BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           1651 (De La Torre)
          
          Hearing Date:  07/15/2010           Amended: 05/28/2010
          Consultant:  Maureen Ortiz      Policy Vote: PE&R 4-2
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   AB 1651 provides that the CalPERS retirement  
          benefit for certain local safety members and classified school  
          employees will be paid as if the employee had not been subject  
          to the mandatory furloughs effective July 1, 2008.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          Increase in employer contrib.    -----unknown, potentially $150  
          annually---      Local

          Admin costs                               --------potentially  
          less than $75-----------         Special*

          *Public Employees Retirement Fund
          _________________________________________________________________ 
          ____

          STAFF COMMENTS:  This bill meets the criteria for referral to  
          the Suspense file.
          
          According to CalPERS, administrative costs to revise pension  
          calculations and provide notices of changes will be minor.   
          However, restorations of service credits could result in future  
          increases in employer contributions paid by school districts and  
          contracting agency employers in the amount of several hundred  
          thousands of dollars per year to pay for the increased  
          liability.  The exact fiscal impact is unknown because the  
          number of employees affected has not been identified.   
          Additionally, it is possible that some employees may have  
          retired during the last year and will be entitled to a  
          recalculation of their pension benefit upon enactment of this  
          bill.

          AB 399 (Brownley) Chapter 240, Statutes of 2009, and SB 75  










          (Committee on Budget and Fiscal Review), Chapter 342, Statutes  
          of 2009 provided that a state employee who is a member of  
          CalPERS and is subject to the mandatory furloughs imposed  
          through Executive Orders during the 2008-09 and 2009-10 fiscal  
          years will receive the same amount of retirement service credit  
          and final compensation he or she would have received had the  
          employee not been subjected to the furloughs.

          AB 1651 will provide equity to employees of a county office of  
          education, a school district, a community college district, or a  
          local safety member so that the furloughs will not have a  
          negative impact on the retirement allowances of these employees.  
           It will apply to furloughs that are designated by the employer  
          or by a memorandum of understanding entered into on or after  
          July 1, 2008 for purposes of achieving budgetary savings.



          Page 2
          AB 1651 (De La Torre)


          AB 1651 requires the employers to notify the CalPERS Board of  
          Administration as to the terms and conditions of any mandatory  
          furlough time imposed on employees during a reporting period.

          The retirement benefit for members of CalPERS is calculated  
          based on age, service credit, and final compensation.  Under  
          limited circumstances, service credit and final compensation  
          could be impacted by the furloughs.

          On December 29, 2008, the Governor issued Executive Order  
          S-16-08 which proclaimed a furlough of two unpaid days per month  
          from February 2009 through June 2010 for represented state  
          employees and supervisors.  The Governor's Executive Order  
          S-13-09 then subjected all state employees to a third furlough  
          day per month effective July 1, 2009 through June 30, 2010 which  
          resulted in a total salary reduction of approximately 13.86%.