BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
752 (Wiggins)
Hearing Date: 5/28/2009 Amended: As Introduced
Consultant: Maureen Ortiz Policy Vote: PE&R 7-0
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BILL SUMMARY: SB 752 creates an exemption in the California
Public Employees Retirement System Law (PERS Law) for Solano
County that will require the assets and liabilities of the trial
court and the county be separated.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Admin expenses
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Special*
*Public Employees' Retirement Fund
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STAFF COMMENTS: SUSPENSE FILE.
The proposed author's amendments specify that before a county
issues a pension obligation bond, the court and county will
jointly approve and submit a list that designates the employer
of all affected employees to CalPERS. After CalPERS prepares a
computation of assets and liabilities, the county and court will
enter into a written agreement that contains terms by which the
court will remit funds to the county subsequent to the issuance
of any future pension obligation bond.
Separating the assets and liabilities of Solano County and the
trial court employees as required under SB 752, retroactive to
June 30, 2002, will result in an unknown increase in the
employer contribution rate for trial court employees, paid from
the state General Fund. CalPERS estimates minor administrative
costs for performing the initial separation of assets and
liabilities back to June 30, 2002.
SB 2140 (Burton), Chapter 1010, Statutes of 2000, enacted the
Trial Court Employment Protection and Governance Act which
requires that, in the case of a trial court located within a
county contracting with PERS for retirement benefits, the trial
court and the county must participate under a joint contract
with PERS. This results in pooled assets and liabilities, a
single employer contribution rate, and a single benefit package.
Trial courts located within a county not contracting with
CalPERS at that time were eligible to independently contract
with CalPERS for retirement benefits.
In 2004, Solano County issued pension obligation bonds to pay
off its unfunded liabilities. This significantly reduced the
county's employer contribution rates for benefits contracted
with CalPERS, which are calculated according to the amounts
needed to amortize any unfunded liability. Since the assets and
liabilities of the trial
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SB 752 (Wiggins)
court and the county are currently pooled, the employer
contribution rate for the trial courts was also significantly
reduced as a result of the pension bonds, even though the
pension bonds did not reduce the unfunded liability of court
employees. Consequently, the state realized a significant
reduction, though unwarranted, in employer contributions as a
result of the county pension bonds. Separating the assets and
liabilities of Solano County and the trial court employees would
result in the trial court employees
contracting separately with CalPERS and, therefore, paying a
higher employer contribution rate.
SB 752 requires the assets and liabilities of the trial court
and Solano County be separated based on a computation as
determined by the actuary retroactive to June 30, 2002.
Following the separation of the assets and liabilities, the
Solano County trial court shall participate in a risk pool. The
risk pool is intended to protect small employers from large
fluctuations in contribution rates. However, creating a
separation between the county employees and the trial court
employees could result in the trial court negotiating retirement
benefits for their employees that may differ from those of
Solano County employees.
There are currently 38 counties contracting with CalPERS for
retirement benefits. Although Solano and Butte Counties both
issued pension obligation bonds to reduce their liabilities to
the retirement system, it is not known how many counties may
issue bonds in the future, and thus, seek similar legislation to
separate their assets and liabilities from the trial courts.
This bill is similar to SB 733 (Aanestad) which would have
required that the assets and liabilities of Butte County and
Solano County and their respective trial courts be kept in
separate accounts under their existing joint contract. That
bill was held on the Assembly Appropriations Committee Suspense
File.