BILL ANALYSIS �
AB 875
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Warren T. Furutani, Chair
AB 875 (Donnelly) - As Amended: March 31, 2011
SUBJECT : Public employees' retirement.
SUMMARY : Prohibits any compensation for accrued leave or
overtime from being included as part of "final compensation" for
purpose of calculating a public retirement benefit for persons
first hired on and after January 1, 2012.
EXISTING LAW :
1)Provides, under the Public Employees' Retirement Law, final
compensation does not include compensation received by a
member for accrued leaves or overtime.
2)Provides, in counties operating retirement systems under the
County Employees' Retirement Law of 1937 ('37 Act),
"compensation earnable" includes all remuneration paid in cash
through the payroll warrant which can include sick leave and
vacation cash-outs, as specified. Overtime is excluded from
the definition of "compensation earnable" which is used to
determine "final compensation" for retirement purposes.
3)Delineates, under the Teachers' Retirement Law, what is, and
is not, creditable compensation. Compensation for unused
accumulated leave is not creditable compensation under the
existing framework. The Teachers' Retirement Law also defines
overtime as the aggregate creditable service in excess of one
year of creditable service that is performed by a member in a
school year. Existing law requires that compensation for
creditable service that exceeds one year in a school year or
is paid for a limited number of times be credited to the
Defined Benefit Supplement Program. Therefore, neither
compensation for accrued leave nor compensation for overtime
work is included in the calculation of final compensation.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "Currently a state
employee's pension is allowed to be based on their base salary
AB 875
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and any overtime they accumulate. This makes it extremely
difficult to project a person's future pension, thus the future
costs to the state."
Opponents state, "AB 875 proposes unilateral changes that fly in
the face of collective bargaining law and amount to a breach of
agreement that state government has made with millions of
workers in California. The average public pension in California
is $26,000 a year. Half of CalPERS retirees receive $18,000 per
year or less. Given these facts, California will not tolerate
policy makers who do not keep their work to the people working
in the trenches to serve, protect, and teach our families.
Elimination of collective bargaining rights is a direct attack
on public employees, unfair and akin to the attacks on workers
happening in Wisconsin. It is unacceptable there and it is
unacceptable in California."
AB 340 (Furutani) of this year, among other things, excludes
from the '37 Act definition of "compensation earnable" payments
for unused vacation time, annual leave, personal leave, sick
leave, or compensatory time off that exceeds what is earned and
payable in a 12-month period, payments for service rendered
outside of normal working hours, bonus payments, housing
allowances, severance pay, unscheduled overtime, and vehicle
allowances.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
California Association of Highway Patrolmen
California School Employees Association
CDF Firefighters
Orange County Employees Association
Retired Public Employees Association
Service Employees International Union
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
AB 875
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