BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 822 (Hall) - Local Government Retirement Plans
          
          Amended: July 10, 2013          Policy Vote: E&CA 4-0, G&F 5-2
          Urgency: No                     Mandate: Yes
          Hearing Date: August 12, 2013                           
          Consultant: Maureen Ortiz       
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary:  AB 822 requires an actuarial summary statement to  
          be included in the sample ballot for any local ordinance or  
          measure that alters the retirement benefit plan of employees of  
          a local government entity.

          Fiscal Impact: 
          
              Unknown, likely minor, reimbursable mandate costs to local  
              governments for procuring actuarial statements, depending on  
              the frequency of qualified measures (General)
              Potentially $100,000 in reimbursable state mandate costs to  
              include the statement in the sample ballot (General)

          The sample ballot cost estimate would apply to each measure that  
          was placed on the ballot for each county.  

          Background:  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 the  
          future costs of changes in retirement benefits or other  
          post-employment benefits available at a public meeting at least  
          two weeks before the adoption of any changes in public  
          retirement plan benefits or other post-employment benefits, as  
          specified.

          Proposed Law:  AB 822 requires the governing body of a local  
          government entity to do the following whenever a local measure  
          qualifies for the ballot that proposes to alter, replace, or  








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          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 the future annual costs that will result  
               from the changes to the retirement plan proposed by the  
               measure at a public meeting held at least two weeks prior  
               to the election.
          AB 822 requires the county elections official to print the  
          actuary statement in the voter information portions of the  
          sample ballot preceding the arguments for and against the  
          measure.

          AB 822 additionally provides that if the entire text of the  
          measure is not printed in the ballot, nor in the voter  
          information portion of the sample ballot, there must 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."

          These requirements apply to any city, county (including charter  
          cities and counties), community college district, and special  
          districts. 
          
          Staff Comments:  The county elections officials estimate that  
          providing a 500 word summary in the sample ballot, including the  
          required translations and proofing expenses, would cost  
          approximately $100,000.  These costs could be less if the local  
          government opted to provide a separate summary statement which  
          the elections officials would include in the mailing.

          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  








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          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.   

          The Public Employee Post-Employment Benefits 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  
          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.