BILL ANALYSIS
AB 194
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CONCURRENCE IN SENATE AMENDMENTS
AB 194 (Torrico and Torres)
As Amended August 27, 2010
2/3 vote. Urgency
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|ASSEMBLY: | |(May 4, 2009) |SENATE: |27-10|(August 30, |
| | | | | |2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |6-0 |(August 30, 2010) |RECOMMENDATION: |Concur |
| | | | | |
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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
AB 194
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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 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."
AB 194
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Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0006889