BILL ANALYSIS
SB 1479
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Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Alberto Torrico, Chair
SB 1479 (P.E .& R. Com.) - As Amended: May 10, 2010
SENATE VOTE : 35-0
SUBJECT : Public employment: retirement benefits:
administration.
SUMMARY : Makes technical and non-controversial changes to the
County Employees' Retirement Law of 1937 ('37 Act).
Specifically, this bill :
1)Allows the retirement board of a county to set the date upon
which a new employee becomes, or ceases being, a member, but
that date can be no later than 12 weeks after entering
employment with the county and no sooner than 12 weeks prior
to ending employment under the previous public employer.
2)Allows a district participating in the San Bernardino County
Employee Retirement Association (SBCERA) to prepay all or part
of the district's required annual contributions to the
retirement system, as specified.
3)Allows, in Alameda County only, the administrative costs of
operating the Supplemental Retiree Benefits Reserve (SRBR) to
be paid through the retirement system's administrative budget
and reimbursed by the SRBR bringing them into compliance with
Internal Revenue Service rulings regarding the exclusive
benefit rule.
EXISTING LAW :
1)Establishes the '37 Act under which 20 county retirement
systems operate.
2)Allows an employee who moves from one public employer to
another public employer to accrue service credit in separate
public retirement systems and to have reciprocity among the
different retirement systems with regard to certain benefits;
however, that employee cannot receive reciprocity if service
is earned in more than one retirement system during the same
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time period.
3)Allows the retirement board of a county retirement system to
set the date upon which a new employee becomes a credited
member of the system, but that date must be no later than 6
weeks after entering employment with the participating county.
4)Requires that '37 Act counties transfer payments to the county
retirement associations to fund the cost of retiree benefits.
Existing law also allows a county board of supervisors to
authorize the county auditor to make payments to the
retirement system in advance of when those payments would
otherwise be due.
5)Establishes the SRBR, to be used exclusively for the benefit
of retirees under county retirement systems that have elected
to be subject to those provisions (specifically, Alameda,
Kern, and Tulare counties).
FISCAL EFFECT : None.
COMMENTS : According to the State Association of County
Retirement Systems, sometimes employees who move between public
employers run the risk of violating reciprocity rules if they
have overlapping periods of credited service. For example, an
employee may still be running out vacation time (i.e.
technically still employed) under one employer while entering
employment with the new employer. This bill provides
flexibility for the retirement systems to start or end credited
service under each system in a coordinated manner so that the
employee does not lose reciprocity rights.
According to South Coast Air Quality Management District
(SCAQMD), the ability to pay retirement system payments in
advance can result in savings on interest charges. SCAQMD
estimates the annual savings realized through pre-payment of
contributions would reach nearly $1 million with 2-3 years.
According to the Alameda County Employees' Retirement
Association (ACERA), "As a result of the IRS's recent campaign
to force all public pension system to file for a tax qualified
determination by the IRS, or face heavy audits and steep fines,
the 20 '37 Act County systems are preparing to file for such
determination letters in January. In the course of preparing
for the filing, a technical problem has come to light that is
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unique to Alameda County. Our tax counsel believes that in
order to completely satisfy the exclusive benefit rule in the
eyes of the IRS, ACERA must pay the salaries and benefits of all
the people who administer post retirement benefits through the
same reimbursement process. Our amendment addresses this issue
and is a cost neutral solution to doing so."
REGISTERED SUPPORT / OPPOSITION :
Support
Alameda County Employees Retirement Association (Co-sponsor)
South Coast Air Quality Management District (Co-sponsor)
State Association of County Retirement Systems (Co-sponsor)
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957