BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1640


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          Date of Hearing:   April 6, 2016


           ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL  
                                      SECURITY


                                  Rob Bonta, Chair


          AB 1640  
          (Mark Stone) - As Introduced January 7, 2016


          SUBJECT:  Retirement:  public employees


          SUMMARY:  Permanently exempts certain public transit workers,  
          who first became members of a public retirement system between  
          January 1, 2013 and December 29, 2014, from the requirements of  
          the Public Employees' Pension Reform Act of 2013 (PEPRA).   
          Specifically, this bill:  





          1)Extends indefinitely the current exemption from PEPRA for  
            certain public transit workers whose collective bargaining  
            rights are protected under Section 13(c) of the Federal  
            Transit Law who became members of a state or local public  
            retirement system prior to December 30, 2014.

          2)Deletes provisions related to specified federal district court  
            rulings regarding the certification of federal transit  
            funding.











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          EXISTING STATE LAW:  





          1)Establishes comprehensive public employee pension reform  
            through enactment of PEPRA (and related statutory changes)  
            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)As enacted by AB 1222 (Bloom and Dickenson), Chapter 527,  
            Statutes of 2013, makes an exemption to PEPRA for employees  
            who are covered by 13(c) arrangements until either a federal  
            district court rules that the United States Secretary of Labor  
            (or his or her designee) erred in determining that application  
            of PEPRA precludes certification of federal transit funding or  
            January 1, 2015, whichever is sooner.



          3)Specifies that if the federal district court upholds the  
            determination of the United States Secretary of Labor (or his  
            or her designee) that application of PEPRA precludes  
            certification of federal transit funding, then PEPRA shall not  
            apply to an employee protected under a 13(c) arrangement.



          EXISTING FEDERAL LAW:













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          1)Protects the collective bargaining rights of specified transit  
            workers employed in certain transit agencies and districts  
            that were, mostly in the 1960's through the 1970's, converted  
            from private to public agencies.

          2)Requires, under Section 13(c) of the Federal Transit Law, that  
            these employee protections, commonly referred to as  
            "protective arrangements" or "Section 13(c) arrangements" must  
            be certified by the United States Department of Labor (USDOL)  
            and in place before federal transit funds can be released to a  
            mass transit employer subject to the Federal Transit Law.



          3)Section 13(c) requires, among other things, the continuation  
            of collective bargaining rights, and protection of transit  
            employees' wages, working conditions, pension benefits,  
            seniority, vacation, sick and personal leave, travel passes,  
            and other conditions of employment.



          4)Allows the USDOL to determine if the collective bargaining  
            rights of an employee group protected under a 13(c)  
            arrangement have been impaired, and if so determined, to stop  
            the flow of federal transportation funding until such time as  
            the those rights have been restored.





          FISCAL EFFECT:  Unknown.


          COMMENTS:  According to the author, "The recent decision in the  
          State of California v. United States Department of Labor ended  
          the exemption provided to transit employees by 









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          AB 1222 (Bloom).  As a result of this decision the California  
          Public Employees' Retirement System (CalPERS) has circulated a  
          letter to transit districts notifying them that employees hired  
          after January 1, 2013 through December 29, 2014 will retain  
          their classic retirement status for that time period, but those  
          hired on or after December 30, 2014 would be PEPRA appointments  
          receiving PEPRA retirement benefits."
          "Although transit districts are appealing the federal court  
          decision, AB 1640 would clarify that workers hired during the  
          exemption between January 1, 2013 and December 29, 2014 should  
          continue to receive classic employee retirement benefits instead  
          of PEPRA employee retirement benefits."


          Supporters contend that CalPERS "appears" to be the only  
          retirement system for public transit employees that has  
          interpreted AB 1222 to mean that those covered by the exemption  
          are only entitled to receive their "classic" retirement benefits  
          from their date of hire to 


          December 30, 2014, and not for the duration of their employment.  
           Supporters further contend that this interpretation is  
          resulting in an inconsistent application of PEPRA across public  
          transit agencies, and "perhaps a misapplication of the  
          Legislature's intent for AB 1222 (Bloom)."
          Supporters conclude, "This bill would clarify that public  
          transit employees, hired between January 1, 2013 and December  
          30, 2014, are exempt from PEPRA for the duration of their  
          employment.  In doing so, the bill would remove any ambiguity  
          regarding the applicability of PEPRA to these public transit  
          employees, limiting it only to employees hired after 


          December 30, 2014; and create consistency in the manner in which  
          public transit employees, across public transit agencies and  
          various retirement systems, are impacted by PEPRA.  This bill  
          would also instill some fairness into this ongoing discussion by  








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          ensuring that public transit employees, hired while the AB 1222  
          (Bloom) exemption was in place, receive the classic retirement  
          benefits they were told they would receive upon accepting  
          employment with a public transit agency."
          According to information provided to the Committee by CalPERS,  
          1,431 members from 36 different CalPERS covered employers were  
          reclassified back into PEPRA membership after the December 30,  
          2014 ruling.  The Committee was also informed that the only 1937  
          Act County Retirement System that has transit workers is the  
          Orange County Employees' Retirement System (OCERS).  According  
          to the information provided, approximately 170 public transit  
          workers were hired during the exemption period and in August of  
          2015, OCERS determined that those members would be permanently  
          exempted from PEPRA.  


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Santa Clara Valley Transportation Authority (Sponsor)


          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinist
          California Teamsters Public Affairs Council
          California Transit Association


          Monterey-Salinas Transit













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          Opposition


          None on file




          Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)  
          319-3957