because the portion of the agreement conferring retroactive safety member retirement service credit was not presented to, and approved by, the Legislature. We agree.
As we will explain, we defer to the arbitrator's decision, based on extrinsic evidence, that the agreement between DPA and CSLEA to move employees of Unit 7 into safety member retirement status included an agreement to apply the new status retroactively to encompass all prior service credit by members employed as of July 1, 2004. However, the MOU presented to the Legislature did not contain language that the change to safety member status would apply retroactively to convert prior miscellaneous member status to safety member status; SB 183 was "silent" as to whether the benefit would apply retroactively to prior service; and the Legislature was not provided with a fiscal analysis of retroactive application of the agreement. Because the part of the agreement giving Unit 7 employees retroactive safety service credit was never explicitly presented to the Legislature for approval, as required by section 3517.61 of the Dills Act, the arbitrator erred in concluding that SB 183 mandates retroactive safety member retirement benefits. Accordingly, we will reverse the judgment to that extent. The retroactive part of the agreement may be enforced only if it and its fiscal consequences are explicitly submitted to, and approved by vote of, the Legislature.
CSLEA is the exclusive bargaining representative for Unit 7, which is comprised of approximately 7,000 state employees.
In early 2002, the president of CSLEA, Alan Barcelona, met with Governor Gray Davis to discuss CSLEA's third attempt to reclassify its members into safety member retirement status. Governor Davis told Barcelona that, if he sponsored legislation to move CSLEA's members into safety member status, the Governor would sign it. The Governor then told DPA Director Marty Morgenstern to meet with CSLEA to implement a plan to reclassify the majority of CSLEA's members.
In March 2002, DPA and CSLEA entered into a written agreement, providing that classifications within Unit 7 are related to public safety and that, "[o]n July 1, 2004, those classifications currently in the Miscellaneous Retirement category and not otherwise indicated shall be moved to the Safety Retirement category."
Existing law permitted DPA to determine which classes of positions meet the criteria for safety member retirement status (§ 19816.20);*fn2 to agree to provide safety member status by a memorandum of understanding reached pursuant to section 3517.5;*fn3 and to notify the California Public Employees' Retirement System of DPA's determination (§ 20405.1).*fn4
But the law precluded DPA from approving safety member status for any class or position that did not meet criteria specified in subdivision (c) of section 19816.20 (fn. 2, ante). Since employees in Unit 7 did not meet those criteria, it was necessary to seek legislation permitting safety member status for Unit 7. (See also § 3517.6, subd. (b) [if any provision of a collective bargaining memorandum of understanding (MOU) requires the expenditure of funds or is not statutorily exempt from further legislative action, the MOU "may not become effective unless approved by the Legislature"].)
Legislative permission was obtained with the passage of SB 183, codified in section 19816.21, which provides in pertinent part: "(a) Notwithstanding Sections 18717 and 19816.20, effective July 1, 2004, the following officers and employees, who are in the following classifications or positions on or after July 1, 2004, shall be state safety members of the Public Employees' Retirement System: [¶] (1) State employees in State Bargaining Unit 7 (Protective Services and Public Services) whose job classifications are subject to state miscellaneous membership in the Public Employees' Retirement System, unless otherwise excluded by a memorandum of understanding. [¶] (2) State employees in managerial, supervisory, or confidential positions that are related to the job classifications described in paragraph (1) and that are subject to state miscellaneous membership in the Public Employees' Retirement System, provided that [DPA] has approved their inclusion. [¶] (3) Officers and employees of the executive branch of state government who are not members of the civil service and who are in positions that are related to the job classifications described in paragraph (1) and that are subject to state miscellaneous membership in the Public Employees' Retirement System, provided that [DPA] has approved their inclusion. [¶] (b) [DPA] shall notify the Public Employees' Retirement System of the classes or positions that become subject to state safety membership under this section, as prescribed in Section 20405.1." (Stats. 2002, ch. 56, § 1.)
The Legislature also made the following amendments (underscored) to section 20405.1: "Notwithstanding Section 20405, this section shall apply to state employees in state bargaining units that have agreed to these provisions in a memorandum of understanding between the state employer and the recognized employee organization, as defined in Section 3513, state employees who are excluded from the definition of 'state employee' by subdivision (c) of Section 3513, and officers or employees of the executive branch of state government who are not members of the civil service. [¶] (a) On and after the effective date of this section, state safety members shall also include officers and employees whose classifications or positions are found to meet the state safety criteria prescribed in Section 19816.20, provided [DPA] agrees to their inclusion, and officers and employees whose classifications or positions have been designated as subject to state safety membership pursuant to Section 19816.21. For employees covered by a collective bargaining agreement, the effective date of safety membership shall be the date on which [DPA] and the employees' exclusive representative reach agreement by memorandum of understanding pursuant to Section 3517.5 or any later date specified in the memorandum of understanding. For employees not covered by a collective bargaining agreement, [DPA] shall determine the effective date of safety membership." (Stats. 2002, ch. 56, § 3.)
The Legislature did not alter the language of subdivision (b) of section 20405.1, which stated: "[DPA] shall notify the [State Personnel Board] as new classes or positions become eligible for state safety membership, as specified in subdivision (a), and ...