BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1878|
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THIRD READING
Bill No: AB 1878
Author: Jones-Sawyer (D)
Amended: 5/31/16 in Assembly
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE: 3-1, 6/27/16
AYES: Pan, Beall, Hall
NOES: Moorlach
NO VOTE RECORDED: Morrell
SENATE APPROPRIATIONS COMMITTEE: 5/2, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 57-19, 6/2/16 - See last page for vote
SUBJECT: Public Employees Retirement System: state or school
members: postretirement death benefit
SOURCE: California Federation of Teachers
DIGEST: This bill authorizes the Board of Administration of
the California Public Employees' Retirement System (CalPERS) to
annually adjust the $2,000 lump-sum death benefit for state and
school members, based on changes in the All Urban California
Consumer Price Index, after each actuarial valuation.
ANALYSIS:
Existing law:
1)Provides, through CalPERS, varying levels of postretirement
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Page 2
death benefits according to membership category and status,
generally a "lump-sum" of money at the time of the retiree's
death, paid to whomever the retiree chooses as a beneficiary.
2)Provides state and school member retirees with a lump-sum
death benefit of $2,000.
3)Allows school employers to individually contract with CalPERS
for a higher lump-sum benefit in the amount of of $3,000,
$4,000 or $5,000.
4)Provides, for retirees covered by the California State
Teachers' Retirement System, a lump-sum death benefit of
$6,163, which may be adjusted by the Teachers' Retirement
Board following each actuarial valuation based on changes to
the All Urban California Consumer Price Index.
This bill authorizes the CalPERS board to adjust the $2,000
lump-sum death benefit for state and school member retirees,
based on changes in the All Urban California Consumer Price
Index, following each annual actuarial valuation.
Background
The 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. 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 death benefit, while members of LRS receive
$600.
The California State Teachers' Retirement System currently
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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.
Related/Prior Legislation
AB 507 (Garcia, 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.
The bill was held in the Assembly Appropriations Committee.
AB 2606 (Mendoza, 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.
The bill was held in the Assembly Appropriations Committee.
AB 617 (Davis, 2011) would have increased the postretirement
death benefit paid to the beneficiary of a school member of
CalPERS from $2,000 to $6,163. The bill was not heard in the
Assembly Public Employees, Retirement, and Social Security
Committee at the request of the author.
SB 1209 (Romero, 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 annually thereafter. The bill
failed passage in the Senate Public Employment and Retirement
Committee.
AB 1477 (Krekorian, 2009) would have increased the
postretirement death benefit paid to the beneficiary of a
CalPERS school member from $2,000 to $6,163. The bill was held
in the Assembly Appropriations Committee.
AB 844 (Negrete McLeod, 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. The
bill was held in the Assembly Appropriations Committee.
AB 2688 (Alquist, 2002) would have increased the various death
benefits paid to all members and retirees in the retirement
systems administered by CalPERS to $7,500. The bill was held in
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Page 4
the Assembly Appropriations Committee.
AB 1162 (Alquist, 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. The bill
was held in the Assembly Appropriations Committee.
AB 50 (Migden, Chapter 947, Statutes of 2000) raised the death
benefit for retired school members from $600 to $2,000.
AB 1829 (Correa, 2000) would have increased the death benefit
for both state and school members who retired prior to July 3,
2001 to $5,000. The bill was held in the Assembly
Appropriations Committee.
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.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, CalPERS would
incur a one-time administrative cost of $50,000 to modify
existing information technology systems and benefit
publications. Additionally, because the cost of the death
benefit is factored into the CalPERS' contribution rate
structure, it could potentially lead to higher state department
contribution rates in future years.
SUPPORT: (Verified8/11/16)
California Federation of Teachers (source)
California Labor Federation
California School Employees Association, AFL-CIO
California State Retirees
California Teachers Association
Retired Public Employees Association
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OPPOSITION: (Verified8/11/16)
None received
ARGUMENTS IN SUPPORT: As stated by the sponsor, the California
Federation of Teachers:
Classified school employees perform duties that are critical
to fostering a positive learning environment for students,
including security, janitorial, clerical, transportation, and
food service. These workers are amongst the lowest paid
school employees during their careers and post-retirement.
Furthermore, most classified staff do not have life
insurance. These factors leave the survivors of classified
school employees in difficult positions after the passing of
a loved one.
The death benefit for CalPERS school employees has not kept
pace with the rising costs of funerals. In 1945, a $300
death benefit was established for CalPERS members to cover
funeral and burial expenses. In 2000, the death benefit was
raised to $2,000. Since then funeral costs have increased
significantly while the death benefit for CalPERS school
employees has remained stagnant. In 2015, according to the
National Funeral Directors Association, the average funeral
cost $7,181, and this does not include costs associated with
the cemetery, grave space, or monument, which increases the
cost of funerals significantly more.
The current death benefit for classified school employees is
far below the actual cost of funerals. AB 1878 will ensure
the death benefit keeps pace with inflation and will help
ensure the survivors of deceased classified employees can
afford to bury their deceased loved ones.
ASSEMBLY FLOOR: 57-19, 6/2/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley,
Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
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Page 6
Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer,
Levine, Linder, Lopez, Low, Maienschein, Mathis, McCarty,
Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Brough, Chávez,
Gallagher, Grove, Harper, Jones, Kim, Lackey, Mayes, Melendez,
Obernolte, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Bigelow, Dahle, Beth Gaines, Hadley
Prepared by:Pamela Schneider / P.E. & R. / (916) 651-1519
8/16/16 9:04:38
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