BILL ANALYSIS �
AB 837
Page 1
GOVERNOR'S VETO
AB 837 (Wieckowski)
As Amended August 4, 2014
2/3 vote
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|ASSEMBLY: | |(May 23, 2013) |SENATE: |31-2 |(August 25, |
| | | | | |2014) |
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(vote not relevant)
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|COMMITTEE VOTE: |4-1 |(August 27, 2014) |RECOMMENDATION: |concur |
|(P.E., R. & | | | | |
|S.S.) | | | | |
| | | | | |
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|ASSEMBLY: |69-6 |(August 28, | | | |
| | |2014) | | | |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Exempts judges who were elected to office prior to January
1, 2013, but who did not take office until on or after that date,
from the provisions of the Public Employees' Pension Reform Act
(PEPRA).
The Senate amendments delete the Assembly version of this bill and
instead exempt judges who were elected to office prior to January 1,
2013, from the PEPRA requirement to pay on half of the normal cost
of their retirement benefits.
EXISTING LAW :
1)Establishes the Judges Retirement System II (JRSII), which is
administered by the board of the California Public Employees'
Retirement System (CalPERS).
2)Provides in JRS II a retirement formula equal to 3.75% of the
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judge's final compensation for each year of service. However, in
order to receive these benefits the judge must be either age 70 or
older with at least five years of service, or be age 65 or older
with at least 20 years of service. Final compensation is based on
the highest twelve months and the judges' retirement benefit may
not exceed 75% of final compensation. A judge who is not eligible
for a retirement benefit may receive monetary credits in either a
lump sum or as an annuity.
3)Requires a judge who is not subject to PEPRA to pay 8% of
compensation as member contributions.
4)Establishes PEPRA, which requires the following for public
employees who first become members of public retirement systems on
or after January 1, 2013:
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.
5)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%.
FISCAL EFFECT : According to the Senate Appropriations Committee,
minor, absorbable administrative costs to CalPERS (Special Fund) and
increased employer costs of approximately $75,000 annually (General
Fund).
COMMENTS : According to the author, "The 2012 public pension reform
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bill (PEPRA) required an equalization of employer and employee
contributions to the Judges Retirement System (JRS 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. [Cal]PERS also takes the position that
judges elected in 2012 but coming from public legal positions (DAs
[District Attorneys], PDs [Police Departments], 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
judges appointed anytime during 2012 are treated differently than
those elected months earlier.
"Assembly Bill 837 corrects this technical issue by clarifying that
the seven judges elected during 2012 but not taking office until
2013 are not 'new members' of the Judges Retirement System. The bill
thus standardizes the treatment of all judges elected or appointed
during 2012 under PEPRA."
According to the sponsor, the California Judges Association, "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."
There is no registered opposition to this bill.
GOVERNOR'S VETO MESSAGE :
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"This measure creates an exemption to the California Public
Employees' Pension Reform Act of 2013. I am unwilling to begin
chipping away at these reforms."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957 FN:
0005680