BILL ANALYSIS �
SB 1219
Page 1
Date of Hearing: June 25, 2014
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
SB 1219 (Torres) - As Amended: April 1, 2014
SENATE VOTE : 33-0
SUBJECT : Public employees' retirement: service after
retirement.
SUMMARY : Makes conforming changes to the Public Employees'
Retirement Law (PERL), administered by CalPERS, in order to
bring the PERL into conformity with the Public Employee's
Pension Reform Act of 2013 (PEPRA). Specifically, this bill :
1)Repeals the article in PERL relative to working after
retirement and rewrites its provisions to incorporate
requirements of PEPRA, eliminate provisions of PERL in
conflict with PEPRA, and to retain provisions of PERL that are
specific to PERL or are not referenced in PEPRA.
2)Specifically, this bill, in addition to incorporating
provisions of PEPRA:
a) Specifies that the 960 hour rule applies to a fiscal
year.
b) Retains the requirement for a bona fide break in service
for individuals who retire prior to normal retirement age.
c) Retains penalties to employees and employers who are
deemed to have purposefully worked or provided employment
unlawfully following the employee's retirement.
d) Retains references to California State University (CSU)
retirees, who are specific to CalPERS.
e) Retains the program to allow disabled retirees to work
in public employment and receive a blended salary of
compensation and retirement benefit up to the retiree's
pre-retirement compensation; and
f) Retains the provision exempting retirees who are elected
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to public office.
EXISTING LAW IN PEPRA :
1)Prohibits a retiree who is receiving a pension benefit from
returning to public employment for an employer in the same
public retirement system from which he or she is receiving the
retirement benefit unless certain requirements are met:
a) The retiree may not return to employment within 180 days
of retirement unless the earlier return is approved in a
public hearing of the employer's governing body, as
specified. However, the retiree is not eligible for the
exemption to the 180-day sit-out provision if he or she
received a retirement incentive (e.g., a "golden
handshake").
The 180-day sit-out provision is not required in the
following cases:
i) A retired public safety officer or firefighter who
is hired to perform a public safety function regularly
performed by a public safety officer or firefighter.
ii) A retiree who is eligible to participate in the
California State University (CSU) Faculty Early
Retirement Program pursuant to an agreement in a
memorandum of understanding that existed prior to January
1, 2013, or has been included in subsequent agreements.
b) The retiree may not be employed as a retiree for more
than 960 hours in a calendar or fiscal year, as determined
by the system.
c) The retiree may not work as a retired public worker for
12 months after receiving unemployment insurance for public
employment performed while retired.
d) The work performed must be either to prevent stoppage of
public business during an emergency or because the retired
person has skills needed to perform work of a limited
duration.
2)Prohibits a public retiree who is first appointed on or after
January 1, 2013, to a full-time, salaried position on a state
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board or commission from receiving both a full-time salary and
a pension, and makes the following requirements in those
situations:
a) Defines full-time as an appointment paying more than
$60,000 annually. This amount is increased proportionally
in any year state employees receive a general salary
increase.
b) Requires a retired full-time appointee to choose to
receive either 1) a salary and instatement or reinstatement
into the retirement system for that service, or 2) the
retirement allowance and per diem paid to all other related
board and commission members and to forgo the salary and
instatement or reinstatement in the retirement system.
c) Allows the individual who instates or reinstates, upon
subsequent retirement, to regain any suspended benefits,
including retiree health benefits, to which he or she was
entitled prior to retirement.
d) Exempts an appointee as a Commissioner to the State
Board of Parole Hearings from these restrictions and allows
that appointee, if retired, to receive both salary and
retirement benefit. However, in that case, the individual
does not earn service credit and may not instate or
reinstate in CalPERS for that service.
3)Allows certain retired individuals to serve without
reinstatement or restriction in the following situations:
a) As a subordinate judicial officer whose position, upon
retirement, is converted to a judgeship and she or he
returns to work in the converted position and the employer
is a trial court.
b) As a retiree who takes office as a judge of a court of
record, as specified, or a retiree of the Judges Retirement
System or the Judges Retirement System II who is appointed
to serve as a retired judge.
EXISTING LAW IN THE PERL :
1)In the case of CSU academic retirees returning to academic
employment, sets a limit on employment of the lesser of 960
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hours or 50% of the hours the individual worked in the fiscal
year prior to retirement.
2)Requires that an employee who has not reached normal
retirement age have a bona fide separation from service, as
required in the Internal Revenue Code, before returning to
work as a retired worker.
3)Requires that a person who is unlawfully employed as a retiree
shall be reinstated to membership in CalPERS in the category
in which, and as of the date on which, the unlawful employment
occurred, and makes specified requirements in those cases.
4)Creates a program that allows a disabled safety officer who
retires for industrial disability to continue working in a
non-safety or unrelated safety position, either full or
part-time, and to receive his or her salary plus all or a
portion of the pension to equal the salary the individual was
receiving while employed as a safety officer, as specified.
5)Allows a retiree who is elected to public office to serve
without loss of benefits; however, if all or part of the
retiree's benefit is based on service in that elected office,
that portion of the benefit is suspended while the individual
is serving in the elected office.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to the sponsor, "CalPERS recognizes the
need for ongoing clarification and conformity of the Public
Employees' Retirement Law (PERL) to the pension reforms signed
into law in 2012. SB 1219 will serve as the legislative vehicle
for consensus clarifications and conformity provisions related
to the PEPRA and post-retirement public employment."
Supporters of the provision that retains the exemption for
elected officials state, "SB 1219 maintains the current practice
that has served municipalities well for several decades.
Failure to enact these clarifying provisions and a strict
interpretation of PEPRA would indicate that many current county
supervisors would be unable to serve in the capacity to which
they were duly elected. Moreover, those supervisors, if allowed
to serve, would be required to reinstate and thus lose their
retirement compensation in exchange for, in some instances, very
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modest compensation under each county's salary schedule. This
has the practical effect of deterring public retirees from
running for the Board of Supervisors and eliminates a large
amount of a county's population from contemplating elected
public service."
Supporters of the provision allowing a disabled safety officer
who retires for industrial disability to continue working
without reinstatement in a non-safety or unrelated safety
position state, "These existing law provisions are compliant
with the provisions and limitations on reinstatement under PEPRA
and offer cost savings benefit to employers and the pension
system combined."
REGISTERED SUPPORT / OPPOSITION :
Support
California Public Employees' Retirement System (Sponsor)
Association of California Cities - Orange County
California Professional Firefighters
California Special Districts Association
California State Association of Counties
League of California Cities
Peace Officer Research Association of California
Rural County Representatives of California
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957