BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1291|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 1291
Author: Williams (D)
Amended: 5/27/15 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE: 4-0, 6/8/15
AYES: Pan, Morrell, Beall, Hall
NO VOTE RECORDED: Fuller
ASSEMBLY FLOOR: 77-0, 5/11/15 - See last page for vote
SUBJECT: The County Employees Retirement Law of 1937
SOURCE: Ventura County Employees' Retirement Association
DIGEST: This bill makes the Ventura County Retirement System
(System) an independent, public employer district within the
Ventura County Employees' Retirement Association (VCERA) and
authorizes the System to appoint specified positions as "at
will" employees, exempt from the county civil service system, as
specified.
ANALYSIS:
Existing law:
1)Establishes the County Employees Retirement Law of 1937 (CERL
or '37 Act), which governs 20 independent county retirement
associations, including the VCERA.
2)Defines "district" as a district formed under the law of the
state, located wholly or partially within a county, and states
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that these districts are public employers whose employees are
eligible to participate in their respective '37 Act county
retirement associations.
3)Provides Orange and San Bernardino county retirement systems
authority to be independent districts within their respective
retirement associations and to appoint statutory employees for
purposes of determining their compensation and benefits, as
specified.
4)Provides the Contra Costa County retirement system with
authority to be an independent district within its respective
retirement association and to appoint all of its employees for
purposes of determining their compensation and benefits, as
specified.
5)Requires, when the retirement system becomes a district and
the employees become retirement system employees and not
county employees, that the employees who had previously been
in county service continue to be members of the retirement
system without interruption in service or loss of credit and
that any new employees of the district become members of the
system on the first day of the calendar month following
entrance into service.
6)Requires each '37 Act retirement system to annually adopt a
budget covering the entire expense of administering the
system, which is charged against earnings of the retirement
fund, as specified.
7)Establishes the Public Employees' Pension Reform Act of 2013
(PEPRA), which requires, as of January 1, 2013, comprehensive
and statewide reform for the state's public pension systems
and plans and public employers and employees.
8)Provides, under the provisions of PEPRA, '37 Act retirement
boards with more independence to perform audits and assess
penalties relating to pension spiking.
9)Provides, in the case of retirement systems that are not
independent districts, that their 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.
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This bill:
1)Includes the System in the definition of "district" for
purposes of the CERL.
2)Authorizes the System, upon adoption of a resolution of the
retirement board, to appoint a retirement administrator, chief
financial officer, chief operations officer, chief investment
officer, and general counsel who will be employees of the
retirement system, not the county, and will be subject to the
terms and conditions of employment established by the board of
retirement.
3)Provides that personnel appointed by the System who had
previously been in county service continue to be members of
the retirement system without interruption in service or loss
of credit and that any new employees of the district become
members of the system on the first day of the calendar month
following entrance into service.
4)Provides that the compensation for these appointed employees
will be treated as an expense of the administration of the
retirement system, as specified.
Background
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. In some cases, retirement
system personnel can experience conflicts of interest between
their status as county personnel and their fiduciary duties as
retirement system administrators and officers. Some counties
and retirement boards have mutually decided to make their
retirement systems independent districts within their applicable
retirement associations with either limited or total control
over retirement system personnel.
Currently, the Orange, San Bernardino, and Contra Costa county
retirement systems have statutory authority to be independent
districts within their respective retirement associations. Both
Orange and San Bernardino retirement systems have authority to
appoint specified employees as "at will" employees of the
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systems. These positions are generally at the highest
administrative and investment levels having oversight of the
retirement system. Other employees remain county employees.
In the case of Contra Costa County Retirement System, all
employees are employees of the system.
Prior/Related Legislation
SB 673 (DeSaulnier, Chapter 244, Statutes of 2013) made Contra
Costa County Retirement System an independent district of the
Contra Costa County Retirement Association and made all
personnel employees of the retirement system.
SB 777 (Soto, Chapter 369, Statutes of 2006) made San Bernardino
County Retirement System an independent district of the San
Bernardino County Retirement Association and made certain
specified personnel employees of the retirement system.
AB 1992 (Correa, Chapter 74, Statutes of 2002) made Orange
County Retirement System an independent district of the Orange
County Retirement Association and made certain specified
personnel employees of the retirement system.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/9/15)
Ventura County Employees' Retirement Association (source)
California Nurses Association
California Professional Firefighters
California Retired County Employees Association
International Union of Operating Engineers, Local 501, AFL-CIO
Peace Officers Research Association of California
Retired Employees Association of Ventura County
Specialized Peace Officers' Association of Ventura County
State Association of County Retirement Systems
Ventura County Deputy Sheriffs' Association
OPPOSITION: (Verified6/9/15)
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None received
ARGUMENTS IN SUPPORT:
According to the author:
There are many benefits to becoming an independent
district, but most applicable to Ventura County is the
ability to recruit and retain specially trained staff with
compensation that's competitive with the private sector.
Further, by allowing the retirement system a degree of
separation from the County, this bill enhances the ability
of the retirement system to implement and enforce the 2012
Public Employee Pension Reform Act (PEPRA), including
enforcement of the new anti-spiking statutes, by making it
less uncomfortable to report spiking. In other words, it
better equips them to carry out their fiduciary
responsibility of managing employee retirement funds.
Supporters state that AB 1291's provisions ensure enforcement of
PEPRA's anti-spiking provisions and the retirement system's
ability to hire and retain the talented human capital necessary
to effectively manage the retirement system.
As stated by the State Association of County Retirement Systems:
AB 1291 is consistent with the precedent established in
existing law for Orange and San Bernardino counties.
Independent district status gives the retirement system the
ability to recruit and retain quality professional
executive and investment staff. Equally important is that
a line of separation from the county administrative staff
will ensure that the retirement system will have the
unfettered ability to enforce the anti-spiking provisions
of the Public Employees' Pension Reform Act of 2013
(PEPRA).
ASSEMBLY FLOOR: 77-0, 5/11/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Cristina Garcia,
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Page 6
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood
NO VOTE RECORDED: Gallagher, Patterson, Atkins
Prepared by:Pamela Schneider / P.E. & R. / (916) 651-1519
6/10/15 10:43:03
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