BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          Bill No:            SB 24           Hearing Date:     1/14/16
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          |Author:    |Hill                                                 |
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          |Version:   |1/05/16    As amended                                |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Glenn Miles                                          |
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          Subject:  California Public Employees' Pension Reform Act of  
          2013: joint powers authority: employees.

            SOURCE:  City of Belmont
                    City of Foster City
                    City of San Mateo
           
           DIGEST:    This bill authorizes a Joint Powers Authority (JPA)  
          formed by the Cities of Belmont, Foster City, and San Mateo to  
          provide the JPA employees a defined benefit plan or formula that  
          those employees received as "classic" CalPERS members from their  
          employment with the cities.  The language of SB 24 is  
          substantially the same as statutory language enacted for the  
          Cities of Fullerton and Brea.
          
          ANALYSIS:
          
          Existing law:
          
          1)Authorizes, under the Joint Exercise of Powers Act, public  
            agencies to enter into agreements to jointly exercise any  
            power common to the contracting parties, including providing  
            for the creation of an agency or entity that is separate from  
            the parties to the agreement and is responsible for the  
            administration of the agreement.

          2)Allows local public employers forming a JPA to contract with  
            CalPERS to offer retirement benefits to their employees if the  
            JPA meets the federal definition of a governmental plan.  The  







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            JPA is then a new contracting employer in the retirement  
            system.

          3)Establishes, under the Public Employees' Pension Reform Act of  
            2013 (PEPRA), 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.

          4)Requires pre-PEPRA members-referred to as "classic" members by  
            CalPERS-who were first hired into public service prior to  
            January 1, 2013, and who move between public employers within  
            a 180-day time period, to be grandfathered under pre-PEPRA  
            retirement formulas and 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).

          5)Authorizes a JPA formed by the cities of Brea and Fullerton on  
            or after January 1, 2013, to provide employees who transfer to  
            the JPA from Brea or Fullerton with the "classic" retirement  
            formulas that the employees were receiving from their  
            respective employers within 180 days of the cities providing  
            for the exercise of the common power, to which the employee  
            was associated, by the JPA.

          6)Specifies that on or before January 1, 2017, up to three  
            cities that are contiguous with Brea or Fullerton may join the  
            JPA and extend the same protections, with regard to classic  
            retirement formulas, to their transferred employees.

          7)Clarifies that the formation of the JPA on or after January 1,  
            2013, shall not act in a manner so as to exempt a member from  
            PEPRA who would otherwise be subject to PEPRA.

          This bill:

          1)Permits a Joint Powers Authority (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 . The  
            language of SB 24 is substantially the same as statutory  
            language enacted for the Cities of Fullerton and Brea.









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          2)Provides 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.


          3)Prohibits the formation of a JPA on or after January 1, 2013,  
            in a manner that would exempt a new member from the  
            requirements of PEPRA.  New members may only participate in a  
            plan that conforms to the requirements of PEPRA.

          4)Makes legislative findings and declarations that a special  
            law, rather than a general law, is needed to clarify the  
            benefits and eligibility rules under PEPRA and to maintain the  
            integrity of that act and further its purpose.

          Background

          PEPRA allows classic employees who move between public employers  
          within a 180-day time period to be grandfathered under pre-PEPRA  
          retirement formulas.  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 as Brea and Fullerton.

          Prior/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.








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          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.

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


          

          SUPPORT:  

          City of Belmont (co-source)
          City of Foster City (co-source)
          City of San Mateo (co-source)

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:  According to the author, SB 24 "clarifies  
          a pension problem that's preventing the cities of San Mateo,  
          Belmont and Foster City from completing their Joint Powers  
          Agreement for fire service in the region.

          According to the sponsors, the bill "would permit a joint powers  
          authority to be formed by the cities of Belmont, Foster City and  
          San Mateo while providing employees, who are not new members  
          under PEPRA, with the defined benefit plan that they received  
          from their respective employers as of December 31, 2012."

          Furthermore, the sponsors state that "Fire services  
          (consolidation), under a Joint Powers Authority, is one of the  
          most cost effective and efficient models for providing fire and  
          EMS (Emergency Medical Services) to our communities. The ability  
          to seamlessly move our current fire employees to a regional JPA  
          could prove to be essential to the success of a fully integrated  
          fire service."
          










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