BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 689
Gloria Negrete McLeod, Chair Hearing date: May 2, 2011
SB 689 (Harman) as amended 4/26/11 FISCAL: YES
PUBLIC RETIREMENT SYSTEMS: ANNUAL REPORT ON RETIREES
RECEIVING AT LEAST $100,000 ANNUALLY IN RETIREMENT
HISTORY :
Sponsor: Author
Prior legislation: None
SUMMARY :
Would require the California Public Employees' Retirement
System (CalPERS), the California State Teachers' Retirement
System (CalSTRS), and the University of California (UC) to
establish and maintain a publicly accessible, and quarterly
updated website on the Internet pertaining to the costs of
pensions and postretirement healthcare benefits, on or before
July 1, 2012.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) establishes the California Public Records Act (CPRA),
which provides that governmental records must be
disclosed to the public, upon request, unless there is a
specific reason not to do so, and a process by which the
public may request such documents, as specified;
b) requires state and local public retirement systems to
annually submit audited financial statements to the
State Controller within six months of the close of each
fiscal year;
c) requires state and local public retirement systems to
prepare annual financial reports in accordance with
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generally accepted accounting principles;
d) requires a state or local public retirement system
to, not less than triennially, secure the services of an
actuary enrolled under subtitle C of Title III of the
federal Employee Retirement Income Security Act (ERISA)
of 1974 to perform a valuation of the system using
actuarial assumptions and techniques, as specified;
e) requires the State Controller to review the audited
annual financial, and triennial valuation reports, as
specified, of each state and local public retirement
system submitted;
f) requires the State Controller to compile and publish
an annual report on the financial condition of all state
and local public retirement systems, as specified, and
g) as provided by the State Constitution, states in part
that the UC is a public trust to be administered by the
Regents of the UC with "full powers of organization and
government, subject only to legislative control as may
be necessary to insure the security of its funds and
compliance with the terms of the endowments of the
university and such competitive bidding procedures as
may be made applicable to the university by statute for
the letting of construction contracts, sales of real
property, and purchasing of materials, goods, and
services." And that:
"The university shall be entirely independent of
all political or sectarian influence and kept free
therefrom in the appointment of its regents and in
the administration of its affairs?."
1)This bill would :
a) require, on or before January 1, 2012, CalPERS,
CalSTRS and the UC to establish and maintain a publicly
accessible and quarterly updated website on the Internet
containing information regarding any retired member who
receives an annual pension of $100,000 or more,
including:
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the retired member's classification;
the department or agency from which the member
retired;
the amount of the pension that the member
receives annually, and
a) require the websites, as specified, by CalPERS,
CalSTRS and the UC to include information on
postretirement healthcare benefits for all retirees,
including:
the total cost of employer contributions paid for
annuitants since the last update, and
the difference in dollars, and percentage between
the total costs of employer contributions paid in the
current and previous reporting period.
a) apply to the UC through express legislative findings
and declarations regarding the security of UC funds,
including retirement funds.
FISCAL :
This bill has not yet been analyzed for fiscal impact, but
could result in increased administrative costs for CalPERS,
CalSTRS and the UC to develop, implement and maintain the
proposed public website, including costs for updating it on a
quarterly basis.
COMMENTS :
1)Ambiguous Terminology - "Classification"
This measure requires, among other things, that public
retirement systems report on the "classification" from
which the member retired. It is unclear whether the
meaning of "classification" refers to the member's
retirement class, (e.g., safety, miscellaneous, etc.), or
whether the term refers to the member's job classification,
(e.g., city manager, janitor, bus driver, etc.)
If the term "classification" is to mean the job position of
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the member before retirement, the data sought by this bill
could result in significant challenges for public
retirement systems. Currently, employers do not
consistently report job classes that members held with
respect to the compensation earned, because job classes do
not affect the determination of a retirement benefit. If a
public retirement system has to include that information in
the report, additional information may need to be collected
from the employer and stored by the public retirement
system, at significant additional expense to the employer
and the retirement system.
For purposes of public retirement systems, the retirement
class is consistently monitored for the purposes of
determining benefits.
2)Quantity of Impacted Earners in the California State
Teachers' Retirement (CalSTRS) and California Public
Employees' Retirement Systems (CalPERS)
According to CalPERS, approximately 8,625 retired members
and beneficiaries received annual CalPERS payments of
$100,000 or more in 2009-10. As of June 30, 2010, this
represented about 2% of retired CalPERS Defined Benefit
(DB) Program members and beneficiaries.
According to CalSTRS, in 2010, about 4,800 members,
representing about 2.2% of retired Defined Benefit (DB)
Program members, received an annual benefit of $100,000 or
more from their own service. An additional 400 members
received a total of $100,000 or more when their own
benefits were combined with the benefits they received by
virtue of being an option beneficiary or ex-spouse of a DB
Program member.
3)Information Currently Available in Public Domain (Internet)
Pursuant to public records requests under the California
Public Records Act (CPRA), both the California Public
Employees' Retirement System (CalPERS) and the California
State Teachers' Retirement System (CalSTRS) have disclosed
the names, former employers and pension amounts of retirees
whose benefits exceeded $100,000 annually.
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This information is currently available for free and
continuously updated on the internet by nonprofit
organizations obtained pursuant to the CPRA under titles
such as "The CalPERS $100,000 Pension Club" and "The
CalSTRS $100,000 Pension Club", etc.
4)Ambiguous Terminology - Health Benefits Data
The language in the measure is unclear as to the
information to be provided by each system, as specified, on
postretirement healthcare benefits. The language could be
interpreted to refer to reporting on the postretirement
healthcare benefits for individual retirees, or cumulative,
quantitative date on costs.
Requiring CalPERS, CalSTRS and the UC to post specific
postretirement health care information on an Internet
website could pose a Health Insurance Portability and
Accountability Act (HIPAA) violation. In addition, not all
of CalPERS' retiree health care is provided through
CalPERS. In those instances, the System would not be able
to obtain this external data.
Although some CalSTRS members receive retiree health care,
CalSTRS is not responsible for retiree health care and
would incur significant challenges in obtaining the
requested data. In this regard, the language does not
specify whether retiree health benefits paid by the
retirement system are those sought for disclosure.
5)Arguments in Support
According to the author:
"No central place exists for the public to easily access
basic information about the rate of increase or decrease
of the cost of public pensions for each of the major
public retirement systems and to be able to track that
information on a timely basis. Currently, the
Controller reports on public pensions only on an annual
basis. The latest report was released December 29,
2010, was 400 pages long, and covered the fiscal year
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2008-2009. In no way can that be considered readily
accessible or timely information that can be readily
understood by the general public. This legislation is
sensitive to the privacy needs of public retirees while
simultaneously promoting the public interests of
transparency and disclosure."
According to the Howard Jarvis Taxpayers Association (HJTA):
"HJTA has filed a number of public records lawsuits over
the past year to compel local agencies to release this
information. While all have thus far been successful,
this bill ensures that there will be a uniform statewide
standard for the collection and dispersal of this
important pension data."
6)Arguments in Opposition
According to the California Retired Teachers Association
(CalRTA):
"The information mandated to be provided by the
retirement systems already is available as public
information to individuals and legislative committees
who make the request," and notes that there is little
need to "create a new report for information that is
already available to the public at public expense."
According to the American Federation of State, County and
Municipal Employees, AFL-CIO:
"The Controller is required to compile and publish an
annual report on the financial condition of all state
and local public retirement systems. This bill far
exceeds reasonable demands for disclosure concerning
retired public employees. Having �a report] that
includes information about those few retirees who
receive a pension of more than $100,000 would unfairly
skew the public perception of the benefits received by
public employees. This bill would only contribute to
the public's confusion and misunderstanding about public
employees and their pension benefits."
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7) SUPPORT :
Howard Jarvis Taxpayers Association (HJTA)
8) OPPOSITION :
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
California Correctional Supervisors Organization (CCSO)
California Retired Teachers Association (CalRTA)
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