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).
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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
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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