BILL ANALYSIS Ó AB 340 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 340 (Furutani) As Amended September 7, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |73-0 |(May 12, 2011) |SENATE: |25-15|(September 8, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: P.E.,R . & S.S. SUMMARY : States legislative intent to convene a conference committee to craft responsible and comprehensive pension reform legislation that reflects both the needs of public employees and the fiscal situations of state and local governments. The Senate amendments delete the Assembly version of this bill, and instead state that it is the intent of the Legislature to convene a conference committee to craft responsible and comprehensive pension reform legislation that reflects both the needs of public employees and the fiscal situations of state and local governments. EXISTING LAW : 1)Creates California's public retirement systems, which, in general, provide defined benefit retirement allowances based on members' ages at retirement, years of service, and highest average compensation, as specified by the retirement system. 2)Specifies that a defined benefit is paid as a retirement allowance for the member-retiree's lifetime and, as an option to the member, the lifetime of his or her survivor at a reduced actuarial amount. AS PASSED BY THE ASSEMBLY , this bill prohibited certain cash payments from being counted as compensation earnable for retirement purposes in counties operating retirement systems pursuant to the County Employees' Retirement Law of 1937 ('37 Act) and prohibits a retiree in those counties from immediately returning to employment with the public employer on a part-time or contract basis. FISCAL EFFECT : Unknown AB 340 Page 2 COMMENTS : In California, most public employees are covered by a defined benefit retirement plan which provides participants with a guaranteed annual pension based upon age at retirement, years of service, and highest average compensation. The California Public Employees' Retirement System (CalPERS) administers the retirement plans for state employees and classified school employees, while the California State Teachers' Retirement System administers the plans for teachers. Many local government entities also contract with CalPERS to administer their retirement plans. Additionally, twenty counties have chosen to establish their own retirement systems under the '37 Act. Finally, some cities and counties have established independent retirement systems to provide benefits to their employees. Funding for defined benefit retirement systems generally comes from three sources - employee contributions, employer contributions, and interest earnings. Employee contributions are generally a fixed percentage amount, while employer contributions generally vary from year to year. This bill states legislative intent to convene a conference committee to craft responsible, comprehensive legislation to reform state and local pension systems; a conference committee would be in a position to examine issues related to state and local pension system reform, so as to support the development of legislation to implement such reform. This bill is similar to SB 827 (Simitian) of this year which would also state that it is the intent of the Legislature to convene a conference committee to craft responsible and comprehensive pension reform legislation that reflects both the needs of public employees and the fiscal situations of state and local governments. Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0002845 AB 340 Page 3