BILL ANALYSIS                                                                                                                                                                                                    Ó






                           SENATE COMMITTEE ON ELECTIONS 
                            AND CONSTITUTIONAL AMENDMENTS
                           Senator Norma J. Torres, Chair


          BILL NO:   AB 822               HEARING DATE: 6/18/13
          AUTHOR:    HALL                 ANALYSIS BY:  Darren Chesin
          AMENDED:   4/30/13
          FISCAL:    YES
          
                                        SUBJECT

           Local government retirement plans
           
                                     DESCRIPTION  
          
           Existing law  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.

           Existing law  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.

           This bill  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:

             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 shall 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  
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               of the Society of Actuaries;

             b)   "Future annual costs" includes, but is not limited to,  
               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.

                                      BACKGROUND  
          
           Actuarial Analyses of Proposed Pension Changes and Previous  
          Legislation  :  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  
          contained 34 recommendations for improving the functioning of  
          public retirement systems and the delivery of other  
          post-employment benefits, and for controlling the costs of  
          public employee benefits.

          SB 1123 (Wiggins), Chapter 371, Statutes of 2008, enacted  
          several of the Commission's recommendations, including a  
          requirement for local agencies to secure an actuary to provide  
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          an actuarial impact statement of future annual costs before  
          authorizing changes in public retirement plan benefits or other  
          post-employment benefits.  AB 822 extends this requirement to  
          local ballot measures that 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.

                                       COMMENTS  
          
           1.According to the Author  :  Across California, there have been  
            increased efforts to make changes to city employee  
            compensation packages relative to pension benefits.  The  
            fiscal changes resulting from these initiatives can have  
            far-reaching impacts on the retirement security of workers and  
            their families as well as dramatic and often unexpected impact  
            on local budgets.  The availability of an actuarial impact  
            report, prepared by an expert actuary, provides public notice  
            of an initiative's fiscal impact and empowers voters to make  
            informed decisions at the ballot box.   

          Prior to a state or local government altering employee  
            retirement benefits, state law requires an independent  
            analysis and public hearing requirement to discuss the  
            proposed changes.  However, this is not required in the case  
            of benefit changes considered by local ballot initiatives.  In  
            some instances, these initiatives can have far reaching  
            impacts on the retirement security of workers and unexpected  
            impacts on local budgets.

           2.Can This Bill Be Made Applicable to Charter Cities  ?  The  
            California Constitution generally gives charter cities the  
            right to adopt ordinances that conflict with general state  
            laws, provided that the subject of the regulation is a  
            municipal affair, rather than an issue of statewide concern.   
            In fact, Section 5 of Article XI of the California  
            Constitution expressly grants charter cities plenary authority  
            to provide for the compensation of city employees.  In light  
            of this fact, and notwithstanding the findings and  
            declarations in this bill that "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  
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            statewide concern, it is not clear whether the provisions of  
            this bill can be made applicable to charter cities.

           3.Timing of Votes on Measures Dealing with Retirement Benefit  
            Plans  :  As noted above, existing law already requires city and  
            city and county charter proposals to be submitted to the  
            voters only at a statewide primary or general election, or at  
            a regularly scheduled municipal election.  These requirements  
            were enacted in 2011, as a response (in part) to a situation  
            where the City of Bell adopted a charter in 2005 at an  
            election scheduled just five days after Thanksgiving.  That  
            charter proposal was the only item on the ballot, and was  
            promoted by city officials as a change that would give the  
            city more local control.  The ballot language included no  
            mention of the fact, however, that the change also gave the  
            city council the ability to set council members' salaries.   
            Fewer than 400 voters turned out to vote on the charter  
            proposal in the city of over 36,000 residents.  

          The rationale for requiring charter proposals to be submitted to  
            voters only at statewide primary or general elections, or at  
            regularly scheduled municipal elections, was that a city  
            charter is akin to a Constitution for charter cities -- a  
            foundational set of rules that govern the essential operations  
            of the city that adopts it.  In light of that fact, requiring  
            charter proposals to be voted on at regularly scheduled  
            elections helps ensure broader voter participation in  
            establishing those foundational rules, and helps prevent  
            situations like the one in the City of Bell where votes on  
            charter proposals are deliberately scheduled at a time when  
            few voters will participate.

          This bill proposes an even more restrictive standard for when  
            local ballot measures that propose to alter, replace, or  
            eliminate the retirement benefit plan of local government  
            employees may appear on the ballot, requiring such measures to  
            be considered by voters only at a statewide general election.   
            The stated rationale for this proposed policy change is that  
            local retirement-related proposals can have dramatic impacts  
            on local budgets, as well as far-reaching impacts on the  
            retirement security of California workers and their families.   
            However, it is unclear whether local retirement-related  
            proposals differ in this respect from other local ballot  
            measures that voters may be asked to consider.  For instance,  
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            local ballot measures dealing with taxes or with the issuance  
            of bonds could have very significant impacts on local budgets,  
            yet they would not be required to appear only at statewide  
            general elections under this bill.  The committee may wish to  
            consider whether retirement-related proposals are materially  
            different from other local government ballot measures that  
            voters are asked to consider, and if so, whether such  
            differences warrant a requirement that retirement-related  
            proposals be considered only at statewide general election  
            ballots while local measures not dealing with retirement  
            benefits continue to appear on the ballot at other times.

           4."General" Election in June  ?  As previously stated, this bill  
            requires local measures that propose a change to municipal  
            employee retirement benefit plans to be submitted to voters  
            only at established statewide general elections.  However,  
            Section 324 of the Elections Code defines "general election"  
            as either the election held throughout the state on the first  
            Tuesday after the first Monday of November in each  
            even-numbered year  or  any statewide election held on a regular  
            election date (which includes June primary elections, among  
            others).  If it is the author's intent (and the will of the  
            committee) to limit these ballot measures to statewide  
            November general election ballots then this bill should be  
            amended to clarify that intent.

           5.Previous and Related Legislation  :  SB 1123 (Wiggins), Chapter  
            371 of 2008, required the Legislature, and local 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.

          SB 311 (Padilla), which is pending in Assembly policy committee,  
            would require a city charter or amendments to a city charter  
            to be submitted to the voters only at a statewide general  
            election.

          AB 1344 (Feuer & Alejo), Chapter 692, Statutes of 2011, required  
            a city charter or amendments to a city charter to be submitted  
            to the voters at an established statewide general, statewide  
            primary, or regularly scheduled municipal election, among  
            other provisions.
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          SB 202 (Hancock), Chapter 558, Statutes of 2011, provided that  
            state initiative and referendum measures that qualify for the  
            ballot on or after July 1, 2011, shall appear on the ballot  
            only at the November statewide general election or at a  
            statewide special election, among other provisions.

           6.Double Referral  .  This bill is double-referred to the Senate  
            Governance and Finance Committee.
                                           
                                    PRIOR ACTION
           
          Assembly Local Government Committee:  7-1
          Assembly Elections and Redistricting Committee:  5-2
          Assembly Appropriations Committee: 12-5
          Assembly Floor:                         52-19
                                           
                                      POSITIONS  


          Sponsor:  California Professional Firefighters

          Support:  California Professional Firefighters (sponsor)
                    American Federation of State, County and Municipal  
                    Employees, AFL-CIO
                    Association for Los Angeles Deputy Sheriffs
                    California Labor Federation
                    California Nurses Association 
                    California School Employees Association, AFL-CIO  
                    (CSEA)
                    California State Association of Electrical Workers
                    California State Pipe Trades Council
                    Coalition of California Utility Employees
                    Glendale City Employees Association
                    Laborers' International Union of North America Local  
                    777
                    Laborers' International Union of North America Local  
                    792
                    Orange County Employees Association (OCEA)
                    Organization of SMUD Employees
                    Peace Officers Research Association of California  
                    (PORAC)
                    Public Employees Union, Local One
                    San Bernardino Public Employees Association
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                    San Luis Obispo County Employees Association
                    Santa Rosa City Employees Association
                    Western States Council of Sheet Metal Workers

           Oppose:   None received






































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