BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   May 4, 2016


           ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL  
                                      SECURITY


                                  Rob Bonta, Chair


          AB 2376  
          (Committee on Public Employees, Retirement, and Social Security)  
          - As Amended March 9, 2016


          SUBJECT:  County employees' retirement: Los Angeles County


          SUMMARY:  Makes various technical and minor policy changes to  
          the County Employees' Retirement Law of 1937 ('37 Act).   
          Specifically, this bill:  


          1)Revises the definition of the Los Angeles County Employees  
            Retirement Association's (LACERA's) Retirement Plan D to mean  
            the contributory retirement plan otherwise available to  
            members of the system between June 1, 1979, and December 31,  
            2012.


          2)Clarifies the applicability of reciprocal retirement benefits  
            in LACERA's noncontributory defined benefit plan know as Plan  
            E and states that this clarification is declaratory of  
            existing law.


          3)Authorizes the alternate retirement member of the board of  
            retirement of a '37 Act county to vote as a member of the  
            board if the 8th member of the board is present and both the  








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            2nd and 3rd, or both the 2nd and 7th, or both the 3rd and the  
            7th members are absent.


          4)Authorizes '37 Act counties to collect specified member  
            information from the member's employer electronically rather  
            than from the member in a sworn statement.


          5)Specifies that the retirement allowance calculation for safety  
            members purchasing qualified service credit for prior service  
            in active law enforcement, active fire suppression or military  
            service during war or national emergency, be based on the  
            safety benefit formula that was in effect on the date of the  
            member's initial safety membership.


          EXISTING LAW:  


          1)Establishes the '37 Act, which provides for retirement systems  
            for county and district employees in those counties adopting  
            its provisions.  Currently 20 counties operate retirement  
            systems under the '37 Act.

          2)Sets forth the composition of the nine-member board of  
            retirement for any '37 Act county retirement system as  
            follows:





             a)   The county treasurer;



             b)   Two general (non-safety) members elected by the general  
               members of the system (2nd and 3rd members);








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             c)   Four members who are qualified electors not in any way  
               connected with county government, except one may be a  
               county supervisor, appointed by the board of supervisors  
               (4th, 5th, 6th, and 9th members);



             d)   One safety member elected by the safety members of the  
               system (7th member); and,



             e)   One retired member elected by the retired members of the  
               system (8th member).



          3)Provides for alternates for all retirement board members  
            except those appointed by the board of supervisors (4th, 5th,  
            6th, and 9th members).
          


          FISCAL EFFECT:  Unknown.  This bill is keyed non-fiscal by the  
          Legislative Counsel.





          COMMENTS:  













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          1)LACERA currently has six plan tiers for its general members:   
            Plans A, B, C, D, E, and G.  Plan G was established to be  
            effective on January 1, 2013 to comply with the requirements  
            of the Public Employees' Pension Reform Act (PEPRA) and is the  
            current plan in which new members are enrolled.  Before the  
            enactment of PEPRA, new members had a choice between enrolling  
            in Plan D or Plan E, both of which are no longer available to  
            new members.  However, existing members of those plans are  
            eligible to prospectively transfer from Plan D to Plan E or  
            vice versa.



          For purposes of the prospective plan transfer, Plan D is  
            currently defined as "the contributory retirement plan  
            otherwise available to new members of the retirement system on  
            the transfer date."  This definition now conflicts with Plan  
            G's status as the contributory retirement plan that is  
            available to new members.  AB 2376 changes the definition of  
            Plan D, so that it is no longer designated as the contributory  
            plan otherwise available to new members of the retirement  
            system, thereby removing the conflict between Plan D and Plan  
            G.

          In order to be eligible for reciprocal retirement benefits, a  
            member must have a period between memberships in each system  
            that does not exceed six months.  There is, however, an  
            exception to the rule relating to concurrent retirement.  If a  
            member is eligible to retire at age 50 under a contributory  
            '37 Act plan but is unable to retire concurrently under a  
            reciprocal retirement system, she is entitled to have her  
            final compensation and service credit determined as if she had  
            retired concurrently under the reciprocal retirement system.
          2)When LACERA's noncontributory Plan E was established in 1982,  
            its provisions provided for reciprocal benefits to be  
            applicable to the plan.  Only those provisions dealing with  
            disability retirement, death benefits, and deposit of member  
            contributions were excluded.  Therefore, a noncontributory  
            Plan E member who moves from one retirement system to another  








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            would be in the same position as a contributory member with  
            respect to the exception to concurrent retirement.  However,  
            the statutory provision for the exception does not specify  
            those members eligible to retire under noncontributory Plan E,  
            thereby creating an ambiguity in the statute.



          The bill would remove the ambiguity between the provisions of  
            noncontributory Plan E, which provide for the member to  
            benefit under the exception to concurrent retirement, and the  
            provision for the exception, which does not expressly state  
            that noncontributory members are included.  It would clarify  
            that noncontributory Plan E members are also eligible for the  
            exception.

          3)Existing law requires '37 Act counties to collect a member's  
            date of birth, nature and duration of employment with the  
            county, compensation received and other required information  
            the member in a sworn statement.  Some counties are currently  
            receiving this information automatically via electronic  
            payroll feed from the county.  In this situation, continuing  
            to require sworn statements from employees just creates  
            compliance issues and inefficiencies.



          By allowing counties to collect this information from the  
            employer electronically, AB 2376 will make administration of  
            the benefit more efficient and bring the current statute in  
            alignment with modern-day technology.

          4)Under PEPRA, members of public retirement systems are still  
            allowed to purchase qualified service credit, such as prior  
            public service and military time.  Additionally, the '37 Act  
            allows the purchased service of safety members to count as  
            safety service if the prior public service consisted of active  
            law enforcement, active fire suppression or military service  
            during war or national emergency.  The retirement benefit for  








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            that service is calculated based on the same calculation that  
            the member receives as a safety member.  This section,  
            however, does not specify the new safety formulas authorized  
            under PEPRA.  



          This bill corrects this issue by stating that the safety  
            member's retirement allowance for that service will be  
            calculated on the safety benefit formula in effect on the date  
            of the member's initial safety membership. 
          REGISTERED SUPPORT / OPPOSITION:




          Support


          State Association of County Retirement Systems (Sponsor)


          Los Angeles County Employees Retirement Association




          Opposition


          None on file




          Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)  
          319-3957










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