BILL ANALYSIS Ó
SB 39
Page 1
Date of Hearing: September 11, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
SB 39 (de León) - As Amended: September 10, 2013
SENATE VOTE : Not Relevant
SUBJECT : LOCAL PUBLIC OFFICERS: RETIREMENT CLAIMS AND
LIABILITY
KEY ISSUE : SHOULD A LOCAL PUBLIC OFFICER CONVICTED OF A FELONY
FOR CONDUCT ARISING OUT OF OR IN THE PERFORMANCE OF HIS OR HER
OFFICIAL DUTIES - SUCH AS MISAPPROPRIATION OF PUBLIC FUNDS -
FORFEIT ANY CONTRACT RIGHT OR SIMILAR CLAIM FOR RETIREMENT
BENEFITS AGAINST HIS OR HER PUBLIC EMPLOYER, OTHER THAN THOSE
BENEFITS HE OR SHE IS ENTITLED TO UNDER THE APPLICABLE PUBLIC
RETIREMENT SYSTEM?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
According to the author, this bill is needed to ensure that
local public officers who are convicted of a felony in the
course of performing their official duties - such as
misappropriation of theft public funds bear appropriate
additional consequences for that illegal conduct - namely that
they forfeit any contract right or similar claim for retirement
or pension benefits against the public employer, other than
those accrued benefits that they may be entitled to under the
applicable public retirement system. Among other examples, the
bill is particularly needed, the author contends, in light of
several widely reported cases, including the Southern
Californian cities of Vernon and Bell, where local public
officers allegedly took actions to boost their compensation and
retirement or pension benefits and misappropriated local funds
for their own personal benefit, among other wrongdoing. The
loss of such claims is consistent with existing law which
provides for the forfeiture of public retirement system benefits
when a public official or employee is convicted of specified
felonies. It is also consistent with contract principles under
which one who is in breach of contract forfeits any benefits of
the contract as a consequence of the breach. This bill is
SB 39
Page 2
supported by the City of Vernon, among others, and has no known
opposition.
SUMMARY : Requires an elected or appointed local public officer,
as defined, to forfeit any contract or similar claim for
retirement or pension benefits, other than those accrued
benefits which he or she may be entitled to under the applicable
public retirement system, if he or she has been convicted of
specified felonies under state or federal law. Specifically,
this bill :
1)Provides that a local public officer, as defined, who is
convicted by a state or federal trial court of any felony
under state or federal law for conduct arising out of or in
the performance of his or her official duties shall forfeit
any contract right or other common law, statutory or
constitutional claim against a local public agency employer to
retirement or pension rights or benefits, however those
benefits may be characterized, including, but not limited to,
lost compensation, other than the accrued rights and benefits
to which he or she may be entitled under any public retirement
system in which he or she is a member.
2)Specifies that the forfeiture provided by this act shall be in
addition to and independent of any forfeiture of public
retirement system rights and benefits pursuant to Government
Code sections 7522.70, 7522.72 or 7522.74.
3)Defines "local public officer" to mean a person, either
elected or appointed, who exercised discretionary, executive
authority in his or her employment.
4)Requires the prosecuting agency and the local public officer,
upon conviction, to notify the public employer who employed
the local public officer at the time of the commission of the
felony within 60 days of the felony conviction regarding the
fact of conviction. Provides that the operation of this
section is not dependent upon the performance of the
notification obligations specified in this subdivision.
5)Finds and declares that local public agencies need protection
from disgraced and avaricious public officials who, following
conviction for crimes arising out of the performance of their
official duties, continue to seek unfair benefits at public
expense by asserting a claim that their former employers owe
SB 39
Page 3
them the value of pension benefits, including benefits that
the public retirement systems charged with administration of
those benefits have rightfully disallowed.
EXISTING LAW :
1)Provides that if an elected public officer after January 1,
2006 is convicted during or after holding office of any felony
involving accepting or giving, or offering to give, any bribe,
the embezzlement of public money, extortion or theft of public
money, perjury, or conspiracy to commit any of those crimes
arising directly out of his or her official duties as an
elected public officer, he or she shall forfeit all rights and
benefits under, and membership in, any public retirement
system in which he or she is a member, effective on the date
of final conviction. (Government Code Section 7522.70.)
2)Provides that if a public employee or a person elected or
appointed to public office is convicted by a state or federal
trial court of any felony under state or federal law for
conduct arising out of or in the performance of his or her
official duties, in pursuit of the office or appointment, or
in connection with obtaining salary, disability retirement,
service retirement, or other benefits, then the following
apply:
a) He or she shall not accrue further benefits in any
public retirement system in which he or she is a member,
effective on the date of the conviction.
b) He or she shall forfeit all rights and benefits earned
or accrued from the earliest date of the commission of the
felony to the date of conviction, inclusive. Further
requires the retirement benefits to remain forfeited
notwithstanding any reduction in sentence or expungement of
the conviction following the date of conviction, but those
retirement benefits attributable to service performed prior
to the date of the first commission of the felony for which
he or she was convicted shall not be forfeited.
(Government Code Sections 7522.72 and 7522.74. All further
references are to this code unless otherwise noted.)
3)Provides that a judge who pleads guilty or no contest or is
found guilty of a crime committed while holding judicial
office which is punishable as a felony under California or
SB 39
Page 4
federal law and which either involves moral turpitude under
that law or was committed in the course and scope of
performing the judge's duties, shall not receive any benefits
from the Judges' Retirement System, except that the amount of
his or her accumulated contributions shall be returned.
(Section 75033.2.)
4)Provides that on or after January 1, 2012, any contract
executed or renewed between a local agency and an officer or
employee of a local agency that provides paid leave salary
offered by the local agency to the officer or employee pending
an investigation shall require that any salary provided for
that purpose be fully reimbursed if the officer or employee is
convicted of a crime involving an abuse of his or her office
or position. (Section 53243.)
5)Provides that on or after January 1, 2012, any contract of
employment between an employee and a local agency employer
shall include a provision which provides that, regardless of
the term of the contract, if the contract is terminated, any
cash settlement related to the termination that an employee
may receive from the local agency shall be fully reimbursed to
the local agency if the employee is convicted of a crime
involving an abuse of his or her office or position. (Section
53243.2.)
COMMENTS : According to the author, this bill is needed to
ensure that local public officers who are convicted of a felony
in the course of performing their official duties - such as
theft, fraud and misappropriation of public funds - bear
appropriate additional consequences for that illegal conduct by
forfeiting any contract right or similar claim for retirement or
pension benefits against the public employer, other than those
accrued benefits that they may be entitled to under the
applicable public retirement system. Among other examples, the
bill is particularly needed, the author contends, in light of
several widely reported cases, including the Southern
Californian cities of Vernon and Bell, where local public
officers allegedly took actions to boost their compensation and
retirement or pension benefits and otherwise misused their
office for personal benefit, among other wrongdoing.
Some of these officials, such as Bruce Malkenhorst, the former
city manager of Vernon, and five former members of the Bell City
Council, were actually convicted of misappropriation and
SB 39
Page 5
corruption charges. In the wake of these events, CalPERS
administrators conducted investigations in which they determined
that these officials were not entitled to the hefty pension
amounts they claimed.
Forfeiture of Non-Statutory Retirement Benefit Claims Based On
Alleged Contracts Is Consistent With Existing Law. This bill
provides that a local public officer, as defined, who is
convicted by a state or federal trial court of any felony under
state or federal law for conduct arising out of or in the
performance of his or her official duties shall suffer the loss
of any alleged contract right or similar claim against a local
public agency employer to retirement or pension rights or
benefits, other than the accrued rights and benefits to which he
or she may be entitled under any public retirement system in
which he or she is a member. In other words, this bill
establishes an additional consequence for local public officials
who have been convicted of wrongdoing in the course of their
official duties. As a result, they shall forfeit any contract
or similar claim for retirement or pension benefits against the
public employer, however those benefits may be characterized,
including, but not limited to, lost compensation.
The loss of an asserted contract right to retirement benefits as
a penalty for conviction of a felony committed in the course of
a public officer's duties is consistent with existing law.
Public employees and public officials who are convicted of
specified felonies currently suffer loss of CalPERS and
analogous benefits that might otherwise be due under a public
retirement system. This bill would modestly expand that rule to
the loss of correlative contract and related claims that do not
relate to the public officer's membership in a public retirement
system. The forfeiture of such rights as a consequence for
wrongdoing in office is also consistent with contract principles
that provide for the loss of contract benefits when one is in
breach of contract, such as would unquestionably be true of a
public officer who commits a felony on the job.
Importantly, this bill does not attempt to strip or deny all
pension benefits to the public officer. The bill allows the
public officer to retain the accrued rights and benefits to
which he or she may be lawfully entitled to under the applicable
public retirement system, but requires the civil forfeiture of
any contract right or other claim to additional retirement or
pension rights or benefits outside of or beyond that amount to
SB 39
Page 6
which the officer may be entitled under that system.
Scope Of The Bill. The forfeiture provisions of this bill apply
only to "local public officers," which is defined as only those
persons, either elected or appointed, who exercised
discretionary, executive authority in their employment.
Accordingly, the bill does not apply to most public employees,
few of whom in any event are convicted of felonies arising out
of the performance of their official duties. In addition, the
bill applies to any claim filed prior to the effective date of
the act, and still pending on that date, and any claim commenced
after that date. The bill is an urgency measure to take effect
immediately.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Vernon
California City Management Foundation (CCMF)
Opposition
None on file
Analysis Prepared by : Anthony Lew and Kevin Baker/ JUD. /
(916) 319-2334