BILL ANALYSIS �
AB 1681
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 1681 (Allen) - As Amended: April 21, 2014
SUBJECT : Public employees: benefits.
SUMMARY : Prohibits a public agency or state employer from
entering into a memorandum of understanding, on or after January
1, 2015, that provides for postemployment health benefits
without a strategy for permanently prefunding those benefits
pursuant to the California Public Employees' Retirement System's
(CalPERS) prefunding plan for health care coverage for
annuitants.
EXISTING LAW
1)Establishes the California Employers' Retiree Benefit Trust
(CERBT) Fund administered by the California Public Employees'
Retirement System (CalPERS) for the purpose of receiving
contributions from participating public employers that will
prefund health and other post-employment benefit costs for
retirees and their beneficiaries.
2)Authorizes, under AB 554 (Hernandez), Chapter 318, Statutes of
2007, all California public employers to join the (CERBT) to
prefund other postemployment benefits (OPEB) obligations.
3)Allows employers authorized by the Board to elect to
participate in the CERBT.
4)Requires the governing body of a participating employer to
enter into a contract with the CalPERS Board of Administration
(Board), setting forth the terms and conditions of that
employer's participation in the prefunding plan, including but
not limited to, funding expenditures, and actuarial,
accounting, reporting, and investment considerations.
5)Specifies that entering into a contract with CalPERS to
participate in the prefunding plan will not change any
obligations of the employer or the Board with regard to
benefits for employees or annuitants of a participating
employer.
AB 1681
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6)Authorizes, under SB 11 (Negrete McLeod), Chapter 326,
Statutes of 2009, the San Bernardino County Board of
Retirement to establish a post-employment health benefits fund
for the investment of assets held in trust for the exclusive
purpose of providing health benefits to the retirees of that
county, and those of any participating local agency.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the recent pension reform
changes that were made in 2012 did, "?attempt to correct the
course of California's public debt crisis, it left untouched the
healthcare debt obligations that employers must pay to their
employees. The current system has left employees and employers
unwilling to discuss and plan for the ever increasing debt
burden being thrust upon future generations."
A report issued by the State Controller's office in February of
2013, showed the unfunded actuarial accrued liability of
providing health and dental benefits for state retirees alone is
projected to be $63.84 billion over 30 years.
While there are many ways for a local public employer to prefund
postemployment health benefits, this bill mandates that those
employers use the CalPERS prefunding plan. For some employers,
this may not be the preferred option.
Opponents state, AB 1681 would obstruct the collective
bargaining process and constrain the abilities of both the
employer and employees groups to effectively negotiate the
funding of postemployment health care costs. "AB 1681 would
mandate, for all public agencies, that any MOU contain a plan
for prefunding postemployment health benefits. This mandate
take this issue out of the hands of the parties at the
bargaining table and requires it to be resolved in a particular
way that may not be in the best interest of either party."
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
AB 1681
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American Federation of State, County and Municipal Employees
AFSCME District Council 36
California Professional Firefighters
Management and Professional Employees Association of MWD/AFSCME
Local 1001
Union of American Physicians and Dentists
United Nurses Associations of California/Union of Health Care
Professionals
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957