28
Jul
2014

Bills, Bills, Bills – An Update on the CA Legislative Session

Categories: California Developments,Legislative Updates
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Public Retirement Journal,  by Amy Brown,  July 28, 2014

It’s been quite some time since we covered the goings ons at the State Capitol but there are a handful of bills that are currently making their way through the legislative process that you might want to keep an eye on. The bills below are still “alive” and have now reached the second house – if it’s a Senate bill, it’s in the Assembly and vice versa. They also may be “enrolled” which means they are currently on the Governor’s desk waiting for his action. The Legislature has until August 31st to pass (or kill) all bills and send them to the Governor for a signature (or veto). The Gov has until September 30th to act.

1)  AB 837 (Wieckowski) Defining Employee Contributions for PEPRA of 2013

As amended 09/06/13

AB 837 is what we call a gut-and-amend bill, whereby the Legislature guts the contents of a bill (in this case it was an economic development bill) and replaces it with something completely unrelated. The new author is Assembly Member Bob Wieckowski from Fremont. AB 837 attempts to clean up some of the language of the Public Employees’ Pension Reform Act of 2012 (PEPRA) and it deals with newly elected judges. The bill clarifies that the new pension rules under PEPRA only apply to judges first elected or appointed after January 1, 2013, and therefore, any judge who was elected in 2012 but did not take office until 2013 would still be classified under the old contribution rules.

2)  AB 1163 (Levine) – Education for CalPERS Board Members

Chaptered

AB 1163 requires PERS to adopt a policy for providing education to its Board members, and to create a system of follow-up to ensure its members are adhering to the ever changing nature of its process. Specifically, AB 1163 requires PERS to:

  • Establish a process to determine which programs, training, and educational sessions should qualify as Board member education
  • Require that all Board members receive 24 hours of education within two years of assuming office, and for every subsequent two-year period of Board service thereafter.
  • Necessitate that the Board provide a record of member compliance with the education requirements and provide an annual report posted on PERS’ website.

The author, Assembly Member Marc Levine, says the bill would achieve the Governor’s goal of “reforming board composition to bring financial sophistication to the Board” without affecting the Boards structural integrity.

 The bill was recently signed by the Governor.

3)  AB 2472 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement Law of 1937: Federal Law Compliance

As Amended 06/16/14

AB 2472 is considered a “housekeeping bill.” It deals with a multitude of small changes (many which affect only a very small pool of employees) and includes the following provisions:

  • Eliminate reporting requirements by PERS to the Legislature and Governor on information like late interest paid on pre and post retirement.
  • Provide that an individual is no longer a PERS member if he or she has less than 10 years of service credit and no accumulated contributions in the retirement fund at the time of retirement. (Current law has that number at 5 years)
  • State that if a correction to the amount of compensation received by a member needed to be made, the allowance shall be computed using the employer contribution rate that was effective at the time the compensation needing adjustment was earned.
  • Allow an election, revocation, or change of election to be made within 30 days after the making of the first payment. (Existing law states that these actions must be taken prior to the first payment).

The bill is currently in the Senate Appropriations Committee and will be heard on August 4th.

4) AB 2476 (Committee on Public Employees, Retirement and Social Security) Public Employees’ Retirement

As Amended 05/23/2014

AB 2476 clarifies that, for legislative employees, the Senate Committee on Rules or the Assembly Rules Committee make the certification necessary in order to bring a retired annuitant back to fill a critically needed position before the person has been retired for 180 days.

The bill also clarifies that, for employees of the California State University (CSU), the Trustees of the CSU make the certification necessary in order to bring a retired annuitant back to fill a critically needed position before the person has been retired for 180 days.

The bill is in Senate Appropriations Committee and will be heard on August 4th.

5)  AB 2582 (Bonta) – Bay Area Rapid Transit District (BART) Vesting Requirement

As Amended 06/02/14

According to BART, AB 2582 would “authorize a new vesting schedule for retiree lifetime healthcare benefits that was negotiated between BART and our employee organizations last fall.” Additionally, the bill will:

  • Enable BART to make contributions for postretirement health benefits for the districts’ underrepresented employees to the extent that they are eligible under existing law.
  • Create an agreement to provide an employer contribution of 50 percent after 10 years of credited service, increasing incrementally to 100 percent after 15 years of credited service.
  • Require any agreement for providing an employer contribution for retiree healthcare to provide full employer contributions for those employees who retire under disability with at least 5 years of service with BART.

Overall, this bill is proposed to save BART $13.8 million over the next 30 years. It passed out of the Assembly with a unanimous aye vote and it has no formal opposition.

It will likely be signed by the Governor in August.

6)   SB 1219 (Torres) Public Employees’ Retirement: Service After Retirement

As Amended 04/1/2014

SB 1219 is authored by the Chair of the Senate Public Employment & Retirement Committee, Senator Norma Torres. The bill is being sponsored by PERS, who asked the Senator to carry the bill because there were a few conforming changes that needed to be made to the body of law that governs PERS. In order to bring the Public Employee Retirement Law (PERL) into conformity, SB 1219 does the following:

 

  1. It eliminates provisions of PERL in conflict with the PEPRA, and to retain provisions of PERL that are specific to PERL or are not referenced in the PEPRA.
  2. It also specifies that the 960 hour rule applies to a fiscal year.
  3. It retains the requirement for a bona fide break in service for individuals who retire prior to normal retirement age.
  4. It retains penalties to employees and employers who are deemed to have purposefully worked or provided employment unlawfully following the employee’s retirement.
  5. It retains the program to allow disabled retirees to work in public employment and receive a blended salary of compensation and retirement benefit up to the retiree’s pre-retirement compensation; and
  6. It retains the provision exempting retirees who are elected.

The bill is now in the Assembly and will likely reach the Governor’s desk by mid August.

7)  SB 1251 (Huff) California Public Employees’ Pension Reform Act of 2013: Joint Powers Authority: Employees

As Amended 06/18/2014

SB 1251 would ensure that a joint powers authority formed on or after January 1, 2013 by one or more public employers must provide employees who are not new members under the PEPRA with the defined benefit plan that was available from their employer on December 31, 2012 (as long as they are employed by the employer without a break of service of more than 180 days).

SB1251 is now in the Assembly Appropriations Committee and will likely reach the Governor’s desk by mid- August.

8)  AB 1824 (Rendon) County Employees’ Retirement: Optional Settlements Revision

As Amended 04/22/14

AB 1824 is sponsored by the California Retired County Employees Association (CRCEA) and is a second attempt at solving a problem for retirees in the 37 Act system. The problem with existing law is that it bars flexibility with determining beneficiary benefits if a worker retires and then gets married.

This bill would allow a retired employee with optional settlement plans to revise the designated beneficiary for those specified optional settlements, but only if he or she meets certain criteria:

  1. At retirement, the retiree was unmarried or had been married less than one year.
  2. The retiree had retired before the county adopted other specified optional retirement settlements.
  3. The retiree’s spouse is at least 55 years of age and is older than the originally designated beneficiary.
  4. The beneficiary has no community property interest in the benefit.

An important aspect to note is that the bill cannot take effect until it is ratified by the board of retirement of a county. This means that all fighting, lobbying and legislation aside, this bill will mean nothing if it can’t get approved at the individual county level.

The bill is currently on the Senate Floor.

9)  AB 2473 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement Law of 1937: Federal Law Compliance

As Amended 04/28/14

AB 2473 is the housekeeping bill for the 37 Act system. It primarily deals with pensions, vested benefits, pension funds being allocated for medical benefits, and alterations to the County Employees Retirement Law of 1937 (CERL). This bill looks to alter portions of CERL to conform with federal law. To do so, AB 2473 looks to:

  1. Ensure that a member’s accrued retirement benefits are nonforfeitable.
  2. Prohibit a refund, distribution, transfer of contributions, or other funds to an employee or district upon the withdrawal of a district from a retirement system (unless in compliance with federal law).
  3. Allow the board of retirement of a county to authorize payment of health benefits with county advance reserves.
  4. Specify that if a county creates a Post-Employment Benefits Trust Account as part of a retirement fund, that account will be used solely to provide health benefits for retirees, their spouses and dependents.
  5. Alter county procedures for providing service credit to a retiree member for all or part of his or her military service, as outlined in federal law.

The bill would also make several technical changes to CERL, mostly to align more closely with federal law.

AB 2473 is currently on the Senate floor.

10)  AB 2474 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement: Benefits

As Amended 04/28/14

This bill deals with provisions in the County 1937 system and aligning that body of law with the new PEPRA.

  • First, it clarifies the process for calculating final compensation for members who are on a leave of absence during the three year final compensation period or in the event there is not three years of earned pensionable compensation.
  • It also conforms provisions of the 37 Act governing the loss of member benefits in the retirement system to the PEPRA requirements for benefit forfeiture in the event of a felony conviction.
  • AB 2474 also clarifies references to employee classifications by designating the position as “safety” or “nonsafety,” as contained in PEPRA, rather than referring to multiple safety employee classifications.
  • It also adds the term “pensionable compensation,” as defined in PEPRA, to the 37 Act’s definition of final compensation and various death benefit provisions so that benefits may be calculated appropriately.

The bill was sent down to the Governor’s desk late last month, but his Administration, the Department of Finance wanted to take a closer look at it so they requested it be shipped back to the Legislature for further review. 


Published by Amy Brown, the Public Retirement Journal provides a very timely source of valuable information and insight into public retirement, health care and related benefits. The Journal seeks out, and interviews, those people shaping public retirement policy and helps our readers understand just what they have planned in this field.

For more information, please visit http://www.publicretirementjournal.org

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