BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1651
                                                                  Page  1

          Date of Hearing:   May 5, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                 AB 1651 (De La Torre) - As Amended:  March 2, 2010 

          Policy Committee:                              P.E.R. &  
          S.S.Vote:    4-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              
           
          SUMMARY  

          This bill ensures that school employees and local safety members  
          of the California Public Employees' Retirement System (CalPERS)  
          who are subject to mandatory furloughs are credited with the  
          same amount of service and compensation they would have received  
          absent the furlough.  Specifically, this bill:  

          1)Requires that the calculations for CalPERS retirement  
            allowances for school employees and local safety members that  
            are subject to mandatory furloughs include, as credit for  
            service and compensation, the amount of service and  
            compensation that would have been credited and paid had the  
            employee not been subject to mandatory furloughs.

          2)Specifies that "mandatory furlough" applies to furloughs  
            required by either their employer or by a memorandum of  
            understanding entered into on or after July 1, 2008.

           FISCAL EFFECT  

          1)Unknown, probably minor administrative costs to CalPERS to  
            revise pension calculations and provide notices of changes  
            (CalPERS fund).

          2)No state pension costs. Restorations of service credits could  
            result in minor future increases in employer contributions  
            paid by school district and contracting agency employers -   
            totaling several hundreds of thousands of dollars per year  
            statewide - to cover increase in unfunded liability.  

           COMMENTS  








                                                                  AB 1651
                                                                  Page  2


           1)Rationale  . According to the sponsor, the California School  
            Employees Association, this bill is intended to provide  
            classified school employees, local police officers, and  
            firefighters with full retirement service credit if they are  
            furloughed as a result of the state budget crisis.  The  
            sponsor asserts that this measure is a parity bill that  
            provides the school employees and local safety members with  
            the same protection that state employees, court employees,  
            California State University employees, officers of the  
            executive branch, and judges receive through legislation  
            signed into law last year.

           2)Background  . Under existing law, a full-time school or local  
            safety employee that is furloughed but still accrues at least  
            10 months, 1,720 hours, or 215 days of service will earn a  
            full year of retirement service credit.  However, part-time  
            school and local safety employees, and those full-time  
            employees hired or retired mid-year who are furloughed and  
            unable to reach the 10-month, 1,720 hours, or 215 day  
            threshold, will experience a reduction in the overall amount  
            of service credit accrued.  Many classified school employees  
            are part-time.
           
          3)Related legislation  . AB 399 (Brownley), Chapter 240, Statutes  
            of 2009, ensures that all state employees (executive,  
            legislative, judicial, and California State University)  
            subject to mandatory furloughs during the 2008-09 and 2009-10  
            fiscal years receive the same amount of retirement service  
            credit and final compensation he or she would have received  
            absent the furlough. 


           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081