BILL ANALYSIS �
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THIRD READING
Bill No: AB 1783
Author: Jones-Sawyer (D)
Amended: 8/25/14 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE PUBLIC EMPLOY. & RETIRE. COMM. : 3-0, 8/22/14
AYES: Torres, De Le�n, Steinberg
NO VOTE RECORDED: Walters, Gaines
SENATE APPROPRIATIONS COMMITTEE : 6-0, 8/28/14
AYES: De Le�n, Gaines, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters
SUBJECT : Public employees' retirement
SOURCE : Author
DIGEST : This bill continues 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.
ANALYSIS :
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Existing federal law:
1.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 and plans.)
2.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.
3.Allows the US DOL to determine if the collective bargaining
rights of an employee group protected under a Section 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.
Existing state law:
1.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.
2.Changed, under PEPRA, the retirement benefit plans that may be
offered to new public employees, including:
A. Establishing uniform retirement formulas, including a 2%
at age 62 formula for non-safety workers;
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B. Requiring a three-year final compensation period for
determining a pension;
C. Requiring employee member contributions equal to 50% of
the normal cost of the employee's benefit plan;
D. Capping the amount of compensation that can count toward
a pension (currently approximately $113,000); and
E. Restricting the pay items that may be included in
pensionable compensation.
1.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.
2.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.
3.Makes an exemption to PEPRA for employees who are covered by
Section 13(c) arrangements until either:
A. a federal district court rules that the United States
Secretary of Labor (or his/her designee) erred in
determining that application of PEPRA precludes
certification of federal transit funding; or
B. January 1, 2015, whichever is sooner.
This bill:
1.Extends the sunset date until January 1, 2016.
2.Includes an urgency clause to take effect immediately in order
to remain eligible for federal transportation funds that would
be forfeited if transit employees are not exempt from PEPRA.
3.Contains double-jointing language with SB 1251 (Huff).
Background
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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).
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 US DOL 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 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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Annual administrative costs of $90,000 to CalPERS (Special
Fund).
Unknown loss of savings to local employers (Local Fund).
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Administrative costs to CalPERS could be higher depending on the
number of exempt transit workers who continue to be hired after
January 1, 2013, and if the exemptions to the PEPRA are
determined to include the Additional Retirement Service Credit
(airtime) or other benefits reduced by the enactment of PEPRA.
Any loss of savings to employers will be dependent on the number
of affected transit workers as well as the difference between
the existing retirement benefits provided and the savings that
would result from the enactment of PEPRA retirement benefits.
SUPPORT : (Verified 8/28/14)
California Transit Association
Golden Gate Bridge, Highway and Transport District
Los Angeles Metropolitan Transportation Authority
Riverside County Transportation Commission
Sacramento Regional Transit
San Francisco Bay Area Rapid Transit District
Santa Clara Valley Transportation Authority
Orange County Transportation Authority
Alameda-Contra Costa Transit District
Monterey-Salinas Transit
JL:e 8/29/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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