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