BILL ANALYSIS                                                                                                                                                                                                    



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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