Board of Administration v. Wilson (52 Cal. App. 4th 1109, 1997)

Opinion

SIMS, Acting P. J.

This litigation arises from changes in the way the Legislature has funded the California Public Employees’ Retirement Fund (PERF). Until 1990, the state paid employer contributions to the PERF on a monthly basis. In 1990, the Legislature changed the payment schedule from monthly to quarterly. In 1991, the Legislature temporarily changed the payment schedule from quarterly to semiannually for one year only. Legislation in 1992 changed the schedule to “semiannually, six months in arrears.” Legislation in 1993 changed the schedule to “annually, 12 months in arrears.” (Gov. Code, § 20822.)

A mandamus action was brought in the trial court, challenging “in arrears” financing on various grounds, including violation of the constitutional right to be free of impairment of contracts. (U.S. Const., art. I, § 10; Cal. Const., art. I, § 9.) The trial court determined “in arrears” financing is an unconstitutional impairment of contract.

Appellant Pete Wilson, Governor of the State of California, appeals from a judgment in favor of the Board of Administration of the California Public Employees’ Retirement System (the PERS Board), individually and as trustee of PERF on behalf of PERS members and beneficiaries, and William D. Crist, PERS member and president of the PERS Board (hereafter collectively PERS).

Appellant contends the trial court erred in determining that the “in arrears” pension financing is an unconstitutional impairment of contract. Appellant also raises issues of standing, statute of limitations, laches, and propriety of directing the transfer of state funds. We shall conclude PERS members have a contractual right to an actuarially sound retirement system and the “in arrears” pension financing unconstitutionally impaired that contractual right. We shall therefore affirm the judgment.

Factual and Procedural Background

This litigation involves two sequential versions of a provision of the Public Employees’ Retirement Law, section 20822 (former § 20751). Senate Bill No. 1107, 1991-1992 Regular Session, enacted in 1992, provided that state employer contributions from the General Fund would be paid to the PERF semiannually, six months in arrears. Senate Bill No. 240, 1993-1994 Regular Session, enacted in 1993, set pension financing at 12 months in arrears.

“In 1931 the Legislature established the State Employees’ Retirement System, presently known as PERS. [Citations.] . . . HD The system was administered by a board of administration. At the outset the PERS Board was directed to make actuarial valuations of the fund and the liabilities of the system and to recommend to the Legislature appropriate changes in the rates of contribution to achieve equality between valuation and liabilities. [Citation.]” (Claypool v. Wilson (1992) 4 Cal.App.4th 646, 653-654 [6 Cal.Rptr.2d 77].) As early as 1947 the Legislature specified actuarially determined compulsory contributions. Since 1968, the PERS Board has been empowered to adjust the rates of employer contributions in accordance with its actuarial determinations. The retirement law requires the Governor to include the actuary’s contribution rates in the budget and requires the Legislature to adopt the actuary’s contribution rates and authorize the budget appropriation. (§ 20814, former § 20750.905.) :

Until 1990, the state’s employer contributions were transferred to the retirement fund on a monthly basis, on the first of every month immediately following the end of a pay period. (Former § 20751, enacted by Stats. 1970, ch. 346, § 29, p. 748.)

In 1990, the Legislature (with PERS Board input and approval) changed the payment schedule from monthly to quarterly, payable on the first day of the calendar quarter for wages earned during the previous quarter. (Stats. 1990, ch. 463, § 3, p. 2024.) At the same time, PERS members received a new advantage, in that retirement benefits would be calculated based on an employee’s highest earnings in the 12-month period before retirement, as opposed to the previous method whereby benefits were calculated based on compensation over a three-year period. (Stats. 1990, ch. 1251, §2, pp. 5270-5271.) The 1990 legislation also provided for PERS to adopt a 40-year amortization period for calculating contribution rates. (Stats. 1990, ch. 1251, § 6, p. 5272; Stats. 1990, ch. 463, § 1, p. 2024.)

In 1991, the Legislature temporarily changed the State’s contribution schedule from quarterly to semiannually for one year only, the 1991-1992 fiscal year. (§ 20823, repealed by Stats. 1996, ch. 906, § 101, formerly §20751.5, Stats. 1991, ch. 83, § 33 (Assem. Bill No. 702 (1991-1992 Reg. Sess.).) Contributions were transferred on January 31, 1992, and June 30, 1992. Assembly Bill No. 702 contained a sunset provision whereby quarterly payments were to be restored in the 1992-1993 fiscal year. (Ibid.) Assembly Bill No. 702 contained specific legislative findings as follows: “The Legislature finds and declares that this section will not affect the soundness of the retirement fund, in that the change to semiannual payments is on a one-time basis and any resulting loss to that fund will be accounted for by increased employer contributions in subsequent years.” (§ 20823, subd. (b) [former § 20751.5].) The validity of the 1991 legislation is not at issue in this appeal.

In September 1992, the Legislature responded to mounting budget pressures by enacting as urgency legislation Senate Bill No. 1107, which amended former section 20751 to provide that the state’s employer contributions for General Fund employees were to be made “semiannually, six months in arrears.” (Stats. 1992, ch. 707, § 2.) Thus, contributions for fiscal year 1992-1993 would be paid on July 1,1993, and January 1,1994. Senate Bill No. 1107’s “in arrears” financing differed from the prior “level contribution” system, whereby payments flowed to the retirement fund as liability was incurred for future pension obligations.

In June 1993 (before any contributions were paid under Senate Bill No. 1107), Senate Bill No. 240 (see fii. 6, ante) was signed into law as urgency legislation. (Stats. 1993, ch. 71.) Senate Bill No. 240 amended former section 20751 to provide that state employer contributions for General Fund employees be made “annually, 12 months in arrears.” Thus, for example, employer contributions for the 1994-1995 fiscal year would not be paid until July 1996.

“In arrears” financing differs from the prior system. Under the prior system, known as a “level contribution” system, payments flowed to the retirement fund as liability was incurred for future pension obligations. Under the “in arrears” system, contributions would not be paid during the same fiscal year that employee services were rendered.

As a result of Senate Bill No. 1107 and Senate Bill No. 240, employer contributions (amounting to $910 million) which would have been paid during fiscal years 1992-1993 and 1993-1994 were not paid during those fiscal years.

While these events were taking place, there was also activity on another front. Thus, in November 1992 (after enactment of Senate Bill No. 1107 but before enactment of Senate Bill No. 240), the voters adopted Proposition 162, which among other things added to California Constitution, article XVI, section 17, the requirement that the PERS Board have “sole and exclusive power to provide for actuarial services in order to assure the competency of the assets of the public pension or retirement system.” (Cal. Const., art. XVI, § 17, subd. (e).) Proposition 162 contained a statement of “Findings and Declaration,” which stated in part: “ ‘Politicians have undermined the dignity and security of all citizens who depend on pension benefits ... by repeatedly raiding their pension funds. ... [^[] ... To protect the financial security of retired Californians, politicians must be prevented from meddling in or looting pension funds.’ ” (Historical Notes, 3 West’s Ann. Const. (1996 ed.) art. XVI, § 17, p. 114 [Prop. 162, § 2, subds. (c)-(d)].) Proposition 162 also contained a statement of “Purpose and Intent,” in which the voters declared their purpose and intent in passing Proposition 162 was, inter alia, “ ‘to strictly limit the Legislature’s power over [public pension] funds, and to prohibit the Governor or any executive or legislative body of any political subdivision of this state from tampering with public pension funds.” (Historical Notes, 3 West’s Ann. Const., supra, art. XVI, § 17, p. 114 [Prop. 162, § 3, subd. (e)].)

In April 1994, PERS filed a petition for writ of mandate and complaint for declaratory relief, alleging that Senate Bill No. 1107 and Senate Bill No. 240 were unconstitutional under California Constitution, article XVI, section 17 and were unconstitutional impairments of contract under the United States Constitution, article I, section 10 (fn. 2, ante), and the California Constitution, article I, section 9 (fn. 3, ante). The pleading named as defendants the Governor, the State Controller, and the State Treasurer, in their official capacities. PERS requested that the trial court issue a peremptory writ of mandate implementing former section 20751 as it existed prior to the enactment of Senate Bill No. 1107 and Senate Bill No. 240. The trial court granted a motion to intervene by the Association of California State Attorneys and Administrative Law Judges, California Association of Professional Scientists, Professional Engineers in California Government, California Department of Forestry Employees Association, and Retired Public Employees’ Association.

In October 1994, PERS filed a consolidated motion for summary judgment/summary adjudication of issues, and a motion in support of writ of mandate, seeking consequential damages on the declaratory relief cause of action. Extensive evidence was submitted with the moving and opposing papers on both sides.

A hearing was held in November 1994. The trial court denied summary judgment/summary adjudication (which is not at issue on appeal) and issued a statement of decision on the writ proceeding. The trial court determined Senate Bill No. 1107 and Senate Bill No. 240 were not unconstitutional under California Constitution, article XVI, section 17. Although the security of the pension system was affected, “this is a matter properly addressed in the ‘contractual’ aspect of [PERS’s] constitutional claims.” However, the trial court determined that Senate Bill No. 1107 and Senate Bill No. 240 both constituted unconstitutional impairments of contract.

In January 1995, the trial court issued its statement of decision, which included the following:

1. Since its inception, the fundamental funding premise of PERS has been the “level contribution” system, whereby retirement obligations are paid for as liability therefore is incurred (not as the obligations mature). “The objective of the level contribution system is to receive approximately level contributions from year to year and from generation to generation, which, in turn and in general, depends upon a consistent and predictable stream of payments, paid in the same fiscal year for which they are calculated.”

2. The change from the monthly payment basis to the quarterly payment basis was accompanied by a corresponding significant advantage to PERS members and was approved by the PERS Board.

3. The state has an obligation not to alter employer contributions without actuarial input from the PERS Board in a timely manner. When employer contributions are paid later than actuarially anticipated, less money is generated for the retirement fund, resulting in an immediate shortfall. As a result of Senate Bill No. 1107 and Senate Bill No. 240, no employer contribution payments were made by the state on behalf of General Fund employees during fiscal years 1992-1993 and 1993-1994. The fiscal year 1992-1993 payment was ultimately made on or about July 1, 1994. Employer contribution rates were appropriated in the 1994-1995 Budget Act but, pursuant to Senate Bill No. 240, will not be made until July 1996. Under Senate Bill No. 240, all future payments will be paid on the average 16-1/2 months later than on the quarterly system. Under Senate Bill No. 1107, had it been implemented, the payments would have been delayed approximately seven and one-half months. “[U]nder either SB 240 or SB 1107, in the absence of considerable (and at this point speculative) mitigation efforts, the value of the contribution payments will be lower than that which would have been due for the same fiscal year under the quarterly system.”

4. The changes in payment schedule of Senate Bill No. 1107 and Senate Bill No. 240 were accomplished “without approval of, actuarial input from, or consideration by the [PERS] Board.” The trial court found no evidence to support the Governor’s contention that the PERS Board established an actuarial predicate for, or acquiesced in, the legislative changes. The court said: “Assuming the relevance of the evidence of [PERS] staff participation in the legislative process, and giving [appellant] the benefit of every conceivable inference arising therefrom, no such inference rises to the dignity of Board action—which is the prerequisite to appropriate legislative action in this context.”

5. The purpose of Senate Bill No. 1107 and Senate Bill No. 240 was to balance the budget, not to reform or improve the pension system. The “in arrears” financing was not accompanied by any comparable new advantage to PERS members.

6. The effect of Senate Bill No. 1107 and Senate Bill No. 240 has been to impair the state’s obligation to maintain an actuarially sound retirement fund. “The testimony—including that of [appellant’s] actuary—establishes that unless substantial mitigating steps are taken, the Fund will never recoup the losses caused by the postponement of the 1992-93 and 1993-94 payments and the continuing ‘in arrears’ method of payment. In this determination, the Court may not properly speculate with regard to potential future mitigating matters.”

7. The interferences are substantial—not minimal. Even if it be assumed that the record justifies a finding of a fiscal “emergency,” the subject legislation was enacted without actuarial input from the PERS Board, and without indication that considered thought was given to possible mitigating measures, or to the possibility of alternative, less drastic means of accomplishing the goal of budget balancing.

The trial court entered judgment directing issuance of a writ commanding the Governor, Controller and Treasurer (1) to disregard Senate Bill No. 1107 and Senate Bill No. 240 and return to the quarterly payment system, and (2) to take all necessary action to transfer to the retirement fund the employer contribution amounts appropriated in the 1993-1994 and 1994-1995 Budget Acts but unpaid as of the date of trial. The writ issued on January 13, 1995.

The Governor appeals from the judgment on the contract clause claim.

Discussion

I. Standing

Appellant contends the PERS Board and Crist in his official capacity as PERS Board president lack standing to challenge Senate Bill No. 1107 and Senate Bill No. 240, and the trial court erred in concluding otherwise.

However, in this case, we do not have to decide (and we do not) whether the PERS Board has standing. Appellant concedes the interveners have standing. Moreover, appellant does not dispute that Crist has standing in his individual capacity as a PERS member. The pleading was filed not only by the PERS Board and Crist in his official capacity, but also by Crist in his individual capacity. The pleading stated: “Dr. Crist is ... a [PERS] state miscellaneous member whose salary is paid from the General Fund. As an active state employee and member of the Retirement System, Dr. Crist is within the class of persons beneficially interested in respondents’/defendants’ faithful performance of their legal duties. Dr. Crist has a particular interest to be preserved or protected which is independent of the interest held by the public at large.”

Since appellant does not challenge Crist’s standing in his individual capacity (nor the standing of the intervenors), the judgment is not defective for lack of standing, and we need not address appellant’s contention further. For convenience, we shall refer to the respondents collectively as “PERS.”

II. Statute of Limitations

Appellant argues PERS is barred from attacking Senate Bill No. 1107 by the statute of limitations. We disagree.

Appellant relies only on section 911.2, which assertedly required PERS to file a claim with the public entity within one year of accrual.

PERS (including Crist in his individual capacity) filed a claim with the Board of Control on December 30, 1993. The claim challenged both Senate Bill No. 1107 and Senate Bill No. 240. Appellant points out Senate Bill No. 1107 became effective September 15, 1992, more than one year before the claim was filed.

However, we agree with the trial court that the Board of Control claim was not necessary, because the primary outcome sought was not money or damages, but an order compelling performance of a mandatory duty. (Eureka Teacher’s Assn. v. Board of Education (1988) 202 Cal.App.3d 469, 475-476 [247 Cal.Rptr. 790] [teacher’s claim for backpay was incidental to mandamus action for reemployment and thus exempt from claim-filing requirement]; County of Sacramento v. Lackner (1979) 97 Cal.App.3d 576, 587 [159 Cal.Rptr. 1] [mandamus action to compel state officer to disburse funds to county under Medi-Cal statutes was exempt from claim-filing requirement]; Forde v. Cory (1977) 66 Cal.App.3d 434 [135 Cal.Rptr. 903] [mandamus proceeding to compel state officer to pay lump sum death benefit on behalf of judge who died before retirement was a suit to compel performance of express statutory duty, not a money action, and thus was exempt from the claim-filing requirement].) “An action in traditional mandamus, which seeks an order compelling an official to perform a mandatory duty, is not an action against the state for money, even though the result compels the public official to release money wrongfully detained.” (County of Sacramento v. Lackner, supra, 97 Cal.App.3d at p. 587.)

This action sought performance of a mandatory duty, and the judgment in this case ordered issuance of a writ directing return to the quarterly payment schedule and transfer to the retirement fund of all payments due under that schedule. The action was thus exempt from the claim-filing requirement.

We conclude appellant has failed to show the case is barred by the statute of limitations.

III. Laches

Appellant argues laches bars the attack on Senate Bill No. 1107, because PERS delayed almost 19 months after enactment of Senate Bill No. 1107 before filing suit, and PERS executives assertedly participated in the decisionmaking process which resulted in enactment of Senate Bill No. 1107. We disagree.

The trial court rejected the laches claim, finding appellant “has failed to establish prejudice due to delay in filing the writ petition, and has failed to establish that [PERS] acquiesced in the passage and implementation of the legislation.”

“The defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.” (Conti v. Board of Civil Service Commissioners (1969) 1 Cal.3d 351, 359 [82 Cal.Rptr. 337, 461 P.2d 617], fns. omitted.) “[U]nreasonable delay by the plaintiff is not sufficient to establish laches. There must also be prejudice to the defendant resulting from the delay or acquiescence by the plaintiff.” (Ragan v. City of Hawthorne (1989) 212 Cal.App.3d 1361, 1368 [261 Cal.Rptr. 219], original italics, fn. omitted.) “Prejudice is never presumed; rather it must be affirmatively demonstrated by the defendant in order to sustain his burdens of proof and the production of evidence on the issue. [Citation.] Generally speaking, the existence of laches is a question of fact to be determined by the trial court in light of all of the applicable circumstances, and in the absence of manifest injustice or a lack of substantial support in the evidence its determination will be sustained. [Citations.]” (Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624 [166 Cal.Rptr. 826, 614 P.2d 258].)

On appeal, appellant claims prejudice in that “[t]he legislative and executive branches relied upon [PERS’s] delay and acquiescence in SB 1107 to the State’s detriment of a ‘worst case’ $1 billion employer contribution claim, which, if transferred to PERF in the 1995-96 fiscal year, could ‘pull the trigger’ and require across-the-board cuts in other State programs” pursuant to a “trigger bill” known as the Budget Adjustment Law. (Stats. 1994, ch. 135.) However, no citation to the record is provided to show this factual matter was ever raised in the trial court with respect to the laches issue. Nor does appellant’s reply brief dispute the assertion in PERS’s brief on appeal that the only prejudice cited by appellant in the trial court was “having to defend this litigation.” A party cannot change its factual theory on appeal. (Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 874 [242 Cal.Rptr. 184].)

We conclude appellant has failed to show any grounds for reversal of the judgment based on laches.

IV. The Contract Clause

Appellant contends the trial court erred in determining that Senate Bill No. 1107 and Senate Bill No. 240 are unconstitutional impairments of contract. We disagree.

A. Standard of Review

Appellant asserts the standard of review is de novo. We disagree with appellant’s apparent belief that a de novo standard of review applies to all issues in this case.

We review questions of law de novo. (County of Yolo v. Los Rios Community College Dist. (1992) 5 Cal.App.4th 1242, 1248 [7 Cal.Rptr.2d 647].) However, this appeal also challenges factual findings of the trial court. Generally, the trial court’s findings will not be disturbed if substantial evidence supports the judgment. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429 [45 P.2d 183].) Under the conflicting evidence rule, we resolve all conflicts in favor of the judgment. (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 278, p. 289.) This standard applies regardless of whether the trial court’s decision is based on oral testimony or declarations. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479 [243 Cal.Rptr. 902, 749 P.2d 339].)

Appellant urges a different standard here. He claims that even if factual matters are at issue, they present mixed questions of law and fact which require de novo review, particularly in constitutional cases. He cites inter alia People v. Louis (1986) 42 Cal.3d 969, 984-988 [232 Cal.Rptr. 110, 728 P.2d 180], which involved the question of a prosecutor’s “due diligence” to secure the presence of a witness at trial. In extensive dictum, the Supreme Court “suggested (but did not decide) that an appellate court should independently review the record” on due diligence. (People v. Hovey (1988) 44 Cal.3d 543, 563 [244 Cal.Rptr. 121, 749 P.2d 776] [due diligence finding would be upheld under either standard].)

As explained in Louis, mixed questions are those “ ‘in which the historical facts are admitted or established, the rule of law is undisputed, and the issue is whether the facts satisfy the [relevant legal] standard, or to put it another way, whether the rule of law as applied to the established facts is or is not violated.’ ” (People v. Louis, supra, 42 Cal.3d at p. 984, quoting Pullman-Standard v. Swint (1982) 456 U.S. 273, 289, fn. 19 [102 S.Ct. 1781, 1790-1791, 72 L.Ed.2d 66] [in title VII civil rights case, discriminatory intent is a factual matter, not a mixed question of law and fact of the kind that in some cases may allow an appellate court to review the facts].)

With mixed questions of law and fact, the first step is to establish what, if any, basic, primary, or historical facts are in dispute (abuse of discretion standard). (People v. Louis, supra, 42 Cal.3d at p. 985.) The second step is to identify the applicable rule of law (de novo standard). (Ibid.) The third step—application of law to fact—is the most troublesome. (Ibid.) If application of the rule of law to the facts requires an inquiry that is essentially factual—one that is founded on the application of the factfinding tribunal’s experience with the mainsprings of human conduct—the concerns of judicial administration will favor the trial court, and the substantial evidence standard will apply. (Id. at p. 987.) If, on the other hand, the question requires that the court consider legal concepts in the mix of fact and law and exercise judgment about the values that animate legal principles, the de novo standard will apply. (Ibid.-, see McGhan Medical Corp. v. Superior Court (1992) 11 Cal.App.4th 804, 808-811 [14 Cal.Rptr.2d 264] [trial court’s denial of petition for coordination of breast implant actions was subject to de novo review because inter alia decision required exercise of judgment about values underlying legal principles].) Louis cited United States Supreme Court authority that when mixed questions implicate constitutional rights, the application of law to fact will usually require that the court look to the well defined body of law concerning the relevant constitutional provision. (People v. Louis, supra, 42 Cal.3d at p. 987, citing Ker v. California (1963) 374 U.S. 23 [83 S.Ct. 1623, 10 L.Ed.2d 726] [mixed question of probable cause for search and seizure was treated as question of law and reviewed de novo].)

Despite Louis's dictum our Supreme Court has indicated it is proper to defer to the trial court’s finding of historical facts, even where constitutional issues are involved. Our Supreme Court has explained how the standard of review operates in the context of search and seizure cases, which involve the adjudication of a citizen’s constitutional rights under the Fourth Amendment. Thus, People v. Leyba (1981) 29 Cal.3d 591, 596-598 [174 Cal.Rptr. 867, 629 P.2d 961], said the first issue to be decided—whether the police officer subjectively entertained a suspicion that there was criminal activity afoot and the person he or she intended to stop was involved—is a question of fact reviewable under the substantial evidence test. This issue involves factual matters as to what the officer actually perceived, or knew, or believed, and what action he or she took in response. (Id. at p. 596.) The second issue—whether it was objectively reasonable for the officer to entertain that suspicion—is a question of law implicating the constitutional standard of reasonableness, which appellate courts have the ultimate responsibility to administer. (Id. at p. 598.) Thus, under Leyba, “We defer to the trial court’s factual findings, express or implied, where supported by substantial evidence. In determining whether, on the facts so found, the search or seizure was reasonable under the Fourth Amendment, we exercise our independent judgment. [Citations.]” (People v. Glaser (1995) 11 Cal.4th 354, 362 [45 Cal.Rptr.2d 425, 902 P.2d 729].)

Our Supreme Court has also discussed the standard of review in a civil case involving constitutional claims. Thus, Ghirardo v. Antonioli (1994) 8 Cal.4th 791 [35 Cal.Rptr.2d 418, 883 P.2d 960], dealt with the question whether a transaction violated the constitutional prohibition against usury. The Supreme Court said the “trial court’s determination of the historical basis of the transactions—in common parlance, what happened—raises a question of fact,” but “[o]nce the historical facts of the transaction are determined, the question of whether that type of transaction is subject to the usury proscription is a question of law.” {Id. at pp. 801, 800, original italics.)

The issues in this case are whether vested contractual rights exist, whether such rights are impaired, and whether the impairment is nevertheless constitutional either because the impairment is not substantial or because a necessity defense applies. The ultimate questions of whether vested contractual rights exist and whether impairments are unconstitutional present questions of law subject to independent review. The question whether there is an impairment is a mixed question of fact and law. However, this does not mean we apply de novo review to all factual findings underlying the question whether an impairment exists. For example, a major point of contention on appeal is whether the retirement fund remains actuarially sound under Senate Bill No. 1107 and Senate Bill No. 240. Appellant would apparently have us reweigh the evidence of actuarial soundness as a mixed question of fact and law. However, the question of actuarial soundness concerns only the establishment of historical facts and is therefore subject to substantial evidence review. Factual issues to which we apply substantial evidence review shall appear in the discussion that follows. Where appropriate, we shall indicate where our review is de novo.

B. Unconstitutional Impairment of Contract

Appellant contends the trial court erred in determining that Senate Bill No. 1107 and Senate Bill No. 240 are unconstitutional impairments of contract. We disagree.

In resolving this appeal, we have in mind the following general principles:

A court must not annul, as contrary to the Constitution, a statute passed by the Legislature, unless it can be said of the statute that it positively and certainly is opposed to the Constitution. (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 692 [97 Cal.Rptr. 1, 488 P.2d 161].)

The contract clauses of the federal and state Constitutions limit the power of a state to modify its own contracts with other parties, as well as contracts between other parties. (Allen v. Board of Administration (1983) 34 Cal.3d 114, 119 [192 Cal.Rptr. 762, 665 P.2d 534]; Valdes v. Cory (1983) 139 Cal.App.3d 773, 783 [189 Cal.Rptr. 212].) “The state occupies a unique position in the field of contract law because it is a sovereign power. This gives rise to general principles which may limit whether an impairment has [occurred] as a matter of constitutional law. First, ‘[a]n attempt must be made “to reconcile the strictures of the Contract Clause with the ‘essential attributes of sovereign power,’. . .’” [Citation.] ‘Not every change in a retirement law constitutes an impairment of the obligations of contracts, however. [Citation.] Nor does every impairment run afoul of the contract clause.’ [Citation.] ‘ “The constitutional prohibition against contract impairment does not exact a rigidly literal fulfillment; rather, it demands that contracts be enforced according to their ‘just and reasonable purport;’ not only is the existing law read into contracts in order to fix their obligations, but the reservation of the essential attributes of continuing governmental power is also read into contracts as a postulate of the legal order. [Citations.] The contract clause and the principle of continuing governmental power are construed in harmony; although not permitting a construction which permits contract repudiation or destruction, the impairment provision does not prevent laws which restrict a party to the gains ‘reasonably to be expected from the contract.’ [Citation.]” ’ ” (California Teachers Assn. v. Cory (1984) 155 Cal.App.3d 494, 510-511 [202 Cal.Rptr. 611] [state’s reduction of contributions to teachers’ retirement system was unconstitutional impairment of contract].)

“Our analysis requires a two-step inquiry into: (1) the nature and extent of any contractual obligation . . . and (2) the scope of the Legislature’s power to modify any such obligation.” (Valdes v. Cory, supra, 139 Cal.App.3d at p. 785.)

As will appear, not all impairments of contract are unconstitutional. We shall first explain why Senate Bill No. 1107 and Senate Bill No. 240 constitute “impairments of contract.” We shall then determine the impairments are not constitutionally permissible.

1. Senate Bill No. 1107 and Senate Bill No. 240 Constitute Impairments of Contract

Appellant contends Senate Bill No. 1107 and Senate Bill No. 240 do not “impair a contract” within the meaning of the constitutional provisions. We disagree.

a. State Employees Have a Contractual Right to an Actuarially Sound Retirement System

An initial question raised by this case is whether state employees have a contractual right to an actuarially sound retirement system. We shall conclude that they do.

Appellant cites our decision in Walsh v. Board of Administration (1992) 4 Cal.App.4th 682 [6 Cal.Rptr.2d 118], for the proposition that it is presumed a statutory scheme is not intended to create constitutionally protected contract rights. (Id. at p. 697.) However, we also said in Walsh that under California law there is a strong preference for construing governmental pension laws as creating contractual rights for the payment of benefits, and when feasible to do so such laws should be construed as guaranteeing full payment to those entitled to its benefits “with the provision of adequate funds for that purpose.” (Id. at p. 698 [rejecting contract claim under specialized Legislators’ Retirement Law].)

In Valdes v. Cory, supra, 139 Cal.App.3d 773, 111, we held constitutionally invalid certain 1982 legislative amendments affecting the method of PERS funding under PERL. One provision prohibited payment of previously appropriated state-employer contributions from the state General Fund to the PERS fund for three months of 1982 and reverted the amounts to the unappropriated surplus of the General Fund. (Id. at p. 778.) Another provision ceased school-employer contributions for the same months and provided a mechanism for their reversion to the unappropriated surplus of the General Fund. (Ibid.) The legislation also required the PERS Board to transfer an amount equal to that which would otherwise be paid by state and school employers as their three-month contributions to PERS, from the “reserve against deficiencies” portion of the PERS fund to its unallocated portion. (Ibid.) The legislation further mandated a retroactive reduction of previously appropriated employer contributions by some school employers for the entire 1981-1982 fiscal year and directed the PERS Board to make commensurate adjustments or refunds from its reserve against deficiencies. (Id. at pp. 778-779.)

Concluding the challenged statutes constituted unconstitutional impairments of contract, we issued a peremptory writ of mandate directing the government officials to perform their legal and ministerial duties without regard to the challenged statutes. (Valdes v. Cory, supra, 139 Cal.App.3d at p. 793.) We held the state, and other public employers, were contractually bound in a constitutional sense to pay the withheld appropriations to the PERS fund, since, explicit language in the retirement law constituted a contractual obligation on the part of the state as employer to abide by its “continuing obligation” to make the statutorily set payment of monthly contributions unless and until such time as the PERS Board or the Legislature (after consideration of actuarial recommendations by the PERS Board) deemed such contributions inappropriate. (Valdes v. Cory, supra, 139 Cal.App.3d at pp. 787, 783-789; see § 20830; former § 20757, enacted by Stats. 1945, ch. 123, § 1, p. 594, and derived from Stats. 1933, ch. 473, § 24, p. 1245 [state’s employer contributions “continue to be obligations of the State”].)

In Valdes we said “ ‘a vested contractual right to pension benefits accrues upon acceptance of employment. Such a pension right may not be destroyed, once vested, without impairing a contractual obligation of the employing public entity.’ [Citations.] . . .

“Under settled California law, ‘[t]he employee does not obtain, prior to retirement, any absolute right to fixed or specific benefits, but only to a “substantial or reasonable pension.” ’ [Citations.] ‘ “An employee’s vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. [Citation.] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees’ pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages,.” ’ ” (Valdes v. Cory, supra, 139 Cal.App.3d at pp. 783-784, original italics, quoting Betts v. Board of Administration (1978) 21 Cal.3d 859 [148 Cal.Rptr. 158, 582 P.2d 614].)

Thus, the PERS statutes set up a retirement system to pay pension rights of state employees. Actuarial soundness of the system is necessarily implied in the total contractual commitment, because a contrary conclusion would lead to express impairment of employees’ pension rights.

In Valdes v. Cory, supra, 139 Cal.App.3d 773, we said in dictum that, although the PERS statutes contained no explicit legislative commitment to an actuarially sound system, our “review of the present law, its statutory antecedents and the legislative history dispel any doubt that the Legislature intended to create and maintain the PERS on a sound actuarial basis . . . .” (139 Cal.App.3d at pp. 785-786.) We cited former section 20750.9 (now section 20814), calling for periodic adjustment of employer contribution rates in accordance with actuarial valuations. A 1979 amendment to that provision required PERS to change the basis for calculating actuarial equivalents on a regular basis to agree with the interest rate and mortality tables then in effect, for the purpose of ensuring that the actuarial equivalents “are fair, equitable and have a direct relationship to current data.” (Assem. Com. on Public Employees and Retirement, Analysis of Assem. Bill No. 260 (1979-1980 Reg. Sess.) Feb. 9,1979, p. 1, Stats. 1979, ch. 240, § 3, p. 498.) The Legislative Analyst stated the prior use of outdated actuarial assumptions “cause[d] inaccurate reporting of the unfunded liability of the system . . . .” (Legislative Analyst, Analysis of Assem. Bill No. 260 (1979-1980 Reg. Sess.), Mar. 9, 1979, p. 1.) Thus, the concern with actuarial soundness was at least implicit in the statutory scheme.

Moreover, in amending other PERS provisions in 1982, the Legislature acknowledged the need for actuarial integrity. Thus, Statutes 1982, chapter 1496, section 1, page 5796, provides in part: “It is the intent of the Legislature in enacting this act to preserve the actuarial integrity of the Public Employees’ Retirement System . . . .”

We also said in Valdes v. Cory, supra, 139 Cal.App.3d 773, that “[authority is not lacking ... for the proposition that employee pension beneficiaries have a vested interest in the integrity and security of the source of funding for the payment of benefits. [Citations.]” We cited cases from other jurisdictions, including Sgaglione v. Levitt (1975) 37 N.Y.2d 507 [375 N.Y.S.2d 79, 337 N.E.2d 592, 594-595], which in the course of invalidating a New York statute that would have mandated the state comptroller to invest retirement funds in certain bonds, indicated that “protection of the sources of funds” for retirement or pension benefits is necessarily implied in the constitutional protection of the underlying contract providing for benefits. (Id. at pp. 511-512 [337 N.E.2d at p. 594].) The Sgaglione court also indicated the purpose of the reserve funds was “to protect future taxpayers against burdens engendered by past generations of taxpayers in providing for retirement benefits of former public employees.” (Id. at p. 514 [337 N.E.2d at p. 596].) Thus, the purpose of the reserve fund was twofold: “to protect the receivers of benefits and to protect future taxpayers by use of actuarially sound retirement funds.” (Id. at pp. 511-512, 514 [337 N.E.2d at pp. 594, 596.)

In Valdes v. Cory, supra, 139 Cal.App.3d at page 785, we also cited the Washington, State case of Weaver v. Evans (1972) 80 Wn.2d 461 [495 P.2d 639], which held the legislature, by giving the governor allotment control and by enacting the budget act, did not intend to confer upon the governor the power to modify the legislative provision of systematic funding to attain and maintain a legislatively promised financially sound teachers’ retirement system. The Weaver court said “. . . where, as here, the legislature has over a span of years indicated a deep concern with the actuarial soundness of the retirement system, and that concern has culminated in the express adoption of a systematic method of funding to ultimately attain the desired soundness, then the principle of systematic funding so adopted becomes one of the vested contractual pension rights flowing to members of the system.” (Weaver v. Evans, supra, 495 P.2d at p. 649.)

Subsequent cases of this court have touched on the concept of actuarial soundness. Thus, in California Teachers Assn. v. Cory, supra, 155 Cal.App.3d 494, we recognized the “ ‘interest of the employee ... in the security and integrity of the funds available to pay future benefits.’ [Citation.]’’ {Id. at p. 506, citing Valdes v. Cory, supra, 139 Cal.App.3d 773.)

Similarly, in Claypool v. Wilson, supra, 4 Cal.App.4th 646, we noted the general rule that pension plan members do not have a vested right to control administration of the plan, but “[t]his court implied contractual obligations in Valdes v. Cory and California Teachers Assn. v. Cory which constrained the administration of PERS and the Teachers’ Retirement Fund. We did so on the strength of assurances to be found in the language of the governing statutes. In both cases the statutes showed a ‘commitment to permanency’ of funding of ‘critical importance’ to the ‘underlying contractual promise to pay the pensions . . . .’ [Citation.] We noted that the implication of suspension of legislative control must be ‘unmistakable.’ [Citation.]” (Claypool, supra, 4 Cal.App.4th at p. 670, citing California Teachers Assn. v. Cory, supra, 155 Cal.App.3d at pp. 506, 509.)

In Claypool, we held the use of funds from former supplemental cost of living adjustment programs to offset employer contributions did not impair funding rights identified in Valdes. (Claypool v. Wilson, supra, 4 Cal.App.4th at pp. 670-673.) However, Claypool differed from Valdes, because Claypool involved the valid repeal of former supplemental cost of living adjustment programs which had created a unique fund of a “critically different nature,” in that the moneys were not previously counted toward actuarial soundness of PERS, were not reserved to underwrite the actuarial soundness of basic pension benefits, and were not tied to the provision of any special benefits required to be paid. (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 671.) Here, however, as in Valdes, we deal with actions which do have an effect on actuarial soundness of the PERS fund.

We therefore conclude that our dictum in Valdes was sound and therefore that state employees under PERS have a contractual right to an actuarially sound retirement system.

Appellant concedes “as a matter of public policy the PERF and all [PERS] funds should be maintained on an actuarially sound basis.” Appellant nevertheless believes there is no implied vested contractual right to level contribution payments (as opposed to “in arrears” financing), because before Senate Bill No. 1107 and Senate Bill No. 240 the Legislature tinkered with the system without litigation being filed. According to appellant, there can be no vested contract right because the timing of state contributions has been “in a state of transition since 1990,” i.e., the 1990 change from monthly to quarterly contributions, and the 1991 change from quarterly to semiannually. Appellant asks: “If a [PERS] member was first employed or retired in 1991, 1992, 1993, 1994, or 1995, what is the supposed ‘vested right’ to which payment schedule?”

However, we have seen there is a vested right to “integrity and security of the source of funding for the payment of benefits.” (Valdes v. Cory, supra, 139 Cal.App.3d at p. 785.)

Here, the prior unchallenged changes did not alter the vested right to integrity and security of the source of funding for the payment of benefits. Thus, the change from monthly to quarterly contributions was approved by the board and accompanied by a comparable new advantage. The change from quarterly to semiannually was of temporary duration with express findings that soundness of the retirement fund would not be affected and with express provision for mitigation through increased employer contributions. Thus, the legislative events since 1990 do not defeat a finding of vested contractual rights.

Appellant asserts the PERS benefit handbook tells members there is a potential for statutory changes as follows: “While reading this material, remember that we are governed by the Public Employees Retirement Law. The statements in this booklet are general. The retirement law is complex and subject to changes. If there is a conflict between the law and this booklet, any decisions will be based upon the law and not this booklet.” Appellant cites City of Torrance v. Workers’ Comp. Appeals Bd. (1982) 32 Cal.3d 371, 379 [185 Cal.Rptr. 645, 659 P.2d 1162], which said laws enacted subsequent to execution of an agreement are not ordinarily deemed to become part of the agreement unless its language clearly indicates this to have been the intention of the parties.

However, appellant fails to provide a record citation for the handbook quote, in violation of California Rules of Court, rule 15(a), which requires that the “statement of any matter in the record shall be supported by appropriate reference to the record.” Moreover, assuming the handbook contains the caveat that the law is subject to change, there has been no change in the law that modifications to vested pension rights must bear a material relation to the theory of a pension system and its successful operation, and changes which result in disadvantage to employees must be accompanied by comparable new advantages. (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 665.)

We conclude state employees under PERS have a contractual right to an actuarially sound retirement system.

b. Vested. Contractual Rights Are Impaired

Appellant contends no actuarially based vested rights are impaired. We disagree.

As indicated, “ ‘[a]n employee’s vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. [Citations.] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees’ pension rights must bear some material relation to the theory of a pension system and its successful operation ....’” (Betts v. Board of Administration, supra, 21 Cal.3d at pp. 864-865.) The material relation requirement fulfills the purpose of “keeping the pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system ....’’ (Wallace v. City of Fresno (1954) 42 Cal.2d 180, 184 [265 P.2d 884].)

“The [‘material relation’] justification must relate to considerations internal to the pension system, e.g., its preservation or protection or the advancement of the ability of the employer to meet its pension obligations. Changes made to effect economies and save the employer money do ‘bear some material relation to the theory of a pension system and its successful operation . . . .’ [Citation.] That is not to say that a purpose to save the employer money is a sufficient justification for change. The change must be otherwise lawful and must provide comparable advantages to the employees whose contract rights are modified. . . . [T]he monetary objective will not invalidate a modification which is otherwise valid.” (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 666 [legislative changes produced comparable new advantages].)

We said in Valdes: “Had the Legislature actually appropriated any of the PERS trust funds for purposes unrelated to the benefit of PERS members, e.g., to balance the state budget and avoid a year-end deficit, we would have no difficulty concluding that such legislative action modified vested rights of PERS members. [Citations.] When instead the Legislature directs that funds held in trust for the exclusive benefit of the members and beneficiaries of PERS be used to satisfy the state’s contractual obligations to make monthly contributions to the retirement fund so that monies regularly appropriated for that purpose can irretrievably be redirected to balance the state budget, the effect is precisely the same, i.e., vested rights of PERS members are impaired.” (Valdes v. Cory, supra, 139 Cal.App.3d at pp. 788-789.)

Here, it is undisputed that Senate Bill No. 1107 and Senate Bill No. 240 were budget balancing measures. Appellant fails to show any pension reform or pension-related connection whatsoever, and, as we discuss post, the legislation afforded no comparable advantage.

Appellant suggests Claypool “clarified” that Vaides was a narrow decision limited to reserve funding. He cites Claypool's statement that Valdes “rests upon ‘the nature of the reserve against deficiencies.’ [Citation.] That fund is statutorily allocated to meet contingencies that could impair the actuarial soundness of the PERS fund.” (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 671.) However, as we have seen, Claypool continued to say that the Claypool issues were different because they involved the valid repeal of former supplemental cost of living adjustment programs which had created a unique fund of a “critically different nature,” in that the moneys were not previously counted toward actuarial soundness of PERS, were not reserved to underwrite the actuarial soundness of basic pension benefits, and were not tied to the provision of any special benefits required to be paid. (Ibid.) Here, however, as in Valdes, we deal with actions which do have an effect on the actuarial soundness of the PERS fund.

Appellant maintains Senate Bill No. 1107 and Senate Bill No. 240 did not impair any rights but merely deferred contributions, and the state continues to make full payment albeit at a different time. Appellant cites our statement in Valdes that in that case the state did not merely defer payment for a brief period but repudiated its obligations, such that suspended contributions appeared to be irretrievably lost. (Valdes v. Cory, supra, 139 Cal.App.3d at p. 791.) However, the deferral in this case was not for a brief period. Neither Senate Bill No. 1107 nor Senate Bill No. 240 contained a sunset provision, and the deferrals were for six or twelve months.

As indicated, appellant does not dispute the need to maintain actuarial soundness but claims the legislation did not render the system actuarially unsound. According to appellant, “the legal question of actuarial soundness, when deemed an implied contract right subject to constitutional protection by the judiciary, must be determined on an objective basis.” However, it appears to us that the question whether a particular fund is actuarially sound presents a factual question reviewable under the substantial evidence standard. This case is thus different from appellant’s cited authority, Huntington Park Club Corp. v. County of Los Angeles (1988) 206 Cal.App.3d 241, 247 [253 Cal.Rptr. 408]. There, the issue was whether the term “percentage game” in the gaming law was unconstitutionally vague. The trial court found, based on expert testimony, that the term “percentage game” had no commonly accepted or technical meaning within the gaming industry; therefore, the trial court held the term was unconstitutionally vague. (Ibid.) The appellate court reversed, stating the definition and precision of the statutory term did not turn on the weighing of expert testimony but was an issue of law. (Ibid.) Here, the issue is not one of statutory construction but rather the factual question of the effect of deferred contributions on actuarial soundness of a retirement fund under actuarial, not legal, principles. We shall conclude substantial evidence supports the judgment.

PERS Actuary Michael Swiecicki explained in his declaration why Senate Bill No. 1107 and Senate Bill No. 240 rendered the retirement fund actuarially unsound: “[PERS] plans are pre-funded. Instead of allocating money at or near the time that benefits become due, a pre-funded plan relies upon an orderly schedule of contributions well in advance of benefit requirements. . . . The willingness and ability of the sponsor of a defined benefit pension plan to maintain this ‘orderly schedule’ is the major factor in the assurance of benefit security for retirees and in the maintenance of intergenerational taxpayer equity. . . .

“. . . In the determination of the value of the employer contribution, it is necessary to make an assumption as to when the contribution will be made. This is because investment earnings are assumed to begin accruing when the contribution is made. When contributions are delayed beyond the date assumed, the plan falls out of actuarial balance and actuarial soundness is endangered.

“. . . The funding method used by [PERS] is a modified entry-age-normal cost method. Under this method, the employer cost is calculated in two distinct pieces: the plan normal cost and the unfunded liability cost. Each of these two pieces is determined as a level percentage of payroll expected to continue as such until a future point in time. The employer contribution rate is the sum of the two and is likewise expressed as a percentage of payroll.

“. . . A normal cost is determined for each member as the level percentage of pay which is expected to accumulate, together with the member’s contributions, to an amount sufficient to completely fund that member’s benefits at his or her retirement date had funding been initiated at his or her entry into the plan. The plan normal cost is the weighted (by salary) average of all the individual normal costs.

“. . . The accumulation of plan normal costs is called the plan’s accrued actuarial liability. When the accrued actuarial liability exceeds the plan assets, an unfunded accrued actuarial liability exists. For the plans for the State employees, this liability is funded as a level percentage of payroll through to June 30, 2029.

“. . . Underpinning both the normal cost calculation and the amortization of the unfunded accrued actuarial liability is an explicit assumption concerning the timing of contributions. The importance of timing stems from the fact that a large portion of a member’s benefit is funded by the investment earnings which are generated by plan contributions. When monies are contributed later than expected, reduced earnings result—thus creating a shortfall. This impairs benefit security and causes a portion of the total current employment cost of plan members to be shifted into the future. This shift of costs can accurately be characterized as a loan to cover the current employee costs—a loan that must be repaid by future generations of taxpayers.” (Italics omitted.)

PERS also submitted the declaration of Richard Roeder, an outside actuary who previously served as a consulting actuary to PERS. He said: “The most important general financial objective for any public employee retirement system is to practice intergenerational equity, which means calculating and receiving during each fiscal year contributions which, expressed as percents of active member payroll, will remain approximately level from the present generation of citizens to future generations of citizens. This level contribution system ensures that the benefit promises made to employees for services rendered will be paid as promised in the future when the employees retire.” “With level contributions today’s taxpayers pay for the retirement costs of today’s employees, at the time the benefits of those employees’ services are being received.”

In Valdes we said in dictum: “The current [as of 1983] provisions of the retirement law contain no explicit legislative commitment to an actuarially sound system. However, our review of the present law, its statutory antecedents and the legislative history dispel any doubt that the Legislature intended to create and maintain the PERS on a sound actuarial basis [citations].” (Valdes v. Cory, supra, 139 Cal.App.3d at pp. 785-786, fn. omitted [finding record inadequate to determine whether disputed provisions in fact impaired actuarial soundness of PERS].) “If for some lawful reason the existing PERS funds are demonstrably sufficient for actuarial soundness without the state’s periodic contribution, the Legislature may forego the contribution without violating the holding in Valdes v. Corey" (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 671.)

Appellant appears to believe Claypool establishes a test that looks only at current financial status by asking whether existing funds are demonstrably sufficient. We disagree. Thus, Claypool continued on to say funds in a reserve account dedicated to “backstopping” the integrity of the system against unexpected contingencies would not be able to be used to offset the employers’ obligations to contribute to the actuarial soundness of the system unless there was a predicate showing that their use would not undermine the financial integrity of the system. (Claypool v. Wilson, supra, 4 Cal.App.4th at p. 672.) Since the funds at issue in Claypool were not allocated to backstop the integrity of the system and were not counted toward the maintenance of actuarial soundness of the PERS fund or allocated to cover contingencies that could impair actuarial soundness, we concluded those funds were immaterial to actuarial soundness. (Id. at p. 673.) Obviously, the same cannot be said in this case.

Appellant contends it is undisputed the PERS fund remains actuarially sound despite Senate Bill No. 1107 and Senate Bill No. 240. However, while PERS experts acknowledged the fund remains “solvent (meaning it still has the ability to meet its monthly benefit payroll),” they did not agree the fund remains actuarially sound. Thus, PERS submitted a supplemental declaration from actuarial expert Richard Roeder, who attested: “[T]he fact that [PERS] can presently meet its cash obligations is not the test that must be made by an actuary in evaluating the actuarial effects of SB 1107 and SB 240. As I stated [in a prior declaration], ‘Shifting from a payment schedule where the employer contributions are made the same fiscal year the liabilities are incurred to “in arrears” financing, where contributions are paid one or two fiscal years after the liability is incurred, results in a tangible loss to [PERS] members which is a permanent loss unless SB 240 and SB 1107 are negated. . . .’ Thus to determine the actuarial soundness of changes in the contribution pattern a public pension system requires the actuary to look to the long term future effects of those changes. . . . [I]t is clear that SB 1107 and SB 240 have ‘significant detrimental effects on the financial future of [PERS], because greater contributions would be required from future taxpayers.” (Original italics.)

The evidence submitted by PERS provides substantial evidence supporting the judgment.

Appellant argues expert testimony is circumstantial, and an appellate court may reject a trial court’s conclus