California Legislature—2015–16 Regular Session

Assembly Constitutional AmendmentNo. 3


Introduced by Assembly Member Gallagher

February 26, 2015


Assembly Constitutional Amendment No. 3—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending and adding subdivision (h) of Section 17 of Article XVI thereof, relating to public employees’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

ACA 3, as introduced, Gallagher. Public employees’ retirement.

Existing statutory law establishes various public agency retirement systems, including the Public Employees’ Retirement System, the State Teachers’ Retirement System, the Judges’ Retirement System II, and various county retirement systems pursuant to the County Employees Retirement Law of 1937, among others, and these systems provide defined pension benefits to public employees based on age, service credit, and amount of final compensation. The California Constitution permits a city or county to adopt a charter for purposes of its governance that supersedes general laws of the state in regard to specified subjects, including compensation of city or county employees. The California Constitution establishes the University of California as a public trust with full powers of organization and government, subject only to specified limitations. Under their respective independent constitutional authority, charter cities and counties and the University of California may establish retirement systems. The California Public Employees Pension Reform Act of 2013 (PEPRA) generally requires the retirement systems to which it applies to modify their provisions to conform with its requirements. PEPRA excepts from its provisions retirement systems established by charter cities and counties and the University of California. PEPRA requires that any enhancement to a public employee’s retirement formula or retirement benefit adopted on or after January 1, 2013, apply only to service performed on or after the operative date of the enhancement and prohibits its application to service performed prior to that date.

This measure would require, with respect to any public retirement systems, that any enhancement to a public employee’s retirement formula or retirement benefit, adopted on or after the measure’s effective date, apply only to service performed on and after the operative date of the enhancement and shall not be applied to any service performed prior to the operative date of the change. The measure would specify how changes in membership classification or changes in employment are to be applied in this context. The measure would provide that specified cost-of-living adjustments are not enhancements of retirement benefits.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

P2    1Resolved by the Assembly, the Senate concurring, That the
2Legislature of the State of California at its 2015-16 Regular
3Session commencing on the first day of December, two-thirds of
4the membership of each house concurring, hereby proposes to the
5people of the State of California, that the Constitution of the State
6be amended as follows:

7

First--  

That subdivision (h) of Section 17 of Article XVI
8thereof is amended to read:

9

Sec. 17.  

begin delete(h)end deletebegin deleteend deletebegin insert(i)end insertbegin insertend insert As used in this section, the term ‛retirement
10begin delete board‛end deletebegin insert boardend insertbegin insertend insert shall mean the board of administration, board of
11trustees, board of directors, or other governing body or board of
12a public employees’ pension or retirement system; provided,
13however, that the term ‛retirementbegin delete board‛end deletebegin insert boardend insertbegin insertend insert shall not be
14interpreted to mean or include a governing body or board created
15after July 1, 1991 which does not administer pension or retirement
16benefits, or the elected legislative body of a jurisdiction which
17employs participants in a public employees’ pension or retirement
18system.

19

Second--  

That subdivision (h) is added to Section 17 of Article
20XVI thereof, to read:

21

Sec. 17.  

(h) (1) Any enhancement to a public employee’s
22retirement formula or retirement benefit, adopted on or after the
P3    1effective date of this subdivision, shall apply only to service
2performed on and after the operative date of the enhancement and
3shall not be applied to any service performed prior to the operative
4date of the enhancement.

5(2) If a change to a member’s retirement membership
6classification or a change in employment results in an enhancement
7in the retirement formula or retirement benefit applicable to that
8member, that enhancement shall apply only to service performed
9on or after the operative date of the change and shall not be applied
10to any service performed prior to the operative date of the change.

11(3) For purposes of this subdivision “operative date” in a
12collective bargaining agreement means one of the following:

13(A) The date that the agreement is signed by the parties.

14(B) A date agreed to by the parties that will occur after the date
15that the agreement is signed by the parties.

16(C) A date designated by the parties that occurred prior to the
17date the agreement was signed if the most recent collective
18bargaining contract was expired at the time of the agreement and
19the date designated is not earlier than 12 months prior to the date
20of the agreement or the day after the last day of the expired
21bargaining contract, whichever occurred later.

22(4) For purposes of this section, an increase to a retiree’s annual
23cost-of-living adjustment within existing statutory limits shall not
24be considered to be an enhancement to a retirement benefit.



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