BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 192|
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THIRD READING
Bill No: AB 192
Author: Gatto (D)
Amended: 8/20/10 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Public employee retirement benefits
SOURCE : Author
DIGEST : This bill prevents an increase in liability for
a former local employer when a Public Employees Retirement
System contracting agency increases a nonrepresented
employees salary by more than 15 percent.
Senate Floor Amendments of 8/20/10 delete the prior version
of the bill relating to statutory changes in the area of
cash management and cash deferrals in order to amend the
2009 Budget Act.
ANALYSIS :
Existing Law
1.Creates and defines the Public Employees' Retirement
System (PERS), which administers retirement, death, and
health benefits for state employees, classified school
employees, and the employees of over 4000 local
contracting agencies.
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2.Requires that if a local agency employs 100 or fewer
employees, its assets and liabilities shall be pooled
with other small agencies having the same benefit
structures and that the employers in the pool shall share
the same employer rate, as specified.
3.Requires PERS to actuarially determine the employer rates
annually, which are based on various factors, including
employee and retiree demographics, experience (e.g.,
numbers of deaths and retirements, amounts of salary
increases, etc.), and the level of investment returns on
the retirement fund. The rates are charged as a
percentage of the employer's total payroll for active
employees and are paid over the course of an employee's
career.
4.Requires that assets and liabilities of terminated
agencies be pooled together in a single account to
provide for the payment of promised benefits to members
of those plans.
5.Allows public employees who change public employers to,
upon retirement and having met specified criteria, have
all their years of service calculated at their highest
compensation for the purpose of determining their
retirement benefits and specifies that this is one of the
benefits of reciprocity.
6.Requires employees to also make contributions to fund
their benefits, which accumulated contributions are the
property of the employees and may be disbursed to them or
their survivors upon separation from employment or death.
This bill:
1.Requires that the contributions and disbursements of
benefits for that portion of compensation that is
excessive shall be the obligation of the contracting
agency that paid the excessive compensation.
2.Requires that the liability of a prior contracting agency
for the contributions and disbursements of benefits for
an employee shall be limited to the contributions and
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other assets sufficient to fund a retirement allowance
calculated using the amount of the employee's final
compensation at the time he or she terminated employment
with the prior agency.
3.Defines excessive compensation as the portion of a salary
that increases by more than 15 percent than the salary
paid by the former employee, and excludes represented
employees from being subject to these provisions.
4.Requires the PERS actuary to determine separate rates for
agencies subject to this bill with respect to the
excessive compensation, and requires that rate to be the
same for al agencies as a group, as specified.
5.Requires these contributions to be pooled and allocated
between the agencies, as determined by the PERS actuary,
without regard to incidences of death or disability.
6.Prohibits these separate contributions to be made by
employees and employees from being part of accumulated
contributions.
7.Makes changes to how benefits would, or would not be,
paid in the terminated agency pool with regard to these
monies.
8.Requires all contracting agencies impacted by these
changes to modify their PERS contracts by July 1, 2011.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
CPM:cm 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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