BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
          PUBLIC EMPLOYMENT AND RETIREMENT
                               Dr. Richard Pan, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 2376         Hearing Date:     6/27/16
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          |Author:    |Committee on Public Employees, Retirement, and       |
          |           |Social Security                                      |
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          |Version:   |6/20/16        As amended                            |
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          |Urgency:   |No                     |Fiscal:    |No               |
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          |Consultant:|Glenn Miles                                          |
          |           |                                                     |
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          Subject:  County employees' retirement: Los Angeles County

            SOURCE:  State Association of County Retirement Systems
                    Los Angeles County Employees Retirement Association

            ASSEMBLY VOTES:
          
          
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          |Assembly Floor:                 |78 - 0                          |
          |--------------------------------+--------------------------------|
          |Assembly Public Employees,      |7 - 0                           |
          |Retirement/Soc Sec Committee:   |                                |
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           DIGEST:    This bill makes various technical and minor policy  
          changes to the County Employees Retirement Law of 1937 ('37  
          Act).

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

          2)In the Los Angeles County Employees Retirement Association  







          AB 2376 (Committee on Public Employees, Retirement, and Social  
          Security)      Page 2 of ?
          
          
            (LACERA), specifies various retirement plans that have been  
            available to new members, including retirement plan D and  
            noncontributory plan E, which were available to new members  
            prior to January 1, 2013, and plan G, which conforms to the  
            Public Employees' Pension Reform Act of 2013 (PEPRA), and  
            which is applicable to new members who were included in the  
            system after January 1, 2013.

          3)Establishes rules for members governing eligibility for  
            reciprocity across retirement systems, including the general  
            requirement that the member must retire on the same date  
            (i.e., "concurrently") from all reciprocal systems.

          4)Establishes, depending on the retirement system and retirement  
            plan, minimum retirement ages for members. 

          5)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);

             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).

          6)Provides for an alternate 7th member selected from specified  
            safety members who may serve as an alternate for all  
            retirement board members except those appointed by the board  
            of supervisors (4th, 5th, 6th, and 9th members).

          7)For some '37 Act systems which so choose, allows an  
            alternative 8th member nominated by the retired members who  
            may serve when the 8th member is absent.








          AB 2376 (Committee on Public Employees, Retirement, and Social  
          Security)      Page 3 of ?
          
          

          8)Allows, if the board has an alternate 8th member, that the  
            alternate 7th member may serve as an alternate for the 8th  
            member when both the 8th and the alternate 8th members are  
            absent.

          9)Allows for the collection of specified member information,  
            which is submitted in the form of a sworn statement by the  
            member.

          This bill:

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


          2)Clarifies the applicability of reciprocal retirement benefits  
            in LACERA's noncontributory defined benefit plan known as Plan  
            E and states that this clarification is declaratory of  
            existing law allowing a member to have an exception to the  
            rule requiring a concurrent retirement date when mandatory  
            retirement dates are different between reciprocal systems.


          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 specified  
            members not appointed by the board of supervisors are absent  
            (i.e., both the 2nd and 3rd, or both the 2nd and 7th, or both  
            the 3rd and the 7th members).


          4)Authorizes '37 Act counties to collect specified member  
            information from employers electronically in lieu of sworn  
            statements from the members.


          Background

          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  








          AB 2376 (Committee on Public Employees, Retirement, and Social  
          Security)      Page 4 of ?
          
          
            effective on January 1, 2013, to comply with the requirements  
            of 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 now designated as the contributory plan  
            available to new members of the retirement system up until the  
            implementation of PEPRA, thereby removing the conflict between  
            Plan D and Plan G.


          2)Reciprocity provides that specified benefits may be  
            coordinated between reciprocal retirement systems (e.g.,  
            CalPERS and '37 Act retirement systems are reciprocal).  In  
            order to be eligible for reciprocity, the member must meet  
            certain requirements, including the requirement to retire from  
            all reciprocal systems on the same day.  There is, however, an  
            exception to the rules relating to reciprocal retirement.  If  
            a member is eligible to retire at age 50 under a contributory  
            '37 Act plan but is ineligible to retire concurrently under a  
            reciprocal retirement system at age 50, the member is entitled  
            to have final compensation and service credit determined as if  
            she had retired concurrently under the reciprocal retirement  
            system.


            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  
            would be in the same position as a contributory member with  
            respect to the exception to concurrent retirement.  However,  








          AB 2376 (Committee on Public Employees, Retirement, and Social  
          Security)      Page 5 of ?
          
          
            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 by clarifying 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 more  
            efficient and bring the current statute in alignment with  
            modern-day technology.



          Related/Prior Legislation
          
          AB 2474 (Committee on Public Employees, Retirement, and Social  
          Security, Chapter 741, Statutes of 2014) made various technical  
          corrections and conforming changes to align the County  
          Employees' Retirement Law of 1937 ('37 Act) with the provisions  
          of the Public Employees' Pension Reform Act of 2013 (PEPRA).

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             No           Local:          No


          SUPPORT:

          State Association of County Retirement Systems (co-source)
          Los Angeles County Employees Retirement Association (co-source)









          AB 2376 (Committee on Public Employees, Retirement, and Social  
          Security)      Page 6 of ?
          
          
          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    According to LACERA, AB 2376 "will  
          bring sections of the County Retirement Law of 1937 that  
          reference Plan D into conformity with PEPRA."  Additionally, the  
          bill "clarifies the eligibility of noncontributory members of  
          LACERA to receive reciprocal retirement benefits."