BILL ANALYSIS                                                                                                                                                                                                    






          SENATE PUBLIC EMPLOYMENT & RETIREMENT    BILL NO: AB 1902
          Lou Correa, Chair             Hearing date: June 23, 2010
          AB 1902 (Portantino)    as amended  3/09/10   FISCAL:  NO

           LOS ANGELES COUNTY:  RETIREMENT PLANS D AND E
           
           HISTORY  :  

              Sponsor:  Los Angeles County Employees Retirement  
          Association (LACERA)

              Prior legislation:  AB 399 (Havice),
                         Chapter 778, Statutes of 2001

           ASSEMBLY VOTES  :

              PER & SS             6-0       5/05/10
              Assembly Floor       72-0      5/10/10
           
          SUMMARY  : 

          Would make technical and non-controversial changes to laws  
          governing the Los Angeles County Employees Retirement  
          Association (LACERA) regarding employee transfer of  
          membership between retirement plans D and E, pay periods, and  
          reciprocity with other public retirement systems for former  
          Plan E members.

           BACKGROUND AND ANALYSIS  : 
          
          1)    Existing law  :

             a)   establishes the 1937 Act County Retirement Laws for  
               20 independent county retirement systems, of which Los  
               Angeles County is a participant.

             b)   provides two retirement plans for LACERA general  
               members:  Plan D (members make contributions in exchange  
               for higher benefits at younger retirement ages) and Plan  
               E (members do not make contributions but receive lower  
               benefits at older ages).

             c)   allows members to choose which plan to participate  
          Pamela Schneider
          Date:  6/16/10                                         Page 1  










               in, and provides that a member in one plan may elect, no  
               more than once every three years, to transfer from one  
               plan to the other.

             d)   provides disability retirement benefits for Plan D  
               members but not for Plan E members, and requires that  
               someone who transfers from Plan E to Plan D must perform  
               2 continuous years of service, or 5 total years of  
               service, in Plan D before being eligible for disability  
               retirement in Plan D.

             e)   provides reciprocity benefits for an employee who  
               moves between public employers within specified  
               timeframes, which include transferability of certain  
               rights and benefits, and requires that to be eligible  
               for reciprocity an employee may not receive service  
               credit in more than one system for the same period of  
               service.

          2)    This bill  :

             a)   clarifies that Plan E members may only be credited  
               for service earned during payroll periods for which they  
               received compensation.

             b)   allows a member who transfers to Plan D and becomes  
               permanently disabled, and who does not have enough  
               service credited in Plan D to retire for disability, to  
               transfer back to Plan E even though it has been less  
               than 3 years, and receive the Long Term Disability  
               offered to Plan E members until he or she is old enough  
               to retire for service from Plan E.

             c)   allows a former Plan E member who changes public  
               employers to retain certain reciprocity rights and  
               purchase service with the new employer that was earned  
               and forfeited under Plan E, as specified.

           COMMENTS  :

          1)   Argument in support  :  
           
          According to the author,
          Pamela Schneider
          Date:  6/16/10                                         Page 2  











            Disabled workers who change retirement plan tiers may  
            receive inequitable treatment that limits rehabilitation  
            periods.  Plan D offers disability benefits while Plan E  
            does not.  

            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 to Plan D and filing for  
            disability benefits.  

            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.

          2)   Regarding benefit portability  :

            This bill re-links [reciprocal] retirement plan benefits  
            between California public 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.

          Pamela Schneider
          Date:  6/16/10                                         Page 3  










          LACERA the sponsor states, 

            "Enactment of Assembly Bill 1902 will greatly improve and  
            update Plan E statutes by allowing for precise crediting of  
            Plan E service, a needed safety net for former Plan E  
            members who recently transferred to contributory Plan D and  
            became disabled, and greater benefit portability under the  
            reciprocity provisions of Plan E. 

          3)   SUPPORT  :

               Los Angeles County Employees Retirement Association  
          (LACERA), Sponsor

          4)   OPPOSITION  :

               None to date




                                      #####



               















          Pamela Schneider
          Date:  6/16/10                                         Page 4