BILL ANALYSIS Ó
AB 1222
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1222 (Bloom and Dickinson)
As Amended September 4, 2013
2/3 vote. Urgency
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|ASSEMBLY: | |(May 9, 2013) |SENATE: |32-6 |(September 6, |
| | | | | |2013) |
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(vote not relevant)
Original Committee Reference: REV. & TAX.
SUMMARY : 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 authorize cashflow loans of up to
$26 million to local mass transit providers. Specifically, this
bill :
1)Makes an exemption to PEPRA for employees who are covered by
13(c) arrangements until either a federal district court rules
that the United States Secretary of Labor (or his or her
designee) erred in determining that application of PEPRA
precludes certification of federal transit funding or January
1, 2015, whichever is sooner.
2)Specifies that if the federal district court upholds the
determination of the United States Secretary of Labor (or his
or 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.
3)Does not exempt employees of a transit agency who are not
protected under Section 13(c).
4)Authorizes the Director of the Department of Finance, in
coordination with the State Controller, to provide cashflow
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.
5)Provides a system for repayment of the loans, with interest,
under the following circumstances, as specified:
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a) The federal district court determines that the US
Secretary of Labor erred in its determination to decertify
federal funding.
b) The US 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.
d) States that a cashflow 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.
e) 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.
The Senate amendments delete the Assembly version of the bill,
and instead exempt certain public transit workers from the
requirements of PEPRA for a specified period of time pending a
ruling from the federal district court, and authorize cashflow
loans of up to $26 million to local mass transit providers.
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 2%
at age 62 formula for non-safety workers;
b) Requiring a three-year final compensation period for
determining a pension;
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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.
3)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.
4)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.
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.
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 (USDOL)
and in place before federal transit funds can be released to a
mass transit employer subject to the Federal Transit Law.
3)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.
4)Allows the USDOL 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.
AB 1222
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FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)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.
2)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.
3)Loans of up to $26 million from the State Transportation Fund
to local mass transit providers, to be repaid according to
three different scenarios described under the "Proposed Law"
section of this analysis. AB 1222 requires the loans to be
repaid with interest, but allows the Director of Finance to
waive all interest charges.
COMMENTS : 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 USDOL 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 USDOL has withheld certification of federal
grants to California transit agencies.
In response to the USDOL, the Secretary of the California Labor
and Workforce Development Agency outlined why he believes PEPRA
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
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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.
According to the author, "Recently, the US Department of Labor
(USDOL) 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 USDOL 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."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN:
0002633