California Supreme Court Upholds Decision on Leave Straddling

On July 27, 2026, the California Supreme Court upheld restrictions on pensionable leave cashouts in Ventura County Employees’ Retirement Association v. Criminal Justice Attorney’s Association of Ventura County.

The Court unanimously ruled that VCERA’s interpretation and application of the 2013 PEPRA leave straddling amendments, based on the Alameda Decision, was correct. The leave straddling issue centered around the exclusion from Legacy members’ pensionable earnings of annual leave redemptions (i.e., vacation buydowns) that exceed what “may be earned and payable in each 12-month period” during their final average compensation (FAC) period.  In interpreting this phrase, the Court ruled that a public employee’s retirement benefit calculation may not include cashed out leave time in excess of the applicable annual limit set by the terms of employment, even though the employee may designate a final compensation period that straddles two or more calendar years.

When multiple leave redemptions from two calendar years are paid in a 12-month period, the total redeemed hours in that period can exceed the redeemable calendar-year hour limit imposed by the member’s MOA.  In upholding the Appellate Court’s decision, which affirmed the trial court’s decision, the Supreme Court ruled that VCERA properly interpreted the law by removing these “excess” hours from members’ pensionable earnings used to calculate their FAC, which could affect their retirement benefits.