BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1251|
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UNFINISHED BUSINESS
Bill No: SB 1251
Author: Huff (R)
Amended: 8/22/14
Vote: 21
SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM. : 4-0, 4/21/14
AYES: Torres, Walters, Block, Gaines
NO VOTE RECORDED: Evans
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 36-0, 5/15/14
AYES: Anderson, Beall, Berryhill, Block, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Evans, Fuller, Gaines, Galgiani,
Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara,
Leno, Lieu, Liu, Mitchell, Monning, Morrell, Nielsen, Padilla,
Pavley, Roth, Steinberg, Torres, Vidak, Wolk, Wyland
NO VOTE RECORDED: Calderon, Walters, Wright, Yee
ASSEMBLY FLOOR : 78-0, 8/26/14 - See last page for vote
SUBJECT : California Public Employees Pension Reform Act of
2013: joint powers authority: employees
SOURCE : City of Brea
City of Fullerton
DIGEST : This bill authorizes a joint powers authority (JPA)
formed by the cities of Brea and Fullerton on or after January
1, 2013, to provide employees who are not new members under the
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Public Employees' Pension Reform Act (PEPRA) with the defined
benefit plan or formula that was received by those employees
from their respective employers on December 31, 2012, if they
are employed by the JPA without a break in service of more than
180 days. The bill also authorizes up to three cities in Orange
County, as specified, to join the authority and prohibits the
formation of a JPA on or after January 1, 2013, in a manner that
would exempt a new employee or a new member from the
requirements of PEPRA.
Assembly Amendments specify that provisions of the bill apply to
those who are not new members under PEPRA, as specified;
authorize, rather than require, the cities of Brea and Fullerton
to provide employees with the defined benefit plan; add
double-jointing language and a declaration and finding; and make
other changes.
ANALYSIS :
Existing law:
1.Authorizes, under the Joint Exercise of Powers Act, public
agencies to enter into agreements to jointly exercise any
power common to the contracting parties, including providing
for the creation of an agency or entity that is separate from
the parties to the agreement and is responsible for the
administration of the agreement.
2.Allows local public employers forming a JPA to contract with
the California Public Employees' Retirement System, the
California State Teachers' Retirement System, or one of the
1937 Act county retirement systems to offer retirement
benefits to their employees if the JPA meets the federal
definition of a governmental plan. The JPA is then a new
contracting employer in the retirement system.
3.Allows public employees who move between public
employers-usually within a 180-day timeframe-limited special
privileges under laws (such as when the move is between two
employers in the same retirement system) or reciprocity
agreements between retirement systems (such as when the change
in employment occurs between employers in different retirement
systems), as specified.
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4.Establishes, under PEPRA, a new retirement plan formula and
requires public employers to offer the PEPRA formula to new
employees first hired into public service after January 1,
2013, as defined.
5.Requires legacy employees (i.e., employees who are not subject
to PEPRA)-who were first hired into public service prior to
January 1, 2013, and who move between public employers within
a 180-day time period, to be grandfathered and eligible to
receive the benefit plans offered to employees of the public
employer on December 31, 2012.
This bill:
1.Allows a JPA formed by the Cities of Brea and Fullerton on or
after January 1, 2013, and up to three other cities in Orange
County that are contiguous to those cities, as specified, to
offer the retirement formula that was available on December
31, 2012, from their respective employers to any employee that
is not a new member and is employed by the JPA without a break
in service of more than 180 days.
2.Allows, on or before January 1, 2017, up to three cities in
Orange County that are contiguous to the City of Brea or the
City of Fullerton to join the JPA formed by the Cities of Brea
and Fullerton.
3.Prohibits the formation of a JPA on or after January 1, 2013,
in a manner that would exempt a new member from the
requirements of PEPRA. New members may only participate in a
plan that conforms to the requirements of PEPRA.
4.Makes legislative findings and declarations that a special
law, rather than a general law, is needed to clarify the
benefits and eligibility rules under PEPRA and to maintain the
integrity of that act and further its purpose.
5.Contains double-jointing language to prevent chaptering out
issues with
AB 1783 (Jones-Sawyer) of the current legislative session.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 8/26/14)
City of Brea (co-source)
City of Fullerton (co-source)
ARGUMENTS IN SUPPORT : According to the author:
The cities of Brea and Fullerton are attempting to create a
Joint Powers Authority (JPA) for joint fire services, and
existing personnel from both cities would be transferred into
the JPA. However, the passage of the Public Employee Pension
Reform Act (PEPRA) introduced a new and unintended challenge
into the feasibility of JPA formation.
The Brea/Fullerton JPA would be a newly formed public agency.
With the adoption of PEPRA in 2012, all new public agencies
formed after January 1, 2013, would be required to use the new
pension formulas outlined in the law.
Because the new pension formulas are reduced, the cities of
Brea and Fullerton would not be able to move their current
employees over without a loss of benefits - even though there
would be no lapse in their public service or change in their
duties and responsibilities. Consequently, this would prevent
the two agencies from taking advantage of the cost and
operational efficiencies a JPA would offer. Without the
ability to transfer current city employees to the JPA, this
good governance effort to consolidate services may become
unworkable.
According to the sponsors:
Brea and Fullerton recognize that the most efficient and
effective model for the long term success of consolidating the
two fire districts is the formation of "a JPA which would
become the employer of the consolidated staff, to provide the
ongoing functions of joint Fire Command Operations, and
finally to set up the structure to allow for the consolidation
of fire service functions of the two cities.
Clearly the most expeditions path to successful formation of
this innovative approach to achieving efficiency in local
government is one that avoids or minimizes employee concerns
about detrimental impacts to their retirement security."
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ASSEMBLY FLOOR : 78-0, 8/26/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A.
P�rez, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Holden, Vacancy
JL/AL:kd 8/27/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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