The Sacramento Bee State Worker Inbox finds answers for common questions about public employment in California. Have a question? Email reporter Wes Venteicher at wventeicher@sacbee.com.

What do you do if your CalPERS pension is reduced after retirement?

It’s the kind of case CalPERS members are willing to fight to the end.

They retire from public employment, start receiving a pension and then, sometimes years later, they get a letter in the mail saying CalPERS is reducing their monthly check based on someone else’s mistake.

The retirement system also can collect up to three years’ worth of overpayments, which can amount to tens of thousands of dollars.

People in that situation often take their case all the way to the retirement system’s Board of Administration, and sometimes further. Sometimes they file lawsuits, contact state legislators or call The Sacramento Bee.

California law says employees are responsible for making up overpayments they receive. Courts have established that CalPERS has broad authority to apply its interpretation of state law to individual cases.

That leaves retirees who feel they’ve been wronged fighting uphill battles to try to restore their pensions after reductions.

“Current law requires that we correct that mistake,” said CalPERS Board President Henry Jones, who represents retirees on the system’s 13-member board.

Many of the mistakes are related to what types of special compensation — including bonuses, hazard pay, bilingual pay and a host of other payments — may be factored into the final determination of a worker’s pension when they retire.

Cities, counties and other government agencies around the state contract with CalPERS to administer their employees’ pensions. Those same governments negotiate contracts with labor unions that establish workers’ pay and benefits.

The negotiations can lead to lots of unique pay arrangements. Among the types of special pay that count toward an employees’ pension are compensation for riding a horse, working in a schoolyard and routinely using sandblasting equipment.

The governments might interpret unique types of pay as pensionable, but the final determination lies with CalPERS.

CalPERS reviews the pensionable pay in different ways, including in regular audits. Some of the recent disputes over pension mistakes have come from CalPERS changing its interpretation of what is pensionable after a worker’s retirement.

In Davis, two firefighters who retired in 2009 and 2012 found out in 2016 that their pensions would be reduced and that they would have to repay $28,000 and $42,000 in overpayments.

The City of Davis and their union had negotiated a deal to convert a type of health insurance payments to longevity pay. Longevity pay is pensionable, but CalPERS determined the firefighters’ unique arrangement didn’t accord with state law.

The firefighters didn’t prevail after appealing the change. Employees may appeal CalPERS’ decisions with the state Office of Administrative Hearings, which is under the Department of General Services.

Those appeals go to administrative law judges, who make decisions after hearing from CalPERS staff members and from employees who appeal or their representatives.

If a judge sides against them, employees may file a petition with the CalPERS Board of Administration.

When that happens, the case goes on an agenda for a CalPERS board meeting, and the cases become publicly accessible. Board members review arguments from the retirement system’s staff and from the appealing employees. Outside attorneys provide an additional layer of review in those cases, Jones said.

The law gives the board discretion on whether to collect overpayments in any given case. Jones, the former chief financial officer of the Los Angeles Unified School District, said the board could face legal pitfalls if it starts exercising that discretion any more broadly than it does.

Before launching an appeal, retired public workers can contact CalPERS to ask for information on their case. The system’s customer service number is 1-888-CalPERS (225-7377).

The Davis firefighters’ case was the basis of a proposal from State Sen. Connie Leyva, D-Chino, to change state law regarding the mistakes.

Leyva introduced Senate Bill 266, which would make employers responsible for the mistakes. Some local governments have expressed opposition, saying that if they became responsible, taxpayers would end up paying for the mistakes.

This story was originally published January 15, 2020 at 6:00 AM with the headline "What do you do if your CalPERS pension is wrong? — State Worker Inbox."