BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 519|
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UNFINISHED BUSINESS
Bill No: SB 519
Author: Ashburn (R)
Amended: 9/2/09
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
SENATE FLOOR : 36-0, 6/1/09
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier,
Dutton, Florez, Hancock, Harman, Hollingsworth, Huff,
Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete McLeod,
Oropeza, Padilla, Pavley, Romero, Runner, Simitian,
Steinberg, Strickland, Wiggins, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Cedillo, Ducheny, Walters, Vacancy
ASSEMBLY FLOOR : 73-2, 9/9/09 - See last page for vote
SUBJECT : Public Employees Retirement System: death
benefits
SOURCE : California Association of Highway Patrol
Officers
California Department of Forestry Firefighters
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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
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.
Assembly Amendments approve the addendum to the memorandum
of understanding entered into by the state and State
Bargaining Unit 5 (Highway Patrol), represented exclusively
by the California Association of Highway Patrolmen and
makes the statutory changes needed to implement the
provisions of the addendum.
ANALYSIS :
I. 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
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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 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,
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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.
II. Bargaining Unit (BU) 5 (Highway Patrol) Memorandum of
Understanding (MOU)Addendum
This bill approves the addendum to the MOU entered into
by the state and BU 5 and makes the following statutory
changes needed to implement the provisions of the
addendum:
1. Requires the compensation increases provided
under the current BU 5 MOU, the 0.5 percent increase
effective July 1, 2009, and the as yet to be
determined increase effective July 1, 2010, be used
to prefund retiree health care benefits for patrol
members.
2. Specifies that the amount used to prefund retiree
health care benefits relative to the required
compensation increases effective July 1, 2010, will
be capped at two percent.
3. Specifies that the amounts that would have been
otherwise paid as salary increases in 2009 and 2010
will apply toward the state's credit in calculating
future increases as required by the statutory salary
setting methodology.
4. Requires patrol members to contribute an
additional 0.5 percent of base pay toward prefunding
retiree health care benefits beginning the first of
the month following the affective date of this bill.
This contribution does not reduce the base salary of
patrol members under the salary setting methodology.
5. Requires the state, beginning on July 1, 2012, to
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contribute toward prefunding retiree health benefits,
on a prospective basis, an amount at least equal to
the contribution rate established for patrol members
in 2009 and 2010.
6. Allows the contribution made by the state to be
used in the salary setting methodology if agreed to
in a MOU.
7. Requires that the contributions made pursuant to
this agreement be used exclusively to pay for the
cost of providing retiree health care to eligible
patrol members of the California Public Employees'
Retirement System and their beneficiaries and
survivors.
8. Prohibits any contributions made by or on behalf
of patrol members pursuant to this agreement from
being refunded under any circumstances.
9. Prohibits any amount used to retiree health
benefits from being included in any benefit
calculation using final compensation.
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
annually
Admin expenses one-time savings of
$28 Special*
*Public Employees Retirement Fund
SUPPORT : (Verified 9/9/09)
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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.
"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
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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."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Galgiani, Garrick, Gilmore, Hagman,
Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Monning, Nava, Nestande, Niello, Nielsen,
John A. Perez, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NOES: Anderson, Logue
NO VOTE RECORDED: Duvall, Gaines, Mendoza, Miller, Vacancy
DLW:cm 9/10/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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