BILL ANALYSIS Ó
AB 1878
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Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1878 (Jones-Sawyer) - As Amended March 28, 2016
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|Policy |Public Employees, |Vote:|5 - 0 |
|Committee: |Retirement/Soc Sec | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill increases the postretirement death benefit paid to the
beneficiary of a school member of the California Public
Employees' Retirement System (CalPERS) from $2,000 to not less
than $5,000, starting on January 1, 2017, and authorizes the
CalPERS Board of Administration to adjust the death benefit
after each actuarial valuation based on changes in the All Urban
California Consumer Price Index.
AB 1878
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FISCAL EFFECT:
1)Significant benefit costs over a 20-year period to CalPERS.
The first payment on the additional unfunded liability created
by this bill is projected to be in the range of $30 million in
FY 2018-2019.
2)One-time administrative costs of $50,000 for CalPERS to modify
existing procedures and publications.
COMMENTS:
1)Background and purpose. California Public Employees'
Retirement Law provides varying levels of death benefits
according to membership category and status, each providing a
"lump-sum" of money to survivors at the time of the member's
death. According to the author, AB 1878 would better align the
death benefit of classified school employees with the actual
costs of funerals and with the death benefit received by other
educators.
2)Death benefits for public employee retirement systems. The
original lump-sum death benefit of $300 for all retired
CalPERS members was enacted in 1945. However, over the years,
the Legislature began to provide different benefit levels to
different categories of members: state, school, local, Judges'
Retirement Systems (JRS and JRS II), Legislators' Retirement
System (LRS), active, and retired. Currently, state and school
members have a retiree death benefit of $2,000. School
employers also have the ability to amend their individual
contracts with CalPERS to provide enhanced retiree death
benefits of $3,000, $4,000 or $5,000. Local members have a
minimum benefit of $500, with an option to provide up to
$5,000 through contract amendment. Members of JRS have no
retiree burial benefit, while members of LRS receive $600.
AB 1878
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The California State Teachers' Retirement System currently
provides a lump sum death payment for survivors of retired
members of $6,163. The amount of the death payment may be
adjusted by the Teachers' Retirement Board following each
actuarial valuation based on changes to the All Urban
California Consumer Price Index.
3)Prior legislation. A number of bills since 1998 have tried to
increase the CalPERS postretirement death benefit paid to a
beneficiary. Specifically
a) AB 507 (Garcia) of 2013 would have increased, over a
period of four years, the postretirement death benefit paid
to the beneficiary of a school member of CalPERS from
$2,000 to $6,000. This bill was held in the Assembly
Appropriations Committee.
b) AB 2606 (Mendoza) of 2012 would have increased, over a
period of four years, the postretirement death benefit paid
to the beneficiary of a school member of CalPERS from
$2,000 to $6,000. This bill was held in the Assembly
Appropriations Committee.
c) AB 617 (Davis) of 2011 would have increased the
postretirement death benefit paid to the beneficiary of a
school member of CalPERS from $2,000 to $6,163. This bill
was not heard in the Assembly PER&SS Committee at the
request of the author.
AB 1878
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d) SB 1209 (Romero) of 2010 would have increased the
postretirement death benefit paid to the beneficiary of a
CalPERS school member from $2,000 to $5,000 incrementally
over a period of three years with cost of living
adjustments (COLA) annually thereafter. This bill failed
passage in the Senate Public Employment and Retirement
Committee.
e) AB 1477 (Krekorian) of 2009, would have increased the
postretirement death benefit paid to the beneficiary of a
CalPERS school member from $2,000 to $6,163. This bill was
held in the Assembly Appropriations Committee.
f) AB 844 (Negrete McLeod) of 2005 would have increased the
postretirement death benefit for state members of CalPERS
who retired on or before July 1, 2006 from $2,000 to
$5,000. This bill was held in the Assembly Appropriations
Committee.
g) AB 2688 (Alquist) of 2002, would have increased the
various death benefits paid to all members and retirees in
the retirement systems administered by CalPERS to $7,500.
This bill was held in the Assembly Appropriations
Committee.
h) AB 1162 (Alquist) of 2001, would have increased from
$2,000 to $5,000 the lump sum death benefit available to
retired CalPERS state and school members who retired on or
before July 3, 2002, and whose death occurred on or after
January 1, 2001. This bill was held in the Assembly
AB 1878
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Appropriations Committee.
i) AB 50 (Migden), Chapter 947, Statutes of 2000, raised
the death benefit for retired school members from $600 to
$2,000.
j) AB 1829 (Correa) of 2000, would have increased the death
benefit for both state and school members who retired prior
to July 3, 2001 to $5,000. This bill was held in the
Assembly Appropriations Committee.
aa) AB 1640 (Migden), Chapter 296, Statutes of 1998,
authorized school employers and contracting agencies the
option to amend their contract to provide a $2,000, $3,000,
$4,000, or $5,000 lump sum retired member death benefit.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081