BILL ANALYSIS �
AB 1542
Page 1
Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Warren T. Furutani, Chair
AB 1542 (Mansoor) - As Amended: March 29, 2012
SUBJECT : County employees' retirement: cost-of-living
adjustments.
SUMMARY : Prohibits a person who first becomes a member of the
Orange County Employees Retirement System (OCERS) on or after
January 1, 2012, from receiving the annual cost-of-living
adjustment (COLA) until they have been retired at least 12
months. This provision only becomes operative upon the adoption
by the Orange County Board of Supervisors.
EXISTING LAW permits a retirement system established pursuant to
the County Employees' Retirement Law of 1937 ('37 Act) to
provide an automatic COLA for retired members each year that is
capped at a set amount, usually 2% or 3%, effective April 1.
The COLA is provided to a member's retirement benefit to offset
changes in the Consumer Price Index. The amount of COLA, if
any, is determined annually by the Board of Retirement.
For 2012, the COLA set by the OCERS' Board of Retirement is 2.5
percent.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "Currently, retirees under
OCERS are automatically eligible for a cost-of-living adjustment
on April 1 of each year regardless of their date of retirement.
Consequently, many employees can retire on dates immediately
before the April 1 adjustment and still receive that adjustment.
The California Public Employees' Retirement System (CalPERS)
currently requires a delay of at least 12 months before a
retiree is eligible for a cost-of-living adjustment. This bill
would make retirees under OCERS consistent with the state's
retirement system."
Opponents state, "Cost-of-living adjustments are simply used to
maintain the buying power of pension benefits that have been
earned by a worker over their career. To deny this benefit
would create a possibility of bringing people into poverty, as
AB 1542
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they would not be able to maintain their buying power as
inflation occurs."
The COLA benefit provided under CalPERS begins in the second
calendar year after retirement and each May annually after that.
The bill currently specifies that the COLA the member would
eligible to receive after being retired for 12 months will be
based on the preceding 12 months. The Committee recommends that
the bill be amended to clarify the period to time that will be
used to compute the COLA that members will receive after 12
months so that OCERS would not be required to compute a separate
COLA amount for each retiree based on the date of retirement.
REGISTERED SUPPORT / OPPOSITION :
Support
Orange County Board of Supervisors (Sponsor)
County of Orange
Opposition
American Federation of State, County and Municipal Employees
Orange County Employees Association
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957