BILL ANALYSIS                                                                                                                                                                                                    



                                                                            



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          |SENATE RULES COMMITTEE            |                        SB 673|
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                                    THIRD READING


          Bill No:  SB 673
          Author:   DeSaulnier (D)
          Amended:  1/6/14
          Vote:     21

           
          PRIOR VOTES NOT RELEVANT

           SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM  :  5-0, 1/13/14
          AYES:  Beall, Walters, Block, Gaines, Yee


           SUBJECT  :    County employees retirement:  Contra Costa County

           SOURCE  :     Contra Costa County Board of Supervisors
                       Contra Costa County Employees Retirement  
                      Association 


           DIGEST  :    This bill makes the Contra Costa County retirement  
          system (System) an independent, public employer district within  
          the Country Costa County Employees Retirement Association  
          (CCCERA) and the statutory employer for System employees.  This  
          bill also provides that System employees are eligible for CCCERA  
          membership.

           ANALYSIS  :    

          Existing law:

           1. Establishes the County Employees Retirement Law of 1937  
             (CERL or '37 Act), which governs 20 independent county  
             retirement associations, including CCCERA. 
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           2. 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.

           3. Provides both Orange and San Bernardino county retirement  
             systems authority to be independent districts within their  
             respective retirement associations and the statutory employer  
             for purposes of determining their employees' compensation and  
             benefits.

           4. 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.

           5. 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 (the Board) to  
             establish conditions of employment for county employees  
             working at the System.

           6. Provides, under the Myers-Milias-Brown Act (MMBA), for the  
             administration and resolution of labor relations between  
             employees of local public agencies and their respective  
             public employers.

          This bill:

           1. Establishes that the System is an independent public agency  
             "district" under CERL rather than a division of Contra Costa  
             County and clarifies that 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 a  
             memorandum of understanding (MOU) with recognized employee  
             representatives.

           2. Clarifies that System employees and other county employees  
             who have prior service with Contra Costa County and who are  

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             appointed to the System after it becomes an independent  
             district retain their membership in CCCERA without  
             interruption in service or loss of credit.

           3. Provides that new System employees without prior eligible  
             CCCERA service become CCCERA members on the first day of the  
             calendar month following their entrance into service (i.e.,  
             hire date).

           4. 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.

           5. Requires the System to retain existing non-probationary  
             employees who were covered by an MOU with Contra Costa 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.

           6. Provides that the terms and conditions for retained  
             employees shall be subject to the terms and conditions  
             established by the applicable MOUs between Contra Costa  
             County and the employees' recognized employee organization  
             prior to the System's establishment as a district.

           7. 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
           
          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  

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          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.

          This bill effectuates 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  1/14/14)

          Board of Supervisors, Contra Costa County (co-source)
          Contra Costa County Employees Retirement Association (co-source)
          AFSCME, Local 2700
          International Federation of Professional and Technical  
          Engineers, Local 21


          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 Contra Costa County Board of Supervisors states that "this  
          case was resolved in 2013 through a court-approved settlement  

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          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."


          JL:nl  1/14/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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