BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
AB 837 (Wieckowski)
As Amended September 6, 2013
Hearing Date: June 17, 2014
Fiscal: Yes
Urgency: No
BCP:rm
SUBJECT
Public Employees' Retirement Benefits
DESCRIPTION
This bill would exempt certain judges who were elected in 2012,
but who did not take office until 2013, from the requirement in
the Public Employees' Pension Reform Act of 2013 (PEPRA) to make
employee contributions equal to one-half of the normal cost of
the retirement benefit plan.
BACKGROUND
The California Public Employees' Pension Reform Act of 2013
(PEPRA), enacted by AB 340 (Furutani, Chapter 296, Statutes of
2012) and AB 197 (Buchanan, Chapter 297, Statutes of 2012), made
major revisions to the laws governing the public retirement
system. Among other things, PEPRA codified a standard of equal
sharing of costs between public employers and employees,
generally requires employees to pay at least 50 percent of
normal costs for a defined benefit plan, and prohibited
employers from paying any of the required employee contribution.
Those requirements apply to "new members" employed by specified
public employers, the Legislature, the California State
University, and the judicial branch. Subject to certain
exceptions, PEPRA defined "new members" as individuals who
became a member of any public retirement system for the first
time after January 1, 2013, or who were an active member but
returned after a break in service of more than six months.
Thus, under existing law, "new members" must generally
contribute significantly more towards their defined benefit plan
(pension) than those who were employed prior to 2013.
(more)
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With respect to judges (who can be either appointed or elected),
PEPRA treats judges that came from private practice who were
elected in 2012 but did not take office until 2013 as "new
members." Alternatively, judges who were appointed in 2012 or
were formerly public employees are not generally considered new
members. In order to equalize treatment of judges who were
either appointed or elected in 2012, this bill would provide
that judges who were elected prior to January 1, 2013, are not
"new members," even if they assumed office and became a member
of the Judges' Retirement System II (a pension plan for judges
and justices elected on or after November 9, 1994) for the first
time on or after January 1, 2013.
CHANGES TO EXISTING LAW
Existing law , the California Public Employees' Pension Reform
Act of 2013, provides that new members employed by public
employers, the Legislature, the California State University, and
the judicial branch who participate in a defined benefit plan
shall have an initial contribution rate of at least 50 percent
of the normal cost for that defined benefit plan. (Gov. Code
Sec. 7522.30(c).)
Existing law provides that employee contributions may be more
than one-half of the normal cost rate if the increase has been
agreed to through the collective bargaining process. (Gov. Code
Sec. 7522.30(e).)
Existing law defines "new member" as: (1) an individual who
becomes a member of any public retirement system for the first
time on or after January 1, 2013, who was not a member of any
other public retirement system prior to that date; (2) an
individual who becomes an active member of a public retirement
system for the first time on or after January 1, 2013, and who
was a member of another public retirement system but who was not
subject to reciprocity; or (3) an individual who was an active
member in a retirement system and who, after a break in service
of more than six months, returned to active membership in that
system with a new employer. (Gov. Code. Sec. 7522.04(e).)
This bill would additionally provide that, for purposes of the
provision requiring new members to have an initial contribution
rate of 50 percent of the normal cost rate for a defined benefit
plan, "new member" does not include a member who is a judge who
was elected to office prior to January 1, 2013, despite assuming
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office of a judge, and becoming a member of the Judges'
Retirement System II, for the first time on or after that date.
COMMENT
1. Stated need for the bill
According to the author:
[The California Public Employees' Pension Reform Act of 2013
(PEPRA)] required an equalization of employer and employee
contributions to the Judges' Retirement System [II] for new
judges. This change approximately doubled the judge's
contribution to the retirement system from 8% to roughly
15-16%. No benefit increases or other changes were included
in PEPRA.
The change for new judges was intended to apply to judges
first elected or appointed after January 1, 2013. It is
clear under PEPRA that judges appointed before this date are
included under the old pension contribution rules. [The
California Public Employees Retirement System (PERS)] also
takes the position that judges elected in 2012 but coming
from public legal positions ([district attorneys, public
defenders], county counsel, etc.) are covered under the old
rules. But there were seven judges elected in 2012 (most in
June 2012 but some in November run-off elections) from
private practice who could not take office until the first
few days of January 2013. This created the anomaly that the
judges appointed anytime during 2012 are treated differently
than those elected months earlier.
. . .
AB 837 corrects [that] technical issue by clarifying that
the seven judges in the state who were elected during 2012
but did not take office until 2013 are not "new members" of
the Judges' Retirement System [II]. The bill thus
standardizes the treatment of all judges elected or
appointed during 2012 under PEPRA.
2. Treating judges equally
As a general rule, the vast majority of trial court judges are
appointed by the Governor to fill a vacant seat. Pursuant to
Section 16 of Article VI of the California Constitution, a
judicial vacancy must be filled by election to a full term "at
the next general election after the second January 1 following
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the vacancy." To ensure that the seat does not remain vacant
for a significant amount of time pending the election, the
Constitution further provides that the Governor shall appoint a
person to fill the vacancy temporarily until the elected judge's
term begins. As a result, vacancies are generally filled by
appointment, thereby leaving the appointed judge a period of
time (potentially several years) to become familiar with the
community before facing election.
Alternatively, judges can be initially elected (instead of
appointed) in two circumstances. First, when a judge is up for
re-election, another candidate can file election papers and
challenge the sitting judge for his or her seat. Second, in an
"open seat race," a candidate files election papers, and the
sitting judge subsequently decides to retire. In that
circumstance, the election process must proceed (the Governor
cannot interfere by appointing a replacement), and a new judge
is selected by popular vote.
This bill seeks to ensure that judges who were either elected or
appointed prior to the enactment of PEPRA are treated similarly
for purposes of contributions towards their pension under the
Judges Retirement System II. This bill would only affect the
narrow group of judges who came from private employment and were
elected in 2012 but were not able to actually assume office
until 2013 because the seat they were filling was not yet
vacant. The California Judges Association (CJA), sponsor,
asserts:
AB 837 is designed to insure that judges elected to office
during 2012 are subject to retirement provisions in effect
at the time of their election. By our count, the bill
applies to seven judges. These are individuals who came
from private legal professions and were elected in 2012.
Most were elected in June, but a small number were elected
in November run-off elections. . . . We believe that simple
fairness suggests that these judges should be subject to the
retirement law in effect when they were elected to office.
They filed for office, ran for office, and in most cases
were actually elected to office, before the provisions of
the [PEPRA] were crafted and enacted into law.
It should be noted that the provisions of PEPRA already
address the issue of individuals who were public employees
prior to being elected judges by not including those
individuals within the definition of "new members." Regarding
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the distinction between public and private practice, CJA
notes: "AB 837 would also treat these seven judges in the
same fashion as those individuals appointed to office during
2012, and those elected to office from public legal
positions."
3. Approved by the Senate Committee on Public Employment and
Retirement
The policy of this bill with respect to public pensions was
approved by the Senate Committee on Public Employment and
Retirement on June 9, 2014. With respect to the issue of
pension reform, CJA states: "We understand and appreciate that
issues relating to public pensions raise controversy in the
legislature, administration, and with stakeholder groups. But
AB 837 merely clarifies that the law in effect during 2012 will
apply to seven judges who were elected to office in 2012 but
could assume office until January 2013."
Support : None Known
Opposition : None Known
HISTORY
Source : California Judges Association
Related Pending Legislation : None Known
Prior Legislation :
AB 340 (Furutani, Chapter 296, Statutes of 2012) See Background.
AB 197 (Buchanan, Chapter 297, Statutes of 2012) See Background.
Prior Vote : Senate Committee on Public Employment and
Retirement (Ayes 4, Noes 1)
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