SB 1433: County employees’ retirement: Deferred Retirement Option Program.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2018-04-02
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions for the purpose of providing pension and death benefits to county and district employees. Existing law creates the Deferred Retirement Option Program within CERL to provide eligible members who elect to participate in the program access to a lump sum or monthly payments for a specified period in addition to a monthly retirement allowance.
This bill, on and after January 1, 2019, would prohibit a county or district from allowing a member to participate in a Deferred Retirement Option Program who was not participating in the program on or before December 31, 2018. The bill would also prohibit a county or district from establishing a new or additional Deferred Retirement Option Program.
Existing law, the California Public Employees Pension Reform Act of 2013, among other things, establishes new retirement formulas for employees first employed on or after January 1, 2013, that a public employer or retirement system offering a defined benefit pension plan is prohibited from exceeding, subject to certain exceptions. This bill would make nonsubstantive changes in these provisions.Existing law, the California Public Employees Pension Reform Act of 2013, among other things, establishes new retirement formulas for employees first employed on or after January 1, 2013, that a public employer or retirement system offering a defined benefit pension plan is prohibited from exceeding, subject to certain exceptions.
This bill would make nonsubstantive changes in these provisions.
(a)This article shall be known and may be cited as the Deferred Retirement Option Program.
(b)On and after January 1, 2019, a county or district shall not do either of the following:
(1)Allow a member to participate in a Deferred Retirement Option Program who was not participating in the program on or before December 31, 2018.
(2)Establish a new or additional Deferred Retirement Option Program.
SECTION 1.Section 7522.15 of the Government Code is amended to read:7522.15.Except as provided in subdivisions (d) and (e) of Section 7522.02, a public employer or public retirement system that offers a defined benefit plan shall offer only the defined benefit formulas established pursuant to Sections 7522.20 and 7522.25 to new members. CORRECTIONS: TextPage 2.Except as provided in subdivisions (d) and (e) of Section 7522.02, each a public employer and each or public retirement system that offers a defined benefit plan shall offer only the defined benefit formulas established pursuant to Sections 7522.20 and 7522.25 to new members.
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Date
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Status
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| Apr 24, 2018 | April 23 set for first hearing. Failed passage in committee. (Ayes 1. Noes 3.) Reconsideration granted. |
| Apr 11, 2018 | Set for hearing April 23. |
| Apr 4, 2018 | Re-referred to Com. on P.E. & R. |
| Apr 2, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS. |
| Mar 8, 2018 | Referred to Com. on RLS. |
| Feb 20, 2018 | From printer. May be acted upon on or after March 22. |
| Feb 16, 2018 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
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Date
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Description
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Location
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Votes
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| Apr 23, 2018 | [First] hearing set for [04-23-2018]: Failed passage in Committee. Reconsideration granted | Senate Standing Committee on Public Employment and Retirement |
Passed |
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| Apr 23, 2018 | Do pass | Senate Standing Committee on Public Employment and Retirement |
Failed |
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.
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Organization
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Position
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Date
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| Los Angeles County Professional Peace Officers Association | ** Against | Apr 18, 2018 |
| Riverside Sheriffs' Association | * Against | Apr 23, 2018 |
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2017 - 2018 Regular
Bill No: SB 1433 Hearing Date: 4/23/18
Author: | Moorlach | ||
Version: | 4/2/18 As amended | ||
Urgency: | No | Fiscal: | No |
Consultant: | Korinne Sugasawara | ||
Subject: County employees’ retirement: Deferred Retirement Option Program.
SOURCE: Author
DIGEST: This bill prohibits a county or district from establishing a new or additional Deferred Retirement Option Program and from allowing an employee to participate in a Deferred Retirement Option Program who had not been participating before, as specified.
ANALYSIS:
Existing law:
- Establishes the County Employees’ Retirement System Act of 1937 (’37 Act) which governs 20 independent retirement associations.
- Establishes the Public Employees’ Pension Reform Act of 2013 (PEPRA) which made substantial changes to public retirement benefits provided to new members, including defining the categories of pensionable compensation that can be used to calculate a public retirement allowance.
- Establishes the Deferred Retirement Option Program (DROP) to provide eligible members, as defined, who elect for participation access to a lump sum, or, in some cases, additional monthly payments for a specified period in addition to a monthly retirement allowance.
- Requires the county board of supervisors or governing board of the district to adopt an ordinance or resolution approving the implementation of DROP.
- Stipulates that the board of supervisors or governing board may not adopt the ordinance or resolution until an actuarial analysis, as specified, has been completed and it has been determined that the DROP will be cost neutral and agreed to in a collective bargaining agreement.
This bill:
- Forbids an employee from participating in a Deferred Retirement Option Program who had not been participating prior to December 31, 2018.
- Prohibits a county or district from establishing a new or additional Deferred Retirement Option Program.
Background
A Deferred Retirement Option Program is an optional program that allows safety employees to continue working while accumulating service pension payments in a DROP account at a guaranteed interest rate. Eligible members may voluntarily enter DROP during their final five years of employment, during which they receive no further service credit, as they are considered retired for the purposes of pension calculations. Upon termination of employment, the participating member begins receiving their retirement allowance plus the money they have accumulated in DROP.
Related/Prior Legislation
AB 704 (Charles Calderon, 2009), held in Assembly Appropriations Committee, would have established the Deferred Retirement Option Program (DROP) as a supplemental benefit program in CalPERS for managerial employees in State Bargaining Units 5, 6, 7, and 8.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT:
None received.
OPPOSITION:
Los Angeles County Professional Peace Officers Association
ARGUMENTS IN OPPOSITION:
The Los Angeles County Professional Peace Officers Association states, “Under a Deferred Retirement Option Program, a person can receive a reduced retirement allowance in order to also receive a lump sum payment when they cease working…These deferred retirement programs allow seasoned public employees to remain in the work force for a longer period of time, [offering] a more experienced work force and thus better service to the people of California.”
Discussed in Hearing
6MIN
Senate Standing Committee on Public Employment and Retirement
Bill Author
Bill Co-Author(s):