Refund of Contributions on Stand-By Pay
This Fact Sheet provides an update regarding the status of the refund of contributions on stand by pay to non-retired members of SBCERS, pursuant to the California Supreme Court’s decision in Alameda County Sheriffs’ Assoc. v. Alameda County Retirement Assoc. (the “Alameda Decision”).
In response to the Alameda Decision, and extensive study of the County’s unique stand-by practices, the Santa Barbara County Board of Retirement voted on March 24th 2021 to change the pensionability of certain stand-by earnings codes. This means that the County of Santa Barbara compensation associated with these codes is no longer included in the calculation of retirement contributions, and no longer included in a member’s Final Average Salary for the purposes of calculating a retirement benefit. This change affects pre-PEPRA “Legacy Members” who worked stand-by after January 1, 2013. Stand-by pay for PEPRA (Plan 8) members was already determined to be non-pensionable pursuant to PEPRA.
Additionally, the County of Santa Barbara negotiated a number of side letters with several labor unions, including SEIU Local 620, Santa Barbara County Fire Fighters Inc., Local 2046, and the Santa Barbara County Deputy Sheriff’s Association, which were all dated March 2, 2022. Pursuant to these side letters, particular special assignment pay within specific job classifications was recharacterized as an allowance, effective December 30, 2019.
Each of these events has resulted in the creation of a number of new or amended earn codes, which are scheduled for implementation to the County timekeeping system effective Pay Period 2022-16.
In order to calculate the total contributions on stand by pay, the earn codes that have been modified, terminated, or initiated pursuant to the negotiated side letters must be finalized and put into effect. Once this occurs, there will a clear date of delineation between the former characterization of earnings, and those created pursuant to the Alameda findings and the negotiated side letters. Our calculations cannot be complete until we receive the pay information for Pay Period 2022-16, which we anticipate receiving on August 1, 2022.
How soon after the earn code changes occur can I expect my refund?
Once SBCERS receives the payroll transmittal reflecting the earn code changes, we can begin to compute refunds and interest. Our calculations will correctly apply the refund data to each applicable pay period for each member; in doing so our record keeping will accurately reflect correct pensionable salary information. We anticipate we will mail every member a refund letter in the first days of September, advising them of their refund amount, and requesting their election to either receive the payment as a check from SBCERS, or a rollover to their 457 deferred compensation account.
Members will have a several weeks to respond to SBCERS by returning their refund payment election form, after which SBCERS will create batches for check processing and rollover transaction. We anticipate issuing payments to all refundees in the month of October. Refunds will be issued directly by SBCERS, and an IRS Form 1099 will be issued to applicable refundees on January 31, 2023.