BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, 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 30, 2013
Consultant: Maureen Ortiz
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
AB 822 (Hall)
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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.