BILL ANALYSIS                                                                                                                                                                                                    Ó






          SENATE PUBLIC EMPLOYMENT & RETIREMENT    BILL NO:  SB 373
          Gloria Negrete McLeod, Chair                              
          Hearing date:  April 11, 2011
          SB 373 (DeSaulnier)     as introduced 2/15/11 FISCAL:  NO

           CONTRA COSTA COUNTY RETIREMENT SYSTEM:  DEPUTY SHERIFFS' 
          RETIREMENT BENEFITS
           
           HISTORY  :

              Sponsor:  Contra Costa County

              Prior legislation:  SB 524 (Torlakson)
                        Chapter 633, Statutes of 2006

          
          SUMMARY  : 

          SB 373 eliminates the sunset date on provisions allowing 
          Contra Costa County, as agreed to in a MOU with the Contra 
          Costa County Deputy Sheriffs' Association (DSA), to provide a 
          lower tier of benefits to employees who either elected to 
          participate in the lower tier prior to 2007, or who were 
          first hired and placed in the lower tier since 2007.


           BACKGROUND AND ANALYSIS  : 
          
          1)  Existing law  :

            a)  establishes the 1937 Act County Retirement Law, which 
            covers 20 independent county retirement systems, including 
            the Contra Costa County Employees Retirement Association 
            (CCCERA).

            b)  authorizes participating counties to provide retirement 
            benefits to general members and safety members of a county 
            retirement system, and generally requires that the benefits 
            be the same for all members of a retirement category (such 
            as "safety" or "general").

            c)  authorizes the Board of Supervisors of Contra Costa 
            County, pursuant to a memorandum of understanding with 
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          Date:  4/1/11                                          Page 1 










            employees, to provide different retirement benefits for 
            different bargaining units of safety employees represented 
            by the DSA, the unrepresented groups of safety employees in 
            similar job classifications, and the supervisors and 
            managers of those employees.

            d)  authorizes the Board of Supervisors in Contra Costa 
            County, by resolution or ordinance and subject to the 
            provisions of the applicable MOU, to terminate increased 
            benefits above the basic level, as specified, for employees 
            who elect by written notice to terminate the higher 
            benefits and thereby receive a lower tier of benefits.

            e)  requires the Board of Supervisors, prior to adopting 
            such an ordinance, to provide a written explanation of the 
            effect and impact of the lower tier for each member 
            requesting a termination of increased benefits,  and to 
            specify how the retirement allowance for employees electing 
            the lower tier of benefits will be calculated.

            f)  prohibits an employee who elects the lower benefit tier 
            from rescinding that election, except as specified.

            g)  provides that these provisions sunset as of January 1, 
            2012.

          2)   This bill  

               a)  eliminates the January 1, 2012 sunset date.

           
          FISCAL  :

          According to the sponsor,

          There is currently a 5.65% difference in the cost to the 
          County for employees in Tier A versus employees in Tier C.  
          For each $80,000 deputy - Tier C saves the County 
          approximately $4,534 per year.  For example, 100 Tier C 
          deputies would cost the County $453,366 less a year than Tier 
          A, and 500 of them would be $2.3 million less.

          Currently, the County reports that of the 619 current sworn 
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          Date:  4/1/11                                          Page 2 










          staff, 507 are in Tier A and 112 are in Tier C.  As each Tier 
          A employee retires or separates, the County realizes 
          permanent savings for every new employee hired into Tier C.


           COMMENTS  :

          1)   Argument in support  

          According to the sponsor,

            The DSA contract ratified in October, 2005, included 
            provisions for "Tier B," which was intended to create an 
            optional lower tier for current employees.  Due to Internal 
            Revenue Code issues, the county was never able to implement 
            Tier B.

            "Tier C" was created for new hires beginning January 1, 
            2007.  Since then, Tier A has been closed to new employees. 
             The website for CCCERA defines the current benefit 
            structure for employees in the two tiers:

           -------------------------------------------------------------- 
          |Benefit             |Tier A              |Tier C              |
          |--------------------+--------------------+--------------------|
          |Retirement Formula  |3% at age 50        |3% at age 50        |
          |--------------------+--------------------+--------------------|
          |Final Compensation  |Highest 1 Year      |Highest 3 Years     |
          |Period              |                    |                    |
          |--------------------+--------------------+--------------------|
          |Post-Retirement     |3% Annually         |2% Annually         |
          |Cost of Living      |                    |                    |
          |Adjustments         |                    |                    |
           -------------------------------------------------------------- 
           --------------------------------------------------------------- 
          |Basic member contribution rates for employees in Tier C are    |
          |approximately 3% to 4% lower than for employees in Tier A in   |
          |fiscal year 2010/2011.                                         |
           --------------------------------------------------------------- 

          The statutory provision allowing the county and the deputy 
          sheriff's to negotiate the lower tier is expiring on January 
          1, 2012.  The sponsor states that Contra Costa County and the 
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          Date:  4/1/11                                          Page 3 










          DSA would like to retain the ability to negotiate lower 
          retirement tiers, which saves money for the County and 
          reduces the contribution rate for employees in the lower 
          tiers, thus allowing them more take-home pay.


          2)   SUPPORT  :

               Contra Costa County Board of Supervisors, sponsor
               Contra Costa County Deputy Sheriffs Association (DSA)
               Peace Officers Research Association of California 
          (PORAC)


          3)   OPPOSITION  :

               None to date




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          Pamela Schneider
          Date:  4/1/11                                          Page 4