BILL ANALYSIS Ó SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 673 Jim Beall, Chair HEARING DATE: January 13, 2014 SB 673 (DeSaulnier) as amended 1/06/14 FISCAL: NO 1937 ACT COUNTY RETIREMENT SYSTEM: CONTRA COSTA COUNTY HISTORY : Sponsor: Contra Costa County Board of Supervisors Other legislation: AB 1992 (Correa) Chapter 74, Statutes of 2002 SB 777 (Soto) Chapter 369, Statutes of 2006 SUMMARY : SB 673 makes the Contra Costa County retirement system (the System) an independent, public employer district within the Country Costa County Employees Retirement Association (CCCERA) and the statutory employer for System employees. The bill also provides that System employees are eligible for CCCERA membership. BACKGROUND AND ANALYSIS : 1)Existing law : a) establishes the County Employees Retirement Law of 1937 (CERL or '37 Act), which governs twenty independent county retirement associations, including the Contra Costa County Employees Retirement Association (CCCERA). b) defines specified districts formed under the law of the state, located wholly or partially within a county and states that these districts are public employers whose employees are eligible to participate in their respective '37 Act county retirement associations. c) provides both Orange and San Bernardino county retirement systems authority to be independent districts Glenn A. Miles Date: 1/08/14 Page 1 within their respective retirement associations and the statutory employer for purposes of determining their employees' compensation and benefits. d) provides that CCCERA retirement system employees are county employees subject to the county civil service or merit system rules adopted by the board of supervisors for the compensation of county officers and employees. e) pursuant to constitutional provisions and applicable case law, provides that retirement boards have plenary authority to administer their respective retirement systems and authorizes the CCCERA Board of Retirement to establish conditions of employment for county employees working at the System. f) under the Myers-Milias-Brown Act (MMBA), provides for the administration and resolution of labor relations between employees of local public agencies and their respective public employers. 2)This bill : a) establishes that the CCCERA retirement system (the System) is an independent public agency "district" under CERL rather than a division of Contra Costa County and clarifies that the CCCERA Board of Retirement (the Board) may appoint necessary personnel as specified. System employees will no longer be Contra Costa county employees but rather employees of the retirement system subject to terms and conditions of employment established by the Board and set forth in an MOU with recognized employee representatives. b) clarifies that System employees and other county employees who have prior service with the county and who are appointed to the System after it becomes an independent district retain their membership in CCCERA without interruption in service or loss of credit. c) provides that new System employees without prior eligible CCCERA service become CCCERA members on the first day of the calendar month following their entrance Glenn A. Miles Date: 1/08/14 Page 2 into service (i.e., hire date). d) provides that county civil service rules do not apply to System employees but that collective bargaining rules under MMBA do apply. As determined by the Board, the CCCERA retirement fund shall bear expenses related to System employees' compensation as specified. e) requires the System to retain existing non-probationary employees who were covered by an MOU with the county and worked at the retirement system for a 90-day transition period unless just cause or legitimate grounds exist to terminate or layoff the employees. If the System determines layoffs are necessary during the 90-day transition period, the System shall retain employees based on seniority within job classifications. f) provides that the terms and conditions for retained employees shall be subject to the terms and conditions established by the applicable MOUs between the county and the employees' recognized employee organization prior to the System's establishment as a district. g) requires the System to recognize the employee organizations that represented the retained employees in negotiations with the county and provides that initial terms and conditions for those employees shall be those previously established by the applicable MOU with the county. COMMENTS : 1) Background - Most '37 Act county retirement systems are county agencies and their employees are county employees. However, independent retirement boards have constitutional rights and duties to oversee the systems' administration. Some counties and retirement boards, by mutual agreement, have made their retirement systems independent districts within their applicable retirement association. Currently, the Orange County and San Bernardino County retirement systems both have statutory authority to be independent districts within their respective retirement associations. Glenn A. Miles Date: 1/08/14 Page 3 This bill would effectuate a settlement agreement to resolve a lawsuit over the role and conflicting responsibilities among the Contra Costa County Auditor-Controller, the Contra Costa Board of Supervisors, and the CCCERA Board of Retirement. Under existing law, the CCCERA Board has authority to establish compensation for retirement system employees, the Board of Supervisors has responsibility to establish civil service rules and enter MOUs for all county employees, and the Auditor-Controller provides payroll and oversight services. The Auditor-Controller would not issue pay warrants to CCCERA employees that did not reflect reductions from furloughs for county employees as required by the Board of Supervisors despite receiving direction from the CCCERA Board to do so since the CCCERA Board had not authorized reductions for retirement system employees. Additionally, the Auditor-Controller indicated that issuing full pay warrants to the CCCERA employees would cause Contra Costa County to violate MOUs that prohibited disparate treatment among employees in the same class. 2) Arguments in Support : According to the author, "administrative issues continued to arise concerning terms and conditions of employment for the staff serving at CCCERA" resulting in a lawsuit filed by CCCERA against the County and the Auditor-Controller. The sponsor states that "this case was resolved in 2013 through a court-approved settlement providing that the (retirement system) staff would be employed by the CCCERA directly instead of employed by the county and that the parties would jointly seek the legislation necessary to implement this transition." AFSCME Local 2700 states that "we believe the language and intent of the bill will serve the very best interests of our members and CCCERA, and will promote positive relations among ourselves, the County and CCCERA." 3)SUPPORT : Glenn A. Miles Date: 1/08/14 Page 4 Board of Supervisors, Contra Costa County, Sponsor Contra Costa County Employees Retirement Association (CCCERA), Co-Sponsor AFSCME Local 2700 4)OPPOSITION : None on file. ##### Glenn A. Miles Date: 1/08/14 Page 5