BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
STATE OF CALIFORNIA
In the Matter of the Application to Cancel
Previous Redeposit of CalPERS Contributions
and Receive a Refund of Contributions by: CASE NO. 6520
OAH NO. L 2005030118
GREGG D. LUSHER,
ORANGE COUNTY EMPLOYEES’
This matter came on regularly for hearing before Roy W. Hewitt, Administrative Law
Judge (ALJ), Office of Administrative Hearings, in Orange, California on June 22, 2005.
Gregg D. Lusher (respondent) appeared personally and represented himself.
Staff Counsel Rory J. Coffey represented the California Public Employees' Retirement
CalPERS withdrew the Statement of Issues against respondent, Orange County
Employees’ Retirement System, so there was no appearance on that entity’s behalf.
Oral and documentary evidence was received and the matter was submitted.
The Administrative Law Judge makes the following Factual Findings:
1. Donna Ramel Lum, made and filed the Statement of Issues in her official
capacity as the Chief of the Benefit Services Division of CalPERS.
2. On October 31, 1973, respondent became employed by the California
Department of Forestry and Fire Protection (CDF) as a full-time firefighter. Respondent was
assigned to the Orange Ranger Unit located in Orange County, California.
3. By virtue of his employment with CDF, respondent was a state safety member
of CalPERS under the then current retirement formula of 2% at age 55.
4. On November 21, 1978, respondent received a memorandum (memo) from the
CDF Office of the Secretary advising respondent that the CDF was considering budget cuts
after the contracts for fire protection in the urbanizing counties of Orange, Riverside, and San
Bernardino expired in 1980. Over the following two-year period it became evident that there
would be layoffs in the Orange County area. In 1980 the layoff potential became a reality
and the State of California notified Orange County that CDF would no longer provide fire
protection in their geographic area. Consequently, Orange County created the Orange
County Fire Department (OCFD) to provide fire protection services in Orange County.
Respondent and the other CDF firefighters who were working in Orange County were given
the option of remaining with CDF and being transferred elsewhere, or joining the OCFD,
which provided retirement benefits through the Orange County Employees’ Retirement
5. The information respondent had at the time indicated that if he stayed with
CDF he would just be delaying inevitable layoff, therefore, respondent elected to transfer
from CDF employment to employment with OCFD. Then, due to financial considerations,
respondent elected to withdraw his retirement contributions from CalPERS. Respondent
received a refund of his retirement contributions, thus terminating his CalPERS membership.
6. In 1997, respondent “began to think more about retirement.” He elected to
redeposit his CalPERS contributions, with interest, thus purchasing 6.8 years of CalPERS
service credit. Respondent failed to investigate the possibility of purchasing 6.8 years of
service with OCERS. It is unclear what the purchase of 6.8 years of service credit from
OCERS would have cost in 1997; however, respondent testified that in 2003 the cost of 6.8
years of service would have cost about $29,000.00 from CalPERS and about $59,000.00
7. On December 22, 1997, respondent signed and submitted his election to
redeposit his withdrawn CalPERS contributions to repurchase 6.8 years of CalPERS service
credit. Respondent signed the election form directly under the notification that, “I
UNDERSTAND THIS ELECTION IS IRREVOCABLE.” (Exhibit R-38, emphasis in
8. When respondent retires from the County his retirement will be calculated
based on a formula using 3% at age 50; however, respondent’s CalPERS retirement will be
calculated using a 2% at 55 formula. Consequently, on March 10, 2004, respondent
submitted a Rollover Election Form to CalPERS requesting a refund of his retirement
contributions. Thereafter, respondent sent a letter, dated April 30, 2004, to CalPERS in
which he requested that CalPERS either refund his contributions or that CalPERS calculate
his retirement benefit using the improved benefit formula that became effective on January 1,
2000, pursuant to Government Code sections 21363 and 21363.1.
9. On June 14, 2004, CalPERS notified respondent of its determination that
CalPERS was statutorily prohibited from either refunding respondent’s CalPERS
contributions or from calculating his retirement based on the formula which became effective
on January 1, 2000.
10. Respondent timely appealed CalPERS determinations and the instant hearing
The foregoing factual findings, considered in their entirety, result in the following
1. CalPERS is statutorily prohibited from refunding respondent’s contributions
and from calculating his retirement based on the 2000 formula. CalPERS is a creation of
statutes, codified in the Government Code, which grant it certain powers. CalPERS has no
authority other than that granted by those statutes. It has the authority to pay benefits to a
member only when the statutes authorize it and then only in the amount authorized. (See
Hudson v. Posey (1967) 255 Cal.App.2d 89.) It the present instance, as set forth in Finding
7, in 1997 respondent elected to, and did, redeposit funds into the CalPERS retirement
system. Respondent understood that he was repurchasing 6.8 years of service and that his
election to redeposit funds into the retirement account was irrevocable.
A. California Government Code section 20731provides, in pertinent part:
An election to allow accumulated contributions to remain in the
retirement fund may be revoked by the member at any time,
(3) while the member is in service, entered within six months
after discontinuing state service, as a member of a county
Application of the relevant portion of this statute to respondent’s situation
results in the following analysis: there was no break in service between respondent’s state
service and his service with Orange County. Respondent transferred from state service
directly into a position with OCFD and he immediately became a member of OCERS, a
county retirement system. Accordingly, since respondent became a member of OCERS, a
county retirement system, within six months after he discontinued state service, his election
to allow contributions to remain in the CalPERS retirement fund is not revocable.
It appears from the language of the statute, quoted above, that if respondent retires from
OCFD or if he terminates his OCERS membership, he would be entitled to withdraw his
CalPERS contributions. Although the rationale underlying this reasoning is difficult to
discern, nonetheless, the statute is clear and we are bound by the clear language of the statute.
Respondent may not withdraw his CalPERS contributions at this time and logic dictates that
CalPERS may not circumvent the “irrevocability” clause of Government Code section 20731
by “voluntarily” refunding respondent’s deposits.
B. Government Code sections 21363, and 21363.1 relate to the increased
retirement benefit formula currently in effect for CalPERS members. Both of those sections
limit applicability of the new percentage rate, as follows: In pertinent part, Government
Code section 21363 provides that the section “…shall not apply to any local safety member
in the employ of an employer not subject to this section on January 1, 2000;” and, in
pertinent part, Government Code section 21363.1 provides that “(d) This section shall
supersede Section 21363 for state peace office/firefighter members, for service not subject to
subdivision (c), who are employed by the state on or after January 1, 2000.” Respondent was
in the employ of an employer, OCFD, not subject to this section on January 1, 2000, and he
was employed by the state on or after January 1, 2000; accordingly, the old formula, not the
new formula, applies to respondent’s situation. As set forth in Finding 8, the formula that
must be used in respondent’s case is 2% at age 55.
2. Since the present hearing resulted in Findings and Conclusions in support of
CalPERS’ determinations that it is statutorily prohibited from refunding respondent’s
CalPERS contributions (at this time), and from calculating his retirement based on the
formula which became effective on January 1, 2000, there were no “errors or omissions” that
may be “corrected” if all of the requirements of Government Code section 20160 are met.
WHEREFORE, THE FOLLOWING ORDER is hereby made:
Respondent’s appeal is denied.
Dated: August ________, 2005.
ROY W. HEWITT
Administrative Law Judge
Office of Administrative Hearings