SB 354: California Public Employees’ Pension Reform Act of 2013: joint powers authority: employees.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-08-10
The California Public Employees Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013. Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies, by agreement, to jointly exercise any common power, which may include hiring employees and establishing retirement systems. PEPRA authorizes a joint powers authority formed by the Cities of Brea and Fullerton on or after January 1, 2013, to provide employees who are not new members under 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 joint powers authority without a break in service of more than 180 days.
This bill would revise the period during which the authorization granted to a joint powers authority formed by the Cities of Brea and Fullerton to provide specified retirement benefits, as described above, may be applied. The bill would authorize the authority to provide its employees the defined benefit plan or formula that those employees received from their respective employers prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of specified cities who is not a new member and subsequently is employed by the joint powers authority within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
The California Public Employees Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013. Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies, by agreement, to jointly exercise any common power, which may include hiring employees and establishing retirement systems. PEPRA authorizes a joint powers authority formed by the Cities of Brea and Fullerton on or after January 1, 2013, to provide employees who are not new members under 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 joint powers authority without a break in service of more than 180 days.
This bill would revise the period during which the authorization granted to a joint powers authority formed by the Cities of Brea and Fullerton to provide specified retirement benefits, as described above, may be applied. The bill would authorize the authority to provide its employees the defined benefit plan or formula that those employees received from their respective employers prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of specified cities who is not a new member and subsequently is employed by the joint powers authority within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
The California Public Employees Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013. Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies, by agreement, to jointly exercise any common power, which may include hiring employees and establishing retirement systems. PEPRA authorizes a joint powers authority formed by the Cities of Brea and Fullerton on or after January 1, 2013, to provide employees who are not new members under 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 joint powers authority without a break in service of more than 180 days.
This bill would revise the period during which the authorization granted to a joint powers authority formed by the Cities of Brea and Fullerton to provide specified retirement benefits, as described above, may be applied. The bill would authorize the authority to provide its employees the defined benefit plan or formula that those employees received from their respective employers prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of specified cities who is not a new member and subsequently is employed by the joint powers authority within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
The Public Employees Retirement Law creates the Public Employees Retirement System, which provides a defined benefit to its members based on age at retirement, service credit, and final compensation. Existing law defines member for purposes of that law.
This bill would make nonsubstantive changes to that definition.
The Public Employees Retirement Law creates the Public Employees Retirement System, which provides a defined benefit to its members based on age at retirement, service credit, and final compensation. Existing law defines member for purposes of that law.
This bill would make nonsubstantive changes to that definition.
(a)(1)Notwithstanding any other law, except as provided in this article, on and after January 1, 2013, this article shall apply to all state and local public retirement systems and to their participating employers, including the Public Employees Retirement System, the State Teachers Retirement System, the Legislators Retirement System, the Judges Retirement System, the Judges Retirement System II, county and district retirement systems created pursuant to the County Employees Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3), independent public retirement systems, and to individual retirement plans offered by public employers. However, this article shall be subject to the Internal Revenue Code and Section 17 of Article XVI of the California Constitution. The administration of the requirements of this article shall comply with applicable provisions of the Internal Revenue Code and the Revenue and Taxation Code.
(2)Notwithstanding paragraph (1), this article shall not apply to the entities described in Section 9 of Article IX of, and Sections 4 and 5 of Article XI of, the California Constitution, except to the extent that these entities continue to be participating employers in any retirement system governed by state statute. Accordingly, any retirement plan approved before January 1, 2013, by the voters of any entity excluded from coverage by this section shall not be affected by this article.
(3)(A)Notwithstanding paragraph (1), this article shall not apply to a public employee whose interests are protected under Section 5333(b) of Title 49 of the United States Code until a federal district court rules that the United States Secretary of Labor, or his or her designee, erred in determining that the application of this article precludes certification under that section, or until January 1, 2016, whichever is sooner.
(B)If a federal district court upholds the determination of the United States Secretary of Labor, or his or her designee, that application of this article precludes him or her from providing a certification under Section 5333(b) of Title 49 of the United States Code, this article shall not apply to a public employee specified in subparagraph (A).
(4)Notwithstanding paragraph (1), this article shall not apply to a multiemployer plan authorized by Section 302(c)(5) of the federal Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer began participation in that plan prior to January 1, 2013, and the plan is regulated by the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(b)The benefit plan required by this article shall apply to public employees who are new members as defined in Section 7522.04.
(c)(1)Individuals who were employed by any public employer before January 1, 2013, and who became employed by a subsequent public employer for the first time on or after January 1, 2013, shall be subject to the retirement plan that would have been available to employees of the subsequent employer who were first employed by the subsequent employer on or before December 31, 2012, if the individual was subject to concurrent membership for which creditable service was performed in the previous six months or reciprocity established under any of the following provisions:
(A)Article 5 (commencing with Section 20350) of Chapter 3 of Part 3 of Division 5 of Title 2.
(B)Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3.
(C)Any agreement between public retirement systems to provide reciprocity to members of the systems.
(D)Section 22115.2 of the Education Code.
(2)An individual who was employed before January 1, 2013, and who, without a separation from employment, changed employment positions and became subject to a different defined benefit plan in a different public retirement system offered by his or her employer shall be subject to that defined benefit plan as it would have been available to employees who were first employed on or before December 31, 2012.
(d)If a public employer, before January 1, 2013, offers a defined benefit pension plan that provides a defined benefit formula with a lower benefit factor at normal retirement age and results in a lower normal cost than the defined benefit formula required by this article, that employer may continue to offer that defined benefit formula instead of the defined benefit formula required by this article, and shall not be subject to the requirements of Section 7522.10 for pensionable compensation subject to that formula. However, if the employer adopts a new defined benefit formula on or after January 1, 2013, that formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the retirement board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the defined benefit plan may only participate in the lower cost defined benefit formula that was in place before January 1, 2013, or a defined benefit formula that conforms to the requirements of this article or is approved by the Legislature as provided in this subdivision.
(e)If a public employer, before January 1, 2013, offers a retirement benefit plan that consists solely of a defined contribution plan, that employer may continue to offer that plan instead of the defined benefit pension plan required by this article. However, if the employer adopts a new defined benefit pension plan or defined benefit formula on or after January 1, 2013, that plan or formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the systems board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the employers plan may only participate in the defined contribution plan that was in place before January 1, 2013, or a defined contribution plan or defined benefit formula that conforms to the requirements of this article. This subdivision shall not be construed to prohibit an employer from offering a defined contribution plan on or after January 1, 2013, either with or without a defined benefit plan, whether or not the employer offered a defined contribution plan prior to that date.
(f)(1)If, on or after January 1, 2013, the Cities of Brea and Fullerton form a joint powers authority pursuant to the provisions of the Joint Exercise of Powers Act (Article 1 (commencing with Section 6500) of Chapter 5), that joint powers authority may provide employees the defined benefit plan or formula that those employees received from their respective employers prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of the City of Brea, the City of Fullerton, or a city described in paragraph (2) who is not a new member and subsequently is employed by the joint powers authority within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
(2)On or before January 1, 2017, a city in Orange County that is contiguous to the City of Brea or the City of Fullerton may join the joint powers authority described in paragraph (1) but not more than three cities shall be permitted to join.
(3)The formation of a joint powers authority on or after January 1, 2013, shall not act in a manner as to exempt a new employee or a new member, as defined by Section 7522.04, from the requirements of this article. New members may only participate in a defined benefit plan or formula that conforms to the requirements of this article.
(g)The Judges Retirement System and the Judges Retirement System II shall not be required to adopt the defined benefit formula required by Section 7522.20 or 7522.25 or the compensation limitations defined in Section 7522.10.
(h)This article shall not be construed to provide membership in any public retirement system for an individual who would not otherwise be eligible for membership under that systems applicable rules or laws.
(i)On and after January 1, 2013, each public retirement system shall modify its plan or plans to comply with the requirements of this article and may adopt regulations or resolutions for this purpose.
(a)(1)Notwithstanding any other law, except as provided in this article, on and after January 1, 2013, this article shall apply to all state and local public retirement systems and to their participating employers, including the Public Employees Retirement System, the State Teachers Retirement System, the Legislators Retirement System, the Judges Retirement System, the Judges Retirement System II, county and district retirement systems created pursuant to the County Employees Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3), independent public retirement systems, and to individual retirement plans offered by public employers. However, this article shall be subject to the Internal Revenue Code and Section 17 of Article XVI of the California Constitution. The administration of the requirements of this article shall comply with applicable provisions of the Internal Revenue Code and the Revenue and Taxation Code.
(2)Notwithstanding paragraph (1), this article shall not apply to the entities described in Section 9 of Article IX of, and Sections 4 and 5 of Article XI of, the California Constitution, except to the extent that these entities continue to be participating employers in any retirement system governed by state statute. Accordingly, any retirement plan approved before January 1, 2013, by the voters of any entity excluded from coverage by this section shall not be affected by this article.
(3)(A)Notwithstanding paragraph (1), this article shall not apply to a public employee whose interests are protected under Section 5333(b) of Title 49 of the United States Code until a federal district court rules that the United States Secretary of Labor, or his or her designee, erred in determining that the application of this article precludes certification under that section, or until January 1, 2016, whichever is sooner.
(B)If a federal district court upholds the determination of the United States Secretary of Labor, or his or her designee, that application of this article precludes him or her from providing a certification under Section 5333(b) of Title 49 of the United States Code, this article shall not apply to a public employee specified in subparagraph (A).
(4)Notwithstanding paragraph (1), this article shall not apply to a multiemployer plan authorized by Section 302(c)(5) of the federal Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer began participation in that plan prior to January 1, 2013, and the plan is regulated by the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(b)The benefit plan required by this article shall apply to public employees who are new members as defined in Section 7522.04.
(c)(1)Individuals who were employed by any public employer before January 1, 2013, and who became employed by a subsequent public employer for the first time on or after January 1, 2013, shall be subject to the retirement plan that would have been available to employees of the subsequent employer who were first employed by the subsequent employer on or before December 31, 2012, if the individual was subject to concurrent membership for which creditable service was performed in the previous six months or reciprocity established under any of the following provisions:
(A)Article 5 (commencing with Section 20350) of Chapter 3 of Part 3 of Division 5 of Title 2.
(B)Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3.
(C)Any agreement between public retirement systems to provide reciprocity to members of the systems.
(D)Section 22115.2 of the Education Code.
(2)An individual who was employed before January 1, 2013, and who, without a separation from employment, changed employment positions and became subject to a different defined benefit plan in a different public retirement system offered by his or her employer shall be subject to that defined benefit plan as it would have been available to employees who were first employed on or before December 31, 2012.
(d)If a public employer, before January 1, 2013, offers a defined benefit pension plan that provides a defined benefit formula with a lower benefit factor at normal retirement age and results in a lower normal cost than the defined benefit formula required by this article, that employer may continue to offer that defined benefit formula instead of the defined benefit formula required by this article, and shall not be subject to the requirements of Section 7522.10 for pensionable compensation subject to that formula. However, if the employer adopts a new defined benefit formula on or after January 1, 2013, that formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the retirement board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the defined benefit plan may only participate in the lower cost defined benefit formula that was in place before January 1, 2013, or a defined benefit formula that conforms to the requirements of this article or is approved by the Legislature as provided in this subdivision.
(e)If a public employer, before January 1, 2013, offers a retirement benefit plan that consists solely of a defined contribution plan, that employer may continue to offer that plan instead of the defined benefit pension plan required by this article. However, if the employer adopts a new defined benefit pension plan or defined benefit formula on or after January 1, 2013, that plan or formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the systems board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the employers plan may only participate in the defined contribution plan that was in place before January 1, 2013, or a defined contribution plan or defined benefit formula that conforms to the requirements of this article. This subdivision shall not be construed to prohibit an employer from offering a defined contribution plan on or after January 1, 2013, either with or without a defined benefit plan, whether or not the employer offered a defined contribution plan prior to that date.
(f)(1)If, on or after January 1, 2013, the Cities of Brea and Fullerton form a joint powers authority pursuant to the provisions of the Joint Exercise of Powers Act (Article 1 (commencing with Section 6500) of Chapter 5), that joint powers authority may provide employees the defined benefit plan or formula that those employees received from their respective employers prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of the City of Brea, the City of Fullerton, or a city described in paragraph (2) who is not a new member and subsequently is employed by the joint powers authority within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
(2)On or before January 1, 2017, a city in Orange County that is contiguous to the City of Brea or the City of Fullerton may join the joint powers authority described in paragraph (1) but not more than three cities shall be permitted to join.
(3)The formation of a joint powers authority on or after January 1, 2013, shall not act in a manner as to exempt a new employee or a new member, as defined by Section 7522.04, from the requirements of this article. New members may only participate in a defined benefit plan or formula that conforms to the requirements of this article.
(g)The Judges Retirement System and the Judges Retirement System II shall not be required to adopt the defined benefit formula required by Section 7522.20 or 7522.25 or the compensation limitations defined in Section 7522.10.
(h)This article shall not be construed to provide membership in any public retirement system for an individual who would not otherwise be eligible for membership under that systems applicable rules or laws.
(i)On and after January 1, 2013, each public retirement system shall modify its plan or plans to comply with the requirements of this article and may adopt regulations or resolutions for this purpose.
(a)(1)Notwithstanding any other law, except as provided in this article, on and after January 1, 2013, this article shall apply to all state and local public retirement systems and to their participating employers, including the Public Employees Retirement System, the State Teachers Retirement System, the Legislators Retirement System, the Judges Retirement System, the Judges Retirement System II, county and district retirement systems created pursuant to the County Employees Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3), independent public retirement systems, and to individual retirement plans offered by public employers. However, this article shall be subject to the Internal Revenue Code and Section 17 of Article XVI of the California Constitution. The administration of the requirements of this article shall comply with applicable provisions of the Internal Revenue Code and the Revenue and Taxation Code.
(2)Notwithstanding paragraph (1), this article shall not apply to the entities described in Section 9 of Article IX of, and Sections 4 and 5 of Article XI of, the California Constitution, except to the extent that these entities continue to be participating employers in any retirement system governed by state statute. Accordingly, any retirement plan approved before January 1, 2013, by the voters of any entity excluded from coverage by this section shall not be affected by this article.
(3)(A)Notwithstanding paragraph (1), this article shall not apply to a public employee whose interests are protected under Section 5333(b) of Title 49 of the United States Code until a federal district court rules that the United States Secretary of Labor, or his or her designee, erred in determining that the application of this article precludes certification under that section, or until January 1, 2016, whichever is sooner.
(B)If a federal district court upholds the determination of the United States Secretary of Labor, or his or her designee, that application of this article precludes him or her from providing a certification under Section 5333(b) of Title 49 of the United States Code, this article shall not apply to a public employee specified in subparagraph (A).
(4)Notwithstanding paragraph (1), this article shall not apply to a multiemployer plan authorized by Section 302(c)(5) of the federal Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer began participation in that plan prior to January 1, 2013, and the plan is regulated by the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(b)The benefit plan required by this article shall apply to public employees who are new members as defined in Section 7522.04.
(c)(1)Individuals who were employed by any public employer before January 1, 2013, and who became employed by a subsequent public employer for the first time on or after January 1, 2013, shall be subject to the retirement plan that would have been available to employees of the subsequent employer who were first employed by the subsequent employer on or before December 31, 2012, if the individual was subject to concurrent membership for which creditable service was performed in the previous six months or reciprocity established under any of the following provisions:
(A)Article 5 (commencing with Section 20350) of Chapter 3 of Part 3 of Division 5 of Title 2.
(B)Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of Title 3.
(C)Any agreement between public retirement systems to provide reciprocity to members of the systems.
(D)Section 22115.2 of the Education Code.
(2)An individual who was employed before January 1, 2013, and who, without a separation from employment, changed employment positions and became subject to a different defined benefit plan in a different public retirement system offered by his or her employer shall be subject to that defined benefit plan as it would have been available to employees who were first employed on or before December 31, 2012.
(d)If a public employer, before January 1, 2013, offers a defined benefit pension plan that provides a defined benefit formula with a lower benefit factor at normal retirement age and results in a lower normal cost than the defined benefit formula required by this article, that employer may continue to offer that defined benefit formula instead of the defined benefit formula required by this article, and shall not be subject to the requirements of Section 7522.10 for pensionable compensation subject to that formula. However, if the employer adopts a new defined benefit formula on or after January 1, 2013, that formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the retirement board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the defined benefit plan may only participate in the lower cost defined benefit formula that was in place before January 1, 2013, or a defined benefit formula that conforms to the requirements of this article or is approved by the Legislature as provided in this subdivision.
(e)If a public employer, before January 1, 2013, offers a retirement benefit plan that consists solely of a defined contribution plan, that employer may continue to offer that plan instead of the defined benefit pension plan required by this article. However, if the employer adopts a new defined benefit pension plan or defined benefit formula on or after January 1, 2013, that plan or formula must conform to the requirements of this article or must be determined and certified by the retirement systems chief actuary and the systems board to have no greater risk and no greater cost to the employer than the defined benefit formula required by this article and must be approved by the Legislature. New members of the employers plan may only participate in the defined contribution plan that was in place before January 1, 2013, or a defined contribution plan or defined benefit formula that conforms to the requirements of this article. This subdivision shall not be construed to prohibit an employer from offering a defined contribution plan on or after January 1, 2013, either with or without a defined benefit plan, whether or not the employer offered a defined contribution plan prior to that date.
(f)(1)If, on or after January 1, 2013, the Cities of Brea and Fullerton form a joint powers authority pursuant to the provisions of the Joint Exercise of Powers Act (Article 1 (commencing with Section 6500) of Chapter 5), that joint powers authority may provide employees the defined benefit plan or formula that those employees received from their respective employers on December 31, 2012, prior to the exercise of a common power, to which the employee is associated, by the joint powers authority to any employee of the City of Brea, the City of Fullerton, or a city described in paragraph (2) who is not a new member and subsequently is employed by the joint powers authority without a break in service of more than 180 days within 180 days of the city providing for the exercise of a common power, to which the employee was associated, by the joint powers authority.
(2)On or before January 1, 2017, a city in Orange County that is contiguous to the City of Brea or the City of Fullerton may join the joint powers authority described in paragraph (1) but not more than three cities shall be permitted to join.
(3)The formation of a joint powers authority on or after January 1, 2013, shall not act in a manner as to exempt a new employee or a new member, as defined by Section 7522.04, from the requirements of this article. New members may only participate in a defined benefit plan or formula that conforms to the requirements of this article.
(g)The Judges Retirement System and the Judges Retirement System II shall not be required to adopt the defined benefit formula required by Section 7522.20 or 7522.25 or the compensation limitations defined in Section 7522.10.
(h)This article shall not be construed to provide membership in any public retirement system for an individual who would not otherwise be eligible for membership under that systems applicable rules or laws.
(i)On and after January 1, 2013, each public retirement system shall modify its plan or plans to comply with the requirements of this article and may adopt regulations or resolutions for this purpose.
SECTION 1.Section 20370 of the Government Code is amended to read:20370.(a)Member means an employee who has qualified for membership in this system and on whose behalf an employer has become obligated to pay contributions.
(b)State member includes the following:
(1)State miscellaneous members.
(2)University members.
(3)Patrol members.
(4)State safety members.
(5)State industrial members.
(6)State peace officer/firefighter members.
(7)National Guard members as defined in Section 20380.5.
(c)Local member includes:
(1)Local miscellaneous members.
(2)Local safety members.
(d)School member includes all employees within the jurisdiction of a school employer, other than local police officers, school safety members, and members included in a risk pool.
(a)Member means an employee who has qualified for membership in this system and on whose behalf an employer has become obligated to pay contributions.
(b)State member includes the following:
(1)State miscellaneous members.
(2)University members.
(3)Patrol members.
(4)State safety members.
(5)State industrial members.
(6)State peace officer/firefighter members.
(7)National Guard members as defined in Section 20380.5.
(c)Local member includes:
(1)Local miscellaneous members.
(2)Local safety members.
(d)School member includes all employees within the jurisdiction of a school employer, other than local police officers, school safety members, and members included in a risk pool.
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Date
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Status
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|---|---|
| May 18, 2015 | Read third time. Passed. (Ayes 36. Noes 0. Page 1027.) Ordered to the Assembly. |
| Aug 10, 2015 | Chaptered by Secretary of State. Chapter 158, Statutes of 2015. |
| Aug 10, 2015 | Approved by the Governor. |
| Jul 30, 2015 | Enrolled and presented to the Governor at 10 a.m. |
| Jul 16, 2015 | Read third time. Passed. (Ayes 79. Noes 0. Page 2433.) Ordered to the Senate. |
| Jul 16, 2015 | Read third time. Passed. Ordered to the Senate. |
| Jul 16, 2015 | In Senate. Ordered to engrossing and enrolling. |
| Jul 9, 2015 | Read second time. Ordered to consent calendar. |
| Jul 8, 2015 | From committee: Do pass. Ordered to consent calendar. (Ayes 14. Noes 0.) (July 8). |
| Jun 24, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 6. Noes 0.) (June 24). Re-referred to Com. on APPR. |
| May 28, 2015 | Referred to Com. on P.E., R., & S.S. |
| May 18, 2015 | Read third time. Passed. (Ayes 36. Noes 0.) Ordered to the Assembly. |
| Feb 24, 2015 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| May 18, 2015 | In Assembly. Read first time. Held at Desk. |
| May 12, 2015 | Read second time. Ordered to consent calendar. |
| May 11, 2015 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8 and ordered to consent calendar. |
| May 1, 2015 | Set for hearing May 11. |
| Apr 28, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 5. Noes 0. Page 797.) (April 27). Re-referred to Com. on APPR. |
| Apr 17, 2015 | Set for hearing April 27. |
| Apr 9, 2015 | Re-referred to Com. on P.E. & R. |
| Apr 6, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS. |
| Mar 5, 2015 | Referred to Com. on RLS. |
| Feb 25, 2015 | From printer. May be acted upon on or after March 27. |
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Date
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Description
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Location
|
Votes
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|---|---|---|---|---|
| Jul 16, 2015 | SB 354 Huff Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Jul 8, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 24, 2015 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Public Employees, Retirement, and Social Security |
Passed |
|
| May 18, 2015 | Consent Calendar 2nd SB354 Huff | Senate Floor |
Passed |
|
| Apr 27, 2015 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Public Employment and Retirement |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 354
(Huff) – As Amended April 6, 2015
Policy Committee: |
Public Employees, Retirement/Soc Sec |
Vote: |
6 - 0 |
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill:
Clarifies the period during which employees of the cities of Brea and Fullerton who are "classic" members of the California Public Employees' Retirement System (CalPERS) can transfer to a Joint Powers Authority (JPA) formed by those cities and retain their benefit formulas received prior to transfer and not the formula required under the California Public Employees' Pension Reform Act of 2013.
Deletes the reference date of December 31, 2012, and instead specifies that transferred employees will receive the defined benefit plans or formulas they were receiving prior joining the JPA, and clarifies that if any of the three contiguous cities to Brea and Fullerton join the JPA, transferred employees with no more than a 6-month break will also retain their existing benefit plans or formulas.
FISCAL EFFECT:
Insignificant costs to CalPERS and/or changes to benefits for employees.
COMMENTS:
Purpose. SB 1251 (Huff), Chapter 757, Statutes of 2014, allowed Brea and Fullerton to transfer employees to a new JPA while retaining the retirement formulas those employees enjoyed prior to the formation and implementation of the JPA. The bill used December 31, 2012, as the reference date for determining retirement benefits of those transferred employees. As a result, employees who joined Brea and Fullerton as "classic" employees after that date and were later transferred to the JPA were not grandfathered under the statute. This bill corrects that error by clarifying that any classic employee who transfers to the JPA will retain the classic benefit formula.
Supporters maintain SB 1251 allowed Brea and Fullerton to form a JPA for purposes of sharing fire services with the intent of allowing classic employees to transfer to the JPA and retain their classic pension formulas. Since December 31, 2012, Brea and Fullerton have hired classic public safety employees to replace retiring employees, and this bill allows those employees to retain their benefits after transfer to the JPA as well.
Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081
SB 354
Page 5
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Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
CONSENT
Bill No: SB 354
Amended: 4/6/15
SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 4/27/15
AYES: Pan, Morrell, Beall, Fuller, Hall
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: California Public Employees’ Pension Reform Act of 2013: joint powers authority: employees
City of Fullerton
DIGEST: This bill clarifies the time period during which a California Public Employees’ Retirement System (CalPERS) “classic” member who is employed in the cities of Brea and Fullerton can transfer to a Joint Powers Authority (JPA) formed by those two cities and retain classic benefit formulas received prior to the transfer.
Existing law:
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.
Allows local public employers forming a JPA to contract with CalPERS 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.
Establishes, under the Public Employees’ Pension Reform Act of 2013 (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.
Requires pre-PEPRA members—referred to as “classic” members by CalPERS—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 under pre-PEPRA retirement formulas and eligible to receive the benefit plans offered to employees of the public employer on December 31, 2012 (i.e., the benefit plan in place prior to PEPRA implementation).
Authorizes a JPA formed by the cities of Brea and Fullerton on or after January 1, 2013, to provide employees who transfer to the JPA from Brea or Fullerton with the “classic” retirement formulas that the employees were receiving on December 31, 2012, from their respective employers.
Specifies that on or before January 1, 2017, up to three cities that are contiguous with Brea or Fullerton may join the JPA and extend the same protections, with regard to classic retirement formulas, to their transferred employees.
Clarifies that the formation of the JPA on or after January 1, 2013, shall not act in a manner so as to exempt a member from PEPRA who would otherwise be subject to PEPRA.
This bill:
Deletes the reference date of December 31, 2012, to identify the formulas transferring employees will be subject to.
Clarifies that transferred employees will receive the formulas that they were receiving from Brea or Fullerton prior to the formation and exercise of the joint, or “common” power created by the JPA.
Clarifies that if any of up to three contiguous cities join the JPA and their employees transfer to the JPA with no more than a six-month break in service between employment with the city and employment in the JPA, those employees shall also be allowed to retain the retirement benefit plans they were entitled to from their employers prior to the transfer of the exercise of common powers to the JPA.
Background
PEPRA allows classic employees who move between public employers to be grandfathered under pre-PEPRA retirement formulas. Since employers, over time, could have more than one retirement formula for specific classes of employees, PEPRA further specifies that a classic employee who moves between public employers within a six-month period will receive the benefit formula that the employer was offering on December 31, 2012 (i.e., one day prior to implementation of PEPRA). A JPA formed after that date would be a new employer in CalPERS and would therefore have no classic formula to offer classic employees.
In 2014, SB 1251 (Huff, Chapter 757) allowed the cities of Brea and Fullerton, after forming a JPA, to allow transferring employees to retain the retirement formulas they had prior to the formation and implementation of the JPA. In doing so, the bill used the standard December 31, 2012 date as the reference for retirement benefits that transferred employees would retain.
At the time, consideration was not given to classic employees who would come to work at Brea or Fullerton in the interim and then be transferred to the JPA. Any classic employees hired between January 1, 2013, and the date of transfer to the JPA would not be grandfathered under the statute as written, even though the intent was to allow all transferring classic employees to retain their classic formulas.
SB 354 thus makes clear the intent of SB 1251 that any classic employee who transfers to the newly formed JPA will be allowed to retain his or her classic formula following the transfer.
Prior/Related Legislation
SB 1251 (Huff, Chapter 757, Statutes of 2014) created the current exemption in PEPRA to allow classic employees transferred to a new JPA formed by the cities of Brea and Fullerton after January 1, 2013, to retain their classic retirement benefits following transfer to and employment in the JPA.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
City of Brea (co-source)
City of Fullerton (co-source)
OPPOSITION: (Verified 5/12/15)
None received
ARGUMENTS IN SUPPORT:
According to the author:
While it was understood that SB 1251 would enable the cities of Brea and Fullerton to form a JPA and retain employees previously enrolled in CalPERS under their formulas available prior to January 1, 2013, according to a technicality, classic employees who have been hired into the joint fire department are falling out of their original pension formulas.
Because the JPA is still in process, CalPERS cannot recognize the original pensions of Fullerton/Brea fire department classic hires. SB 354 aligns and clarifies recent pension reforms with JPA laws, until the JPA can exercise authority for the cities of Brea and Fullerton.
As stated by the sponsors:
SB 1251(2014) paved the way for the Cities of Brea and Fullerton to form a Joint Powers Authority (JPA) that will permit both agencies to completely share fire services and allow classic employees with no break in service, hired before December 31, 2012, to transfer over to the forming JPA and retain their classic pension formulas. As we are working toward formation of the JPA, both Brea and Fullerton have hired classic public safety employees after December 31, 2012 to replace retiring personnel. Unfortunately, CalPERS has told us that these employees would be classified as new members under the Public Employees’ Pension Reform Act of 2013 once they are moved over to the new JPA.
To address this issue, SB 354 would revise the period during which the authorization granted to a JPA formed by the Cities of Brea and Fullerton to provide specified retirement benefits, as described above, may be applied.
Prepared by: Pamela Schneider / P.E. & R. / (916) 651-1519
5/13/15 16:56:00
**** END ****
SB 354 (Huff) Page 4 of 4
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2015 - 2016 Regular
Bill No: SB 354 Hearing Date: 4/27/15
Author: |
Huff |
||
Version: |
4/06/15 As amended |
||
Urgency: |
No |
Fiscal: |
Yes |
Consultant: |
Pamela Schneider |
||
Subject: California Public Employees’ Pension Reform Act of 2013: joint powers authority: Brea and Fullerton employee benefits
SOURCE: City of Brea
City of Fullerton
DIGEST: This bill clarifies the time period during which a CalPERS “classic” member who is employed in the cities of Brea and Fullerton can transfer to a Joint Powers Authority (JPA) formed by those two cites and retain classic benefit formulas received prior to the transfer.
ANALYSIS:
Existing law:
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.
Allows local public employers forming a JPA to contract with the California Public Employees’ Retirement System (CalPERS) 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.
Establishes, under the Public Employees’ Pension Reform Act (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.
Requires pre-PEPRA members—referred to as “classic” members by CalPERS—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 under pre-PEPRA retirement formulas and eligible to receive the benefit plans offered to employees of the public employer on December 31, 2012 (i.e., the benefit plan in place prior to PEPRA implementation).
Authorizes a JPA formed by the cities of Brea and Fullerton on or after January 1, 2013, to provide employees who transfer to the JPA from Brea or Fullerton with the “classic” retirement formulas that the employees were receiving on December 31, 2012, from their respective employers.
Specifies that on or before January 1, 2017, up to three cities that are contiguous with Brea or Fullerton may join the JPA and extend the same protections, with regard to classic retirement formulas, to their transferred employees.
Clarifies that the formation of the JPA on or after January 1, 2013, shall not act in a manner so as to exempt a member from PEPRA who would otherwise be subject to PEPRA.
This bill:
Deletes the reference date of December 31, 2012, to identify the formulas transferring employees will be subject to.
Clarifies that transferred employees will receive the formulas that they were receiving from Brea or Fullerton prior to the formation and exercise of the joint, or “common” power created by the JPA.
Clarifies that if any of up to three contiguous cities join the JPA and their employees transfer to the JPA with no more than a 6-month break in service between employment with the city and employment in the JPA, those employees shall also be allowed to retain the retirement benefit plans they were entitled to from their employers prior to the transfer of the exercise of common powers to the JPA.
Background
PEPRA allows classic employees who move between public employers to be grandfathered under pre-PEPRA retirement formulas. Since employers, over time, could have more than one retirement formula for specific classes of employees, PEPRA further specifies that a classic employee who moves between public employers within a 6 month period will receive the benefit formula that the employer was offering on December 31, 2012 (i.e., one day prior to implementation of PEPRA). A JPA formed after that date would be a new employer in CalPERS and would therefore have no classic formula to offer classic employees.
In 2014, SB 1251 (Huff, Chapter 757 ) allowed the cities of Brea and Fullerton, after forming a JPA, to allow transferring employees to retain the retirement formulas they had prior to the formation and implementation of the JPA. In doing so, the bill used the standard December 31, 2012 date as the reference for retirement benefits that transferred employees would retain.
At the time, consideration was not given to classic employees who would come to work at Brea of Fullerton in the interim and then be transferred to the JPA. Any classic employees hired between January 1, 2013 and the date of transfer to the JPA would not be grandfathered under the statute as written, even though the intent was to allow all transferring classic employees to retain their classic formulas.
SB 354 thus makes clear the intent of SB 1251 that any classic employee who transfers to the newly formed JPA will be allowed to retain his or her classic formula following the transfer.
Prior/Related Legislation
SB 1251 (Huff, Chapter 757, Statutes of 2014) created the current exemption in PEPRA to allow classic employees transferred to a new JPA formed by the cities of Brea and Fullerton after January 1, 2013, to retain their classic retirement benefits following transfer to and employment in the JPA.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
SUPPORT:
City of Brea (co-source)
City of Fullerton (co-source)
OPPOSITION:
None received
ARGUMENTS IN SUPPORT:
According to the author:
While it was understood that SB 1251 would enable the cities of Brea and Fullerton to form a JPA and retain employees previously enrolled in CalPERS under their formulas available prior to January 1, 2013, according to a technicality, classic employees who have been hired into the joint fire department are falling out of their original pension formulas.
Because the JPA is still in process, CalPERS cannot recognize the original pensions of Fullerton/Brea fire department classic hires. SB 354 aligns and clarifies recent pension reforms with JPA laws, until the JPA can exercise authority for the cities of Brea and Fullerton.
As stated by the sponsors:
SB 1251(2014) paved the way for the Cities of Brea and Fullerton to form a Joint Powers Authority (JPA) that will permit both agencies to completely share fire services and allow classic employees with no break in service, hired before December 31, 2012, to transfer over to the forming JPA and retain their classic pension formulas. As we are working toward formation of the JPA, both Brea and Fullerton have hired classic public safety employees after December 31, 2012 to replace retiring personnel. Unfortunately, CalPERS has told us that these employees would be classified as new members under the Public Employees’ Pension Reform Act of 2013 once they are moved over to the new JPA.
To address this issue, SB 354 would revise the period during which the authorization granted to a JPA formed by the Cities of Brea and Fullerton to provide specified retirement benefits, as described above, may be applied.
Bill Author
Bill Co-Author(s):