BILL ANALYSIS Ó SB 39 Page 1 SENATE THIRD READING SB 39 (De León) As Amended September 10, 2013 2/3 vote. Urgency SENATE VOTE :Vote not relevant JUDICIARY 10-0 -------------------------------------- |Ayes:|Wieckowski, Wagner, | | | |Alejo, Chau, Dickinson, | | | |Garcia, Gorell, | | | |Maienschein, Muratsuchi, | | | |Stone | | | | | | -------------------------------------- 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 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 SB 39 Page 2 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 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. 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: SB 39 Page 3 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. FISCAL EFFECT : None 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 California 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 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. 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 SB 39 Page 4 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 which the officer may be entitled under that system. 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 SB 39 Page 5 on that date, and any claim commenced after that date. The bill is an urgency measure to take effect immediately. Analysis Prepared by : Anthony Lew and Kevin Baker/ JUD. / (916) 319-2334 FN: 0002774