CITY OF CATHEDRAL CITY
Objective and Scope
CaPERS ID Job Number Contract Date
3286869204 1P23-003 October 10, 1982
The objective of the Office of Audit Services (OFAS) review was to determine whether public agencies (employers) reported Educational Incentive Pay for classic members in compliance with Government Code (GC) section 20636 and Title 2 of the California Code of Regulations (CCR) section 571.
Educational Incentive Pay is an item of special compensation and must meet the requirements of GC section 20636, and the definition and criteria listed in CCR section 571, Specifically, CCR section 571, subdivision (a)(2), defines Educational Incentive Pay as compensation to employees for completing educational courses, certificates and degrees which enhance thei ability to do their job. The employer must have a program or system in place to evaluate and approve acceptable courses. Educational Incentive Pay does not include costs of education that is required for the employee's current job classification and reimbursement for an application or test, books, tuition, or travel costs. Additionally, CCR section 571, subdivision (b), outlines that all items of special compensation must be contained in a written labor policy or agreement that has been duly approved and adopted by the employer's governing body. The written labor policy or agreement must indicate the eligibility and conditions for payment of the pay item that must be available to all members in the group or class of employment for work performed during normal hours of employment.
Incorrect reporting of Educational Incentive Pay may result in miscalculation of employer contributions, delays in processing member retirement benefits, inaccurate retirement estimates, incorrect payment of benefits, reduction in benefits, and increased employer administrative costs for processing corrections to all impacted employee accounts for the periods the misreporting occurred.
OFAS' review was limited to examining employer records and a sample of employee records for the period of July 1, 2021 through June 30, 2023. Unless otherwise specified, OFAS did not review the employer's compliance with the Public Employees' Retirement Law (PERL) with regard to any areas outside of the scope described herein, including, but not limited to, other types of compensation, membership enrollment, or employment after retirement. In addition, OFAS did not review sampled employees' job classification minimum qualifications for required education or certification, unless stated in the employer's written labor policy or agreement.
Results in Brief
No. Area Observations
1 Not Reportable - The Employer reported Educational Incentive Pay for one sampled Group or Class active employee that was not reportable. Specifically, the Employer f Emplovmen reported Educational Incentive Pay that was not available for the group or class. The Employer reported Educational Incentive Pay of $522.98 and $46.70 for pay period ending November 12, 2022.
Educational Incentive Pay Review Page A-11
CITY OF CATHEDRAL CITY
No. Area Observations
The Employer's Fire Management Association (FMA) labor policy, 2020. indicated -ducational incentive Pa
GC section 20636, subdivisions (c) and (e), and CCR section 571, subdivision (b), states special compensation shall be contained in a labor policy or agreement and be available to similarly situated members of a group or class of employment. If an individual is not part of a group or class, special compensation is limited to that which is received by similarly situated members in the closest related group or class. A group or class of employment means a number of employees considered together because they share similarities in job duties, work location, collective bargaining unit, or other logical work-related grouping. A single employee is not a group or class. Additionally, CCR section 571 states items of special compensation must be contained in an approved written labor policy or agreement, which must indicate conditions of payment for the item of special compensation, including but not limited to, eligibility for and amount, and does not reference to another document is lieu of disclosing an item of special compensation. The Employer was unaware requiring additional eligibility provisions for Educational Incentive Pay created a group or class issue and was unaware their labor policy could not reference another document for an item of special compensation. 2 Not Reportable - The Employer reported Educational Incentive Pay that was not Incorrect Type of reportable for two sampled active employees and one sampled Special retired employee. Specifically, the Employer incorrectly includes Compensation compensation for obtaining a Peace Officer Standard Training (POST) certificate in the reported Educational Incentive Pay. Fo employee obtaining an executive POST certificate, as indicated in the Employer's Executive, Administrative, Professional, Educational Incentive Pay Review Page A-12
CITY OF CATHEDRAL CITY
No. Area Observations
Confidential, and Other Particular Employees labor policy, effective uly 17, 2019. In addition, the Employer provided an email ndicating the executive POST certificate was approved for th employee and did not provide a copy of the POST certificate. eported amount did not meet the definition of Educationa centive Pay
CCR section 571, subdivision (a), provides an exclusive list of 3 Not Correctly
Reported -
Incorrectly
Calculated
reported Educational Incentive Pay including in the employee's Educational Incentive Pay.
CCR section 571 subdivision (b), states all special compensation of special compensation. The Employer stated their definition of base salary includes all aditional compensation items paid to the Recommendation and Criteria
The Employer should ensure Educational Incentive Pay is reported in compliance with GC section 20636, and CCR section 571. The Employer should work with CaPERS Employer Educational Incentive Pay Review Page A-13
CITY OF CATHEDRAL CITY
Account Management Division to identify all active and retired members impacted and for all impacted members identified, determine the accurate amount of Educational Incentive Pay, and what adjustments, if any, are needed to correct written labor policies or agreements, and/or inaccurately reported Educational Incentive Pay amounts. To the extent that any amounts of pay were improperly included in the retirement allowance of retired members, correction to the retirement allowance should be made pursuant to GC section 20160.
GC: § 20120, § 20121, § 20122, § 20160, and § 20636
CCR: § 571
Conclusion
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions. Sample testing procedures provide reasonable, but not absolute, assurance that the Employer complied with the specified provisions of the PERL, and the CaPERS contract subject to this review. The results outlined in this report are based on information made available or otherwise obtained at the time this report was prepared. This report does not constitute a final determination with regard to the results noted within the report. The appropriate CaPERS divisions will notify the Employer of the final determinations and provide appeal rights, if applicable, at that time.
Summarized Response
The Employer agreed with the Observations noted in the report.
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