BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1902
                                                                  Page  1

          Date of Hearing:   May 5, 2010

            ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL  
                                      SECURITY
                               Alberto Torrico, Chair
                  AB 1902 (Portantino) - As Amended:  March 9, 2010
           
          SUBJECT  :   County employees' retirement: Los Angeles County.

           SUMMARY  :   Effects changes to the Los Angeles County Employees  
          Retirement Association's (LACERA) defined benefit Plan E that  
          will ensure plan members are treated equitably under plan  
          provisions for the recording of payroll data, disability  
          eligibility, and benefit portability.  Specifically,  this bill  :   


          1)Clarifies that Plan E workers will be credited with service  
            for payroll periods in which compensation is received.

          2)Allows a disabled worker who prospectively transfers to Plan D  
            and does not meet the requirements to apply for a Plan D  
            disability retirement benefit the option of transferring back  
            to Plan E even though fewer than three years may have elapsed  
            since the member's most recent transfer date.

          3)Allows an active member to retain reciprocity rights when Plan  
            E members forfeit their LACERA retirement benefit to purchase  
            the retirement benefit through another California public  
            employer.

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   LACERA's Plan E is a noncontributory defined benefit  
          plan available to general members of the retirement system.   
          Since the plan is unique to LACERA, this bill will not impact  
          any other retirement systems being operated under the County  
          Employees' Retirement Law of 1937 ('37 Act).

          The following information was provided to the Committee by  
          LACERA and describes in detail those areas addressed by AB 1902:

           Recording Payroll Data  
          Los Angeles County's payroll system has transitioned from  
          monthly payroll periods to semi-monthly payroll periods.  This  
          bill clarifies Plan E workers will be credited with service for  








                                                                  AB 1902
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          payroll periods in which compensation is received.  These  
          amendments are consistent with LACERA's current practice.  The  
          rewording of these sections is required to accommodate Los  
          Angles County's new payroll system, and will support any future  
          payroll system changes.

           Disability Eligibility
           Disabled workers who change retirement plan tiers may receive  
          inequitable treatment that limits rehabilitation periods.  A Los  
          Angeles County non-safety worker may choose between two  
          retirement plan tiers: contributory Plan D and non-contributory  
          Plan E.  Plan D offers disability benefits while Plan E does  
          not.  AB 399 (Havice), Chapter 778, Statutes of 2001, provided  
          the authority for a worker to prospectively transfer between the  
          plans no more than once every three years.  A worker  
          participating in Plan E who prospectively transfers to Plan D  
          must meet one of two waiting period requirements before applying  
          for Plan D disability retirement benefits: (1) complete two  
          continuous years of active service, or (2) earn five years of  
          retirement service credit under Plan D.  The intent of the  
          waiting period requirement is to limit the possibility of a  
          worker transferring from Plan E (worker does not contribute to  
          cost and plan has no disability benefit) to Plan D and filing  
          for disability benefits.  Los Angeles County's Long Term  
          Disability (LTD) program provides 24 months of disability  
          benefits for workers unable to perform their job functions and  
          extends benefits to age 65 for those workers disabled under  
          federal Social Security standards.  However, disabled workers in  
          Plan D are required to leave employment and file for retirement  
          benefits at the earliest possible age following the 24 month  
          period (generally age 50 with 10 years of retirement credit).   
          As such, a worker who prospectively transfers from Plan E to  
          Plan D and becomes disabled prior to satisfying the waiting  
          period receives inequitable treatment compared to other disabled  
          workers who remained in Plan E by being forced to leave  
          employment and losing the opportunity to participate in the  
          employer's Return to Work rehabilitation programs.  This bill  
          allows a disabled worker who prospectively transfers to Plan D  
          and does not meet the requirements to apply for a Plan D  
          disability retirement benefit the option of transferring back to  
          Plan E even though fewer than three years may have elapsed since  
          the member's most recent transfer date.

           Benefit Portability
           The California Government Code establishes reciprocal benefits  








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          (Reciprocity) as a tool to encourage career public service and  
          to protect the retirement benefits earned by a public worker  
          under two or more California public employers.  Reciprocity  
          provides benefit portability through linking eligibility  
          requirements, age, and compensation information provided the  
          worker rehires with a California public employer with in a  
          specified number of days and becomes a member of their  
          retirement plan.  Former Los Angeles County workers who are  
          noncontributory Plan E members may voluntarily forfeit their  
          retirement Plan E benefits and purchase them through their  
          current California public employer.  As Plan E requires no  
          worker contributions, this allows the worker to contribute more  
          towards their retirement buy purchasing a retirement benefit  
          with their current employer.  However, this action breaks the  
          reciprocity rule requiring continuous membership.  This bill  
          re-links retirement plan benefits between California pubic  
          retirement systems when a Plan E member forfeits their LACERA  
          retirement benefit, and keeps intact the prohibition of workers  
          receiving a retirement benefit from multiple California  
          government employers for the same time period worked.  This  
          section does not apply to those who have already retired from  
          LACERA.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Los Angeles County Employees Retirement Association (Sponsor)

           Opposition 
           
          None on file
           
          Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957