BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1651| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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) CONTINUED AB 1651 Page 2 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, AB 1651 Page 3 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 AB 1651 Page 4 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 AB 1651 Page 5 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 **** END ****