BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1821|
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THIRD READING
Bill No: AB 1821
Author: Ma (D)
Amended: 6/23/10 in Assembly
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 4-1, 6/14/10
AYES: Correa, Corbett, Ducheny, Liu
NOES: Ashburn
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Emmerson, Walters, Wyland
ASSEMBLY FLOOR : 50-25, 6/1/10 - See last page for vote
SUBJECT : Public Employees Retirement System:
preretirement death
benefits
SOURCE : California Public Employees Retirement System
DIGEST : This bill uses the excess reserves from the
California Public Employees Retirement System 1959 Survivor
Benefit Program to merge the first, second and third
benefit levels into a single contracting agency pool paying
the current Level 3 survivor benefit.
ANALYSIS :
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Existing Law
1.Establishes the 1959 Survivor Benefit, a survivor benefit
paid in a similar manner to the survivor benefit provided
by Social Security. The benefit is provided for
survivors of employees who do not participate in Social
Security and who die prior to retirement from non
work-related causes.
2.Defines an eligible survivor as a spouse or registered
domestic partner who either cares for dependent children
or has reached age 62 or older. A dependent child is
defined as one who has never married, is living with the
surviving spouse or domestic partner, and is under the
age of 22. The dependent child may be over the age of 22
if the child is incapacitated due to a disability that
began prior to age 22. Finally, if there is no surviving
spouse or child, a surviving parent who was dependent on
the employee at the time of his or her death may receive
the benefit.
3.Establishes six levels of 1959 Survivor Benefit,
including the following:
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| Level | Who |Monthly Benefit Amount | Status of |
| | Participates | | Level |
| | | | |
|-------+---------------+-----------------------+------------|
|First |Local |With 1 child: |Closed |
| |Contracting | $360 |Since |
| |Agencies | |1/1/1994 |
| | |With 2 or more | |
| | |children: $430 | |
| | | | |
| | | Spouse only at age | |
| | |62: $180 | |
| | | | |
|-------+---------------+-----------------------+------------|
|Second |Local |With 1 child: |Closed |
| |Contracting | $450 |Since |
| |Agencies | |1/1/1994 |
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| | |With 2 or more | |
| | |children: $538 | |
| | | | |
| | | Spouse only at age | |
| | |62: $225 | |
| | | | |
|-------+---------------+-----------------------+------------|
|Third |Local |With 1 child: |Closed |
| |Contracting | $700 |Since |
| |Agencies | |7/1/2001 |
| | |With 2 or more | |
| | |children: $840 | |
| | | | |
| | | | |
| | | Spouse only at age | |
| | |62: $350 | |
| | | | |
|-------+---------------+-----------------------+------------|
|Fourth |Local |With 1 child: |Contract |
| |Contracting | $1900 |Option |
| |Agencies | |since |
| | |With 2 or more |7/1/2001 |
| | |children: $2280 | |
| | | | |
| | | | |
| | | Spouse only at age | |
| | |60: $950 | |
| | | | |
|-------+---------------+-----------------------+------------|
|Fifth |State and |With 1 child: |Established |
| |School | $1500 |level |
| |Employers | |since |
| | |With 2 or more |1/1/2000 |
| | |children: $1800 | |
| | | | |
| | | Spouse only at age | |
| | |60: $750 | |
| | | | |
|-------+---------------+-----------------------+------------|
|Indexed|Local |With 1 child: |Contract |
| |Contracting | $1149 |option |
|(increa|Agencies | |since1/1/200|
|se of | |With 2 or more |0 |
|2% | |children: $1723 | |
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|annuall| | | |
|y) | |Spouse only at age 60: | |
| | | $574 | |
| | | | |
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4.Requires that participating employees pay $2 per month
and that employers pay any remaining costs to fund the
benefit, up to $2 per month, after which the cost (if it
is more than $4 per month) is to be split between
employer and employee.
5.Allows the California Public Employees' Retirement System
(CalPERS) to pool the premiums for this benefit and
requires that premiums paid for the 1959 Survivor Benefit
may only be used to pay for that benefit.
This bill:
1.Allows CalPERS to transfer pooled assets from the first
two levels to the third level, and to increase survivor
benefits in the first two levels to the third level of
benefits. Survivors in the first two levels will receive
a better benefit and the infusion of assets into the
third level funding pool will strengthen the funded
status of that pool and ensure continued full funding of
premiums.
2.Allows CalPERS to suspend employee premiums of $2 per
month as long as the third level funding contains surplus
funds and the surplus exceeds 200 percent of the total
liabilities of the pool.
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
Admin costs -- minor,
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absorbable -- Special*
Higher benefit -- unknown, potentially
over $150 -- Special*
*Public Employees Retirement Fund
SUPPORT : (Verified 8/16/10)
California Public Employees' Retirement System (source)
California State Sheriffs' Association
ARGUMENTS IN SUPPORT : According to the sponsor, CalPERS,
"There are approximately 13,000 participants in the first
two levels. The third level has approximately 46,000
participants. Benefits in the first three levels are set
in statute and do not increase; therefore, premiums are
extremely stable.
"While employers are not required to pay when the pools are
fully funded, existing law requires participating employees
to pay monthly premiums of a minimum of $2, even when the
pools are fully funded. Thus, in some of the funding
pools, large surpluses build up over the year. In the case
of the first and second levels, they are funded at
approximately 1000% and 300% respectively. The third level
is estimated to be funded at approximately 250%. These
funding levels take into account recent losses generated by
the economic downturn. After combining the three pools,
the funding level of the third pool will be an estimated
300%.
"While this bill 'would result in a higher benefit or
potential higher benefit for the small number of members
currently in the 1st and 2nd level pools, the large
surpluses that exist in the first two pools will be used to
reduce the probability of future employer contributions for
contracting agencies in the 3rd level pool.'"
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
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Leon, Eng, Evans, Feuer, Fong, Furutani, Galgiani,
Gilmore, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,
Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,
Nava, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway,
DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick,
Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Norby, Silva, Smyth, Tran,
Villines
NO VOTE RECORDED: Tom Berryhill, Cook, Fuentes, Audra
Strickland, Vacancy
CPM:cm 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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