BILL ANALYSIS Ó
AB 160
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 160 (Alejo) - As Amended: April 11, 2013
Policy Committee: Local
GovernmentVote:5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill excludes certain Taft-Hartley multiemployer retirement
plans, and retirement plans for public employees whose
collective bargaining rights are protected by provisions of the
Federal Transit Act, from the provisions of the Public
Employees' Pension Reform Act of 2013 (PEPRA), as specified.
Specifically, this bill:
1)Excludes the following retirement plans from the definition of
public retirement system, as used in PEPRA:
a) Multiemployer plans authorized by the Taft-Hartley Act
if the employer participated in the plan prior to January
1, 2013 and the plan is regulated under the Employee
Retirement Income Security Act of 1974 (ERISA).
b) Retirement plans for public employees whose collective
bargaining rights are protected by provisions of the
Federal Transit Act if the United States Department of
Labor (DOL) has determined PEPRA requirements are in
conflict with federal law.
2)Creates an exception for multiemployer plans from the
provisions of PEPRA prohibiting an employer from offering
supplemental defined benefit plans after January 1, 2013,
provided the public employer participates pursuant to a
collective bargaining agreement or similar agreement.
FISCAL EFFECT
1)Estimated administrative costs for CalPERS of approximately
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$100,000 for the first year to establish a new system for and
then process any transit worker members that are excluded from
PEPRA. Annual costs annual costs of $90,000 thereafter to
process members excluded from PEPRA.
2)If this bill indirectly reduces the anticipated savings from
PEPRA, it could result in cost pressure on the state to
improve CalPERS funding. The greater direct impact from
possible reduced savings would be on the affected local
governments. They are directly responsible for any increased
retirement benefits.
3)If the author and supporters are correct that PEPRA
contradicts federal law, this bill would allow hundreds of
millions in federal transportation funding to flow to
California.
COMMENTS
1)Purpose . According to the author, PEPRA reduces the
collective bargaining rights of public transit employees and
conflicts with federal law regarding protective arrangements
between transit unions and the State of California. The
author notes, under the Federal Transit Act, affected labor
unions may challenge Federal transit funding for the state
upon a finding by the United States Department of Labor.
Since the passage of PEPRA, numerous objections have been
filed with the Department, and the author adds, the Department
must approve of all protective arrangements before releasing
Federal transit funds. Consequently, according to the author,
the Department has refused to release any transit funds. The
author argues failure to exempt from PEPRA any public
employees who have Federal Transit Act section 13(c) rights
could result in a loss of over $1 billion in annual transit
funding.
2)Support. Supporters, composed of transit worker unions, state
AB 160 is not an effort to undermine PEPRA. They argue when
PEPRA was enacted, the Legislature was simply not aware of
these federal preemption questions. They note enacting these
exemptions is similar to the Legislature exempting charter
cities and the University of California for constitutional
reasons when it passed AB 340. Supporters conclude in order
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to save state and local governments from losing hundreds of
millions in federal funding and avoiding costly pension
withdrawal liability, AB 160 should be enacted.
3)Background . The Employee Retirement Income Security Act of
1974 (ERISA) provides a comprehensive federal scheme for the
regulation of employee pension and welfare benefit plans
offered by private-sector employers. ERISA allows
multiemployer pension plans which cover workers from more than
one employer. Multiemployer pension plans have a specific
definition under the Labor Management Relations Act of 1947,
known as the Taft-Hartley Act. Under Taft-Hartley, a
multiemployer pension plan is established by negotiating an
employer contribution as part of a labor-management agreement
and establishing a trust fund. Then labor organizations
bargain with additional employers to have workers covered by
these plans. Employer contributions, determined by collective
bargaining, fund the multiemployer pension plans. A
Taft-Hartley multiemployer pension plan is characterized by
provisions allowing individual employees to gain credits
toward pension benefits from work with multiple employers, as
long as each employer has a collective bargaining agreement
requiring plan contributions.
The Federal Transit Act is the federal law authorizing federal
financial assistance for urban transit. As a precondition of
receiving federal aid, Section 13(c) provides fair and
equitable protective arrangements must be made by the grantee
to protect employees affected by federal assistance. The
Secretary of Labor is granted authority to determine what is
far and equitable and certifies that protections are in place
before grant funds are released.
4)Communications with Federal government . In response to a
request from the DOL, the Secretary of the California Labor
and Workforce Development Agency responded and outlined the
state's position that PEPRA does not violate the goals and
requirements of section 13(c). The response states it is the
agency's opinion that PEPRA does not limit a local transit
authority's ability to bargain or to enter into fair and
equitable protective agreements or arrangements that satisfy
Section 13(c) and the changes in state pension law implemented
by PEPRA do not impede Section 13(c)'s goal of assuring a
continued right to collective bargaining. The response also
notes, to the contrary, PEPRA merely modifies, prospectively,
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certain aspects of the defined benefit pension plan than can
be offered by a public employer and PEPRA does not permit
employers to unilaterally determine and impose terms under
which defined benefit pensions may be provided. They conclude
PEPRA retains the ability of current and future employees to
engage in good faith collective bargaining.
5)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081