BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1477
                                                                  Page  1

          Date of Hearing:   May 6, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

               AB 1477 (Krekorian) - As Introduced:  February 27, 2009 

          Policy Committee:                              P.E.R. &  
          S.S.Vote:    4-1

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill increases the postretirement death benefit paid to the  
          beneficiary of a classified school member of the California  
          Public Employees' Retirement System (CalPERS) from $2,000 to  
          $6,163, bringing it into line with the benefit paid by the  
          California State Teacher Retirement System (CalSTRS).
           
          FISCAL EFFECT

           CalPERS estimates that the increased death benefit would raise  
          its unfunded liability by $525 million. Amortizing the cost of  
          this liability over a 20 year period would result in  
          contribution increases by local school districts of about $49  
          million per year. 
           
          COMMENTS  

           1)Background  . A death benefit is a "lump sum" of money paid to  
            survivors at the time of the death of a member in a retirement  
            system. It is meant to cover a portion of the member's funeral  
            costs. Current state law provides varying levels of death  
            benefits for members of retirement systems. For example, state  
            and school classified members of CalPERS have a retiree death  
            benefit of $2,000, though school employers may amend their  
            individual contracts with CalPERS to provide enhanced retiree  
            death benefits of $3,000, $4,000 or $5,000. CalSTRS currently  
            provides a death benefit $6,163. The amount may be adjusted by  
            the Teachers' Retirement Board following each actuarial  
            valuation based on changes to the California Consumer Price  
            Index.  









                                                                 AB 1477
                                                                  Page  2

          2)Rationale  . According to the sponsor (California Federation of  
            Teachers), the bill is intended to more fully offset the costs  
            of a deceased member's funeral and establish equity between  
            local school employees covered by CalPERS and CalSTRs. 

           3)Previous legislation  . AB 2688 (Alquist) of 2002, would have  
            increased the various death benefits paid to all members and  
            retirees in the retirement systems administered by CalPERS to  
            $7,500. This bill was held in this committee.

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081