FROM: Barbara Hannah, Chief Counsel
SUBJECT: Benefits Appeal of Michael Milligan
RECOMMENDATION:
title
Deny Michael Milligan’s appeal and find that he is not eligible to purchase service credit pursuant to Government Code section 31641.5 for his work as an independent contractor with the San Bernardino County Public Defender’s Office.
body
BACKGROUND:
Appeal:
Michael Milligan requested a service purchase for prior non-membership service pursuant to Government Code section 31641.5. In accordance with Benefits Policy No. 025, Mr. Milligan is now appealing the Chief Executive Officer’s determination that Mr. Milligan is ineligible to purchase SBCERA service for his work prior to becoming a member based on the following:
1. Mr. Milligan was not an employee of the County as defined by the County Employees’ Retirement Law (“CERL”).
2. It was not Mr. Milligan’s tenure in county service that prevented him from being enrolled in SBCERA membership but rather his status as an independent contractor who was paid as such by the County.
3. CERL prohibits Mr. Milligan from purchasing SBCERA service for work his work during the requested period, and as a result SBCERA has no discretion to grant an exemption. SBCERA has “no authority to disregard” CERL and no authority “to pursue a practice that is contrary to” CERL. (Alameda County Deputy Sheriff’s Assoc. v. Alameda County Employees’ Retirement Assoc. (2020) 9 Cal.5th 1032, 1069.)
Issue:
Whether Michael Milligan, who worked as an independent contractor for the San Bernardino County Public Defender’s Officer prior to becoming a member of SBCERA, is eligible to purchase the requested period under Government Code section 31641.5.
Summary of Law:
San Bernardino County Employees’ Retirement Association was established under the County Employees’ Retirement Law (CERL) (Gov. Code § 31450 et seq.) The Board, which under the California Constitution, is established under the CERL as an independent body - is vested with the power to manage the retirement system. Generally speaking, CERL plans are defined benefit plans, which means that qualifying employees are entitled to receive a fix monthly retirement payment calculated by a formula of “credits” based upon factors such as final compensation, retirement age, and years of service. CERL pensions are funded through contributions collected by the retirement plan both from the participating employers and from employees of the participating employers.
The CERL was enacted to “recognize a public obligation to county … employees who became incapacitated by age or long service in public employment and its accompanying physical disabilities by making provision for retirement compensation and death benefit as additional elements of compensation.” Consequently, Government Code section 31552 provides that “all existing officers and employees of the county become members on the … first day of the calendar month after his entrance into the service.” To that end, employee “members” of county retirement systems established under the CERL may receive credits for service to be applied toward retirement benefits upon retirement. ‘
Generally, these credits may be accrued during the time when an individual is an actual member of the retirement system. Government Code section 31641.5 allows members of the county retirement system to purchase prior service credits for time periods during which the members was not a member of the retirement system but nonetheless “held a position in the county service the tenure of which was such as to exclude him from membership.” Specifically, section 31641.5 provides in pertinent part, as follows:
“A member prior to his entrance into the retirement system held a position in the county service the tenure of which was such as to exclude him from membership, … shall have the right to receive credit in the retirement association for all or any part of the county service before becoming a member …” (Emphasis added.)
The Government Code in turn, defines “county service” as the “the employment of a person by a county, district, municipal court, or superior court.” The term employee is defined in section 31469(a) as “… any officer or other person employed by a county whose compensation is paid by the county, and any officer or other person employed by a district within the county.”
Based on the above, in order to be eligible to purchase service credit under section 31641.5 for service rendered prior to becoming a member of SBCERA, the member must have (1) employed as an employee in a position of the participating employer and (2) such position was excluded from SBCERA membership. An independent contractor is not an employee.
Michael Milligan and SBCERA’s Counsel provided written briefs for the Board’s consideration.
Oral Argument for Open Session:
Mr. Milligan is in pro per. San Bernardino County Employees’ Retirement Association (SBCERA) is represented by Alex Westerfield of Nossaman.
Each side will have 4 minutes for argument. The chair or by vote of a majority of the Board may extend the time for argument equally for both sides. The sequence of oral argument for this matter is as follows: (1) Mr. Milligan and (2) SBCERA’s Counsel.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Operational Excellence & Efficiency
STAFF CONTACT:
Barbara Hannah
David Lantzer
ATTACHMENTS:
Exhibit A: SBCERA Response to Service Purchase Request
Exhibit B: Notice of Appeal of Pension Benefits, Request for Extension to File Appeal
Exhibit C: SBCERA Response to Notice of Appeal and Request for Extension
Exhibit D: Milligan Request for Second Extension to File Appeal
Exhibit E: SBCERA Response to Second Request for Extension to File Appeal
Exhibit F: Milligan Hearing Brief dated February 14, 2024
Exhibit G: SBCERA Response - CEO Determination Letter re Appeal, dated
April 16, 2024
Exhibit H: Appeal to the Retirement Board of April 16th Decision, dated May 8, 2024
Exhibit I: SBCERA Opposition to Brief