BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 807|
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THIRD READING
Bill No: SB 807
Author: Correa (D) and Lieu (D)
Amended: 6/13/11
Vote: 27 - Urgency
SENATE PUBLIC EMPLOYMENT & RET. COMM. : 5-0, 6/27/11
AYES: Negrete McLeod, Walters, Gaines, Padilla, Vargas
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Retirement: compensation earnable
SOURCE : Author
DIGEST : This bill 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.
ANALYSIS :
Existing law :
1. 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).
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2. 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.
3. Allows the state employer, through laws and collective
bargaining agreements, to pay differentials, bonuses,
overtime, leave pay, and other forms of compensation in
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.
4. 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.
5. Grants CalPERS the authority to correct any incorrect
pay reporting if discovered and to adjust a pension to
reflect an accurate compensation earnable calculation.
This bill amends the law specifying which forms of pay for
a state employee may be pensionable to specifically exclude
any travel expenses or housing allowances.
Comments
According to the author's office, 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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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
CPM:cm 1/24/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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