BILL ANALYSIS Ó
AB 1878
Page 1
GOVERNOR'S VETO
AB
1878 (Jones-Sawyer)
As Enrolled August 25, 2016
2/3 vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Public |5-0 |Bonta, Cooley, | |
|Employees | |Cooper, | |
| | | | |
| | | | |
| | |Cristina Garcia, | |
| | |O'Donnell | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-3 |Gonzalez, Bloom, |Bigelow, Gallagher, |
| | |Bonilla, Bonta, |Obernolte |
| | |Calderon, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 1878
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|ASSEMBLY: |57-19 |(June 2, 2016) |SENATE: |24-12 |(August 18, |
| | | | | |2016) |
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| | | | | | |
| | | | | | |
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SUMMARY: Authorizes the California Public Employees' Retirement
System (CalPERS) Board of Administration to adjust the current
$2,000 postretirement death benefit paid to the beneficiary of a
state or school member after each actuarial valuation to reflect
changes in the All Urban California Consumer Price Index.
EXISTING LAW: 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 burial benefit, while members of LRS receive
$600.
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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.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, "Unknown cost pressures if CalPERS chooses to
increase postretirement death benefits based on changes in
inflation."
COMMENTS: According to the author, "Classified school employees
perform duties that are critical to fostering a positive
learning environment for students, including security,
janitorial, clerical, transportation, and food service. Despite
their vital importance, these workers are amongst the lowest
paid school employees during and after their career.
"Furthermore, when district dismissals take place, it is
classified employees who are the first to lose their jobs. It
is estimated that 10% of classified employees lost their jobs
during the Recession, which does not include the classified
employees who took pay cuts.
"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 is $7,181; and this does not include costs associated with
the cemetery, grave space, or monument, which increases the cost
of funerals significantly more. To cover funeral expenses,
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surviving family members and loved ones report having to secure
high-interest loans, embarrassingly ask community members for
assistance, and spend down limited savings."
According to supporters, "The death benefit amount provided to
different public employee groups varies considerably. The
survivors of members of California State Teachers' Retirement
System (CalSTRS) and the University of California Retirement
System receive $6,163 and $7,500 respectively. The current
death benefit amount for classified school employees is far
below the actual cost of funerals, putting their survivors in
difficult positions upon the death of a loved once. Classified
employees are low-wage workers whose families often do not have
the means to pay for funerals. 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."
Prior legislation:
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.
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.
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.
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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.
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.
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.
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.
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 Appropriations Committee.
AB 50 (Migden), Chapter 947, Statutes of 2000, raised the death
benefit for retired school members from $600 to $2,000.
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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.
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.
GOVERNOR'S VETO MESSAGE:
This bill authorizes the California Public Employees'
Retirement System Board to increase the lump-sum
post-retirement death benefit for state and school
members based on inflation.
Given the state's huge unfunded pension liabilities, I
don't believe it is prudent to add the additional
costs that this bill would require.
Analysis Prepared by:
Karon Green / P.E.,R., & S.S. / (916) 319-3957
FN:
0005072
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