BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1222|
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THIRD READING
Bill No: AB 1222
Author: Bloom (D)
Amended: 9/4/13 in Senate
Vote: 27 - Urgency
PRIOR ASSEMBLY VOTES NOT RELEVANT
SENATE PUBLIC EMPLOYMENT & RETIRE. COMMITTEE : 4-0, 9/6/13
AYES: Beall, Block, Gaines, Yee
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : 5-1, 9/6/13
(ROLL CALL NOT AVAILABLE)
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Public employees retirement: collective
bargaining: transit workers: transportation
SOURCE : Author
DIGEST : This bill exempts certain public transit workers from
the requirements of the Public Employees Pension Reform Act of
2013 (PEPRA) for a specified period of time pending a ruling
from the federal district court, and authorizes cash flow
loans-totaling up to $26 million-to local mass transit
providers.
ANALYSIS :
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Existing federal law:
1. Protects the collective bargaining rights of specified
transit workers employed in certain transit agencies and
districts that were, mostly in the 1960's through the 1970's,
converted from private to public agencies. (Many such
agencies are now included in California Public Employees'
Retirement System (CalPERS), 1937 Act, or other public
retirement systems and plans.)
2. Requires, under Section 13(c) of the Federal Transit Law,
that these employee protections, commonly referred to as
"protective arrangements" or "Section 13(c) arrangements"
must be certified by the United States Department of Labor
(US DOL) and in place before federal transit funds can be
released to a mass transit employer subject to the Federal
Transit Law.
Section 13(c) requires, among other things, the continuation
of collective bargaining rights, and protection of transit
employees' wages, working conditions, pension benefits,
seniority, vacation, sick and personal leave, travel passes,
and other conditions of employment.
3. Allows the US DOL to determine if the collective bargaining
rights of an employee group protected under a 13(c)
arrangement have been impaired, and if so determined, to stop
the flow of federal transportation funding until such time as
the those rights have been restored.
Existing state law:
1. Creates comprehensive public employee pension reform through
enactment of PEPRA (and related statutory changes) that apply
to all public employers (including public transit agencies)
and public pension plans on and after January 1, 2013,
excluding the University of California and charter cities and
counties that do not participate in a retirement system
governed by state statute.
2. Under PEPRA, changed the retirement benefit plans that may
be offered to new public employees, including:
A. Establishing uniform retirement formulas, including a
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2% at age 62 formula for non-safety workers;
B. Requiring a three-year final compensation period for
determining a pension;
C. Requiring employee member contributions equal to 50%
of the normal cost of the employee's benefit plan;
D. Capping the amount of compensation that can count
toward a pension (currently approximately $113,000); and
E. Restricting the pay items that may be included in
pensionable compensation.
1. Protects the vested benefits of workers employed prior to
the implementation of PEPRA and allows public workers to
collectively bargain over wages, working conditions, and the
impact of changes to their wages and working conditions.
2. Specifies, with some exceptions, that the PEPRA requirements
(including those listed above) are applicable to new
retirement plan members who first become members on and after
January 1, 2013.
This bill:
1. Makes an exemption to PEPRA for employees who are covered by
13(c) arrangements until either:
A. A federal district court rules that the U.S. Secretary
of Labor (or his/her designee) erred in determining that
application of PEPRA precludes certification of federal
transit funding; or
B. January 1, 2015, whichever is sooner.
1. Specifies that if the federal district court upholds the
determination of the U.S. Secretary of Labor (or his/her
designee) that application of PEPRA precludes certification
of federal transit funding, then PEPRA shall not apply to an
employee protected under a 13(c) arrangement.
2. Does not exempt employees of a transit agency who are not
protected under Section 13(c).
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3. Authorizes the Director of Finance, in coordination with the
State Controller, to provide cash flow loans-totaling up to
$26 million-from monies in the Public Transportation Account
in the State Transportation Fund to local mass transit
providers upon their request to the Director, as specified.
4. Provides a system for repayment of the loans, with interest,
under the following circumstances, as specified:
A. The federal district court determines that the U.S.
Secretary of Labor erred in its determination to decertify
federal funding.
B. The U.S. Secretary of Labor provides certification
that results in the receipt of funds.
C. By not later than January 1, 2019, if neither of the
above contingencies have occurred.
1. States that a cash flow loan, as authorized in this bill,
does not constitute a budgetary expenditure and that the loan
or repayment of the loan shall not affect the budgetary
reserve.
2. States that this is an urgency statute, necessary to
preserve funding for essential infrastructure projects while
balancing the need to control the costs of pension benefits.
Background
Last year the state adopted PEPRA, which became effective on
January 1, 2013. Since that time, labor unions representing
certain public transit employees have asserted to the US DOL
that PEPRA impairs pension benefits contained in existing
collective bargaining agreements and restricts collective
bargaining rights, in violation of the protections in Section
13(c) of the Federal Transit Act.
In response, the US DOL has withheld certification of federal
grants to California transit agencies.
In response to the US DOL, the Secretary of the California Labor
and Workforce Development Agency outlined why he believes PEPRA
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does not violate the goals and requirements of Section 13(c),
citing the belief that PEPRA modifies, prospectively, certain
aspects of the defined benefit pension plan than can be offered
by a public employer while retaining the ability of current and
future employees to engage in good faith collective bargaining.
According to the press release on August 4, 2013 by Governor
Jerry Brown:
Federal transit money creates jobs and this legislation keeps
those funds flowing while allowing the state to defend in
court our landmark pension reforms.
This morning, the U.S. Department of Labor notified the
Sacramento Regional Transit District that it is refusing to
certify millions of dollars in transit grants to the district
because it asserts that the provisions of the California
Public Employee Pension Reform Act of 2013 (PEPRA) are
incompatible with federal labor law.
The proposed legislation will temporarily exempt local
agencies' transit workers from PEPRA, but preserves the
state's ability to fight for the pension reform law in court.
The legislation also creates a $26 million state loan program
to assist transit operators, like Sacramento Regional Transit,
that are at risk of losing federal transit grants.
As stated by the author:
Recently, the US Department of Labor (US DOL) notified the
Sacramento Regional Transit District that it is refusing to
certify millions of dollars in transit grants to the district
because it asserts that the provisions of the California
Public Employee Pension Reform Act of 2013 (PEPRA) are
incompatible with federal labor law.
If this situation is not addressed by the end of this
legislative year, September 13, 2013, the US DOL could begin
notifying other transit authorities across the state that they
will also be decertified and no longer be able to receive
federal grants for projects.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee:
One-time start-up administrative costs of approximately
$109,000 to CalPERS and ongoing $90,000 to establish a
process for employers to provide notification of which
employees will be exempted from PEPRA, and to administer that
enrollment appropriately.
An estimate of actuarial costs/savings from exempting these
employees from PEPRA is not available as it is not known how
many employees will be affected at this time.
Loans of up to $26 million from the State Transportation
Fund to local mass transit providers, to be repaid, as
specified. This bill requires the loans to be repaid with
interest, but allows the Director of Finance to waive all
interest charges.
SUPPORT : (Verified 9/6/13)
AFSCME, AFL-CIO
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation
California Teamsters Public Affairs Council
California Transit Association
Peninsula Corridor Joint Powers Board
Riverside Transit Agency
Sacramento Regional Transit
Sacramento Area Council of Governments
San Francisco Bay Area Rapid Transit District
San Joaquin Regional Transit District
San Mateo County Transit District
San Mateo County Transportation Authority
Santa Cruz Metropolitan Transit District
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
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Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Torres, Wagner, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
JL:k 9/6/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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