BILL ANALYSIS Ó
AB 1783
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1783 (Jones-Sawyer)
As Amended August 25, 2014
2/3 vote. Urgency
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|ASSEMBLY: |56-22|(May 28, 2014) |SENATE: | | |
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(vote not available)
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|COMMITTEE VOTE: |7-0 |(August 29, 2014) |RECOMMENDATION: |concur |
|(P.E., R. & | | | | |
|S.S.) | | | | |
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Original Committee Reference: P.E., R. & S.S.
SUMMARY : Continues to exempt certain public transit workers from
the requirements of the Public Employees' Pension Reform Act of
2013 (PEPRA) until January 1, 2016, or until a federal district
court rules that the United States (U.S.) Secretary of Labor (or
his or her designee) erred in determining that application of PEPRA
precludes certification of federal transit funding, whichever is
sooner.
The Senate amendments delete the Assembly version of the bill, and
instead:
1)Extend the date in provisions exempting certain public transit
workers from PEPRA, as specified, from January 1, 2015, to
January 1, 2016.
2)State that this is an urgency statute, necessary in order to
remain eligible for federal transportation funds that would be
forfeited if transit employees are not exempt from PEPRA.
3)Add double jointing language to prevent chaptering out issues
with SB 1251 (Huff) of the current legislative session.
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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.
2)Requires, under Federal Transit Law Section 13(c), 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.
3)Allows the USDOL to determine if the collective bargaining rights
of an employee group protected under a Section 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 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
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normal cost of the employee's benefit plan;
d) Capping the amount of compensation that can count toward a
pension; 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.
5)Makes an exemption to PEPRA for employees who are covered by
Section 13(c) arrangements until either:
a) 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
b) January 1, 2015, whichever is sooner.
6)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 Section 13(c) arrangement.
7)Does not exempt employees of a transit agency who are not
protected under Section 13(c).
FISCAL EFFECT : According to the Senate Appropriations Committee,
"Annual administrative costs of $90,000 to the California Public
Employees' Retirement System (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
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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."
COMMENTS : In 2012, the state adopted PEPRA, which became effective
on January 1, 2013. In 2013, labor unions representing public
transit employees began asserting 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, in 2013 the USDOL withheld certification of a federal
grant to the Sacramento Regional Transit District, which in turn
brought an action in federal court to challenge the USDOL
determination. That case is still pending and is unlikely to be
resolved in 2014.
While the case is ongoing, transit workers have been exempted from
PEPRA and federal transit monies have been allowed to flow.
According to the press release on August 4, 2013, by Governor Jerry
Brown in regard to AB 1222 (Bloom), Chapter 527, Statutes of 2013:
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.
According to supporters, "Last year, the US Department of Labor
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(USDOL) notified the Sacramento Regional Transit District that it
was refusing to certify millions of dollars in transit grants to
the district because it asserted that provisions of PEPRA are
incompatible with federal labor law. AB 1222 (Bloom), Chapter 527,
Statutes of 2013, granted a one-year exemption from PERPA for
certain transit employees covered under federal law.
"Data compiled by the California State Transportation Agency,
working with the Federal Transit Administration, indicates that
decertification would have resulted in the state's transit agencies
losing up to $1.6 billion last year, and we estimate a similar
amount could be lost this year if this exemption is not continued.
This potential loss threatens thousands of jobs throughout the
state, and would severely diminish the ability of local transit
systems to provide the mobility services utilized by millions of
Californians.
"AB 1783 extends the PEPRA exemption for transit employees covered
under the federal law until January 1, 2016. This is necessary
because the Sacramento Regional Transit District's legal action to
maintain PEPRA through a determination by a federal court is not
yet resolved, and likely will not be this calendar year. If the
court determines PEPRA is in compliance with what's known
colloquially as 'Section 13(c)' of the Federal Transit Act, then
the additional one-year exemption will sunset. On the other hand,
if the court says PEPRA is not in compliance, then the exemption
will become permanent."
There is no registered opposition to this bill.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0005596