BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1844| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1844 Author: Hernandez (D) Amended: 8/12/08 in Senate Vote: 21 SENATE PUBLIC EMP. & RET. COMMITTEE : 4-0, 6/23/08 AYES: Wiggins, Ashburn, Migden, Negrete McLeod NO VOTE RECORDED: McClintock SENATE APPROPRIATIONS COMMITTEE : 15-0, 8/7/08 AYES: Torlakson, Cox, Aanestad, Ashburn, Cedillo, Corbett, Dutton, Florez, Kuehl, Oropeza, Ridley-Thomas, Runner, Simitian, Wyland, Yee ASSEMBLY FLOOR : 79-0, 5/28/08 - See last page for vote SUBJECT : Public employee benefits SOURCE : Governors Public Employee Post-Employment Benefits Commission DIGEST : This bill implements various recommendations made by the Governors Public Employee Post-Employment Benefits Commission. ANALYSIS : Existing law: CONTINUED AB 1844 Page 2 1. Provides that it is a crime to knowingly make a false statement or representation for the purpose of obtaining a workers' compensation benefit or making such a false statement for the purposes of supporting or denying a workers' compensation benefit. 2. Requires all state and local public retirement systems to: A. Not less than triennially, hire an actuary to perform a valuation of the system. B. Hire a qualified person to perform an audit of the system's financial statements. C. Submit audited financial statements to the State Controller within six months of the close of each fiscal year. 3. Requires, the State Controller to compile and publish a report annually on the fiscal condition of state and local public retirement systems. This bill: 1. Establishes a definition of, and penalties for, fraud when done so in connection with benefits, or an application for benefits, administered by the Public Employees' Retirement System (PERS), the State Teachers' Retirement System (STRS) or a retirement system established under the County Employees' Retirement Law of 1937 ('37 Act). 2. Requires that workers' compensation insurers and the Director of the Employment Development Department (EDD) provide PERS investigators with information they deem necessary when investigating someone concerning the application for, or the receipt of, PERS benefits. 3. Requires the State Controller to devise a cost-efficient procedure for collecting the required other post-employment benefits data and posting it on the State Controller's web site. AB 1844 Page 3 4. Requires the State Controller to publish the currently required annual report on the financial condition of California's public retirement systems within 12 months of the receipt of the information, and in no case later than 18 months after end of the fiscal year upon which the information in the report is based. 5. Authorizes PERS to request information from the Director of EDD and from any workers' compensation insurer as part of an investigation of unlawful application for, or receipt of, benefits provided by that retirement system. Comments Governor Arnold Schwarzenegger established the Governor's Public Employee Post-Employment Benefits Commission in December 2006, to "identify the extent of unfunded liabilities" in public sector pension and retiree health care obligations, review and analyze options for addressing them and recommend a plan to the Legislature and Governor. The 12-member Commission, chaired by former University of California Board of Regents President Gerald Parsky, was charged with the tasks of identifying the size of the public sector's unfunded other post-employment benefits liability, comparing various approaches for addressing that unfunded liability, considering the advantages to the state of providing post-employment benefits, and proposing a plan(s) for addressing unfunded other post-employment benefits liabilities. After conducting more than a dozen public hearings around the state, the Commission produced its final report in January 2008. That report contains 34 recommendations for improving the functioning of retirement systems and the delivery of other post-employment benefits, and for controlling employer benefit costs, seven of which require legislative implementation. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: Fiscal Impact (in thousands) AB 1844 Page 4 Major Provisions 2008-09 2009-10 2010-11 Fund State Controller $95 $51 $51General EDD $50, reimbursed by requestorSpecial Agency report to unknown, probably not significant General State Controller SUPPORT : (Verified 8/12/08) Governor's Public Employee Post-Employment Benefits Commission (source) Amalgamated Transit Union Association of California Healthcare Districts Association of California Water Agencies California Association of Joint Powers Authorities California Conference of machinists California Faculty Association California Federation of Teachers California School Employees Association California Special Districts Association California State Association of Counties California State Employees Association California Teachers Association California Teamsters Public Affairs Council Department of Personnel Administration Engineers and Scientists of California Glendale City Employees Association Howard Jarvis Taxpayers Association IFPTE Local 21 Organization of SMUD Employees Peace Officers Research Association of California PERS Board of Administration PERS Retirement Betterment Committee Inc. Professional Engineers in California Government Regional Council of Rural Counties San Bernardino Public Employees Association San Diego County Court Employees Association San Luis Obispo County Employees Association AB 1844 Page 5 Santa Rosa City Employees Association Service Employees International Union, Local 1000 Strategic Committee of Public Employees, Laborers' International Union of North America STRS Board of Administration ARGUMENTS IN SUPPORT : According to the author, "This bill will help increase transparency with regard to public employee benefits through enhanced reporting requirements and will also help to curb fraud in the various public retirement systems by providing those systems with the tools they need to detect and prosecute fraudulent actions." ASSEMBLY FLOOR : AYES: Adams, Aghazarian, Anderson, Arambula, Beall, Benoit, Berg, Berryhill, Blakeslee, Brownley, Caballero, Charles Calderon, Carter, Cook, Coto, Davis, De La Torre, De Leon, DeSaulnier, DeVore, Duvall, Dymally, Emmerson, Eng, Evans, Feuer, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garcia, Garrick, Hancock, Hayashi, Hernandez, Horton, Houston, Huff, Huffman, Jeffries, Jones, Karnette, Keene, Krekorian, La Malfa, Laird, Leno, Levine, Lieber, Lieu, Ma, Maze, Mendoza, Mullin, Nakanishi, Nava, Niello, Nunez, Parra, Plescia, Portantino, Price, Sharon Runner, Ruskin, Salas, Saldana, Silva, Smyth, Solorio, Spitzer, Strickland, Swanson, Torrico, Tran, Villines, Walters, Wolk, Bass NO VOTE RECORDED: Soto JJA:mw 8/12/08 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****