BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2140 (Lara) - California Highway Patrol: Retirement
Contributions
Amended: As Introduced Policy Vote: PE&R 4-0
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: AB 2140 reduces the employee retirement
contribution rate by 3 percent for miscellaneous and industrial
members of the State Bargaining Unit 5 (California Highway
Patrol), specifically the cadets, pursuant to a previously
negotiated Memorandum of Understanding (MOU).
Fiscal Impact:
One-time reimbursement costs from CalPERS of approximately
$200,000. (Special)
Minor, absorbable costs to State Controller's Office and to
CalPERS for readjusting member contributions.
(General/Special)
Background: SB 846 (Correa) Chapter 162/2010, among other
things, ratified an agreement between the State and Bargaining
Unit 5, but did not accurately reflect the agreement reached on
the employee retirement contributions for CHP Cadet
Miscellaneous Members.
During negotiations that culminated in the current BU 5 MOU, it
was intended that the funding methodology for the cadets'
retirement contribution would correspond to that of the patrol
officers - both groups would realize an increase of 2% in the
employee rate. The current MOU suspends the retiree health
prefunding contributions of 2 percent of monthly pay from
employees, and instead redirects that amount to employee pension
contributions resulting in an increase in the contribution rate
from 8% to 10% of monthly pay for CHP officers. Consequently,
the contribution for cadets should have increased 2% from the
previous contribution rate of 5% to 7% of monthly pay in excess
of $513 .
AB 2140 (Lara)
Page 1
However, the specifics of the CHP cadets retirement contribution
did not appear in the agreement, and so was incorrectly ratified
by SB 846 whereby both groups' contribution increased to 10%,
meaning the cadets' contribution was erroneously increased from
5% to 10% of pay. Cadets are classified as Miscellaneous
members of CalPERS, not Safety patrol members.
BU 5 cadets are a group of employees who undergo a six-month CHP
training academy. During this training period, cadets are
classified as Miscellaneous employees for CalPERS retirement
purposes. Upon graduation from the academy, cadets are promoted
to the position of officer and become Patrol members of CalPERS.
Proposed Law: AB 2140 will correct an oversight in the
ratification of the current MOU between the State and Bargaining
Unit 5 (CHP) to ensure that the employee retirement contribution
for cadets is adequately withheld at a rate of 7% of monthly pay
in excess of $513.
Staff Comments: SB 846 (Correa) Chapter 162/2010 ratified the
BU 5 MOU, but also provided that the parties may agree to a
different rate of contribution without legislative action if
such an agreement does not require an additional expenditure of
funds. In the ongoing process of administering State employee
bargaining agreements, the Department of Personnel
Administration (now CalHR) was notified of the discrepancy in
the contribution rate for cadets by the State Controller's
Office. At this time, however, the cadets are still being
subjected to an incorrect retirement contribution withholding
rate of 10%.