BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 24|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 24
Author: Hill (D)
Amended: 1/5/16
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE PUBLIC EMP. & RET. COMMITTEE: 3-0, 1/14/16
AYES: Pan, Beall, Hall
NO VOTE RECORDED: Morrell, Moorlach
SENATE APPROPRIATIONS COMMITTEE: 5-0, 1/21/16
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
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 this bill is
substantially the same as statutory language enacted for the
Cities of Fullerton and Brea.
SB 24
Page 2
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
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
SB 24
Page 3
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 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.
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 exempts 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
SB 24
Page 4
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 ) allowed 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.
Related/Prior 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 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee 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.
SUPPORT: (Verified1/21/16)
City of Belmont (co-source)
City of Foster City (co-source)
SB 24
Page 5
City of San Mateo (co-source)
California Professional Firefighters
San Mateo County Firefighters, IAFF Local 2400
OPPOSITION:(Verified 1/21/16)
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."
Prepared by:Glenn Miles / P.E. & R. / (916) 651-1519
1/25/16 15:58:51
**** END ****