BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  AB 1651
          Author:   De La Torre (D)
          Amended:  5/28/10 in Assembly
          Vote:     21

           
           SENATE PUBLIC EMP. & RET. COMMITTEE  :  4-2, 6/28/10
          AYES:  Correa, Corbett, Ducheny, Liu
          NOES:  Ashburn, Hollingsworth

           SENATE APPROPRIATIONS COMMITTEE  :  7-4, 8/12/10
          AYES:  Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
          NOES:  Ashburn, Emmerson, Walters, Wyland

           ASSEMBLY FLOOR  :  51-22, 6/2/10 - See last page for vote


           SUBJECT  :    Public Employees Retirement Law:  furloughs:   
          retirement 
                      credit

           SOURCE  :     California School Employees Association


          DIGEST  :    This bill gives classified school employees and  
          local police and firefighters the same retirement service  
          credit they would have received absent any furlough.

           ANALYSIS  :    

           Existing Law

           1.Known as the Public Employees' Retirement Law (PERL)  
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            provides pension benefits based in part upon credited  
            service.  The PERL provides that credit for service  
            generally is accrued based upon service rendered and  
            compensated in a fiscal year, and that time during which  
            a member is absent without compensation is not allowed  
            for computing service.

          2.Provides that a state employee (executive, legislative,  
            judicial, and California State University) who is a  
            member of the California Public Employees' Retirement  
            System (CalPERS), and 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 had the  
            employee not been subject to mandatory furloughs.

          3.Provides that a trial court employee who is a member of  
            CalPERS, and 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 had the employee not been subject  
            to mandatory furloughs.

          This bill:

          1.Provides that an employee of a county office of  
            education, a school district, a school district that is a  
            contracting agency, a community college district, or a  
            local safety member, as specified, who are members of  
            CalPERS, and subject to mandatory furloughs receive the  
            same amount of retirement service credit and final  
            compensation value he or she would have received had the  
            employee not been subject to the mandatory furlough.

          2.Specifies its provisions affect those persons subject to  
            mandatory furloughs occurring on or after July 1, 2008 as  
            directed by the employer, or by memorandum of  
            understanding between the employer and employee  
            bargaining unit.

           Background

           On December 12, 2008, the Governor implemented a furlough  
          of state employees for two days per month from February 1,  







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          2009 through June 30, 2010.  On July 1, 2009, the Governor  
          added another furlough day through June 30, 2010.
           
           A member's retirement allowance is computed based on  
          benefit formula, final compensation and service credit.   
          Although the benefit formula is unaffected by a furlough,  
          there might be an impact on service credit accrual, under  
          certain limited circumstances.  To help mitigate this  
          concern, AB 399 (Brownley), Chapter 240, Statutes of 2009,  
          was subsequently enacted and required that the mandatory  
          furloughs not   impact a state employee's service credit or  
          benefit for retirement purposes.

          As a result of budgetary reductions, declining local trial  
          court revenues and to achieve savings, the Judicial Council  
          sought and achieved legislation that authorizes trial court  
          closures of one day per month for the transaction of  
          judicial business, until July 1, 2010.

          The court closure results in one furlough day of trial  
          court employees each month.  However, because the furloughs  
          could impact service credit accrual, under certain limited  
          circumstances for trial court employees who are CalPERS  
          members, SB 75 (Senate Budget and Fiscal Review Committee),  
          Chapter 342, Statutes of 2009, was enacted which requires  
          that for all retirement purposes, credit for service and  
          compensation earnable by trial court employees who are  
          members of CalPERS and who are subject to mandatory  
          furloughs, be based on the amount that would have been  
          credited had the employee not been subject to mandatory  
          furloughs.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                          Fiscal Impact (in thousands)

           Major Provisions             2010-11             2011-12          
              2012-13            Fund

           Increase in employer   -- Unknown, potentially $150  
          annually --       Local







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          contributions 

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

           SUPPORT  :   (Verified  8/17/10)

          California School Employees Association (co-source)
          California Professional Firefighters (co-source)
          American Federation of State, County and Municipal  
            Employees, AFL-CIO (co-source)
          Association of California School Administrators
          Association of California State Supervisors
          California Association of School Business Officials
          California Federation of Teachers
          California Labor Federation
          California Public Employees' Retirement System, Board of  
            Administration
          California School Boards Association
          California State Employees Association
          California State University Employees' Association
          California Teachers Association
          CDF Firefighters Local 2881
          Faculty Association of California Community Colleges
          Laborer's International Union of North American, Locals 777  
            and 792
          San Francisco Unified School District
          Service Employees International Union, State Council

           ARGUMENTS IN SUPPORT  :    According to the sponsor, the  
          California School Employees Association, this bill "?would  
          provide classified school employees, local police officers  
          and firefighters with retirement service credit if they are  
          furloughed as a result of the state budget crisis.  AB 1651  
          is essentially a parity bill that provides these important  
          employee groups with the same protection that state  
          employees, court employees, California State University  
          (CSU) employees, officers of the executive branch and  
          judges receive through legislation signed into law last  
          year."

          As examples, the sponsor states that the law "provides  
          retirement service credit for education employees who work  
          in the CSU system, but not if they work in local K-12  







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          schools or in California's community colleges.  Current law  
          gives this retirement service credit protection to  
          California Highway Patrolmen, but not police officers who  
          work in cities and counties.  Firefighters who are employed  
          through the Department of Forestry are protected, but not  
          firefighters who service our local communities."

          Other supports such as the Association of California School  
          Administrators, the California School Boards Association  
          and the California Association of School Business Officials  
          contend that with reductions in payroll due to budgetary  
          cuts, this bill will help mitigate losses already incurred  
          by classified school employees through lay offs, loss of  
          health benefits and salary reductions.


           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Arambula, Bass, Beall, Block,  
            Blumenfield, Bradford, Brownley, Buchanan, Caballero,  
            Charles Calderon, Carter, Chesbro, Cook, Coto, Davis, De  
            La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes,  
            Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jones, Bonnie Lowenthal, Ma, Mendoza,  
            Monning, Nava, V. Manuel Perez, Portantino, Ruskin,  
            Salas, Saldana, Skinner, Solorio, Swanson, Torlakson,  
            Torres, Torrico, Yamada, John A. Perez
          NOES:  Anderson, Bill Berryhill, Blakeslee, Conway, DeVore,  
            Emmerson, Fletcher, Gaines, Garrick, Gilmore, Hagman,  
            Harkey, Jeffries, Logue, Miller, Niello, Nielsen, Norby,  
            Silva, Smyth, Tran, Villines
          NO VOTE RECORDED:  Tom Berryhill, Fuller, Knight, Lieu,  
            Nestande, Audra Strickland, Vacancy


          CPM:cm  8/17/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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