BILL ANALYSIS
SB 752
Page 1
SENATE THIRD READING
SB 752 (Correa)
As Amended August 24, 2009
2/3 vote. Urgency
SENATE VOTE :39-0
PUBLIC EMPLOYEES 6-0
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|Ayes:|Hernandez, Furutani, | | |
| |Beall, Conway, Nestande, | | |
| |Torrico | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Implements a recently negotiated bargaining agreement
between Orange County and the Orange County Employees'
Association (OCEA). This agreement implements a second tier
option for new non-safety employees and gives incumbent
non-safety employees a one-time election to enter the new lower
tier, for prospective service only. Specifically, this bill :
1)For employees first hired after the adoption of a resolution
by the board of supervisors, or the governing body of a
district within the county, authorizing this option:
a) Requires employees to make a written election between
two specified pension calculations - the current 2.7% at
age 55 formula or the newly offered 1.62% at age 65 formula
which also includes a Defined Contribution (DC) component;
b) Specifies that this irrevocable election must be made
within 45 calendar days of beginning employment with the
county; and,
c) Specifies that if a new employee fails to make an
election within the 45 days, the employee will be deemed to
have elected the 1.62% at age 65 formula.
2)For current employees in the 2.7% at age 55 formula:
a) Allows, within 180 calendar days of approval of the
resolution, employees to make a one-time written election
to have all future service calculated under the 1.62% at
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age 65 formula; and,
b) Requires employees electing the 1.62% at age 65 formula
to sign an affidavit stating they fully understand the
impact of terminating the 2.7% at age 55 formula and that
the election is irrevocable.
3)For current employees who move into a position covered by the
2.7% at age 55 formula after adoption of the resolution:
a) Requires employees to make a one-time written election
between the two formulas - the 2.7% at age 55 formula or
the 1.62% at age 65 formula - within 45 calendar days of
becoming eligible for the 2.7% at age 55 formula;
b) Requires employees electing the 1.62% at age 65 formula
to sign an affidavit stating they fully understand the
impact of terminating the 2.7% at age 55 formula and that
the election is irrevocable; and,
c) Specifies that failure to make an election within 45
calendar days will be cause for termination of employment.
4)Requires any current county employee electing the 1.62% at age
65 formula to include the signature of the designated
beneficiary of the employee's pension acknowledging the
election or to include a written declaration that one of the
following is applicable:
a) The beneficiary has no identifiable community property
interest in the benefit;
b) The employee does not know the whereabouts of the
beneficiary;
c) The beneficiary has refused to sign the written
acknowledgement; or,
d) The beneficiary is incapacitated due to a mental or
physical condition.
5)Specifies that a person who knowingly provides false
information in the written declaration is subject to a civil
penalty of not less than $1,000 and not more than $25,000.
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6)Allows employees electing the 1.62% at age 65 formula to
receive a contribution from the county or district to a DC
plan.
7)Specifies that these provisions do not apply to safety
members.
8)Allows the county to require employees electing the 1.62% at
age 65 formula to pay additional member contributions beyond
the normal rate of contribution required under current law.
9)Specifies that these additional contributions will not result
in an additional benefit to the member but do become part of
the accumulated contributions of the member for the following
purposes only:
a) Funding the annuity portion of the member's retirement
allowance; or,
b) Withdrawal of contributions by the member upon
terminating membership in the retirement system.
10)Specifies that the date of membership for new hires making an
election between the two specified pension calculations will
be retroactive to the date of hire.
FISCAL EFFECT : Unknown
COMMENTS : According to one of the bill's co-sponsors, the
Orange County Employees' Association (OCEA), "SB 752 allows
miscellaneous employees in Orange County to voluntarily opt-in
to a new hybrid retirement plan for new and general members of
the retirement system. The optional hybrid plan includes a
1.62% at age 65 Defined Benefit Plan as well as a Defined
Contribution Plan?Current employees will have the option of
staying in the 2.7% at age 55 plan or electing the new hybrid
plan. No employee will be forced out of the 2.7% at 55 plan.
This is part of a collectively-bargained agreement between the
parties. OCEA believes that SB 752, which implements this
agreement, is in all parties' best interest."
Other supporters state, "The County of Orange is pleased to join
with the OCEA in supporting SB 752. The agreement is an
innovative partnership of the OCEA and the County to address the
needs of our workforce while remaining responsible stewards of
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taxpayer dollars."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0002358