Elaine Estrada, was a former employee of the City of La Habra Heights. On April 28, 2016, the Los Angeles County District Attorney’s Office filed a felony complaint against Estrada that charged her with one count of misappropriation of public funds in violation of Penal Code section 424, subdivision (a), (count 1), and one count of embezzlement by a public officer in violation of Penal Code section 504 (count 2).

As to both counts, it was alleged that, between April 1, 2007 and July 31, 2009, Estrada removed payroll deductions, and as a result, did not pay the required employee share for dependents covered on her plan. The City did not discover the alleged conduct until an audit in 2012 because Estrada was responsible for the payroll and timekeeping of all City employees.

Estrada pled no contest to a felony that arose out of the performance of her official duties. Under the terms of Estrada’s plea agreement, the conviction was later reduced to a misdemeanor under Penal Code section 17 and then dismissed under Penal Code section 1203.4.

Government Code section 7522.72 provides that if a public employee is convicted of a felony for conduct arising out of or in the performance of his or her official duties, the employee forfeits certain accrued retirement benefits, which “shall remain forfeited notwithstanding any reduction in sentence or expungement of the conviction.” Thus California Public Employees’ Retirement System (CalPERS) determined that Estrada forfeited a portion of her retirement benefits as a result of her felony conviction.

Estrada appealed the forfeiture action. The ALJ found CalPERS was correct in its determination that Estrada was convicted of a felony arising out of her official duties as an employee of the City. As a result, the ALJ concluded that Estrada forfeited her right to retirement benefits for the period from September 1, 2007, the earliest date of the commission of the felony, through June 28, 2017, the date of her felony conviction.

On August 6, 2019, after the ALJ issued the proposed decision but before the Board adopted it, Estrada returned to criminal court. Following an off the-record conference with Estrada’s counsel and a deputy district attorney, the court stated that it was granting a request to issue a nunc pro tunc order. The court then found “nunc pro tunc that on June 28th, 2017, the defendant pleaded to the felony but was not convicted.” The court further found that “on January 3rd, 2018, the defendant was convicted of a misdemeanor and sentenced to a misdemeanor.” At the request of Estrada’s counsel, the court added that “[t]he record will so reflect that the defendant did not suffer a felony conviction in this case.”

Estrada filed a petition for writ of administrative mandate in Los Angeles County Superior Court seeking an order directing CalPERS to set aside its forfeiture decision and to reinstate her retirement benefits. Estrada argued that she was entitled to retain her retirement benefits because she was convicted of a misdemeanor, not a felony, and the criminal case against her was dismissed. The trial court denied Estrada’s petition.

The Court of Appeal affirmed the denial in the published case of Estrada v. Public Employees’ Retirement System -B317848 (September 2023).

On Appeal Estrada contends that her retirement benefits were not subject to forfeiture under section 7522.72 because she withdrew her plea to the felony and entered a new plea to a misdemeanor, and the criminal case was later dismissed. The Court of Appeal Disagreed.

“Under the plain language of section 7522.72, a public employee’s accrued retirement benefits are subject to forfeiture upon his or her conviction of a job-related felony. While section 7522.72 does not define the terms “convicted” or “conviction,” the general rule in California is that ” ‘[a] plea of guilty constitutes a conviction.’ ” (People v. Banks (1959) 53 Cal.2d 370, 390 – 391; accord, People v. Laino (2004) 32 Cal.4th 878, 895.) “A guilty plea ‘admits every element of the crime charged’ [citation] and ‘is the “legal equivalent” of a “verdict” [citation] and is “tantamount” to a “finding” [citations]’ ” (People v. Wallace (2004) 33 Cal.4th 738, 749.)

“This interpretation of section 7522.72 is also consistent with the legislative purpose of statute. … section 7522.72 is part of PEPRA (of the California Public Employees’ Pension Reform Act of 2013) , which was enacted to close loopholes and to curb abusive practices that existed in California’s public pension system.”

“Our conclusion in this case is further supported by Danser v. Public Employees’ Retirement System (2015) 240 Cal.App.4th 885, in which the Court of Appeal considered section 75526, a benefit forfeiture statute applicable to judges.”

The order denying the petition for writ of administrative mandate was affirmed