BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1651
Lou Correa, Chair Hearing date: June 28, 2010
AB 1651 (De La Torre) as amended 5/28/10 FISCAL: YES
CALPERS' PUBLIC EDUCATION AND LOCAL SAFETY MEMBERS: SERVICE
CREDIT WITHOUT REGARD TO MANDATORY FURLOUGS
HISTORY :
Sponsor: California School Employees Association
American Federation of State, County and
Municipal Employees (AFSCME), AFL-CIO
Prior legislation: AB 399 (Brownley),
Chapter 240, Statutes of 2009
SB 75 (Committee on Budget and Fiscal Review),
Chapter 342, Statutes of 2009
ASSEMBLY VOTES :
PER & SS 4-1 4/21/10
Appropriations 12-5 5/28/10
Assembly Floor 51-22 6/02/10
SUMMARY :
Would give classified school employees and local police
and firefighters the same retirement service credit that
they would have received absent any furlough.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) known as the Public Employees' Retirement Law (PERL)
provides pension benefits based in part upon credited
service. The PERL provides that credit for service
generally is accrued based upon service rendered and
compensated in a fiscal year, and that time during which
a member is absent without compensation is not allowed
for computing service;
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b) provides that a state employee (executive,
legislative, judicial, and California State University)
who is a member of the California Public Employees'
Retirement System (CalPERS), and subject to mandatory
furloughs during the 2008-09 and 2009-10 fiscal years,
receive the same amount of retirement service credit and
final compensation he or she would have received had the
employee not been subject to mandatory furloughs, and
c) provides that a trial court employee who is a member
of CalPERS, and subject to mandatory furloughs during
the 2008-09 and 2009-10 fiscal years, receive the same
amount of retirement service credit and final
compensation he or she would have received had the
employee not been subject to mandatory furloughs.
2)This bill :
a) Would provide that an employee of a county office of
education, a school district, a school district that is
a contracting agency, a community college district, or a
local safety member, as specified, who are members of
CalPERS, and subject to mandatory furloughs receive the
same amount of retirement service credit and final
compensation value he or she would have received had the
employee not been subject to the mandatory furlough; and
b) Specifies its provisions affect those persons subject
to mandatory furloughs occurring on or after July 1,
2008 as directed by the employer, or by memorandum of
understanding between the employer and employee
bargaining unit.
FISCAL :
According to the Assembly Appropriations Committee analysis,
costs are unknown with probable minor administrative costs to
CalPERS to revise pension calculations and provide notices of
changes. Additionally, there are no state pension costs, and
restorations of service credits could result in minor future
increases in employer contributions paid by school district
and contracting agency employers - totaling several hundreds
of thousands of dollars per year statewide - to cover
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increase in unfunded liability.
COMMENTS :
1) Governor implements furloughs and affect on retirement
service credit and benefits: (executive, legislative,
judicial, and California State University (CSU) employees )
On December 12, 2008, the governor implemented a furlough of
state employees for two days per month from February 1, 2009
through June 30, 2010. On July 1, 2009, the governor added
another furlough day through June 30, 2010.
A member's retirement allowance is computed based on benefit
formula, final compensation and service credit. Although the
benefit formula is unaffected by a furlough, there might be
an impact on service credit accrual, under certain limited
circumstances. To help mitigate this concern, Chapter 240,
Statutes of 2009 (AB 399/Brownley) was subsequently enacted
and requires that the mandatory furloughs not impact a state
employee's service credit or benefit for retirement purposes.
2) Trial court closures, employee furloughs, and affect on
retirement service credit and benefits
As a result of budgetary reductions, declining local trial
court revenues and to achieve savings, the Judicial Council
sought and achieved legislation that authorizes trial court
closures of one day per month for the transaction of judicial
business, until July 1, 2010.
The court closure results in one furlough day of trial court
employees each month. However, because the furloughs could
impact service credit accrual, under certain limited
circumstances for trial court employees who are CalPERS
members, Chapter 342, Statutes 2009 (SB 75/Senate Budget and
Fiscal Review Committee) was enacted which requires that for
all retirement purposes, credit for service and compensation
earnable by trial court employees who are members of CalPERS
and who are subject to mandatory furloughs, be based on the
amount that would have been credited had the employee not
been subject to mandatory furloughs.
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3) Local Safety Member Defined
Under Government Code section 20420, "local safety member"
includes all local police officers, local sheriffs,
firefighters, safety officers, county peace officers, and
school safety members, employed by a contracting agency who
have by contract been included within this system.
4) Arguments in Support
According to the sponsor, the California School Employees
Association, this bill ,
"?would provide classified school employees, local police
officers and firefighters with retirement service credit if
they are furloughed as a result of the state budget crisis.
AB 1651 is essentially a parity bill that provides these
important employee groups with the same protection that
state employees, court employees, California State
University (CSU) employees, officers of the executive
branch and judges receive through legislation signed into
law last year."
As examples, the sponsor states that the law "provides
retirement service credit for education employees who work in
the CSU system, but not if they work in local K-12 schools or
in California's community colleges. Current law gives this
retirement service credit protection to California Highway
Patrolmen, but not police officers who work in cities and
counties. Firefighters who are employed through the
Department of Forestry are protected, but not firefighters
who service our local communities."
Other supporters such as the Association of California School
Administrators, the California School Boards Association and
the California Association of School Business Officials
contend that with reductions in payroll due to budgetary
cuts, this bill will help to mitigate losses already incurred
by classified school employees through lay offs, loss of
health benefits and salary reductions.
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5) SUPPORT :
California School Employees Association, (Sponsor)
American Federation of State, County and Municipal
Employees (AFSCME),
(Co-Sponsor)
Association of California School Administrators (ACSA)
Association of California State Supervisors (ACSS)
California Association of School Business Officials (CASBO)
California Federation of Teachers (CFT)
California Labor Federation (CLF)
California Professional Firefighters (CPF)
California Public Employees Retirement System (CalPERS),
Board of Administration
California School Boards Association (CSBA)
California State Employees Association (CSEA)
California State University Employees' Union (CSUEU)
California Teachers Association (CTA)
CDF Firefighters Local 2881
Faculty Association of California Community Colleges
(FACCC)
Laborer's International Union of North America (LIUNA)
Locals 777 and 792
Peace Officers Research Association of California (PORAC)
San Francisco Unified School District (SFUSD)
Service Employees International Union (SEIU), State Council
6) OPPOSITION :
None to date
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