BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 519|
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THIRD READING
Bill No: SB 519
Author: Ashburn (R)
Amended: As introduced
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 7-0, 4/20/09
AYES: Correa, Ashburn, Benoit, Ducheny, Liu, Padilla,
Wiggins
SENATE APPROPRIATIONS COMMITTEE : 11-0, 5/28/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Wyland, Yee
NO VOTE RECORDED: Walters, Wolk
SUBJECT : Public Employees Retirement System: death
benefits
SOURCE : California Association of Highway Patrol
Officers
California Department of Forestry Firefighters
Department of Personnel Administration
DIGEST : This bill (1) eliminates the sunset date
(January 1, 2010) on the 5th level 1959 Survivor Benefit
for state employee member of the Public Employees'
Retirement System (PERS) who do not receive Social
Security, (2) apply to PERS classified school employees
that do not participate in federal Social Security, and (3)
provide that by eliminating the sunset date, current 5th
level 1959 Survivor Benefit level recipient survivors will
CONTINUED
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not lose a significant amount of monthly income (moreover,
as explained below, some of them would lose their benefits
entirely for up to two years) or health benefits.
ANALYSIS :
PERS 1959 Survivor Benefit
The PERS 1959 Survivor Benefit, which is paid monthly, was
created in 1959 as a substitute for Social Security for
survivors of active state and school employees who die
prior to retirement and who are not included in Social
Security.
State Employees Who are Covered by the 1959 Survivor
Benefit
Department of the California Highway Patrol officers, all
peace officers, and safety employees working in
correctional institutions and in support of law enforcement
are covered by the 1959 benefit.
The 1959 benefit is only paid when the employee dies due to
non-work related causes.
(If the safety employee dies due to injury or illness
incurred on the job, he or she is subject to the "Special
Death Benefit," which cannot be paid in conjunction with
the 1959 Survivor Benefit.
Who Pays for the 1959 Survivor Benefit ?
Employees pay a portion of the cost of the 1959 benefit via
payroll deduction, and the State or school district pays
any remaining costs.
Who Receives the Monthly Payments Provided in the 1959
Survivor Benefit ?
The monthly benefit is paid to dependents of the deceased
employee in a specified order:
1.In the majority of cases, a spouse who has the care of
dependent children receives a benefit until the children
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are 22 (or longer if the child is incapacitated due to
disability occurring prior to age 22),
2.The benefit then ceases until the surviving spouse
reaches age 60, at which time the spouse receives a
lifetime benefit, and
3.When there is no eligible spouse or child, the benefit
can also be paid to parents who were financially
dependent on the deceased employee.
What is the Employee's Cost of the 1959 Survivor Benefit ?
Employees pay $2 per month unless the monthly premium
exceeds $4, in which case the premium is shared equally
between employee and employer.
What are the Different Benefit Levels Offered Under the
PERS 1959 Survivor Benefit ?
The benefit has evolved over the years, and there are
several monetary levels of benefits.
The original 1st level of benefits and the 2nd level, which
were established in 1975, are closed and no longer
available to PERS contracting agencies.
The 3rd and 4th, and "Indexed" levels are available to PERS
contracting agencies, which may contract for whichever
levels they choose.
Survivors of state and school employee members are eligible
for the 5th level of benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Survivor benefit loss of savings of approximately
$4,300 General
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annually
Admin expenses one-time savings of
$28 Special*
*Public Employees Retirement Fund
SUPPORT : (Verified 5/28/09)
California Department of Forestry Firefighters (co-source)
California Association of Highway Patrol Officers
(co-source)
Department of Personnel Administration (co-source)
California Professional Firefighters
California Public Employees' Retirement System
California Statewide Law Enforcement Association
California School Employees Association
California State Employees Association
California Teachers Association
Peace Officers Research Association of California
ARGUMENTS IN SUPPORT : According to the Department of
Personnel Administration, the sponsor of the bill, "CHP
officers, firefighters, peace officers, and school
classified employees who die unexpectedly in their prime
earning years do not have Social Security coverage for
their surviving dependent children and spouses.
"The 1959 Survivor Benefit Program, in effect for 50 years,
provides an extremely valuable safety net for these
employees and their families, at a little over $5 per
employee per month in state costs and at no cost currently
to school districts.
"The elimination of this benefit will hurt these survivors
significantly, and at very small cost savings to the State.
In fact, departments already are funded for this benefit
in their current budgets, so continuing the benefit creates
no new costs. Any savings achieved by reducing benefits
for these survivors would create negligible costs savings
for the state, and the cost to the individual survivors of
these safety members will be felt profoundly.
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"Considering the costs saved by the State by not
coordinating these employees with Social Security (at 6.2
percent of payroll), the 5th level of benefits is an
inexpensive safety net that our classified school
employees, CHP officers, firefighters, peace officers, and
their families have come to rely upon.
"Allowing survivors to fall back into a lower benefit at a
time when costs are rising for essentials such as food,
gasoline, and prescription drugs, and other assets, such as
homes and retirement savings, are losing value, would be
unfair to the employee who put their health and safety on
the line everyday in public service."
DLW:cm 5/29/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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