BILL ANALYSIS Ó
SB 24
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL
SECURITY
Rob Bonta, Chair
SB
24 (Hill) - As Amended January 5, 2016
SENATE VOTE: 29-4
SUBJECT: California Public Employees' Pension Reform Act of
2013: joint powers authority: employees
SUMMARY: Allows a joint powers authority (JPA), formed by the
Cities of Belmont, Foster City, and San Mateo to provide
employees of those cities who move to the JPA the retirement
benefit that those employees received from their respective
employer prior to the JPAs formation rather than the benefit
required under the California Public Employees' Pension Reform
Act of 2013 (PEPRA). Specifically, this bill:
1)Allows a JPA formed by the Cities of Belmont, Foster City, and
San Mateo on or after January 1, 2013, to provide employees
the retirement formula that the employees received from their
respective city employer forming the JPA prior to the JPA's
formation.
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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 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.
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
the California Public Employees' Retirement System (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.
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3)Establishes, under 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 in Orange County 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 and prohibits the formation of the JPA
in a manner that would exempt a new employee or member from
the requirements of PEPRA. New members may only participate
in a plan that conforms to the requirements of PEPRA.
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FISCAL EFFECT: According to the Senate Appropriations
Committee, CalPERS estimates that it would incur one-time costs
of $200,000 (special fund) to implement the provisions of the
bill.
COMMENTS: According to the author, "SB 24 resolves a pension
obstacle that's preventing the cities of San Mateo, Belmont and
Foster City from completing their Joint Powers Agreement for
shared fire service. It's identical to last year's bill by
Senator Huff that was signed into law to allow shared fire
service in the cities of Fullerton and Brea."
Supporters state, "Our cities, over the past four years, have
successfully integrated our fire administration functions and
other fire services and are now positioned to consider fully
integrating all fire services. A significant obstacle to full
integration of fire services is our current ability to transfer
existing fire employees to a new JPA without an interruption or
loss of their current defined benefit plans. We are supporting
SB 24 because it resolves the defined benefit plan concerns of
our current fire employees and allows us to move forward with
consideration of a full integration of fire services for the
three cities."
This bill is similar to SB 1251 (Huff), Chapter 757, Statutes of
2014, which created an exemption in PEPRA to allow classic
employees transferred to a new JPA formed by the cities of Brea
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and Fullerton after January 1, 2013, to retain their classic
retirement benefits following transfer to and employment in the
JPA.
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.
REGISTERED SUPPORT / OPPOSITION:
Support
California Professional Firefighters
City of Belmont
City of Foster City
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City of San Mateo
San Mateo County Firefighters, IAFF Local 2400
Opposition
None on file
Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)
319-3957