BILL ANALYSIS Ó
AB 1640
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ASSEMBLY THIRD READING
AB
1640 (Mark Stone)
As Introduced January 7, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Public |5-1 |Bonta, Cooley, |Wagner |
|Employees | |Cooper, | |
| | | | |
| | | | |
| | | Cristina Garcia, | |
| | |O'Donnell | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |11-5 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Gallagher, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Roger | |
| | |Hernández, Quirk, | |
| | |Santiago, Wood | |
| | | | |
| | | | |
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SUMMARY: Permanently exempts certain public transit workers,
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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 (13(c) arrangements) 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.
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), 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
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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:
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: According to the Assembly Appropriations
Committee:
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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: 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 AB 1222 (Bloom)
[Chapter 309, Statutes of 2015]. 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)."
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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 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.
There is no opposition on file.
Analysis Prepared by:
Karon Green / P.E.,R., & S.S. / (916) 319-3957
FN:
0002765
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