BILL ANALYSIS Ó
AB 344
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 344 (Furutani) - As Amended: April 25, 2011
Policy Committee: PERS Vote:6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill prohibits the California Public Employees' Retirement
System (CalPERS) from granting exceptions for members not in a
group or class of similar employees, from the prohibition that
limits increases in compensation that can be earned for the
purposes of calculating retirement. This bill also eliminates
the ability of a CalPERS employer to request that a retired
annuitant be extended beyond the 960 hour limit in any fiscal
year.
FISCAL EFFECT
Small savings to CalPERS from not processing the requests for
extending retired annuitants.
Local agencies are likely to incur some additional costs,
non-reimbursable, for hiring consultants or full time employees
because of the possible limitations to retired annuitants.
CalPERS approves very few exceptions to the 960 hour rule, so
the costs would be minor.
COMMENTS
1)Purpose . According to the author, the recent City of Bell
scandal brought to light an area of the Public Employees'
Retirement Law that needs to be changed. Under current law,
increases in compensation that is earned by an employee who is
not in a group or class of similar employees, is limited to
the average increase in compensation earnable for all
employees who are in the same membership classification, i.e.,
the same employer. This prohibition was added to the law to
eliminate the ability of high level managers to
AB 344
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inappropriately increase their retirement allowances during
their final years of employment. Unfortunately, existing law
allowed CalPERS to grant exceptions to this rule, which they
did in the case of the City of Bell.
2)Background . Current law allows CalPERS employers to hire
retired annuitants under specified conditions. For example, a
retired annuitant must possess specialized skills needed for a
limited time or during an emergency to prevent a stoppage of
public services. These appointments may not exceed 960 hours
per fiscal year and the total compensation for these
appointments may not exceed the maximum pay scale for the
vacant position. Existing law permits the governing body of a
public agency to request an extension to the 960 hour limit by
submitting a resolution to CalPERS for approval. This bill
would also eliminate CalPERS' ability to extend employment of
retired annuitants beyond the current 960 hour limit.
3)Opposition . Opponents, including the League of California
Cities, California State Association of Counties and the
California Special District Association, raise concerns with
the provisions of the bill that eliminate the ability of a
retired annuitant to continue providing services to a public
agency beyond the 960 hour limit. Opponents state that local
agencies utilize retired annuitants to lower the costs of the
service (retirement and health care expenses are not paid) and
ensure the service is fulfilled while a replacement candidate
is being selected. Opponents argue that while it may seem
difficult to justify the on-going employment of a retired
annuitant, in many ways it is beneficial to the state or local
agency, the employee and the taxpayer, and by eliminating this
option it impedes local agencies' ability to immediately fill
highly technical positions - expertise that may be in short
supply, especially in rural agencies.
State government also uses retired annuitants and could be
affected by the provisions in the bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081