BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 673
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          SB 673 (DeSaulnier)
          As Amended January 23, 2014
          Majority vote 

           SENATE VOTE  :34-0  
           PUBLIC EMPLOYEES    7-0                                         
          |Ayes:|Bonta, Allen, Harkey,     |     |                          |
          |     |Jones-Sawyer, Rendon,     |     |                          |
          |     |Ridley-Thomas, Wieckowski |     |                          |
          |     |                          |     |                          |
           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 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 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  
            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).


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          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.

          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 County 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.


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

          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 the  
          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 Board.  Under existing law, the 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 Contra  
          Costa Board of Supervisors despite receiving direction from the  
          Board to do so since the Board had not authorized reductions for  
          retirement system employees.  Additionally, the  
          Auditor-Controller indicated that issuing full pay warrants to  


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          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  
          staff serving at CCCERA" resulting in a lawsuit filed by CCCERA  
          against Contra Costa 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, "This bill will resolve a legal dispute between  
          CCCERA and Contra Costa 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."

          There is no opposition on file.

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

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