BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 822 HEARING: 7/3/13
AUTHOR: Hall FISCAL: Yes
VERSION: 6/20/13 TAX LEVY: No
CONSULTANT: Ewing
LOCAL GOVERNMENT RETIREMENT PLANS
Requires ballot measures affecting local agency retirement
plans to be submitted to voters at a statewide general
election and requires independent actuarial analysis of
future costs.
Background and Existing Law
Article XI of the California Constitution authorizes cities
and counties to adopt, amend, or repeal city or county
charters with a majority approval of voters. State law
determines the process for the review and adoption of
charters. Charters can be proposed by the legislative body
of a city or county, or through a charter commission
established for that purpose, which can be called for
through a voter petition. Charters can be amended or
repealed directly through a voter petition. Charter
measures can be considered at a regularly scheduled
municipal election, a statewide primary, or statewide
general election (AB 1344, Feuer, 2012).
The Constitution specifies that a city or county charter
can include provisions relating to employee compensation.
For general law cities and counties, and for other local
agencies, the Meyers-Milias-Brown Act governs
labor-management relations, although its bargaining and
representation procedures generally do not apply to
executive employees. State law restricts the compensation
that local agencies can offer to employees not covered by
the Meyers-Milias-Brown Act, including restrictions on
compensation when employment contracts are terminated, and
the mechanisms local agencies can use to set compensation.
The Public Employees' Retirement Law also contains
provisions governing postemployment benefits (AB 340,
Furutani 2012).
AB 822 -- 6/20/13 -- Page 2
State law requires local agencies, including community
colleges, before adopting changes to a retirement or
postemployment benefit, to secure the services of an
actuary to provide a statement on the fiscal impact of
those proposed changes, and to make that information public
(SB 1123, Wiggins, 2008).
Public employee organizations would like ballot measures
that affect postemployment benefits to be limited to
statewide general elections to ensure the highest level of
voter turnout. They also are concerned that proposals to
change retirement or postemployment benefits made through a
ballot measure may not provide voters an adequate
assessment of the fiscal impact of those changes.
Proposed Law
Assembly Bill 822 requires local agencies to submit ballot
proposals affecting a retirement benefits plan of local
agency employees to the statewide general election that
occurs in November of even-numbered years. Under AB 822,
for ballot measures affecting retirement benefit plans,
local agencies must:
Secure the services of an independent actuary to
provide a statement, not to exceed 500 words, of the
impact of the proposed measure on future annual costs,
including normal costs and any additional accrued
liability.
Make public, at a public meeting, at least two
weeks prior to the election, the future annual costs
of the measure.
Print the statement on costs from the actuary in
the voter information portion of the sample ballot,
preceding arguments for and against the measure.
If the entire text of the measure is neither on the
ballot nor in the voter information portion of the
ballot, the local agency must include a statement
indicating how to obtain a copy of the ordinance or
measure.
For measures placed on the ballot through petition,
local agencies must establish an additional filing fee
to cover the cost of the actuarial statement, not to
exceed $500. The fee is refundable for measures that
are adopted.
AB 822 -- 6/20/13 -- Page 3
AB 822 applies to cities, counties, special districts,
school districts, community college districts, charter
cities, charter counties, and a charter city and county.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . State law requires local
agencies to prepare an actuarial analysis, and to hold a
public hearing, before adopting a decision to alter a
retirement benefit. But there is no comparable requirement
if a benefit change is adopted through a ballot measure.
The fiscal changes resulting from proposed
retirement-related initiatives can have far-reaching
effects on workers and their families. Without an
independent fiscal analysis, voters could be asked to
change compensation policies without full knowledge of the
costs. Ensuring that local measures affecting
postemployment benefits are on the ballot during the
statewide general election will improve opportunities for
voter consent on these important issues, because those
elections have the greatest turnout.
2. Who is included ? The Meyers-Milias-Brown Act (MMBA)
governs compensation practices between local agencies and
represented employees. For non-represented employees,
local agencies have contracting and compensation authority
through the Government Code. The Constitution allows
cities and counties to adopt voter-approved charters that
can set compensation policies. In matters not governed by
charters, local agencies must follow the general, statewide
laws, including MMBA. AB 822 establishes regulatory
statutes governing compensation policies set through city
or county charters, and compensation measures placed on the
ballot outside of a charter. It's not clear that the local
agencies affected by AB 822, other than cities and counties
with charters, have the authority to set compensation
through ballot measure, when doing so creates a conflict
with MMBA. Further, if AB 822 only applies to ballot
measures affecting compensation through a charter, it may
AB 822 -- 6/20/13 -- Page 4
conflict with the constitutional authority of cities and
counties to establish those charters. AB 822 includes a
legislative finding and declaration that the bill's
provisions are a matter of statewide concern, thus creating
an exemption from the application of a charter, because of
the need to ensure the integrity and security of government
pension systems and the sufficiency of public safety
services are matters of statewide concern. Ultimately, the
courts may decide whether AB 822 applies to charter cities
and charter counties.
3. Priorities . State and local agencies, generally, have
the flexibility to place measures on the ballot based on
circumstances, as in the case of special elections, or
efficiency and convenience, with the use of consolidated
elections, or timing, with the use of municipal elections
or primaries. By repealing local agencies' authority to
use elections other than the statewide general election for
measures affecting retirement benefits, AB 822 establishes
a higher standard for these measures than is in place for
electing a Governor, other state officials or local
officials, voting on statewide ballot measures, raising
taxes or other issues, all of which can be done through an
election other than the statewide general. It is unclear
whether this prioritization is warranted.
4. Petition measures too ? City charter measures can be
placed on the ballot through petition, either by a petition
calling for a charter commission or a petition to amend or
repeal a charter. AB 822 prohibits measures authorized by
petition, if they would affect retirement benefits, from
being considered at a regularly scheduled municipal
election, or a statewide primary. Recognizing the value of
voter-led initiatives, the Committee may wish to consider
amending AB 822 to preserve the use of a regularly
scheduled municipal election or a statewide primary for
measures placed on the ballot by petition.
5. Voter fatigue . SB 202 (Hancock, Chapter 558, Statutes
of 2011) required initiative and referenda measures to be
considered during the statewide general election held in
November of even-numbered years. The statewide general
election also includes federal, state and local races and
other ballot measures. By requiring measures that affect
retirement benefits to be placed only on the statewide
general election ballot, AB 822 would ensure these measures
AB 822 -- 6/20/13 -- Page 5
are considered during the election with greatest turnout,
but also would ensure greatest competition for the time and
attention of voters. Because of voter fatigue, AB 822
could result in retirement-related measures receiving
limited scrutiny on a ballot crowded with presidential,
gubernatorial, Senate, Assembly, and other races.
6. Room for exceptions ? It is unclear how AB 822 may
impact local agencies going through bankruptcy,
reorganizations, mergers or consolidations or other changes
that could impact retirement benefit plans. Changes in
state and federal laws, or judicial rulings, can create
conflicts with local measures that at times need to be
addressed through charter amendments. However, AB 822
allows local governments to make necessary changes only
once every two years. The Committee may wish to consider
amending AB 822 to permit a local agency to place a measure
on the regularly scheduled municipal election or statewide
primary in response to a court order, an action of the
federal government or state government that creates a
conflict with a charter or other measure that can only be
amend with the vote of the people.
7. Room for exceptions II ? State law allows for
consolidated of elections to reduce costs and avoid
confusion among voters. A county board of supervisors must
approve a request for a consolidated election unless the
ballot style, voting equipment, or computer capability
cannot accommodate the request. The County of Los Angeles,
for instance, conducts elections for more than 250 local
agencies, including cities, school districts, and special
districts, as well as the County. The county reports that
it cannot respond to all current requests to conduct
consolidated elections because of technology constraints.
Requiring all ballot measures dealing with retirement
benefits to be conducted during the statewide general
election, could result in greater burdens on the county's
voting processes. If the county cannot conduct an election
for a local agency during the statewide general election
because of capacity constraints, a local agency would be
required to conduct their own election or contract for
services from another entity. Under that scenario, some
residents may need to participate in two separate elections
on the same day. The Committee may wish to consider
amending AB 822to allow ballot measures to be heard during
a regularly scheduled municipal election or a statewide
AB 822 -- 6/20/13 -- Page 6
primary if a board of supervisors demonstrates that
limitations due to ballot style, voting equipment, or
computer capability prevent the measure from appearing on
the statewide general election ballot.
8. Double referral . The Senate Rules Committee has
ordered a double-referral of AB 822, first to the Senate
Election and Constitutional Amendments Committee, which has
policy jurisdiction over the statutes governing elections,
and then to the Senate Governance and Finance Committee,
which has jurisdiction over statutes relating the local
agencies. On June 18, 2013, AB 822 passed out of Senate
Elections and Constitutional Amendments with a vote of 4-0.
9. Related bills . AB 822 is not the only bill intended to
limit when measures can be placed on the ballot. SB 311
(Padilla) would restrict the adoption or amendment of a
charter to the statewide general election. SB 311 passed
out of the Senate Governance & Finance Committee with a
vote of 5-1.
Assembly Actions
Assembly Local Government Committee 7-1
Assembly Elections and Redistricting Committee5-2
Assembly Appropriations Committee 12-5
Assembly Floor 52-19
Support and Opposition (6/27/13)
Support : American Federation of State, County and
Municipal Employees, AFL-CIO; Association for Los Angeles
Deputy Sheriffs; California Labor Federation; California
Nurses Association; California Professional Firefighters;
California School Employees Association, AFL-CIO;
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
Locals 777 and 792; Los Angeles County Probation Officers
Union; Los Angeles Police Protective League; Orange County
Employees Association; Organization of SMUD Employees;
Peace Officers Research Association of California; Public
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Employees Union, Local #1; Riverside Sheriffs' Association;
San Bernardino Public Employees Association; San Luis
Obispo County Employees Association; Santa Rosa City
Employees Association; Western States Council of Sheet
Metal Workers.
Opposition : Association of California Cities - Orange
County; City and County of San Francisco.