BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1640


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          Date of Hearing:  April 20, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


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


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          |Policy       |Public Employees,              |Vote:|5 - 1        |
          |Committee:   |Retirement/Soc Sec             |     |             |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill permanently exempts public transit workers whose  
          collective bargaining rights are protected under Section 13(c)  
          of the Federal Transit Law, 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). 










                                                                    AB 1640


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          FISCAL EFFECT:


          1)One-time administrative costs of approximately $65,000 to  
            CalPERS to implement system changes and data corrections. 


          2)Additional benefit costs of approximately $2.4 million  
            annually spread across 36 non-state public employers. 


          COMMENTS:


          1)Purpose. According to the author, AB 1640 would allow transit  
            employees hired under an agreement for "classic" retirement  
            benefits to retain those benefits for the duration of their  
            employment. Supporters also argue that this bill would create  
            consistency across public transit agencies and public  
            retirement systems in how they are affected by PEPRA. 


          2)Background. Following the passage of PEPRA, the US Department  
            of Labor (DOL) withheld certification of federal grants to  
            California transit agencies, arguing that this new state law  
            violated existing collective bargaining rights. AB 1222  
            (Bloom), Chapter 527, Statutes of 2013, exempted these transit  
            workers from PEPRA for a specified period of time, pending a  
            ruling from the federal district court. This exemption allowed  
            federal grants to be certified in these transit districts.  
            Following a District Court ruling in December 2014 that found  
            that DOL acted in excess of its authority in denying grants,  
            CalPERS notified employers that transit employees hired on or  
            after January 1, 2013 would now be subject to PEPRA, but that  
            transit employees hired on or after January 1, 2013 through  
            December 29, 2014 would retain their "classic" retirement  
            benefits for that period of time. 
            
            CalPERS estimates that 1,431 members from 26 different CalPERS  








                                                                    AB 1640


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            covered employers were reclassified back into PEPRA membership  
            after the December 2014 court ruling. This bill would  
            permanently exempt these workers from PEPRA. 
          
          Analysis Prepared by:Luke Reidenbach / APPR. / (916)  
          319-2081