BILL ANALYSIS                                                                                                                                                                                                    Ó






          SENATE PUBLIC EMPLOYMENT & RETIREMENT    BILL NO:  SB 807
          Gloria Negrete McLeod, Chair Hearing date:  June 27, 2011
          SB 807 (Correa and Lieu)     6/13/11         FISCAL:  YES

           STATE EMPLOYEES:  COMPENSATION EARNABLE
           
           HISTORY  :

              Sponsor:  Author

              Prior legislation:  SB 27 (Simitian), 2011
                         in Assembly PER&SS Committee


           SUMMARY  :

          SB 807 specifies that any travel expense or housing allowance 
          paid to a state employee may not be included in compensation 
          earnable for the purpose of calculating a pension.  This is 
          an  URGENCY BILL .
          

           BACKGROUND AND ANALYSIS  :
          
          1)   Existing law  :

            a)  establishes the California Public Employees' Retirement 
              System (CalPERS), which provides retirement benefits for 
              state employees based on employees' years of service, age 
              at retirement, and final compensation (highest paid 
              "compensation earnable" during a consecutive 12 or 36 
              month period of employment).

            b)  defines "compensation earnable" as consisting of 
              payrate and special compensation, and specifies which 
              items of compensation paid by an employer may be included 
              in either payrate or special compensation for the purpose 
              of determining a pension, and likewise prohibits certain 
              compensation items from being pensionable.
             
             c)  allows the state employer, through laws and collective 
              bargaining agreements, to pay differentials, bonuses, 
              overtime, leave pay, and other forms of compensation in 
          Pamela Schneider
          Date:  6/20/11                                         Page 1 










              addition to base pay and requires that the state identify 
              which items of special compensation may be included in 
              compensation earnable for the purposes of determining a 
              pension.

            d)  gives CalPERS the authority to exclude from 
              compensation earnable any pay differential or form of 
              special compensation that does not meet specified 
              criteria for being pensionable, even if formerly approved 
              by the state employer.

            e)  grants CalPERS the authority to correct any incorrect 
              pay reporting if discovered and to adjust a pension to 
              reflect an accurate compensation earnable calculation. 

          2)   This bill  :

            a)  amends the law specifying which forms of pay for a 
              state employee may be pensionable to specifically exclude 
              any travel expenses or housing allowances.

            b)  this is an  URGENCY BILL  .


           COMMENTS :

          1)   Argument in Support  

          According to the author,

               The Senate Veterans Affairs Committee has uncovered 
               several dishonest pay practices in regard to Military 
               Department employees, and some of these practices may be 
               being used to pad pensions.

               Specifically, there is currently some confusion as to 
               whether or not the Department of Personnel 
               Administration (DPA) or CalPERS has jurisdiction over 
               determining which forms of pay are pensionable with 
               regard to Military Department employees, who are 
               sometimes dually employed by both the State and the US 
               Army, and may have confusing pay records.

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          Date:  6/20/11                                         Page 2 










               There is a concern that employees of the Military 
               Department are claiming homes in San Diego, Nevada, and 
               Texas for Sacramento-based jobs, and collecting travel 
               and housing allowances, which are being included in 
               compensation earnable and are thus pensionable.

               One such individual purportedly gained approximately 
               $10,000 in annual compensation due to such an 
               arrangement.

               Both CalPERS and DPA state that they are currently 
               auditing their programs to determine the extent to which 
               any abuse or incorrect reporting has occurred.

          2)   OPPOSITION  :

            None to date




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          Pamela Schneider
          Date:  6/20/11                                         Page 3