BILL ANALYSIS Ó AB 1640 Page 1 Date of Hearing: April 20, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1640 (Mark Stone) - As Introduced January 7, 2016 ----------------------------------------------------------------- |Policy |Public Employees, |Vote:|5 - 1 | |Committee: |Retirement/Soc Sec | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 Page 3 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