BILL ANALYSIS
AB 194
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 194 (Torrico and Torres)
As Amended August 27, 2010
2/3 vote. Urgency
-----------------------------------------------------------------
|ASSEMBLY: | |(May 4, 2009) |SENATE: |27-10|(August 30, |
| | | | | |2010) |
-----------------------------------------------------------------
(vote not relevant)
Original Committee Reference: BUDGET
SUMMARY : Limits the amount of salary or payrate a member of a
public retirement system may include for the purpose of
determining a retirement benefit to 125% of the Governor's
current recommended salary.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Limit the amount a member of a public retirement system may
include in salary or payrate for the purpose of receiving a
retirement benefit to 125% of the salary recommended to be
paid to the Governor by the California Citizens Compensation
Commission as of December 7, 2009 ($173,987 annually).
2)Require that the base amount of $173,987 be adjusted annually
based on changes in the All Urban California Consumer Price
Index.
3)Specify that this limit applies to any individual who first
becomes a member of a public retirement system on or after
January 1, 2011.
EXISTING FEDERAL LAW : Section 401(a)(17) of the Internal
Revenue Code limits the amount of annual compensation that can
be taken into account under qualified retirement plans. The
compensation limit for the 2010 calendar year is $245,000. The
compensation limit is only applicable to persons who first
became members or participants in a qualified retirement system
on or after July 1, 1996. The compensation limit does not limit
the salary an employer can pay an employee, but rather limits
the amount of compensation taken into account under the
AB 194
Page 2
retirement plan.
EXISTING STATE LAW : The California Citizens Compensation
Commission (Commission) was established in June 1990 through the
voters' passage of Proposition 112. The Commission was given
independent responsibility for determining the salaries and
benefits for California's elected officers, including the
Governor and members of the Legislature. The Commission has
seven members appointed by the Governor to six-year terms.
On May 20, 2009, the Commission met and voted to decrease
elected officials' salaries 18% effective December 7, 2009. The
salary recommended to be paid to the Governor was reduced from
$212,179 to $173,987.
AS PASSED BY THE ASSEMBLY , this bill expressed the intent of the
Legislature to enact changes relating to the Budget Act of 2009.
FISCAL EFFECT : Unknown
COMMENTS : This bill would create a salary cap for purposes of
determining retirement benefits for public employees that is
lower than the compensation cap currently imposed by federal
law. The new cap will apply to any person who first becomes a
member of a public retirement system on or after January 1,
2011.
According to the author, "We have all seen the escalating costs
of public pensions put increased pressure on the budgets and
well-being of state and local government. The malfeasance and
abuse uncovered in the City of Bell only serves to further
highlight the potential abuse of public pensions.
"The time to act is now. For the first time in California, we
will put a cap, equal to 125% of the governor's salary, on the
amount of salary that can be counted towards pension for all
public employees in California, including management and rank
and file members. This is real and meaningful reform, which
will have bi-partisan support and we hope will be signed by the
Governor."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
AB 194
Page 3
FN:
0006646