BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 581|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 581
Author: Wiggins (D), et al
Amended: 8/30/07
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
SENATE FLOOR : 35-1, 5/29/07
AYES: Aanestad, Ackerman, Alquist, Ashburn, Calderon,
Cedillo, Cogdill, Correa, Cox, Denham, Ducheny, Dutton,
Florez, Harman, Hollingsworth, Kehoe, Kuehl, Lowenthal,
Machado, Margett, Migden, Negrete McLeod, Oropeza,
Padilla, Perata, Ridley-Thomas, Romero, Runner, Scott,
Simitian, Steinberg, Torlakson, Wiggins, Wyland, Yee
NOES: McClintock
NO VOTE RECORDED: Battin, Corbett, Maldonado, Vincent
ASSEMBLY FLOOR : Not available
SUBJECT : Firefighters: volunteer firefighters length of
service award
SOURCE : California Firefighters Association
CONTINUED
SB 581
Page
2
DIGEST : This bill transfers the Volunteer Firefighters
Length of Service Award System from the California Public
Employees Retirement System to the California State Fire
Employees Welfare Benefit Corporation.
Assembly Amendments require the state to indemnify, from
the General Fund, and hold harmless, past, present and
future California Public Employees' Retirement System
(PERS) board members, officers and employees from all
claims, as specified, arising out of the transfer of the
Volunteer Firefighters Length of Service Award System,
require PERS, on or before January 31, 2008, to divulge and
transfer specified data and files regarding the award
system to the board of the California State Fire Employees
Welfare Benefit Corporation, and lastly require PERS to
terminate the award system, as specified, if the transfer
of the award system is not completed on or before March 1,
2008.
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
when they reach retirement age as a recruitment and
retention incentive, and to thank them for their service.
The VFLSAS is administered by the 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).
SB 581
Page
3
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
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,
SB 581
Page
4
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.
9.Requires CalPERS, in the event the transfer of the
VFLSAS is not completed on or before March 1, 2008, to
terminate the program, reimburse itself for
administrative expenses incurred, and distribute the
remaining assets first to award recipients and those
qualified to receive an award as of March 1, 2008, as a
lump-sum payment, and the remainder of award system
assets to participating fire districts on a pro-rata
basis.
10.Requires CalPERS or the CSFEWBC to notify award
recipients and participating fire districts in writing
of the transfer of the award system, and requires fire
districts to provide written notice of the transfer to
its participating volunteer firefighters.
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----------
Special
SB 581
Page
5
SUPPORT : (Verified 6/20/07) (Unable to reverify)
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 PERS has been
extremely supportive of this program, it has become clear
to CSFA as its creators, fire chiefs, and even PERS Board
members and staff that the program should not have been
legislatively created to be administered by PERS. 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 PERS 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 PERS 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 9/4/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****