BILL ANALYSIS �
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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