BILL ANALYSIS �
AB 822
Page 1
ASSEMBLY THIRD READING
AB 822 (Hall)
As Amended April 30, 2013
Majority vote
LOCAL GOVERNMENT 7-1 ELECTIONS 5-2
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|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Fong, Bocanegra, Bonta, |
| |Bradford, Gordon, | |Hall, Perea |
| |Mullin, Frazier | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Waldron |Nays:|Donnelly, Logue |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Hall, | | |
| |Rendon, Pan, Quirk, Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Bigelow, | | |
| |Donnelly, Linder, Wagner | | |
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SUMMARY : Requires local measures that propose a change to
municipal employee retirement benefit plans to be submitted to
voters only at established statewide general elections, and
requires an independent actuarial statement regarding such
measures to be prepared and printed in the voter information
portion of the sample ballot. Specifically, this bill :
1)Requires the governing body of a local government entity to do
all of the following whenever a local measure qualifies for
the ballot that proposes to alter, replace, or eliminate the
retirement benefit plan of employees of the local government
entity, whether by initiative or legislative action:
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a) Secure the services of an independent actuary to provide
a statement, not to exceed 500 words in length, of the
actuarial impact of the proposed measure upon future annual
costs of the retirement benefit plan, including normal
costs and any additional accrued liability; and,
b) Make public at a public meeting, at least two weeks
prior to the election that the measure has qualified for,
the future annual costs that will result from the changes
to the retirement plan proposed by the measure.
2)Requires the actuarial statement to be printed in the voter
information portion of the sample ballot preceding the
arguments for and against the measure, if any.
3)Requires, if the entire text of the measure is not printed on
the ballot, nor in the voter information portion of the sample
ballot, there to be printed immediately below the independent
actuarial analysis, in no less than 10-point bold type, a
legend substantially as follows: "The above statement is an
independent actuarial analysis of Ordinance or Measure ____.
If you desire a copy of the ordinance or measure, please call
the elections official's office at (insert telephone number)
and a copy will be mailed at no cost to you."
4)Requires, if a measure described in this bill qualifies for
the ballot pursuant to an initiative petition described in
current law governing county, city or district petitions, the
proponents of the measure to pay an additional filing fee to
pay for the costs of the actuarial impact statement in an
amount to be established by the local governing body, not to
exceed five hundred dollars ($500). If the measure is adopted
by the voters, the fee shall be refunded to the proponents.
5)Requires measures described in this bill that qualify for the
ballot to be submitted to the voters only at an established
statewide general election.
6)Provides the following definitions:
a) "Actuary" means an actuary who is an associate or fellow
of the Society of Actuaries;
b) "Future annual costs" includes, but is not limited to,
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annual dollar changes, or the total dollar changes involved
when available, as well as normal cost and any change in
accrued liability; and,
c) "Local government entity" includes a city, county, city
and county, school district, community college district,
county board of education, and special district.
7)Applies this bill's requirements to a charter city, charter
city and county, or charter county.
8)Finds and declares that the security of public moneys and the
fiscal integrity of local governmental entities in this state,
including charter cities and charter counties, have a direct
impact on the long-term well-being of all residents of this
state. Further, many local governments experiencing budgetary
crises have difficulty providing sufficient public safety
services and place additional burdens on resources of the
state. Accordingly, ensuring an informed electorate with
respect to the statewide integrity and security of government
pension systems and ensuring the sufficiency of public safety
services are matters of statewide concern and not a municipal
affair, as that term is used in Section 5 of Article XI of the
California Constitution.
9)Provides that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state,
reimbursement to local agencies and school districts for those
costs shall be made pursuant to current law governing state
mandated local costs.
EXISTING LAW :
1)Requires a charter or charter amendment proposed by a charter
commission, whether elected or appointed by a governing body,
for a city or city and county to be submitted to the voters at
an established statewide general, statewide primary, or
regularly scheduled municipal election date, as specified,
provided that there are at least 95 days before the election.
2)Requires the following city or city and county charter
proposals to be submitted to the voters at an established
statewide general, statewide primary, or regularly scheduled
municipal election, as specified, provided that there are at
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least 88 days before the election:
a) An amendment or repeal of a charter proposed by the
governing body of a city or a city and county on its own
motion;
b) An amendment or repeal of a city charter proposed by a
petition signed by 15% of the registered voters of the
city;
c) An amendment or repeal of a city and county charter
proposed by a petition signed by 10% of the registered
voters of the city and county; and,
d) A recodification of the charter proposed by the
governing body on its own motion, provided that the
recodification does not, in any manner, substantially
change the provisions of the charter.
3)Requires the Legislature and local legislative bodies (except
school districts or county offices of education) 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are 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 : This bill has two major provisions: it requires
local measures that propose a change to municipal employee
retirement benefit plans to be submitted to voters only at
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statewide general elections; and, it requires an independent
actuarial statement regarding such measures to be prepared and
printed in the voter information portion of the sample ballot.
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 there is no
requirement if the benefit change is adopted by a local
initiative.
"The fiscal changes resulting from proposed retirement related
initiatives can have far-reaching impact(s) on the retirement
security of workers and their families as well as dramatic and
often unexpected impact(s) on local budgets. 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." This bill is sponsored by the
California Professional Firefighters.
The Public Employee Post-Employment Benefits Commission
(Commission) was established by Executive Order S-25-06 to
propose ways for addressing unfunded post-employment benefits.
In early January 2008, the Commission delivered its final report
to the Governor and the Legislature, which identified the full
amount of post-employment health care and dental benefits for
which California governments are liable and which remain
unfunded; evaluated and compared various approaches for
addressing governments' unfunded retirement health care and
pension obligations; and, proposed a plan to address
governments' unfunded retirement health care and pension
obligations.
The report contained 34 recommendations for improving the
functioning of public retirement systems and the delivery of
other post-employment benefits (OPEB), and for controlling the
costs of public employee benefits. Approximately 78% of
public-sector employees work for counties, cities, school
districts and special districts.
SB 1123 (Wiggins), Chapter 371, Statutes of 2008, enacted
several of the Commission's recommendations, including 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.
This bill extends this requirement to local ballot measures that
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propose changes to local agency employee retirement benefits.
This provision applies to cities and counties (including charter
cities and charter counties), school districts, community
college districts, county boards of education, and special
districts.
This bill also requires the actuarial statement to be printed in
the voter information portion of the sample ballot, along with a
notice to voters explaining that they can obtain the entire text
of the measure if it is not printed on the ballot or in the
voter information portion of the sample ballot. The proponents
of such an initiative must pay an additional filing fee of up to
$500 to cover the cost of the actuarial statement, which must be
refunded if the measure passes.
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.
The sponsor contends that "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. For example, the City of San Diego
estimated the cost for implementing Proposition B would be $54
million over the first three years. However, based on the first
year cost it is likely that the three-year cost may be three
times what was projected during the election. According to the
San Diego Union-Tribune:
"The city's budget continues to get squeezed with news that the
voter-mandated switch from pensions to 401(k)s has pushed San
Diego's annual pension payment to $275 million for the coming
fiscal year, an increase of $44 million from a year
ago?Proposition B, which replaced guaranteed pensions with
401(k)-style plans for all new hires except police officers, is
the main driver of the cost increase. (SDUT, Pension Costs
Squeeze SD Budget - 1.11.13)"
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The sponsor also notes that fewer voters participate in the
local direct democracy process because many initiatives appear
in primary elections when voter participation is lower than in
general elections. This bill requires local measures that
propose to alter, replace, or eliminate the retirement benefit
plan of local government employees to be submitted to voters
only at an established statewide general election.
This bill is keyed a state mandate, which means the state could
be required to reimburse local agencies and school districts for
implementing the bill's provisions if the Commission on State
Mandates determines that the bill contains costs mandated by the
state.
Support arguments: Supporters state, "AB 822 recognizes that
voters weighing changes to retirement benefits have the right to
impartial fiscal analysis just as state and local legislators
do. AB 822 also strengthen(s) the local direct democracy
process by requiring initiatives that seek to alter, replace or
eliminate a local government employee's retirement benefit plan
to be placed on November General Elections. In doing so, AB 822
brings the local initiative process back to its original intent
and will aid in greater voter participation."
Opposition arguments: Opponents could argue that this bill
places an unfair burden on proponents of initiatives that
propose to change local employee benefit plans by requiring them
to pay the costs of the actuarial analysis.
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
FN: 0000617