On July 27, 2026, the California Supreme Court issued its decision in Ventura County Employees’ Retirement Assn. v. Criminal Justice Attorneys Assn. of Ventura County, and it directly affects how many public employees’ pensions are calculated. We want you to have the key points now.

What the Court Decided

For “legacy” members — those hired before PEPRA took effect on January 1, 2013 — who work in the roughly twenty California counties operating under the County Employees Retirement Law of 1937 (CERL), the Court held that pensions can count leave cashouts only up to the annual limit set by the terms of employment. This is true even when a member’s final compensation period straddles two calendar years.

In plain terms: members can no longer “stack” two years’ worth of leave cashouts by timing retirement so the final compensation year spans two calendar years. Only the annual cashout allowance counts, regardless of how the final compensation period is designated.

Why it Matters

• Legacy members keep the right to count leave cashouts up to the annual limit. That right was not taken away — only the ability to stack across years. (Employees hired after PEPRA still cannot count any leave cashouts.)

• The ruling was not compelled by the statute’s plain words. The Court itself found the language ambiguous and acknowledged the members’ reading was reasonable. It reached its result by relying on PEPRA’s anti-“spiking” purpose rather than the text. The concurrence went further, noting the ordinary meaning of the words pointed toward the members.

• Even the Court agreed there is “nothing inherently abusive” about cashing out leave within the limits an employer allows. These are bargained-for benefits, not manipulation.

What to Do Now

• The fight has moved to the bargaining table. The pensionable cashout ceiling is now tied to the annual limit set by your MOUs, employment agreements, and leave policies — not by Sacramento. Annual cashout allowances, accrual caps, and the measurement period (which need not be a calendar year) should be negotiated deliberately, because they now carry direct pension consequences.

• Retirement counseling needs to change immediately. Members planning to designate a straddling final compensation period to stack two years of cashouts should be advised that this approach no longer works. Anyone nearing retirement should get updated guidance before making plans.

We are ready to help locals and bargaining teams review their agreements and advise members on how this decision affects them.

For a more in-depth discussion of the California Supreme Court’s decision, please see our recent Client News Bulletin.

This Alert and linked Bulletin are provided for informational purposes only, do not constitute legal advice, and do not create an attorney-client relationship. Because outcomes depend on the specific terms of your employment, MOUs, agreements and leave policies, consult qualified counsel about your particular situation.

If you have any questions about this alert, please contact Alison Berry Wilkinson in our San Rafael office.