BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 24 (Hill) - California Public Employees' Pension Reform Act
of 2013: joint powers authority: employees
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|Version: January 5, 2016 |Policy Vote: P.E. & R. 3 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: January 19, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 24 would authorize a Joint Powers Authority
(JPA) formed by the Cities of Belmont, Foster City, and San
Mateo to provide the JPA's employees a defined benefit plan or
formula that those employees received as "classic" CalPERS
members from their employment with the three cities.
Fiscal Impact:
The California Public Employees' Retirement System
(CalPERS) estimates that it would incur one-time costs of
$200,000 (special fund) to implement the provisions of the
bill.
Background: Current law authorizes public agencies to enter
SB 24 (Hill) Page 1 of
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into agreements to jointly exercise any power common to the
contracting parties, including providing for the creation of an
agency or entity (a Joint Powers Authority, or JPA) that is
separate from the parties to the agreement and is responsible
for the administration of the agreement. The JPA can then
contract with CalPERS to offer retirement benefits if it meets
certain requirements, and becomes a contracting employer in the
retirement system.
Current law, the Public Employees' Pension Reform Act of 2013
(PEPRA), establishes a new retirement plan formula and requires
public employers to offer the PEPRA formula to new employees
first hired into public service after January 1, 2013, as
defined. Pre-PEPRA members (also known as "classic" members) who
were first hired into public service prior to January 1, 2013,
and who move between public employers within a 180-day time
period, are grandfathered under pre-PEPRA retirement formulas
and consequently are eligible to receive the benefit plans
offered to employees of the public employer on December 31, 2012
(i.e., the benefit plan in place prior to PEPRA implementation).
Since employers, over time, could have more than one retirement
formula for specific classes of employees, PEPRA further
specifies that a classic employee who moves between public
employers within a 180-day period will receive the benefit
formula that the employer was offering on December 31, 2012
(i.e., one day prior to implementation of PEPRA). A JPA formed
after that date would be a new employer in CalPERS and would
therefore have no classic formula to offer classic employees.
SB 1251 (Huff, Chapter 757, Statutes of 2014 ) allows the cities
of Brea and Fullerton, after forming a JPA, to allow
transferring employees to retain the retirement formulas they
had prior to the formation and implementation of the JPA. The
Cities of Belmont, Foster City, and San Mateo seek to accomplish
the same objective with this bill.
Bill Summary: This bill would, among other things, do all of the
following:
Permit a JPA formed by the Cities of Belmont, Foster
City, and San Mateo on or after January 1, 2013, to provide
employees the "classic" retirement formula that the
employees received from their respective city employer
forming the JPA prior to the JPA's formation.
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Provide that the employee must not be a new member of
the retirement system as defined by PEPRA and must be
employed by the JPA without a break in service from the
employee's respective city employer of more than 180 days.
Related Legislation: SB 354 (Huff, Chapter 158, Statutes of
2015) clarified the time period during which a CalPERS "classic"
member who is employed in the cities of Brea and Fullerton can
transfer to a Joint Powers Authority (JPA) formed by those two
cites and retain classic benefit formulas received prior to the
transfer.
SB 1251 (Huff, Chapter 757, Statutes of 2014) created the
current exemption in PEPRA to allow classic employees
transferred to a new JPA formed by the cities of Brea and
Fullerton after January 1, 2013, to retain their classic
retirement benefits following transfer to and employment in the
JPA.
Staff Comments: CalPERS estimates that the bill would result in
a one-time cost of about $200,000 for information technology
changes in order to provide each JPA employee the same benefit
formula as that employee had with one of the cities forming the
JPA.
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