Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco County Super. Ct. No. CGC-05-446610
Reardon, Acting P.J.
During appellant James P. Keenan’s last year of employment with the San Francisco Community College District (College District), his employer paid him more than $62,000 for unused “comp time” and other benefits which had accrued prior to Keenan’s final year of service before retirement. These payments would have increased Keenan’s final year compensation by nearly 50 percent. The San Francisco Employees’ Retirement System (Retirement System) calculated Keenan’s average final compensation, for purposes of setting his retirement allowance, without regard to the extra payments because they were not connected to service creditable during the period in which they were paid. He appeals the judgment in favor of respondent Retirement Board of the City and County of San Francisco (Retirement Board) on his complaint for declaratory relief. We affirm.
I. BACKGROUND
In 2002 Keenan was positioned to assume responsibilities as Director of Buildings and Grounds for his employer, the College District. At that time he had accumulated 605 hours of unused “comp time.” The vice-chancellor of finance and administration recommended that Keenan be paid for his “comp time” prior to retirement. The Retirement System had no knowledge of this arrangement prior to Keenan’s retirement. Indeed, the agreement ran counter to the Retirement System’s practice of cashing out unused compensatory time off after the employee’s separation from employment.
In April 2005 the College District paid Keenan $30,984 for 40 hours of accrued bonus time, plus 295 hours of unused vacation time and 145 hours of overtime “ ‘comp’ ” time. Another lump sum payment was made in July 2005, this time in the amount of $31,321.40 for an additional 460 hours of overtime “ ‘comp’ ” time. Neither lump sum payment compensated Keenan for any hours he worked in his final year of employment.
Keenan retired effective August 27, 2005. He is a member of the Retirement System under section A8.509 of the Charter of the City and County of San Francisco (Charter). Pursuant to this provision, Keenan was entitled to receive a monthly retirement allowance based on his age, length of service and average final compensation. (Charter, § A8.509, subd. (b).) Further, as modified by San Francisco Administrative Code section 16.30-1(a), “average final compensation” under the Charter means “the average monthly compensation earned by a member during any year of credited service in the Retirement System in which his average earned compensation is the highest.” Keenan’s final year of service was also the year of his highest average earned compensation.
The Retirement System did not include the compensation paid to Keenan during his last year of employment for vacation time, compensatory time and bonus “comp” time which he had accrued prior to the last year of employment. Keenan sued the Retirement Board for declaratory relief. The Retirement Board administers the Retirement System and is the entity with sole authority over the conditions under which members of the Retirement System receive retirement benefits. Keenan asserted that his accrued earned vacation, sick leave and overtime should have been included as compensation in the calculation of his average final compensation.
On appeal Keenan restricts his claim to payments for compensatory time off.
At trial the deputy administrative director of the Retirement System testified that it looked at the 12-month period before Keenan retired, which was the period of his highest pay, and found that he was never credited with more than 40 hours of work during any of the pertinent pay periods. The lump sum payments for overtime and bonus time were accumulated prior to 2002. It has been the practice of the Retirement System to exclude any payment that is not creditable to service during the 12-month measuring period from the retirement allowance calculation. In Keenan’s case, the lump sums, if included, would have resulted in nearly a 50 percent increase in his average final compensation. There is a “strong” pension fund principle that benefits need to be determinable and thus not subject to manipulation “by either the employer or the employee.”
The trial court concluded that the definition of average final compensation, and in particular the meaning of “earned” within that definition, was ambiguous. However, in deference to the Retirement Board’s own interpretation of its regulations, it entered judgment in favor of the board. Keenan moved for new trial but withdrew the motion because it was not timely served. This appeal followed.
II. DISCUSSION
A. Standard of Review; Principles of Construction
We undertake a de novo review of cases involving issues of statutory interpretation. (Mason v. Retirement Board (2003) 111 Cal.App.4th 1221, 1227 (Mason).) The normal rules of statutory construction apply to the provisions of a city charter. (Ibid.) Thus our primary goal will be to ascertain legislative, i.e., voter, intent. And that intent shall be determined, where possible, from the language of the charter provision at issue. (Ibid.)
Moreover, we do not view statutes in isolation. Rather, we construe a statute with regard to the entire legal scheme of which it is a part, so that the whole may be harmonized and retain its effectiveness. (Ford & Vlahos v. ITT Commercial Finance Corp. (1994) 8 Cal.4th 1220, 1234.) As well, we construe statutes in a practical rather than a technical manner, in a way that will lead to wise policy, not mischief or absurdity. In other words, we should heed the consequences that might flow from a particular interpretation. (Mason, supra, 111 Cal.App.4th at p. 1230.)
B. Relevant Charter Provisions
Under the retirement plan governing Keenan’s benefits, a member who retires after reaching 60 years of age “shall receive a service retirement allowance at the rate of two percent of said average final compensation for each year of service . . . .” (Charter, § A8.509, subd. (b).) Compensation is “all remuneration whether in cash or by other allowances made by the city and county, for service qualifying for credit under this section.” (Id., subd. (a).) As first enacted, “average final compensation” was defined as “the average monthly compensation earned by a member during any five consecutive years of credited service in the retirement system in which his average final compensation is the highest, unless the board of supervisors shall otherwise provide by ordinance enacted by three-fourths vote of all members of the board.” (Ibid.)
The board of supervisors, pursuant to the authority granted to it under the above provision, changed the definition of “average final compensation” to mean: “the average monthly compensation earned by a member during any year of credited service in the Retirement System in which his average earned compensation is the highest.” (S.F. Admin. Code, § 16.30-1(a).)
This new definition substitutes a one-year measuring period for the prior five-year period. Additionally, the phrase “in which his average final compensation is highest” (Charter, § A8.509, subd. (a), italics added) was changed to “in which his average earned compensation is the highest” (S.F. Admin. Code, § 16.30-1(a), italics added). The word “earn” means “[t]o render an equivalent in labour or service for (wages); hence, to obtain or deserve (money, praise, any advantage) as the reward of labour.” (5 Oxford English Dict. (2d ed. 1989) p. 25.) The term “compensation earnable” as used in Charter section A8.509, subdivision (a) is also pertinent, meaning “the compensation as determined by the retirement board, which would have been earned by the member had he worked, throughout the period under consideration . . . .”
Additionally, “average final compensation” is defined in terms of the “average monthly compensation” earned during the period in question. (Charter, § A8.509, subd. (a), italics added.) The term “monthly” means “[o]ccurring, appearing, or coming due every month . . . .” (American Heritage Dict. (4th ed. 2000) p. 1140.) Thus, only payments that come due every month qualify for purposes of computing average final compensation. Lump sum payments by their nature are atypical and irregular; they do not appear or come due every month.
Thus it is apparent that the definition of “average final compensation” enacted by the board of supervisors contemplates compensation due every month that is tied to work performed during the applicable time period. Since the two lump sums were atypical payments not rendered to Keenan for any service he performed during his final year of service, they did not constitute “average monthly compensation earned” for purposes of determining his retirement allowance.
Keenan’s argument is this: Accrued overtime is time left on the books. It becomes earned compensation when it is compensated in cash by virtue of the employee’s decision to work instead of taking time off from work. Had the employee instead taken accrued overtime as time off, he or she would have received compensation at the regular salary rate for not working. If the period in which the employee takes accrued time off falls within the year of the highest compensation, such compensation would be included in the calculation of the employee’s final average compensation. Keenan finds it “incongru[ous]” that compensation paid to an employee for taking time off (i.e., receiving regular pay for off-work time) is included within the pension calculus, but monetary compensation paid for working in lieu of taking time off is not. Finally, he urges that we should construe any ambiguity in pension legislation in favor of the pensioner. (Hudson v. Board of Administration (1997) 59 Cal.App.4th 1310, 1324-1325.)
Keenan cites Mason as supporting his position that cash paid during the operable measuring period for calculating a pension should count toward that pension, regardless of when it is actually earned. In Mason, certain employees challenged the Retirement Board’s policy of not including payments for unused vacation and sick leave in its retirement calculations. Such benefits could only be exchanged for cash after termination from employment. The reviewing court upheld this practice. (Mason, supra, 111 Cal.App.4th at pp. 1228-1231.)
It appears Keenan is relying on the following passage: “Under San Francisco’s system, vacation and sick leave have no cash value while an employee is providing credited service. These benefits can only be exchanged for cash after an employee retires. Only after the contingency of retirement has occurred, will the lump-sum cash payments be issued. We conclude a benefit that has no cash value during the specified measuring period should not be included in retirement calculations.” (Mason, supra, 111 Cal.App.4th at p. 1128.) Mason of course does not decide the issue presented in this case: whether lump sum payments for overtime made during the measuring period but compensating work performed outside the measuring period, should count in the pension calculation. More to the point, we do not agree with the trial court that the term “earned” as used in San Francisco’s pension legislation is ambiguous. As explained above, in the relevant legislation the words “earned” and “earnable” are tied to work performed and the phrase “average monthly compensation earned” refers to periodic payments connected to work performed during the measuring period.
We of course are free to affirm the judgment on any proper legal theory applicable to the case, whether or not relied on by the trial court. (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1268.)
In any event, even if the trial court correctly determined that the meaning of “earned” was ambiguous, it also correctly deferred to the Retirement Board’s interpretation of the legislation it administers. We must accord respect and weight to an administrative agency’s interpretation of a statute governing its own responsibilities and powers. Consistent construction of a statute by an agency charged with putting the statutory machinery into play deserves great deference. (Mason, supra, 111 Cal.App.4th at p. 1228.) Thus the agency’s interpretation will be accepted unless clearly erroneous. (American Federation of Labor v. Unemployment Ins. Appeals Bd. (1996) 13 Cal.4th 1017, 1027; Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 845.) The principle that uncertainty in the meaning of pension legislation should be resolved in favor of the pensioner does not trump the rule of deference to an agency’s interpretation of its core legislation. It is clear from the record that the Retirement Board has consistently interpreted its pension laws as excluding from the retirement allowance calculation any payments made during the applicable measuring period that are not attached or attributable to work performed during that period. This interpretation serves the principle that benefits should be determinable, not subject to manipulation by various pension spiking schemes. We heed the rule of construction that consideration be paid to the practical consequences that would emanate from a particular interpretation. (Mason, supra, 111 Cal.App.4th at p. 1230.) The interpretation advanced by Keenan would create an unfunded liability for the Retirement System and has the potential of resulting in vastly different retirement benefits payable to employees who, in all other respects, would be entitled to similar benefits under the Charter.
III. DISPOSITION
The judgment is affirmed.
We concur: Sepulveda, J., Rivera, J.