BILL ANALYSIS Ó AB 2376 Page 1 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 AB 2376 Page 2 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); AB 2376 Page 3 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: AB 2376 Page 4 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 AB 2376 Page 5 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 AB 2376 Page 6 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 AB 2376 Page 7