BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1651 (De La Torre)
Hearing Date: 07/15/2010 Amended: 05/28/2010
Consultant: Maureen Ortiz Policy Vote: PE&R 4-2
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BILL SUMMARY: AB 1651 provides that the CalPERS retirement
benefit for certain local safety members and classified school
employees will be paid as if the employee had not been subject
to the mandatory furloughs effective July 1, 2008.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Increase in employer contrib. -----unknown, potentially $150
annually--- Local
Admin costs --------potentially
less than $75----------- Special*
*Public Employees Retirement Fund
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STAFF COMMENTS: This bill meets the criteria for referral to
the Suspense file.
According to CalPERS, administrative costs to revise pension
calculations and provide notices of changes will be minor.
However, restorations of service credits could result in future
increases in employer contributions paid by school districts and
contracting agency employers in the amount of several hundred
thousands of dollars per year to pay for the increased
liability. The exact fiscal impact is unknown because the
number of employees affected has not been identified.
Additionally, it is possible that some employees may have
retired during the last year and will be entitled to a
recalculation of their pension benefit upon enactment of this
bill.
AB 399 (Brownley) Chapter 240, Statutes of 2009, and SB 75
(Committee on Budget and Fiscal Review), Chapter 342, Statutes
of 2009 provided that a state employee who is a member of
CalPERS and is subject to the mandatory furloughs imposed
through Executive Orders during the 2008-09 and 2009-10 fiscal
years will receive the same amount of retirement service credit
and final compensation he or she would have received had the
employee not been subjected to the furloughs.
AB 1651 will provide equity to employees of a county office of
education, a school district, a community college district, or a
local safety member so that the furloughs will not have a
negative impact on the retirement allowances of these employees.
It will apply to furloughs that are designated by the employer
or by a memorandum of understanding entered into on or after
July 1, 2008 for purposes of achieving budgetary savings.
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AB 1651 (De La Torre)
AB 1651 requires the employers to notify the CalPERS Board of
Administration as to the terms and conditions of any mandatory
furlough time imposed on employees during a reporting period.
The retirement benefit for members of CalPERS is calculated
based on age, service credit, and final compensation. Under
limited circumstances, service credit and final compensation
could be impacted by the furloughs.
On December 29, 2008, the Governor issued Executive Order
S-16-08 which proclaimed a furlough of two unpaid days per month
from February 2009 through June 2010 for represented state
employees and supervisors. The Governor's Executive Order
S-13-09 then subjected all state employees to a third furlough
day per month effective July 1, 2009 through June 30, 2010 which
resulted in a total salary reduction of approximately 13.86%.