BILL ANALYSIS
AB 616
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 616 (Calderon)
As Amended September 7, 2001
Majority vote
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|ASSEMBLY: |76-0 |(June 4, 2001) |SENATE: |22-7 |(September 13, |
| | | | | |2001) |
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Original Committee Reference: P.E.,R. & S.S.
SUMMARY : Provides three additional retirement formulas that
local contracting agencies of the California Public Employees'
Retirement System (CalPERS) may provide their local
miscellaneous members. They include a 3% at age 60 formula, a
2.5% at age 55 formula, and a 2.7% at age 55 formula. The same
optional formula would be provided to county retirement systems
under the County Employees Retirement Act of 1937 ('37 Act).
The Senate amendments add 2.5% at age 55 formula and 2.7% at age
55 formula to this bill and provide the same optional formula to
county retirement systems under the '37 Act. It also makes
technical changes to avoid chaptering out problems.
EXISTING LAW provides local contracting agencies of CalPERS the
option of providing their local miscellaneous members with a 2%
at age 60 or a 2% at age 55 retirement formula. Both formulas
provide a maximum benefit of 2.418% at age 63 and the normal
member contribution rate for both formulas is 7% of
compensation.
AS PASSED BY THE ASSEMBLY this bill allowed local contracting
agencies of CalPERS the option of providing a 3% at age 60
retirement formula to their miscellaneous members.
Specifically, this bill :
1)Created a new optional retirement formula (3% at age 60) for
local contracting agencies of CalPERS.
2)Increased the normal member contribution rate for local
miscellaneous members subject to the new formula from 7% to 8%
of their monthly compensation.
FISCAL EFFECT : According to the Assembly Appropriations
AB 616
Page 2
Committee analysis, the increase in retirement benefits
authorized by this bill would have a present value of up to $1.6
billion, if all of the contracting agencies choose to provide
the 3% at age 60 retirement formula. The member contribution
rate would increase from 7% to 8% of payroll to cover part of
this benefit increase. The remainder would be born by employer
contribution rate increases of 3% to 4.7% of payroll, varying by
agency.
COMMENTS : Supporters of this bill contend that as the labor
market in California becomes more competitive, attractive
benefit packages are necessary in order to attract and retain
qualified, experienced individuals in public service. The
increased retirement formulas provided by this bill not only
allow employers to improve the retirement formulas overall but
it also encourages experienced, skilled workers to stay in their
jobs longer.
Supporters further state that with the passage of SB 400
(Ortiz), Chapter 555, Statutes of 1999, local safety members
received authorization to negotiate a 50% increase in their
benefit while local miscellaneous members were not offered a
commensurate formula. This bill seeks to provide a local option
formula for these members that would increase their retirement
benefits by 33%.
This bill is similar to AB 2642 (Calderon) of 2000, which was
vetoed by the Governor. AB 2642 would have added two new
retirement formulas for miscellaneous members of CalPERS local
contracting agencies (a 2.5% at age 55 formula and a 2.7% at age
55 formula). The Governor's veto message stated, in part, that
he was "?not aware of a business or policy need to provide a
new, higher level of retirement benefits for non-safety public
employees."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0003747