BILL ANALYSIS
SB 519
Page 1
SENATE THIRD READING
SB 519 (Ashburn)
As Amended June 25, 2009
Majority vote
SENATE VOTE :36-0
PUBLIC EMPLOYEES 6-0 APPROPRIATIONS 17-0
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|Ayes:|Hernandez, Furutani, |Ayes:|De Leon, Conway, Ammiano, |
| |Beall, Conway, Nestande, | | |
| |Torrico | |Charles Calderon, Coto, |
| | | |Davis, |
| | | |Fuentes, Hall, Harkey, |
| | | |Miller, |
| | | |Nielsen, John A. Perez, |
| | | |Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Eliminates the January 1, 2010 sunset on the 5th level
1959 Survivor Benefit for certain state and school employees
covered under the California Public Employees' Retirement System
(CalPERS) who do not participate in the Social Security program.
Prevents an increase in age eligibility and a decrease in
benefits that would coincide with the sunset.
EXISTING LAW :
1)Provides that the 1959 Survivor Benefit was created in 1959 as
a substitute for Social Security for survivors of state and
school employees who die prior to retirement. The benefit is
paid for employees who are not included in Social Security and
who die while in active service prior to retirement. In regard
to the state, this group includes Highway Patrol officers, all
peace officers and firefighters, and safety employees working
in correctional institutions and in support of law
enforcement.
2)States that he benefit is only paid when the employee dies due
SB 519
Page 2
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. In the case of
state and school employers, employees pay a portion of the
cost of ensuring for the benefit via payroll deduction, and
the State or school district pays any remaining costs. The
cost for employees is $2 per month unless the monthly premium
exceeds $4, in which case the premium is shared equally
between employee and employer. Some school districts are
coordinated with Social Security, and would therefore not be
subject to this 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 was
established in 1975, are closed and no longer available to
CalPERS contracting agencies. The 3rd, 4th, and "Indexed"
levels are available to CalPERS 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.
The benefit is paid to dependents of the deceased employee in a
specified order. In the majority of cases, a spouse who has
the care of dependent children receives a benefit until the
children are 22 (or longer if the child is incapacitated due
to disability occurring prior to age 22). The benefit then
ceases until the surviving spouse reaches age 60, at which
time the spouse receives a lifetime benefit. When there is no
eligible spouse or child, the benefit can also be paid to
parents who were financially dependent on the deceased
employee.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)The Department of Personnel Administration (DPA) indicates
that, relative to current law, the bill will result in a loss
of employer contribution savings that would otherwise occur as
a result of the scheduled benefit reduction on January 1,
2010. The loss of savings would be $2.3 million in 2009-10
($1.5 million General Fund) and $4.6 million ($3 million
General Fund) thereafter.
2)According to DPA, there would be no cost relative to the
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2009-10 Budget, since the budget assumes employer
contributions at the current level for the full year.
COMMENTS : According to DPA, 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.
"Departments already are funded for this benefit in their
current budgets, so continuing the benefit creates no new costs.
And while any savings achieved by reducing benefits for these
survivors would create negligible costs savings for the state,
the cost to the individual survivors of these safety members
would be felt profoundly.
"Compared to the costs saved by the State by not paying for
Social Security for these employees (at 6.2 percent of payroll),
the 5th level survivor benefit provides a highly cost effective
safety net that our classified school employees, CHP officers,
firefighters, peace officers, safety personnel and their
families have come to rely upon. Social Security survivor
benefits, on average, are already higher than the 5th Level 1959
Survivor benefit, and Social Security benefits receive cost of
living increases. Allowing survivors to fall back to a lower
benefit than they currently receive would be unfair to the
employees who put their health and safety on the line everyday
in service to the public."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0002585