BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
581 (Wiggins)
Hearing Date: 5/7/07 Amended: As Introduced
Consultant: Maureen Ortiz Policy Vote: P. E. & R. 4-1
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BILL SUMMARY: SB 581 transfers the Volunteer Firefighter
Length of Service Award System (VFLSAS) from CalPERS to the
California State Fire Employees Welfare Benefit Corporation
(CSFEWBC).
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Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09 2009-10 Fund
Transfer of VFLSAS --------------not
significant---------------- Special
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STAFF COMMENTS: There could be some savings to fire districts
which participate in the program because the annual cost per
person is currently derived from three factors, activity in the
program, the interest earnings, and the cost of administrative
expenses. This bill, by providing a new administrator, could
reduce the annual per person cost paid by participating
employers if the new administrator is able to increase
participation and lower administrative costs. Costs to CalPERS
to transfer the VFLSAS are expected to be minor, and will be
deducted from the fund prior to the transfer.
The Volunteer Firefighters Length of Service Award System was
established by the Legislature in 1980 to provide a means for
fire departments and districts that use volunteer firefighters
to offer a lifetime award as a recruitment and retention
incentive. The program provides an annual award of $600 to
volunteer firefighters with 10 years of service, and $1,200 to
those with 20 years of service. The member must be at least 60
years of age to receive the benefit. The system also provides
for a $3,000 lump sum death benefit for any member who has at
least ten years of service, and there is an optional
supplemental payment equal to 50% of the basic award amount, not
to exceed $50 per month, contingent upon available funding.
There are approximately 54 fire departments currently
participating in the program, and 128 volunteer firefighters who
are receiving monthly payments and who are eligible for the
death benefit. The total membership is comprised of 3,983
volunteer firefighters and the balance in the fund is
approximately $2.6 million. In 1998, CalPERS changed the
methods and assumptions it used in determining the
administrative costs of the VFLSA. Since that time, the
administrative costs have increased from $10,000 to an estimated
cost of $139,025 for 2007-08.
The system is currently administered by CalPERS and is funded
entirely by contributions from contracting fire entities and
investment earnings. AB 2330 (Samuelian) would have required a
General Fund contribution to fund the administration expenses,
but that bill was vetoed by the Governor in 2004.
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SB 581 (Wiggins)
SB 581 will transfer the program away from CalPERS and direct
the administrative responsibilities of it to the California
State Fire Employees Welfare Benefit Corporation. The CSFEWBC
currently administers several group insurance benefit programs
for members of the California State Firefighters Association
including Life, Accidental Death and Dismemberment, and Long
Term Disability insurance, as well as Homeowners, Auto and
Health Insurance programs. The bill gives the CSFEWBC complete
authority over the benefit structure including eligibility
criteria, death benefits and award payments. SB 581 requires
the CSFEWBC to use a financial institution that is eligible to
establish and administer a trust according to IRS Revenue
Procedures to be the custodian of the fund.