FROM: Amy McInerny, Chief Financial Officer
SUBJECT: SBCERA Resolution No. 2026-7 - Employer Pay Codes of
Employee Compensation
RECOMMENDATION:
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Adopt SBCERA Resolution No. 2026-7 - Employer Pay Codes of Employee Compensation.
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BACKGROUND:
The SBCERA Board of Retirement (Board) is required by Government Code sections 31461, 31542, 7522.10, and 7522.34, as well as Benefits Policy No. 26 (Compensation Earnable and Pensionable Compensation), to determine what items of member compensation are included or excluded in employee compensation upon which appropriate contribution rates should be applied and upon which retirement benefits are calculated. When an employer presents a new pay item, SBCERA staff initially determines whether such items will be considered “compensation earnable” or “pensionable compensation,” such determination will be effective immediately, subject to ratification by the Board.
On October 1, 2026, the Board reviewed and adopted Resolution No. 2026-6. Since the adoption of Resolution No. 2026-6, staff reviewed one additional pay item request, in the normal course of business, and made initial determinations. The Pay Code Resolution is before the Board at its November 5, 2026, for consideration of the inclusion of Designated Staff Assignment under the Memorandum of Understanding Fire Management Unit (2025 - 2030). This proposed inclusion represents a change from the Board’s prior action, which adopted staff’s recommendation to exclude DSA Pay from compensation earnable and pensionable compensation. Staff’s prior determination was based on language contained in the applicable MOU and the information available at the time. Specifically, the pay appeared to be discretionary and ad hoc, as eligibility was contingent upon the Fire Chief’s designation of certain staff assignments rather than being uniformly available to similarly situated employees within the same grade or class. Additionally, the MOU did not clearly establish whether the duties associated with the designated staff assignments were performed during normal working hours. Accordingly, staff determined that DSA Pay did not meet the requirements for inclusion under Government Code section 31461 and 7522.34, and the Board adopted staff’s recommendation to exclude the pay.
Following further review and clarification provided by the Fire District, staff’s preliminary review determined that DSA pay qualifies for inclusion as compensation earnable and pensionable compensation. The additional information established that DSA pay is available to Battalion Chiefs assigned to designated staff position involving distinct from regular battalion coverage, that the pay associated with the performance of those assigned duties, and that such duties are generally performed as part of the employee’s regular 40-hour workweek. Based on these clarifications, staff recommends that the Board approve the inclusion of DSA as compensation earnable and pensionable compensation with an inclusion date effective the date of the applicable MOU and amend SBCERA’s Pay Code accordingly.
See Exhibit B - Summary of Changes to Pay Codes for an explanation of all items added and excluded.
The resolution (Exhibit A) provides a redline version of the changes including Exhibits A through L, which set out, by Employer, the existing items of compensation, identified by employer codes, which will be included in compensation earnable for Tier I members, and Exhibit M sets out pensionable compensation for Tier II members, effective November 5, 2026, for all employers.
The resolution is intended to comply with the requirements of the Internal Revenue Code of 1986, the 1937 Act, PEPRA, and the regulations issued thereunder as applicable.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amy McInerny
Barbara Hannah
ATTACHMENTS:
Exhibit A: Pay Code Resolution No. 2026-7
Exhibit B: Summary of Changes to Pay Codes