Inter-Departmental Correspondence

Office of the County Counsel



January 10, 2011


January 25, 2011







Honorable Board of Supervisors


Michael P. Murphy, County Counsel


Ordinance Authorizing Members of the Board of Supervisors Who Are Receiving SamCERA Pension Benefits to Waive Salary and Other Compensation



Adopt an ordinance adding Sections 2.71.220 and 2.71.230 to Title 2, Chapter 2.71 of the San Mateo County ordinance code authorizing the waiver of salary and other compensation by members of the Board of Supervisors who are receiving retirement pension benefit payments from the San Mateo County Employees’ Retirement Association.



The annual salaries of the members of the Board of Supervisors (the “Board”) currently in effect are set forth in Ordinance No. 04274 which was adopted on August 16, 2005. The employment benefits of the members of the Board currently in effect are set forth in the “Resolution Establishing the Salary and Benefits of Unrepresented Management Employees of the County of San Mateo.” Without authority directing him otherwise, the Controller must pay this salary and other compensation to the person entitled to such compensation and salary by virtue of his or her position on the Board.


When San Mateo County officers and employees retire, they receive a monthly pension from the County's retirement system, San Mateo County Employees’ Retirement Association (“SamCERA”). SamCERA is governed by the "County Employees Retirement Law" ("CERL"), contained in the Government Code. Under CERL, in general, County retirees cannot receive their pension and work full time for the County. However, there is an exception, which allows both the receipt of the pension and the salary and benefits, for a retiree of the County who is “subsequently elected to County office after retirement.” Government Code section 31680(d).



Supervisor Don Horsley took office as a member of the Board of Supervisors on January 3, 2011. As a retired County employee, Supervisor Horsley is entitled to receive both his salary as a member of the Board of Supervisors and his pension as a retired County employee. Supervisor Horsley has approached this office to enquire how he might be able to legally waive his salary as a member of the Board of Supervisors. Because of Internal Revenue Service limitations on the amount of income which can be deducted as a charitable contribution in any calendar year, waiving salary by making a charitable donation to a government entity might not provide for an adequate waiver in Supervisor Horsley’s situation.


On February 26, 2010, the Internal Revenue Service indicated in a private letter ruling (PLR 201024045) that governmental employees may waive their salaries and that such waived amounts are not includible in any such employees’ gross income if the waiver is accomplished pursuant to legislation adopted by the governmental entity. The waiver must be voluntary, irrevocable, executed by the employee prior to the date the salary to be waived is earned, and must not provide the employee with a future claim to the waived salary. While IRS regulations provide that the private letter ruling is directed only to the taxpayer requesting it and may not be cited as precedent by other parties, we believe that waiver legislation following the criteria set forth in the letter will allow for a salary waiver meeting IRS requirements.


The proposed ordinance authorizes members of the Board who are receiving retirement pension benefit payments from the County to waive their salary and other County compensation. It further authorizes the Controller to not pay that portion of the salary or compensation that has been waived. To facilitate administration of the waiver process, the ordinance requires waivers to be submitted on a form supplied by the Controller at least five (5) days prior to the commencement of the pay period in which the employee is to earn the salary or benefits that he or she desires to waive. In addition to the IRS requirements set forth above, the waivers may not place conditions upon the County’s use of the waived funds; the resulting funds must be placed in the County’s General Fund and used for any General Fund purpose.


Adoption of this ordinance contributes to the Shared Vision 2025 outcome of a Collaborative Community by approaching issues with fiscal accountability and concern for future impacts.



The fiscal impact of this ordinance is unknown. There will be no costs associated with the implementation of the ordinance. The cost savings will depend the number and amount of any salary and compensation waivers.