BILL ANALYSIS Ó
ACA 3
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Date of Hearing: June 24, 2015
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL
SECURITY
Rob Bonta, Chair
ACA 3
(Gallagher) - As Introduced February 26, 2015
SUBJECT: Public employees' retirement
SUMMARY: Places in the Constitution the current statutory
prohibition on applying any enhancement to a benefit formula or
retirement benefit to service performed prior to the operative
date of the enhancement. Specifically, this constitutional
amendment:
1)Specifies that any enhancement to a public employee's
retirement formula or retirement benefit only applies to
service performed on and after the operative date of the
enhancement.
2)Specifies that if a change in retirement membership
classification or employment results in an enhancement in the
retirement formula or retirement benefit, that enhancement
only applies to service performed on and after the operative
date of the change.
3)Defines "operative date" for purposes of these provisions.
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4)Provides that a retiree's annual cost-of-living increase,
within statutory boundaries, is not considered an enhancement
to a retirement benefit.
EXISTING LAW:
1)Creates comprehensive public employee pension reform through
enactment of the Public Employees' Pension Reform Act of 2013
(PEPRA) that apply to all public employers and public pension
plans on and after January 1, 2013, excluding the University
of California and charter cities and counties that do not
participate in a retirement system governed by state statute.
2)Requires, under PEPRA, that any enhancement to a benefit
formula or retirement benefit shall only be applicable to
service performed after the operative date of the enhancement.
3)Specifies that if a change in retirement membership
classification or employment results in an enhancement in the
retirement formula or retirement benefit, that enhancement
only applies to service performed on and after the operative
date of the change.
4)Clarifies that a retiree's annual cost-of-living increase,
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within statutory boundaries, is not considered to be an
enhancement to a retirement benefit.
FISCAL EFFECT: Unknown.
COMMENTS: According to the author, "ACA 3 would put the current
prohibition on retroactive benefit increases for public
employee's retirement formulas into the State Constitution.
This will help protect taxpayers from undue financial
liabilities, as putting this provision in the Constitution will
make it more difficult to overturn in the future."
The author concludes, "Providing accurate and sufficient
benefits to retirees is crucial. Although retroactive benefit
enhancements may seem like a good idea in the short-run, the
long-term impact on California's economy would be extremely
detrimental, eventually harming those it seeks to help. ACA 3
will assure that future generations are protected from such
systems by solidifying the prohibition on retroactive benefit
increases through a constitutional amendment."
Opponents point out that the California Constitution grants a
city or county the right to adopt a charter, and said charter
supersedes state general laws in relation to the compensation of
city or county employees. Opponents state, "ACA 3 will ignore
rights granted under the Constitution that have worked for the
last 75 or more years and will interject changes in retirement
membership classifications or even employment
compensation?Amending the Constitution undermines the system's
independent tradition and the original rights to supersede the
general laws of the state."
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Opponents also state, "ACA 3 also circumvents the collective
bargaining process, where employees and employers can negotiate
and discuss wages, working conditions, and benefits. The
collective bargaining process work because improved
labor-management relationship result in employee loyalty that
reduces turnover, and creates long term stability to the
workforce. This benefits employers as much as employees because
they can better reap the return on investments in training and
experience spent on the employee."
REGISTERED SUPPORT / OPPOSITION:
Support
California Pension Reform
California Republican Taxpayers' Association
Howard Jarvis Taxpayers Association
Kern Citizens for Sustainable Government
Opposition
American Federation of State, County and Municipal Employees
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American Federation of State, County and Municipal Employees,
Local 685
Association for Los Angeles Deputy Sheriffs
Association of Deputy District Attorneys
California Federation of Teachers
California School Employees Association
California Professional Firefighters
Glendale City Employees Association
Los Angeles County Probation Officers Union
Los Angeles Police Protective League
Organization of SMUD Employees Association
Riverside Sheriffs Association
San Bernardino Public Employees Association
San Diego County court Employees Association
San Luis Obispo County Employees Association
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Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)
319-3957