BILL ANALYSIS                                                                                                                                                                                                    

          Jim Beall, Chair          HEARING DATE:  January 13, 2014
          SB 673 (DeSaulnier)    as amended   1/06/14   FISCAL:  NO


           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.

           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  


               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  


               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  

           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  


            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  


            Board of Supervisors, Contra Costa County, Sponsor
            Contra Costa County Employees Retirement Association  
             (CCCERA), Co-Sponsor AFSCME Local 2700
            International Federation of Professional & Technical  
             Engineers (IFPTE), Local 21

           4)OPPOSITION  :

            None on file.


          Glenn A. Miles
          Date:  1/08/14                                          Page