BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 354


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          Date of Hearing:   June 24, 2015


           ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL  
                                      SECURITY


                                  Rob Bonta, Chair


          SB  
          354 (Huff) - As Amended April 6, 2015


          SENATE VOTE:  36-0


          SUBJECT:  California Public Employees' Pension Reform Act of  
          2013: joint powers authority: employees.


          SUMMARY:  Clarifies the time period during which a "classic"  
          member of the California Public Employees' Retirement System  
          (CalPERS) 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.  Specifically, this bill:





          1)Deletes the reference date of December 31, 2012, and instead  
            specifies that transferred employees will receive the defined  
            benefit plan or formula they were receiving from Brea or  
            Fullerton prior to the exercise of a common power by the JPA. 











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          2)Clarifies that if any of up to three contiguous cities join  
            the JPA formed by Brea and Fullerton and their employees  
            transfer to the JPA with no more than a 6-month break in  
            service between employment with the city and employment in the  
            JPA, those employees will also be allowed to retain the  
            defined benefit plan or formula they were entitled to from  
            their employers prior to the exercise of common power by the  
            JPA.
          


          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 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.









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          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 on December 31,  
            2012, from their respective employers.



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


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  Last year, SB 1251 (Huff), Chapter 757, Statutes of  








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          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.  In doing so, the bill used the standard December 31,  
          2012 date as the reference for retirement benefits that  
          transferred employees would retain.





          At the time, consideration was not given to classic employees  
          who would come to work at Brea of Fullerton in the interim and  
          then be transferred to the JPA.  Any classic employees hired  
          between January 1, 2013 and the date of transfer to the JPA  
          would not be grandfathered under the statute as written, even  
          though the intent was to allow all transferring classic  
          employees to retain their classic formulas.





          SB 354 makes clear the intent of SB 1251 so that any classic  
          employee who transfers to the newly formed JPA will be allowed  
          to retain his or her classic formula following the transfer.





          According to supporters, "SB 1251 (2014) paved the way for the  
          Cities of Brea and Fullerton to form a Joint Powers Authority  
          (JPA) that will permit both agencies to completely share fire  
          services and allow classic employees with no break in service,  
          hired before December 31, 2012, to transfer over to the forming  
          JPA and retain their classic pension formulas.  As we are  
          working toward formation of the JPA, both Brea and Fullerton  
          have hired classic public safety employees after December 31,  








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          2012 to replace retiring personnel.  Unfortunately, CalPERS has  
          told us that these employees would be classified as new members  
          under the Public Employees' Pension Reform Act of 2013 once they  
          are moved over to the new JPA.





          "To address this issue, SB 354 would revise the period during  
          which the authorization granted to a JPA formed by the Cities of  
          Brea and Fullerton to provide specified retirement benefits, as  
          described above, may be applied."


          




















          REGISTERED SUPPORT / OPPOSITION:










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          Support


          City of Brea (Sponsor)


          City of Fullerton (Sponsor)




          Opposition


          None on file




          Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)  
          319-3957