BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON
          PUBLIC EMPLOYMENT AND RETIREMENT
                               Dr. Richard Pan, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 868          Hearing Date:     6/08/15
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          |Author:    |Obernolte                                            |
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          |Version:   |2/26/15    As introduced                             |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Glenn Miles                                          |
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          Subject:  Public Employees' Retirement System:  contracting  
          agencies:  transfer of membership

            SOURCE:  Big Bear Fire Authority

            ASSEMBLY VOTES:
          
          
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          |Assembly Floor:                 |77 - 0                          |
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          |Assembly Appropriations         |17 - 0                          |
          |Committee:                      |                                |
          |--------------------------------+--------------------------------|
          |Assembly Public Employees,      |7 - 0                           |
          |Retirement/Soc Sec Committee:   |                                |
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           DIGEST:    This bill authorizes the California Public Employees'  
          Retirement System (CalPERS) and the San Bernardino County  
          Employees Retirement System (SBCERS) to agree to transfer the  
          service credit and employee and employer assets from CalPERS to  
          SBCERS on behalf of local public agency and state employees who  
          are transferred to SBCERS covered employment.

          ANALYSIS:
          
          Existing law:
          







          AB 868 (Obernolte)                                 Page 2 of ?
          
          
          1)Authorizes CalPERS and a county retirement system established  
            under the County Employees Retirement Law of 1937 ('37 Act)  
            for the counties of Los Angeles, Kern, or Orange to make an  
            agreement to transfer assets and service credit to the '37 Act  
            system from CalPERS for CalPERS members whose public agency or  
            state employer transfers their firefighting or law enforcement  
            functions and positions to the county and terminates its  
            contract with CalPERS governing the transferred members.

          2)Provides that the agreement between CalPERS and the '37 Act  
            system shall contain provisions necessary to protect CalPERS,  
            including provisions for determination of the amount, time,  
            and manner of transfer of cash or securities, or both, to be  
            transferred to the county system representing the actuarial  
            value of the interests in the retirement fund of the public  
            agency or the state and the transferred employees by reason of  
            accumulated contributions credited to that public agency or  
            the state and the transferred employees.

          3)Requires that all liability of CalPERS with respect to the  
            transferred members under the agreement shall cease and shall  
            become the liability of the respective '37 Act system as of  
            the date of transfer specified in the agreement.  Liability of  
            the '37 Act system shall be for payment of benefits to  
            transferred employees in accordance with '37 Act requirements.

          4)Provides that the transferred members shall become members of  
            the '37 Act system upon entering county service and shall be  
            entitled to service credit in the county retirement system for  
            the service for which the person was entitled to credit in  
            CalPERS at the time of cessation of employment by the public  
            agency or the state, without necessity of payment of any  
            additional contributions in respect to that service, as  
            specified.

          This bill:

          1)Authorizes CalPERS to enter into an agreement with the Board  
            of Retirement for the San Bernardino County Employees'  
            Retirement Association (SBCERA) for the transfer of service  
            credit and associated assets and liabilities for specified  
            safety employees.  The decision to enter into the agreement  
            must be agreed to by both CalPERS and SBCERA.

          2)Permits such an agreement for safety employees of a public  








          AB 868 (Obernolte)                                 Page 3 of ?
          
          
            agency or the state who have ceased to be employed by that  
            public agency or the state as a result of the transfer of  
            firefighting or law enforcement functions to a local agency  
            that participates in SBCERA.

          3)Specifies that the agreement must provide for the termination  
            of participation in CalPERS for the public agency's  
            transferring employees.

          4)Specifies that public agencies must have contracted with  
            CalPERS for at least five years to be eligible.

          5)Empowers CalPERS to require provisions it finds necessary in  
            the agreement related to the transfer of assets and  
            accumulated contributions and benefits subject to an  
            outstanding domestic relations order or benefits subject to a  
            lien.

          6)Specifies that the agreement applies only to employees of the  
            public agency on the effective date of the agreement.

          7)Specifies that once transferred from CalPERS to the county  
            system, SBCERA would assume all the liability for the payment  
            of benefits for the transferred members.

          8)Specifies that the transferred members would have the same  
            rights and limitations as if they had been members of the  
            county retirement system during their membership in CalPERS.

          Background

          According to the bill's sponsor,

               In June of 2012, the boards of the Big Bear City Community  
               Services District (City) and the Big Bear Lake Fire  
               Protection District (Lake) acted to establish a Joint  
               Powers Authority creating the Big Bear Fire Authority (Fire  
               Authority).  Since that time, the fire department  
               administration has been consolidated, jurisdictional  
               boundaries have been removed, and standard operational  
               policies and procedures have been implemented.  The Fire  
               Authority is now set to manage its own financial  
               responsibilities and is now functioning in almost every  
               aspect as one department.









          AB 868 (Obernolte)                                 Page 4 of ?
          
          
               Currently, all employees remain employed by their  
               respective agencies.  Under those employment arrangements,  
               employees of the City are enrolled in a CalPERS retirement  
               plan and employees of the Lake are enrolled in a SBCERA  
               retirement plan.  Under current law, however, if the Fire  
               Authority chooses to contract with SBCERA, the City safety  
               employees (currently in CalPERS) cannot transfer their  
               service credit to SBCERA without legislative approval.

          Current law allows for a CalPERS safety employee's service  
          credit to be transferred to a county retirement system in cases  
          where firefighting or law enforcement functions are transferred  
          from an agency participating in CalPERS to an agency  
          participating in a county retirement system.  Currently,  
          however, this is only applicable to the counties of Los Angeles,  
          Kern, and Orange.  AB 868 would add San Bernardino County to  
          this group.




          Prior/Related Legislation
          
          AB 1683 (Assembly PER&SS Committee, Chapter 11, Statutes of  
          2001) added Kern County to the list of counties eligible to  
          transfer safety/firefighter members from CalPERS to their '37  
          Act county system.

          AB 355 (Morrissey, Chapter 832, Statutes of 1997) provided for  
          the transfer of assets and liabilities from CalPERS to the '37  
          Act system in Orange County related to the 1980 shift of  
          firefighting services previously provided by the State (CDF) to  
          Orange County.

          AB 2819 (Epple, Chapter 419, Statutes of 1990) authorized the  
          transfer, from CalPERS to the '37 Act system in Los Angeles, of  
          assets and liabilities associated with employees of numerous  
          cities that had previously contracted with CalPERS but then  
          transferred their fire services to LA County.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


          SUPPORT:  








          AB 868 (Obernolte)                                 Page 5 of ?
          
          

          Big Bear Fire Authority (source)
          Big Bear City Community Services District
          Big Bear Lake Fire Protection District

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    According to the sponsor, the joint  
          powers agency created by City and Lake would consolidate City  
          employees who are covered in CalPERS with Lake employees who are  
          covered in SBCERA.  "The Fire Authority is now set to manage its  
          own financial responsibilities and is now functioning in almost  
          every aspect as one department."  However, "under current law,  
          City safety employees cannot transfer their CalPERS service  
          credit to the new system without legislative approval."  AB 868  
          would authorize such a transfer and enable the Big Bear City and  
          Lake fire agencies to complete their consolidation into the Fire  
          Authority.