BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1251
                                                                  Page  1

          Date of Hearing:   August 6, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     SB 1251 (Huff) - As Amended:  June 18, 2014

          Policy Committee:                              PERSSVote:7-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill requires a joint powers authority (JPA), formed on or  
          after January 1, 2013, to provide employees who were employed by  
          the public entity establishing the JPA and have not had a break  
          in service of more than 180 days, the retirement formula that  
          was available to those employees on December 31, 2012 and not  
          the formula required under the California Public Employees'  
          Pension Reform Act of 2013 (PEPRA).  The bill further specifies  
          that JPAs formed by more than one public entity must specify  
          which forming entity's retirement formula will apply to  
          transferring employees, and prohibits public entities from  
          forming a JPA on or after January 1, 2013 in a manner that would  
          exempt new employees from the requirements of PEPRA.

           FISCAL EFFECT  

          1)One-time special fund costs to the California Public  
            Employees' Retirement System (CalPERS) of approximately  
            $200,000 for implementation and systems changes.

          2)Increased pension benefits payable as a result of more  
            generous benefits for certain members under pre-PEPRA formulas  
            compared with current post-PEPRA benefit formulas.

           COMMENTS  

          1)  Purpose.   According to the sponsors, the cities of Brea and  
            Fullerton and California Professional Firefighters, those  
            cities seek to create a JPA for joint fire services, and  
            existing personnel from both cities will be transferred into  
            the JPA.  Under PEPRA, new public agencies formed after  
            January 1, 2013 must use the new pension formulas for their  








                                                                  SB 1251
                                                                  Page  2

            employees.  As a result, current employees cannot be  
            transferred into a JPA without losing their benefits, even if  
            no lapse in public service or change in duties and  
            responsibilities occurs.  This bill allows local agencies to  
            leverage the cost benefits and efficiency advantages JPAs can  
            offer without prejudice to existing employee pensions.

          2)  Reduced JPA Flexibility.   While the circumstances in Brea and  
            Fullerton warrant permitting those cities to transfer  
            employees to a JPA without modifying pension benefits, this  
            bill requires all new JPAs to grandfather existing employees  
            from the authority that created the JPA regardless of  
            circumstance.  That requirement may reduce local agencies'  
            flexibility to use JPAs as a cost management tool in the  
            manner originally contemplated under PEPRA.


           Analysis Prepared by  :    Joel Tashjian / APPR. / (916) 319-2081