BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1902
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 1902 (Portantino)
          As Amended March 9, 2010
          Majority vote 

           PUBLIC EMPLOYEES    6-0                                         
           
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          |Ayes:|Torrico, Harkey,          |     |                          |
          |     |Furutani, Hernandez, Ma,  |     |                          |
          |     |Nestande                  |     |                          |
          |     |                          |     |                          |
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           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:








                                                                  AB 1902
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           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 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  








                                                                  AB 1902
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          may have elapsed since the member's most recent transfer date.

           Benefit Portability  :  The California Government Code establishes  
          reciprocal benefits (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.


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957 


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