BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 673
                                                                  Page  1

          Date of Hearing:   June 25, 2014

                                  Rob Bonta, Chair
                 SB 673 (DeSaulnier) - As Amended:  January 23, 2014

           SENATE VOTE  :   34-0
          SUBJECT  :   County employees' retirement: Contra Costa County.

           SUMMARY  :   Makes the Contra Costa County retirement system  
          (System) an independent, public employer district within the  
          Contra Costa County Employees Retirement Association (CCCERA)  
          and the statutory employer for System employees.  Specifically,  
           this bill  :

          1)Establishes that the System is an independent public agency  
            "district" under County Employees Retirement Law of 1937 (CERL  
            or '37 Act) 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 CCCERA Board of Retirement (the Board) and set forth in a  
            memorandum of understanding (MOU) with recognized employee  

          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  
            Myers-Milias-Brown Act (MMBA) do apply.  As determined by the  
            Board, the CCCERA retirement fund will bear expenses related  
            to System employees' compensation as specified.


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          5)Requires the System to retain existing non-probationary  
            employees who were covered by a 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 will retain employees based on seniority within job  

          6)Provides that retained employees are 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  

          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 are those previously established by the  
            applicable MOU with the county.

           EXISTING LAW  : 

          1)Establishes CERL, 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  

          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,  


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            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  

          6)Provides, under the MMBA, for the administration and  
            resolution of labor relations between employees of local  
            public agencies and their respective public employers.

           FISCAL EFFECT  :   Unknown.  This bill is keyed non-fiscal by  
          Legislative Counsel.

           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  
          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.

          According to the author, "administrative issues continued to  
          arise concerning terms and conditions of employment for the  


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          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  
          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 states that "This bill will resolve a legal dispute  
          between CCCERA and the County.  CCCERA, the County's Board of  
          Supervisors, and AFSCME Local 2700, which represents public  
          employees in Contra Costa County, all support the bill because  
          it will resolve the outstanding legal issues and serves the best  
          interest of the workers."


          Contra Costa County Board of Supervisors (Co-Sponsor)
          Contra Costa County Employees Retirement Association  
          American Federation of State, County and Municipal Employees
          California State Firefighters' Association 
          International Federation of Professional and Technical Engineers  
          Local 21
          None on file

           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)