BILL ANALYSIS Ó
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 |
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|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."