BILL ANALYSIS
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THIRD READING
Bill No: SB 581
Author: Wiggins (D)
Amended: As introduced
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 4-1, 4/23/07
AYES: Wiggins, Ashburn, Migden, Negrete McLeod
NOES: McClintock
SENATE APPROPRIATIONS COMMITTEE : 16-0, 5/14/07
AYES: Torlakson, Cox, Aanestad, Ashburn, Calderon,
Cedillo, Corbett, Correa, Dutton, Florez, Kuehl, Oropeza,
Ridley-Thomas, Runner, Wyland, Yee
NO VOTE RECORDED: Battin
SUBJECT : Firefighters: volunteer firefighters length of
service award
SOURCE : California Firefighters Association
DIGEST : This bill requires the California Public
Employees retirement System Board of Administration to seek
an appropriate successor administrator for the Volunteer
Firefighters Length of Service Award program.
ANALYSIS : The Volunteer Firefighters Length of Service
Award System (VFLSAS) was established by SB 273 (R.
Johnson), Chapter 1145, Statutes of 1979, to provide a
means for fire departments and districts to offer a small
lifetime award each month to their volunteer firefighters
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when they reach retirement age as a recruitment and
retention incentive, and to thank them for their service.
The VFLSAS is administered by the California Public
Employees' Retirement System (PERS) Board and is funded
entirely by contributions from contracting fire entities
and the investment earnings of the Volunteer Firefighters
Length of Service Award Fund.
To be eligible for benefits, a VFLSAS member must have
attained age 60 and have at least 10 years of volunteer
firefighter service. The years of service do not have to
be consecutive (due to the nature of the volunteer work,
many members have frequent breaks in their service).
The monthly VFLSAS award is $100 per month for the lifetime
of the member, reduced proportionately for service of less
than 20 years (e.g. the award is $50 for 10 years of
service, with an additional five dollars for every year of
service up to a maximum of $100 with 20 years of service).
The VFLSAS also provides a $3,000 lump sum death benefit
payable to the named beneficiary of any member of the
system with 10 years of service.
A supplemental payment of 50 percent of the basic award
amount, not to exceed $50 per month, is authorized in
statute and may be added to the VFLSAS service award
payment, based on an actuarial analysis of the condition of
the fund by the PERS Board. The supplemental payment is
reviewed annually by the PERS Board to ensure that it
remains consistent with the maintenance of adequate
actuarial reserves. A supplement was paid every year from
the 1993-94 to 2002-03. The PERS Board adopted no payment
of the supplement for the 2007-08 plan year due to lack of
adequate funding.
This bill:
1.Removes responsibility for administration of the VFLSAS
from the PERS Board and places it with the board of the
California State Fire Employees Welfare Benefit
Corporation (CSFEWBC).
2.Requires the PERS Board of Administration to transfer,
upon request of the CSFEWBC board, data and files of the
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VFLSAS members in its possession.
3.Authorizes local fire departments to contract with the
CSFEWBC board to make their volunteer firefighters
members of the service award system.
4.Requires the CSFEWBC Board of Administration to maintain
a benefit plan pursuant to specified provisions of the
Internal Revenue Code, and to select a financial
institution or other qualified entity to act as trustee
and establish a trust for the award system.
5.Requires the CSFEWBC Board to administer the award system
subject to specified fiduciary duties and for the
exclusive purpose of providing benefits to members of the
service award system.
6.Requires the CSFEWBC Board to adopt rules and regulations
to administer the award system, including, but not
limited to, eligibility requirements for membership in
the award system, requirements for a member to receive an
award, and the amount of an award payable.
7.Establishes a qualifications review commission for
purposes of determining eligibility for service award
benefits.
8.Requires a volunteer firefighter who is a member of the
award system and the members of the qualifications review
commission, as specified, to certify, under penalty of
perjury, that the volunteer firefighter has actively
participated in specified fire department activities.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09
2009-10 Fund
Transfer of VFLSAS-------------not significant----------
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Special
SUPPORT : (Verified 5/15/07)
California State Firefighters Association (source)
County of Mendocino
ARGUMENTS IN SUPPORT : According to the sponsor, "The
ever rising cost to administer the system will eventually
make the system cost prohibitive. While CalPERS has been
extremely supportive of this program, it has become clear
to CSFA as its creators, fire chiefs, and even CalPERS
Board members and staff that the program should not have
been legislatively created to be administered by CalPERS.
The VFLSAS is not a retirement program, it a small stipend
award that more closely resembles a Rabbi Trust and 457
plan. The future of the program relies on its growth, but
due to the high administrative cost, the program has become
stagnant.
"The most recent CalPERS Actuarial Valuation presented to
the Legislature and Governor dated April 18, 2007 states,
"?the report shows the development of the actuarially
required employer contribution per active plan member for
the fiscal year July 1, 2007 to June 30, 2008. This amount
is $427.73 as compared to $340.34 for the previous fiscal
year.
"After working with the CalPERS staff for over four years
trying to research ways to save the program, we have all
come to determine that this very worthy program can no
longer be administered in its current form."
JJA:do 5/16/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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