BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 673| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 673 Author: DeSaulnier (D) Amended: 1/23/14 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. Senate Floor Amendments of 1/23/14 correct a minor typographical error. ANALYSIS : Existing law: CONTINUED SB 673 Page 2 1. Establishes the County Employees Retirement Law of 1937 (CERL or '37 Act), which governs 20 independent county retirement associations, including CCCERA. 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. CONTINUED SB 673 Page 3 2. Clarifies that System employees and other county employees who have prior service with Contra Costa 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. 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 CONTINUED SB 673 Page 4 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. 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. CONTINUED SB 673 Page 5 The Contra Costa County Board of Supervisors 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." JL:nl 1/23/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED