BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1783
Norma Torres, Chair HEARING DATE: August 22, 2014
AB 1783 (Jones-Sawyer) as amended 8/18/14
FISCAL: YES
PUBLIC EMPLOYEES' PENSION REFORM ACT OF 2013 (PEPRA):
EXEMPTION FOR PROTECTED TRANSIT WORKERS
HISTORY :
Sponsor: Author
Other legislation: AB 340 (Furutani)
Chapter 296, Statutes of 2012
AB 1222 (Bloom)
Chapter 527, Statutes of 2013
ASSEMBLY VOTES :
Not applicable - New bill with August 18, 2014 amendments
SUMMARY :
AB 1783 would continue to exempt certain public transit
workers from the requirements of the Public Employees'
Pension Reform Act of 2013 (PEPRA) until January 1, 2016,
pending a ruling from the federal district court with regard
to whether or not the implementation of PEPRA, with regard to
the impacted transit workers, justified the federal Secretary
of Labor's determination in 2013 that the implementation of
PEPRA precluded certification of certain transit projects and
related federal funding.
BACKGROUND AND ANALYSIS :
1)Existing federal law :
a) protects the collective bargaining rights of
specified transit workers employed in certain transit
agencies and districts that were, mostly in the 1960's
through the 1970's, converted from private to public
agencies. (Many such agencies are now included in
CalPERS, 1937 Act, or other public retirement systems
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and plans.)
b) requires, under Section 13(c) of the Federal Transit
Law, that these employee protections, commonly referred
to as "protective arrangements" or "Section 13(c)
arrangements" must be certified by the United States
Department of Labor (US DOL) and in place before federal
transit funds can be released to a mass transit employer
subject to the Federal Transit Law.
Section 13(c) requires, among other things, the
continuation of collective bargaining rights, and
protection of transit employees' wages, working
conditions, pension benefits, seniority, vacation, sick
and personal leave, travel passes, and other conditions
of employment.
c) allows the US DOL to determine if the collective
bargaining rights of an employee group protected under a
13(c) arrangement have been impaired, and if so
determined, to stop the flow of federal transportation
funding until such time as the those rights have been
restored.
1)Existing state law :
a) creates comprehensive public employee pension reform
through enactment of PEPRA (and related statutory
changes) that apply to all public employers (including
public transit agencies) and public pension plans on and
after January 1, 2013, excluding the University of
California and charter cities and counties that do not
participate in a retirement system governed by state
statute.
b) under PEPRA, changed the retirement benefit plans
that may be offered to new public employees, including:
i. establishing uniform retirement formulas, including a
2% at age 62 formula for non-safety workers;
ii. requiring a 3-year final compensation period for
determining a pension;
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iii. requiring employee member contributions equal to 50%
of the normal cost of the employee's benefit plan;
iv. capping the amount of compensation that can count
toward a pension (currently approximately $113,000);
and
v. restricting the pay items that may be included in
pensionable compensation.
a) protects the vested benefits of workers employed
prior to the implementation of PEPRA and allows public
workers to collectively bargain over wages, working
conditions, and the impact of changes to their wages and
working conditions.
b) specifies, with some exceptions, that the PEPRA
requirements (including those listed above) are
applicable to new retirement plan members who first
become members on and after January 1, 2013.
c) makes an exemption to PEPRA for employees who are
covered by 13(c) arrangements until either:
i. a federal district court rules that the United States
Secretary of Labor (or his or her designee) erred in
determining that application of PEPRA precludes
certification of federal transit funding; or
ii. January 1, 2015 , whichever is sooner.
1)This bill
a) extends the sunset date until January 1, 2016 .
b) states that this is an urgency statute, necessary in
order to remain eligible for federal transportation
funds that would be forfeited if transit employees are
not exempt from PEPRA.
COMMENTS :
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1)Background :
In 2012, the state adopted PEPRA, which became effective
on January 1, 2013. In 2013, labor unions representing
public transit employees began asserting to the US DOL
that PEPRA impairs pension benefits contained in
existing collective bargaining agreements and restricts
collective bargaining rights, in violation of the
protections in Section 13(c) of the Federal Transit Act.
In response, in 2013 the US DOL withheld certification
of a federal grant to the Sacramento Regional Transit
District, which in turn brought an action in federal
court to challenge the US DOL determination. That case
is still pending and is unlikely to be resolved in 2014.
While the case is ongoing, transit workers have been
exempted from PEPRA and federal transit monies have been
allowed to flow.
According to the press release on August 4, 2013, by Governor
Jerry Brown in regard to AB 1222:
"Federal transit money creates jobs and this legislation
keeps those funds flowing while allowing the state to
defend in court our landmark pension reforms."
This morning, the U.S. Department of Labor notified the
Sacramento Regional Transit District that it is refusing to
certify millions of dollars in transit grants to the
district because it asserts that the provisions of the
California Public Employee Pension Reform Act of 2013
(PEPRA) are incompatible with federal labor law.
The proposed legislation will temporarily exempt local
agencies' transit workers from PEPRA, but preserves the
state's ability to fight for the pension reform law in
court."
2)Issues :
This bill should be amended to prevent chaptering out by SB
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1251 (Huff), which is currently on the Assembly floor,
because both bills amend the same Government Code section.
Provisions in SB 1251 are unrelated to the transit worker
exemption that would be extended by this bill.
3)SUPPORT :
California Transit Association
Golden Gate Bridge, Highway and Transport District
Los Angeles Metropolitan Transportation Authority (Metro)
Riverside County Transportation Commission (RCTC)
Sacramento Regional Transit (RT)
San Francisco Bay Area Rapid Transit District (BART)
Santa Clara Valley Transportation Authority (VTA)
4)OPPOSITION :
None.
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