BILL ANALYSIS Ó SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 54 Jim Beall, Chair HEARING DATE: February 11, 2013 SB 54 (Hancock) as amended 2/06/13 FISCAL: NO RETIREMENT: COUNTY EMPLOYEES HISTORY : Sponsor: Alameda County Other legislation: AB 340 (Furutani) Chapter 296, Statutes of 2012 SUMMARY : SB 54 would authorize Alameda County to provide a 2% at 65 retirement benefit formula for new employees covered by a MOU adopted on or before December 31, 2012. URGENCY BILL . BACKGROUND AND ANALYSIS : 1) Existing law : a) establishes the Alameda County Employees' Retirement Association (ACERA), a public retirement system governed by the County Employee's Retirement Law of 1937 ('37 Act). b) provides that all employees of the employer who are in the same retirement classification (such as "general" members) receive the same retirement benefit plan. c) requires substantive changes to public retirement systems in California pursuant to the Public Employee's Pension Reform Act of 2013 (PEPRA), including to those systems established under the '37 Act county retirement law. d) makes reforms pursuant to PEPRA, including that California public retirement systems offer a 2% at 62 retirement benefit formula to new miscellaneous (or general) members as of January 1, 2013, in lieu of prior Glenn A. Miles Date: 2/06/13 Page 1 existing retirement benefit formulas. e) authorizes a limited exception to allow public employers to provide a defined benefit pension plan other than the PEPRA plan to new members on or after January 1, 2013, but only if the alternative plan has a lower retirement benefit formula and lower normal cost than PEPRA and is approved by the Legislature after being bargained between employer and employee representatives. 2) This bill : a) would authorize Alameda County, subject to a MOU approved prior to December 31, 2012, to provide a different retirement formula in lieu of the PEPRA formula. The formula would provide a retirement benefit of approximately 2% at 65 for new members after a resolution approving the formula is passed by the Board of Supervisors. b) would permit Alameda County to provide a different retirement benefit formula to different bargaining units within the general members retirement class. Thus, some employees could have a new 2% at 65 formula while other employees in the same class that had not agreed to the formula would have PEPRA's 2% at 62 formula. c) requires employees subject to the 2% at 65 formula to be subject to all other requirements of PEPRA, including the cap on pensionable compensation and the 3-year final compensation factor. d) is an URGENCY BILL . COMMENTS : 1) Proposed Author's Amendments : The committee is informed that the author will offer Glenn A. Miles Date: 2/06/13 Page 2 amendments to remove provisions of SB 54 that would permit providing retirement benefits by bargaining unit. Under current law, retirement benefits are generally required to be provided by member classification not by bargaining unit. The proposed amendments would conform to current law. 2) Arguments in Support : According to Alameda County's representative, SB 54 "represents the culmination of contract negotiations between Alameda County and SEIU 1021." SEIU Local 1021 states that SB 54 "will save money for county taxpayers and will strengthen the (Alameda County) pension system." CSAC notes that "SB 54 is the product of local employees coming together with Alameda County to achieve savings that will protect local jobs and services." 3) SUPPORT : Alameda County (Sponsor) California State Association of Counties (CSAC) Service Employees International Union, Local 1021 (SEIU) 4) OPPOSITION : None to date ##### Glenn A. Miles Date: 2/06/13 Page 3