BILL ANALYSIS �
AB 822
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 822 (Hall) - As Amended: April 30, 2013
Policy Committee: Elections and
RedistrictingVote: 5-2
Local Government 7-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill requires an independent actuarial statement to be
prepared and printed on the ballot for local government measures
proposing a change to municipal employee retirement benefit
plans. Specifically this bill:
1)Requires a local government measure proposing to change a
municipal employee retirement benefit plan be submitted to the
voters at an established statewide general election.
2)Requires the governing body of the local government entity to
ensure an independent actuarial statement of these proposed
local measures is prepared and available to the both the
public generally and voters, as specified.
FISCAL EFFECT
Minor state reimbursable costs of thousands of dollars for
reimbursing local governments for the cost of obtaining the
actuarial statement and minor costs associated with elections.
The costs will depend on the number of local governments with
such proposed local measures and the size and complexity of the
proposal and the local government's retirement system. Some
costs could be offset by fees collected from proponents.
COMMENTS
1)Purpose . According to the author, state law requires an
independent analysis and public hearing requirement prior to a
state or local government altering a retirement benefit, but
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there is no requirement if the benefit change is adopted by a
local initiative. The author argues the fiscal changes
resulting from proposed retirement related initiatives can
have far-reaching impacts on the retirement security of
workers and their families as well as dramatic and often
unexpected impacts on local budgets. The author concludes
without an independent fiscal analysis, voters could be asked
to make dramatic changes to a vital program without full
knowledge of the costs to taxpayers.
2)Support . The sponsor, the California Professional
Firefighters, contend the increasing trend in local ballot
measures and ordinances seeking to modify municipal employee
pension plans raises a public interest concern, specifically
with respect to the accuracy of such a proposal's fiscal
analysis, particularly if the analysis isn't conducted by a
qualified actuarial expert. They cite as an example, the City
of San Diego, where the estimate for implementing Proposition
B was $54 million over the first three years, an amount that
is about three times the cost projected by the proposition
sponsors during the election.
3)Background . Existing law requires the Legislature and local
government legislative bodies to secure the services of an
actuary to provide a statement of the actuarial impact upon
future annual costs, including normal cost and any additional
accrued liability, before authorizing changes in public
retirement plan benefits or other postemployment benefits.
Local agencies must make public, at a public meeting, the
future costs of changes in retirement benefits or other
post-employment benefits at least two weeks before the
adoption of any changes in public retirement plan benefits or
other post-employment benefits, as specified.
4)Local measures . According to the sponsor, 13 municipal
employee pension-related measures appeared on local ballots in
November 2010, including measures in Pacific Grove, San Jose,
Menlo Park, Carlsbad, Bakersfield and Riverside County. Five
surfaced in November 2011 (three in Modesto and two in San
Francisco), and two such measures were on the ballot in June
2012 in San Jose and San Diego.
5)Previous legislation . SB 1123 (Wiggins), Chapter 371,
Statutes of 2008, enacted pension reforms recommended by the
Public Employee Post-Employment Benefits Commission, including
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a requirement on local agencies to secure an actuary to
provide an actuarial impact statement upon future annual costs
before authorizing changes in public retirement plan benefits
or OPEB.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081