BILL ANALYSIS Ó SB 1203 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1203 (Hertzberg) - As Amended April 13, 2016 ----------------------------------------------------------------- |Policy |Public Employees, |Vote:|6 - 0 | |Committee: |Retirement/Soc Sec | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes a joint powers authority (JPA) formed on or after January 1, 2013, to provide employees who transfer to the JPA the same defined benefit plan or formula that they received from their respective employer prior to the JPA's formation SB 1203 Page 2 rather than the benefit required under the California Public Employees' Pension Reform Act of 2013 (PEPRA). FISCAL EFFECT: One-time special fund costs to the California Public Employees' Retirement System (CalPERS) of approximately $200,000 for implementation and systems changes. COMMENTS: 1)JPA and PEPRA. A JPA is the authority created by an agreement between multiple public agencies to exercise powers common to each of them for the purpose of accomplishing specific common goals. A JPA can be used by agencies to share regional responsibilities, such as fire services. Under PEPRA, new public agencies formed after January 1, 2013 must use the new pension formulas for their employees. As a result, current employees cannot be transferred into a JPA without losing their benefits, even if no lapse in public service or change in duties and responsibilities occur. 2)Purpose. This bill is intended to allow local agencies to leverage the cost benefits and efficiency advantages JPAs can offer without prejudice to existing employee pensions. 3)Related legislation. SB 24 (Hill) of 2016, currently in this committee, authorizes a 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 SB 1203 Page 3 cities. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081