BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 837|
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THIRD READING
Bill No: AB 837
Author: Wieckowski (D)
Amended: 8/4/14 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM : 4-1, 6/9/14
AYES: Walters, Block, Evans, Gaines
NOES: Torres
SENATE JUDICIARY COMMITTEE : 6-0, 6/17/14
AYES: Jackson, Corbett, Lara, Leno, Monning, Vidak
NO VOTE RECORDED: Anderson
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
SUBJECT : Public employees retirement benefits
SOURCE : California Judges Association
DIGEST : This bill exempts judges who were elected to office
prior to January 1, 2013, 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.
ANALYSIS : Existing law:
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1.Establishes the Judges Retirement System II (JRSII), which is
administered by the board of the California Public Employees'
Retirement System (CalPERS).
2.Requires a judge who is not subject to PEPRA to pay 8% of
compensation as member contributions.
3.Establishes PEPRA, which provides a statewide benefit plan for
public employees who first become members of public retirement
systems on or after January 1, 2013.
4.Allows, in PEPRA, a legacy employee (i.e., a public employee
who first became a member of a public retirement system prior
to 2013) to move between public employers or retirement
systems, as specified, and be "grandfathered" under the plans
that existed on December 31, 2012, prior to implementation of
PEPRA.
5.Requires the following of all new public employees subject to
PEPRA:
A. For non-safety employees, a benefit based on 2% of final
compensation at age 62, increasing to 2.5% at age 67;
B. A final compensation period of three years;
C. A limit on the compensation that can count toward a
pension, established as the Social Security wage base
(approximately $113,000 in 2013) with annual increases to
the limit based on increases to the Consumer Price Index,
as specified; and
D. The requirement that all employees subject to PEPRA pay
one half of the normal cost of their retirement benefits as
member contributions.
1. Exempts, in PEPRA, new members in JRSII from the
requirements of PEPRA except for the requirement to pay one
half of the normal cost of their retirement benefits as
member contributions. For JRSII members, this is currently
15%.
This bill exempts judges who were elected to office prior to
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January 1, 2013, from the provisions of PEPRA requiring new
members to pay one half of the normal cost of their retirement
benefits by clarifying that a "new member" does not include a
member who is a judge who was elected to office prior to January
1, 2013, despite assuming the office of judge, and becoming a
member of the JRSII, for the first time on or after that date.
Background
According to the author, seven judges were elected in 2012 who
did not take office until 2013. These seven judges came out of
private practice, and are therefore subject to PEPRA because
they are new public employees and new members of JRSII.
Other judges elected in 2013 were former public employees, such
as district attorneys and county councils, and those former
public employees were grandfathered under the PEPRA rules that
allow public employees to move between public employers and
retirement systems without the loss of their status as legacy
employees.
PEPRA exempted judges in JRSII from all reforms with one
exception; it requires that new members of the system pay one
half of the normal cost of their benefits-the same as was
required of all employees subject to PEPRA. At this time the
normal cost of the JRSII plan is slightly over 30%, and new
judges subject to PEPRA are currently paying 15% as member
contributions.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Minor, absorbable administrative costs to CalPERS (Special
Fund)
Increased employer costs of approximately $75,000 annually
(General Fund*)
The actuarial increase in employer costs result from the reduced
employee contribution rate and long-term costs associated with
the pre-PEPRA final compensation period.
*Superior Court judges salary and retirement benefits are paid
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from the Trial Court Trust Fund. Additionally, employers will
need to recalculate the employee contribution and refund
overpayments back to the date of employment.
SUPPORT : (Verified 8/14/14)
California Judges Association (source)
ARGUMENTS IN SUPPORT : According to the sponsor:
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 positions and were elected in 2012.
Most were elected in June, but a small number were elected
in November run-off elections. They were not able to
assume office until early in January, 2013, because the
seats they were filling were not yet vacant.
We believe that simple fairness suggests that these judges
should be subject to the retirement law in effect when they
were elected to office.
JL:nl 8/16/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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