BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1902| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1902 Author: Portantino (D) Amended: 3/9/10 in Assembly Vote: 21 SENATE PUBLIC EMP. & RET. COMMITTEE : 5-0, 6/23/10 AYES: Correa, Corbett, Ducheny, Hollingsworth, Liu NO VOTE RECORDED: Ashburn ASSEMBLY FLOOR : 72-0, 05/10/10 - See last page for vote SUBJECT : County employees retirement: Los Angeles County SOURCE : Los Angeles County Employees Retirement Association DIGEST : This bill 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. ANALYSIS : Existing Law 1.Establishes the 1937 Act County Retirement Law for 20 independent county retirement systems, of which Los CONTINUED AB 1902 Page 2 Angeles County is a participant. 2.Provides two retirement plans for Los Angeles County Employees Retirement Association (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). 3.Allows members to choose which plan to participate 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. 4.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 two continuous years of service, or five total years of service, in Plan D before being eligible for disability retirement in Plan D. 5.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. This bill: 1.Clarifies that Plan E members may only be credited for service earned during payroll periods for which they received compensation. 2.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 three 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. 3.Allows a former Plan E member who changes public employers to retain certain reciprocity rights and AB 1902 Page 3 purchase service with the new employer that was earned and forfeited under Plan E, as specified. Comments According to the author's office, "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." 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 AB 1902 Page 4 period worked. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 6/30/10) Los Angeles County Employees Retirement Association (source) ARGUMENTS IN SUPPORT : 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." ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De Leon, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma, Miller, Monning, Nava, Nestande, Niello, Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas, Silva, Skinner, Smyth, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Yamada, John A. Perez NO VOTE RECORDED: De La Torre, DeVore, Harkey, Mendoza, Norby, Saldana, Solorio, Vacancy CPM:cm 6/30/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****