BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 1783 (Jones-Sawyer) - Public Transit Employees
Amended: August 25, 2014 Policy Vote: PE&R 3-0
Urgency: Yes Mandate: No
Hearing Date: August 28, 2014
Consultant: Maureen Ortiz
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: AB 1783 extends the exemption on certain public
transit workers from the requirements of the Public Employees'
Pension Reform Act (PEPRA) until January 1, 2016, or earlier
contingent on specified events.
Fiscal Impact:
Annual administrative costs of $90,000 to CalPERS (Special
Fund)
Unknown loss of savings to local employers (Local Fund)
Administrative costs to CalPERS could be higher depending on the
number of exempt transit workers who continue to be hired after
January 1, 2013, and if the exemptions to the PEPRA are
determined to include the Additional Retirement Service Credit
(airtime) or other benefits reduced by the enactment of PEPRA.
Any loss of savings to employers will be dependent on the number
of affected transit workers as well as the difference between
the existing retirement benefits provided and the savings that
would result from the enactment of PEPRA retirement benefits.
Background: Existing Federal Law does the following:
a) 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 CalPERS, 1937 Act, or
other public retirement systems and plans.)
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b) 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.
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.
c) 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 those rights have been restored.
The Public Employees' Pension Reform Act became effective on
January 1, 2013 and applies 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.
Since the enactment of PEPRA, 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 action, 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 that can be offered by a
public employer while retaining the ability of current and
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future employees to engage in good faith collective bargaining.
The case is still pending and is unlikely to be resolved in the
next few months. Meanwhile, federal transit monies have been
allowed to flow.
Proposed Law: AB 1783 would continue to exempt certain public
transit workers from the requirements of the Public Employees'
Pension Reform Act of 2013 until January 1, 2016, pending a
ruling from the federal district court with regard to whether or
not the implementation of PEPRA, as it relates to the affected
transit workers, justified the federal Secretary of Labor's
determination in 2013 that the implementation of PEPRA precluded
certification of certain transit projects and related federal
funding.
AB 1783 also contains provisions to prevent chaptering out
problems with SB 1251 (Huff).
Related Legislation: AB 1222 (Bloom), Chapter 296, Statutes of
2012 exempted public transit workers from the requirements of
the Public Employees' Pension Reform Act until January 1, 2015.
Staff Comments: Last year, pursuant to AB 1222, new public
transit workers that were hired after January 1, 2013 were
provided an exemption to PEPRA until January 1, 2015 pending a
U. S. Department of Labor's determination on whether the
implementation of PEPRA precluded certification of certain
transit projects and related federal funding.
To the extent a public agency has employees that are exempted
from PEPRA, and as a result, those employees receive higher
retirement benefits, then that agency's potential savings due to
PEPRA will be reduced. However, the amount of this loss of
savings will depend on the number of employees who will now be
exempted from the provisions of PEPRA.
AB 1783 will continue to exempt public transit workers from the
provisions of PEPRA pending the final determination by the
federal district courts. It will provide additional time to
resolve apparent conflicts between the enactment of the
California Public Employees' Pension Reform Act in 2012 and
federal transit law that assures the rights of transit employees
to collectively bargain. The bill will ensure that millions of
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dollars in federal grants to local transit agencies will not be
jeopardized while the USDOL determination is pending.