Assembly Standing Committee on Public Employment and Retirement

Ready? Okay. Go ahead. Do that first.

Thank you so much.

Good morning and happy New Year to everyone. Welcome to the Assembly Committee on Public Employment and Retirement. Before we begin, I have several announcements. Assemblymember Lackey is absent, and Assemblymember Chin will. Will substitute in today's hearing. Welcome, Assemblymember Chen. We have two bills on the agenda today.

They are File Items 1, AB 1054, Gibson, and File Item 2, AB 1439, Garcia. For this hearing, we'll be limiting substantive testimonies to two primary witnesses on each side of the Bill, and each will have two minutes to speak. All others may only say their name, organization, if any, and position on the Bill.

As a reminder, primary witnesses and support must be those accompanied by the author who has registered a support position with the Committee, and the primary witness in opposition must have their opposition registered with the Committee.

All other support and opposition can be stated at the standing microphone when called upon to simply state name and affiliation and position for Committee Members.

Since our hearings are public and some travel far to be here in respect for them and the author, please allow the author to complete their opening remarks regarding the Bill before making a motion so that the public has an idea of what the Bill is about and why it's proposed.

If a motion is made during the author's opening remarks, I'll simply say that the motion will be recognized at the appropriate time for authors. You'll note that our hearing is publicly noticed as file order. Your staff should be monitoring this hearing to assist you with coming at the appropriate time to present your Bill.

And I see that Assemblymember Gibson is here. Finally, the Assembly has experienced a number of disruptions to Committee and floor proceedings in the last few years because we seek to protect the rights of all who participate in the legislative process and can effectively deliberate on critical issues facing California.

So that everyone is absolutely clear, conduct that disrupts, disturbs, or impedes the orderly process of this hearing is prohibited. We will not accept such behavior or behavior that incites or threatens violence.

To address any such conduct, I'll direct the individual to stop and warn them that if they continue to, they'll be removed from participating in this hearing or from the Capitol and will temporarily recess the hearing if necessary so that the sergeants can restore order. Hopefully, it won't happen. Thank you in advance for your cooperation.

Members, we need to establish a quorum. Secretary, please call the roll.

McKenna here. McKenna. President Chin. Chin. President Alanis.

Present.

Melanie's present. Berner. Elawari. Garcia. Garcia. Present. When? When present. Thank you. We have a Quorum.

Before we start with the remainder of the agenda, I will remind everyone that we'll be limited to two primary witnesses. First on the agenda we have Assembly Member Gibson AB 1054.

Thank you very much. Good morning, Madam Chair and Members, thank you for allowing me to present Assembly Bill 1054. All of us share a common knowledge. The natural disasters are once thought incapable are now part of our common California fabric. We have entered an era that begins to be called the new norm.

The best response during these times of crisis to retain the most experienced and knowledgeable public safety personnel to assist us in protecting the people we love, our friends, our neighbors, our communities and our businesses.

I am pleased to offer a solution Assembly Bill 1054 as a key solution towards retaining the knowledgeable High Patrol officers and firefighters on the job.

Unfortunately, both High Patrol officers and Cal Fire struggle to keep on board the personnel, personnel ideally suited to direct a response when needed the most in critical times when a fire or disaster is upon us. The deferred retirement option program known as DROP is neither revolutional nor nor untested.

It is work working well in other parts of California, either in or parts of the states. The solution is smart, fiscally sound and is collaborative.

A solution for California, specifically Assembly Bill 1054 will allow CHP officers or CAL Fire fires who is eligible for retirement to voluntarily work for an additional five years while accumulating retirement benefits in an interest bearing account. It works for employees because they receive the accumulative funds as a supplement to their pension.

It works for the state because it it is cost neutral. The legislation is absolutely clear. The Legislature is absolutely clear that there cannot be a cost to the state of California. This Bill is long overdue. We will benefit from the legislation when California need it the most.

Members with me to provide supporting testimony and also technical response to any technical questions you may have is the President, Jake Johnson, the President of the California Association of High Patrol, as well as Terry McHaley, representative representing the Cal Fire Local 2881, with me today. Mr. President or Terry.

Madam Chair, Members of the Committee, Terry McHale with Aaron Reed and Associates representing Cal Fire Firefighters and the men and the women of the California Highway Patrol.

First of all, I want to thank the chief consultant Michael Bolden for his insights, for his shared understanding and for his incredible patience as we work through the interim on this Bill. It's very much appreciated, Mr. Bolden.

The key to AB 1054 is that incentivizes senior personnel to stay on the job and it is cost Neutral to the state. Madam Chair, Members of the Committee. Last year Cal Fire answered more than 550,000 calls for assistance. Madam Chair and Members of the Committee.

Last year, the California Highway Patrol has been called to do incredible dangerous duty in riotous situations. They are ostensibly now the State's Police Department. The challenges being confronted by Cal Fire and CHP are dangerously protracted and require experience and expertise to confront. DROP is a voluntary program. DROP is a voluntary program negotiated through hr.

DROP is a voluntary program that allows eligible CHP officers and firefighters to extend their career for one to five years. As it is negotiated allows them to freeze their pension calculation so there is no cost to the state. No longer accruing adjustments that are ascribable to California.

Yet they continue to work as employees to have income and they are allowed to do employee contribution to an interest bearing account. DROP addresses the critical shortage of veteran officers. It is cost neutral to the state. It is reviewed by finance every five years.

This Bill is so clean that Pope Leo is going to call Michael Bolden next week to have him do the next Vatican Council. There is no reason not to support this Bill. It does everything we need to do and it works for the Administration and it works for both parties.

I ask for an aye vote and I introduce the President of CHP, Jake Johnson. Thank you.

Good morning Madam Chair, Members of the Committee. My name is Jake Johnson. Statewide elected President for the California Association of Highway Patrolmen bargaining unit 5, the largest state police union in the U.S. CAHP is proud to sponsor with Cal Fire Firefighters a piece of legislation that will keep our best and brightest on the job.

In what will be a cost neutral equation, CHP has 6,000 rank and file officers. 4,000 serve in a uniform patrol capacity. While CHP's expanded duties have greatly improved public safety, CAHB union Members continue to report to union leadership that staffing remains strained by due to the added responsibilities.

Over the past four years, 2,300 well trained, dedicated men and women have become part of the CHP. As a result, there are now 2,300 officers with less than five years experience. These new officers still require guidance from experienced and senior personnel. I appreciate the Administration, CHP leadership and the Legislature for boosting hiring and funding for officer recruitment.

These collaborative efforts have had a positive impact. However, without a new strategy, keeping experienced uniform officers will be difficult as early retirement persists. AB 1054 offers an effective approach to managing both present and future budget limitations while ensuring the preservation of essential public safety expertise.

A DROP program inherent with this Bill will not financially burden the retirement plan. In fact, we have worked with the Committee staff to guarantee that the legislation specifically states drop must be cost neutral.

This piece of legislation is smartly written, overdue and will help secure safety of the state and is respectful to the taxpayers of the state of California. I respectfully urge the Committee to vote Aye on AB 1054.

Thank you. Thank you so much. Are there any other witnesses in support? Please come forward. State your name, your organization and your opposition, I mean your support. Are seeing none. Are there any witnesses in opposition? Seeing none. Are there any witnesses that would like to come up and give their opposition organization and name seeing none.

Any questions from the dais, from the Members? Yes.

Assembly Member, good morning. Thank you for bringing this Bill. As you guys know, my background in law enforcement relates a lot to what you guys are talking about today as a watch commander, as a supervisor out on the streets and in the courthouse.

It was nice to be able to bring back my retirees past their 960 hours that we can work with them during a state of emergency like we had during COVID. As you guys know, we didn't get to go home. We started to work the streets and keep everybody safe.

And so I see this Bill helping in those situations as well and making sure that we have experienced officers still in the area that can help with our younger generations as far as mentoring and showing them how the job should be done. So thank you guys for bringing this and looking forward to supporting it.

Assembly Member Elhawary,

I also wanted to add that we have some incredible retired annuitants that support here in the Capitol. And I sounds like this will help them as well.

And it really makes a difference when we think about the work that we do every day and the ways that we have that level of support, wanting to make sure that they feel supported as well.

Seeing no other Members, I have a couple of questions. When you talk about the hiring, I spoke with a couple of CHP officers and they're stating that there's not really a recruitment problem that you guys see about 30,000 applications a year. Is this true?

I would say the recruiting is going well. Just like in my testimony, the recruitment's going excellent. The retention is going to struggle. In the analysis, it speaks to that about the eligible CHP officers and Cal Fire that are eligible to retire in the next several years.

What DROP does is it also allows the employer to project out for at least in the analysis has three years, I believe, to project out what they will need to do for recruitment and hiring. What I would just like to say is since 1970, there were 6,300 sworn CHP officers. That means from officer up to.

Up to commissioner. Now there's 7,100. So in 55 years, that's 800. The population of California has doubled. The amount of registered vehicles has gone. I believe it's 18 million in 1970 to 36 million at the end of last year. So the recruitment's going well, but there are not enough CHP officers.

Based on the added responsibilities and all the growth and the stat in the. In California. I commend the Department. I've done it in my magazine to commend them. I think along with the Legislature, the Administration, and with the Department. They've done a superb job. I give them all the credit.

2300 bodies in a significant period, in a short period of time is significant. But we've also lost people. And we continue in the analysis again to point you back like we. We might have an issue going forward if we don't continue this. This process of hiring, hiring at a rapid rate.

And it has put a significant amount of stress on the employer running that many people through a police academy in a short period of time. So it's also stressed the amount of bodies it takes of trainers to train that many people in a short period of time.

Thank you, Assembly Member.

Just one more thing to add, if I could be added as a co author, please.

Sure. Thank you.

Thank you.

Well, I thank you for bringing this forward. As I drive on the highways in California, I really worry about speed. People are driving so fast. So it'll be good to have guys out there trained and out there doing their job and helping keep us safe on our highways. With that, can I get a motion?

Motion. Second.

We have a motion and a second. Please call the roll item number one.

[Roll Call]

Our next item is AB 1439. Garcia.

Well, good morning. Good morning Madam Chair and Members of the Committee, I am here to present AB 1439 which is sponsored by the State Building and Construction Trades Council of California. A little bit of background.

CalPERS and CalSTRS have a responsible contractor policy RCP that attempts to ensure that contractors doing work on CalPERS and CalSTRS funded construction projects are not only good stewards of public employee Members investments, but also treat construction workers on CalPERS and CalSTRS projects with dignity.

So unfortunately, the responsible contractor policy lacks the necessary language to ensure that that construction workers are paid prevailing wages, properly trained or that there is labor peace after construction without these adequate protections.

This allows the largest work public worker pension fund in the United States to actively invest in projects that allow worker exploitation such as paying construction workers minimum wage without health care or pension benefits, while CalPERS board Members and staff have a fiduciary duty to properly invest Members contributions.

There are several practical things that the state's pension system can do to mitigate the risk associated with contractors not complying with the RCP and withdrawn out labor disputes at investment properties.

When construction project managers do not consider the qualifications of potential contractors, they are choosing to favor low quality irresponsible contractors who submit the lowest cost bids and actively operate in the underground economy.

Issues such as wage theft, health and safety violations and poor quality construction are not readily apparent during a construction project and often come to light only after construction is complete because workers fear losing their jobs. But these low road employer violations create investment risks for CalPERS and CalSTRS as an asset owner.

Wage theft, health and safety issue, project delays, construction defects may result in fines and penalties from public agencies and litigation by workers and end users. And so these negative outcomes are financial risks that eat away at the construction project's investment returns and are difficult to mitigate once the problem has developed.

CalPERS and CalSTRS ultimately bear the risk of failure to deliver such projects on time, within budget and in accordance with construction standards.

So my Bill AB 1439 seeks to require state and local public pension or retirement systems to make responsible investments or finance development projects in California using public employee pension or retirement funds unless the projects include specified labor standard protections for workers.

And so with me this morning I have representative from the State Building and Construction Trades Council sponsor testifying support Mr. Jeremy Smith.

Now we'll hear from the witnesses in support. You'll each have two minutes.

Thank you Madam Chair. Jeremy Smith here on behalf of the State Building and Construction Trades Council of California, the proud sponsors of this piece of legislation Just wanted to step back for a second and just let you know why we're here.

We believe that investments of union members, defined benefit pension contributions by public pension funds and construction projects should not possibly go to underground economy developers and contractors who do not pay the construction workers a living wage or ensure that those workers are graduates of state approved apprenticeship programs. That's what we're trying to do.

Why are we here today asking for help? Why don't we approach Mr. Garcia, we got here today because since 2023 we have been trying to get the boards of PERS and STIRS to update and make more robust their existence existing responsible contractor policies.

Since that has not worked, we're here today and from our first conversations with some of the non Persian STIRS funds since the Bill affects all public pension funds which did not occur unfortunately until last week, it seems that there are few such policies guiding local Fund investments.

We just do not believe it's good policy to make investments of public employee union Members pension money and projects that do not protect construction workers on those projects by using skilled and trained construction labor, pay the prevailing wage or provide neutrality for organizing the pers and serves.

RCPs ask good questions and we tried to work with them and not come before you. Unfortunately neither RCP is currently constructed provides real protections. They ask questions such as do you provide health care? Have you ever been debarred? Are you any are there any pending complaints against your firm? But all of those questions are self certification answers.

At the end of both PERS and CSRS forms they ask the very people vying for a contract with both who just checked a series of simple yes or no boxes if they believe whether they themselves meet the requirements of the RCP. And importantly both RCPs specifically do not require the payment of prevailing wage.

As I mentioned we fear the same is true for local non Persian CSRS funds. After initial conversations with local pension funds at time the same city, county and local level which just begun last week when we were notified of many of the opponents opposition. So for those reasons that's why we're here today.

We urge your Aye vote we want to continue this conversation moving forward. We heard from a bunch of opponents. We look forward to continuing those conversations.

Thank you. Thank you.

Thank you. Good morning Chair Members Elmer Lazardi here on behalf of the California Federation of Labor Unions.

We know that strong state labor standards can create and support good union jobs in a pathway to the middle class for Californians rather than allowing low wage jobs to exacerbate the widening inequality that we're seeing today and ensuring that public and union investments create good jobs has led us to approach many creative funding sources to ensure that more workers can access and actually achieve this middle class.

We have looked at everything from federal and state grants and investments to procurement and contracting to the state's many tax credits. Actually, in December, we co sponsored with the Building Trades and CFT a conference on using public and private pension funds to build affordable workforce housing with labor standards.

And the big takeaways from that was that union pensions should and can meet the triple aim of having good jobs, secure retirements and investments in the public good. And we see AB 1439 as a similar attempt to reach those goals.

Also, just want to touch briefly on the point of fiduciary duty that was raised because we've heard arguments about how labor standards and fiduciary duty are somehow mutually exclusive. But we want to emphasize that strong labor standards can benefit projects and actually help fulfill that duty.

Because whether we're talking about reducing delays because workers are always available or ensuring that there are no strikes on a project because there's a PLA, or just making sure that projects are actually built to last because better trained and compensated workers have been proven to provide higher quality products and services, all these support a better return on investment.

So in closing, I just want to ensure that as we continue having these discussions on investments, that we're not only considering the project, but also the human capital that helps bring it to life. So AB 1439 will ensure that is the case with our public pension funds. And. And we respectfully ask for an Aye vote.

Thank you so much.

Thank you. Are there any other witnesses in support? Please state your name, your organization and your position.

Madam Chair Members, Bob Giroux, on behalf of the International Union of Painters and Allied Trades, we support the bill very strongly. I do want to point out that the Chair.

I'm sorry. I'm sorry. I'm sorry. Please state your name, your organization and your position.

Bob Giroux, on behalf of the International Union of Painters and Allied Trades in support. Because every project, like the Hollywood Park Casino in your district, should be built the way the built states.

Thank you. Thank you. Mr. Giroux.

Madam Chair, Members, Matt Braud for Teamsters California in support.

Thank you. Madam Chair Members. Matt Crimmins on behalf of the California Nevada Conference of Operating Engineers. And strong support.

Thank you.

Good morning, Madam Chair and Members, James Thurbacker with the California State Council of Labor is also in strong support. Thanks.

Good morning. Mitch Steiger with CFT, a union of educators and classified Professionals also in support.

Morning, Madam Chair. Timothy Jeffries representing Boilemakers International, representing the Members in our apprenticeship programs. Standing support State building traits. Thank you.

Thank you. Thank you. Seeing no more witnesses in support. Are there any witnesses and opposition? Please come forward. You'll have two minutes each. Thank you.

Good morning. My name is Eric Stern. I'm Chief Executive Officer of the Sacramento County Employees Retirement System. I am here on behalf of our statewide association for county retirement plans, which is known as SACRS. We represent 20 independent county retirement plans from LA County to Stanislaus to Mendocino County.

Collectively, our retirement systems invest more than $300 billion in pension assets for 800,000 public employees and retirees. We're opposing this bill, as the analysis stated, because it interferes with our board's constitutional fiduciary duty to prudently manage pension assets. And.

And what makes the county retirement systems different than CalPERS or CalSTRS is that the county pension plans are 100% externally managed. And that means we invest through diversified pooled funds managed by external managers. We are limited partners and have no ability to control or influence an underlying company's construction practices.

The bill's lack of a clear definition of a development project creates sweeping consequences, potentially extending beyond real estate or infrastructure projects to corporate bonds, private equity, even passive public equity index funds. So take a major publicly traded company like Target. We hold stock in those companies like that. They're just large passive index funds.

If Target wants to build a new store in California, is my retirement system, as a tiny shareholder supposed to intervene and demand compliance with the bill? Or would we be forced to sell the stock when the target CEO doesn't answer my emails?

And that is what fiduciary duty represents is not being able to invest in things that deliver us the return. So the practical effect of this bill would likely be forced divestment from a broad range of California related investments that reduces diversification, increases risk and potentially lowers investment returns that fund pension benefits for our members.

Thank you. Good morning, Chair and Members. Vanessa Chavez with the California Building Industry association here in opposition to AB 1439. This bill will effectively impact all types of construction spanning from affordable housing projects, residential to commercial sites in the state which receive financing from boards of pension funds and retirement systems, which are private entities.

AB 1439 would mandate that these projects would require new and additional labor standards regardless of the level of investment or size of the project. This requirement would dramatically exacerbate the cost of construction of housing projects and also thwarts existing contracts. In addition to stalling development.

An example of the magnitude of the impact of this measure on just one system, CalPERS. The investment in real estate accounts for nearly 13% of its holding, which equates to $60 billion.

Furthermore, 1439 is ripe for litigation as it not only breaches existing contracts, but also, as the analysis points out, in violation of existing state and federal laws. AB 1439 will have a rippling effect with massive litigation claims and further have a chilling effect for housing construction and business growth throughout the state.

There will also be litigation costs which impact the fund or as the measure will violate existing contracts. As California enters yet another year of exist of declining housing permits, additional restrictions to housing funding will make projects less affordable and reduce growth opportunities to communities that receive such funding.

AB 1439 conflates the terminology of what is a public versus private fund investment that has already been contributed to retirement system such as CalPERS ceases to continue being public funds and they are personal and private property of contributing employees.

As the analysis aptly points out, the source of the fund ceases to continue to be public funds and becomes the personal private property of the public employee. It is for these reasons that we urge a no vote today on AB 1439.

Thank you. Are there any more witnesses in opposition? Please come forward. State your name, organization and your position. Thank you. Thank you.

Good morning, Chair and Members Freddie Quintana on behalf of the California Apartment Association in opposition.

Good morning, Chair, Members. My name is Paul Schaefer, the California Council for Affordable Housing here in respectful opposition. Thank you.

Good morning, Chair, Members, Nicole Robinson-Dumont with Cal Chamber in opposition Good morning.

Melanie Perrin on behalf of the Associated General Contractors of California chapters in opposition.

Good morning. Chair, Members, Isla Bravo on behalf of the California Business Properties Association in opposition Good.

Morning, Madam Chair Members Jean Hurst here today on behalf of the Urban counties of California in opposition Good morning.

Chair, Members. Johnny Feeney with the League of California Cities and respectful opposition. Thank you. Thank you.

Good morning, Madam Chair. Aaron Avery, California Special Districts Association respectfully opposed. Thank you.

Good morning. Eric Lurie on behalf of the California State Association of Counties. Opposed. Thank you.

Sarah Duquette on behalf of the Rural County Representatives of California. Opposed

Good morning. Gracia La Castillo Krings on behalf of The California Housing Consortium. In opposition thank you.

Good morning. Michelle Gayle on behalf of California Association of School Business Officials in opposition.

Good morning. Cassie Mancini here on behalf of the California School Employees Association. Just wanted to clarify that we're not asking for the Bill to stop moving today, but we remain opposed for the reasons articulated in our letter.

Thank you, thank you, thank you. Seeing no more witnesses, we'll bring it up to the dais. Assemblymember Boerner.

Good morning everyone.

This is a strange position to be in because I don't know If I've ever 8 years agreed with the analysis from the BIA. I think if you look at my voting record, everybody's going to be like what is going on in January 2026. I want to thank the author for bringing this forward.

I believe pers and stirs pensions and public pensions qualify as public investment and so they should have stricter labor standards. That is true. And I think what you described, I take it at your word that it's true that a self certified checklist is insufficient to guarantee labor standards.

For that reason I will give you a courtesy eye today to move this forward. But the concerns from the BIA are real. We have our second largest commercial corridor in Encinitas happens to be owned by a teacher pension fund.

We don't have none of the projects, the tenant improvements, all the stuff they need to keep it going and get that return on investment for those teachers.

Needs to be very explicit in the Bill that tenant improvements are excluded, that there's a minimum size because what if you put these labor standards, there's small improvements, no one bids on the project because it's not a large pension Fund, it's a small one. What happens then?

What's the minimum size and what happens when there are no skilled in trade and trained labor forces to do these smaller projects? We can't stop tenant improvements. We don't want blight throughout our state because of this bill. And I know that's not the author's intention, it's not the detention of the sponsor.

So this bill does need more tweaking. It's January, you have a couple weeks before the floor. It's a short time period. But hopefully those are the three things that tenant improvements need to be excluded.

That these need to be very clear because I heard from the supporters that this is, you know, basically geared at CalSTRS and CalPERS and not all pensions. Right. So how do you differentiate that?

We need to make sure that this is like what do we do in case of a labor shortage where there are no skilled and trained or no one bids on a project. Right. That's a problem. And so do I have the commitment from the author to keep working on that expeditiously in the next week and a half?

Absolutely. And I appreciate the comments. Assemblymember and I do thank the opposition for coming forward with the concerns. And so, you know, I want to share that I, as a former educator, teacher for teacher and administrator for 21 years, paid into CalSTRS.

And so I would not be doing something that, you know, it affect, you know, my family's, you know, bottom line, you know, when I, when I do end up being a beneficiary. And so I strongly believe that having labor standards is a good investment for the, for the investments that are made by these pension funds.

And so in the long term, I think it's going to, it's going to help. It's a win, win for everyone. And so the specificity of this bill, I know there's concerns regarding that and I know my sponsors are willing to engage with folks and to make sure that we get the details right.

And so definitely you have that commitment for me. Thank you, Assembly Member.

And I would just put it out to the University of CalSTRS and CalPERS that you have to have better labor standards for the investment of our public pensions. This is ridiculous that we're even hearing this bill.

Thank you. And with that, I'll move the bill. Assembly Member Nguyen, thank you.

Thank you, Madam Chair. I want to thank the author and the sponsors for taking part of this. I understand the intent. Prior to being here, I ran an organization that was around workforce development.

And many of the folks that the organization helped were from low income communities, immigrant communities, and one of the areas in which we partnered with so heavily was the construction industry and trades.

And they felt so much joy in being able to get connected into these jobs because it was about fair living wages, worker protection, apprenticeships, all under the umbrella of union status, union workers. And so I completely understand what you're trying to do. However, I think I'm one of the only Members that has the most amount of pers.

Strs State workers that live in my district that I represent, that the largest, one of the largest school district, Elgrove Unified School District is all in my district.

I have nearly 60,000 members that I represent and anytime we do anything that is going to impact their pension negatively is an area in which I get the phone calls, I get the emails, and that is the one area that I can tell you that I get asked all the time, please protect my pension, please make sure it's there.

I, you know, I've worked all these years. I want to make sure that that is still going to be there for me and my family. This is what we're working towards and I just want to make sure that you are going to be the person that is going to protect it if you're going to represent us.

The reason why I fought so hard with the speaker to make sure that I stood on this Committee is because so many of them live in my district. And so while I understand the intent and I, you know the words that you said, you would never put your family at risk because you were a former educator yourself.

But I've got thousands of folks that live in my district that tell me that this is one area in which they don't want me to support when it impacts them. And for that reason, I cannot support this bill today. And I hope that you continue to work on this because there has to be a balance somewhere.

Everything that you said is true, but there has to be a balance somewhere where we can figure this out, where we're not going to impact the pensions of these folks that have spent so many years of their life and investing in the community and investing to make sure that at the end they're able to live a comfortable life.

Thank you.

Thank you. Yes, Member Chen.

Thank you, Madam Chair. I appreciate that. I have some questions for the author. In addition to skilled and trained and prevailing wage, what type of later standards are we talking about that you're looking at these investments for these development projects?

Well, the technical aspects, I think I'll let Mr. Smith kind of answer those.

Sure.

Sorry about that. I think that in the bill now we have this idea of neutrality. So anything that a pension bund owns on their own, we ask for this idea of neutrality in other places as well.

When the organizing happens on the ground for the, for the building that's being built, we want to make sure that the pension funds don't take a side on whether workers can organize. They don't have to say yes or no. We just don't want them to take a side in those situations.

That's, that's the third thing that is in the bill to go along with skilled and trained and prevailing wage.

Thank you. As you know, we have a major housing shortage in the state of California. And though the state has made requirements and ask to move that needle forward, unfortunately we've been willfully behind on that development.

And I understand and I fully agree that the women and men in the construction building trades have the best quality products in order to sustain good infrastructure. With that said, I wanted to see that. I've heard there could be anywhere between 20% to 30% increases of infrastructure development.

Do you see a spike increase in terms of housing additionally? Do you see that there's a inability to keep up with our housing needs in the state of California, that that's going to be reduced because of this type of policy.

I'm having a little trouble hearing. Could you just repeat the question again? I apologize for that.

Do you think the housing needs that are in the state of California are going to be red because of this type of legislation?

I think that the housing needs in California are going to be reduced when those who develop housing decide that the need for affordable housing outweighs the need for market rate housing. I think that we have the workforce to meet the demand for housing.

And in fact, housing projects themselves will help create pathways for apprentices to work on a job site, to journey through to become journeymen and journey women. So the very fact that you, the state invests in more housing that's affordable creates the opportunities for apprentices to become journeymen and journeywomen, crafts tradespeople.

So I think that we have spent the last decade here streamlining the process for housing. Assembly Member Wicks has a hearing this afternoon of her select Committee on Housing Construction Innovation. It's time to talk about how the housing is built.

And I do not think that that this bill would get in the way of housing construction per se. This bill is not in its final form. Today we heard from opponents who have concerns about what you're talking about.

We look forward to having those conversations as we move forward to get to the bottom of what their concerns are.

And I assume that some of the testimony from the opposition today, in terms of the specific definition of what a development project entails, is that something that can be clearly defined in the event that this legislation moves out of this Committee? Yeah, that is our goal and that's our intent. So definitely.

And if I may respond, please.

Yeah. I think from our perspective, obviously when you look at housing, there is a jobs housing balance. From our perspective, as the bill currently reads and with additional labor standards, obviously, as companies are looking at how California businesses are able to operate within this state, this is something that they're extremely sensitive to.

Yes.

So when you're adding additional restrictions that put businesses in a place where they aren't able, able to aptly hire and find employees within any jurisdiction that they're potentially proposing, whether it be a housing project or a project for a new retail site, that is obviously challenging. And so that's something that we're extremely sensitive to.

And so adding additional requirements is something that obviously perks our ears. And we're going to be, you know, a seat at the table making sure to making sure that those additional requirements aren't burdening our businesses.

But what I can tell you is that based on our perspective, this bill will definitely negatively impact not only housing availability but affordability.

Thank you. I do have one final question and comment. Madam Chair, if I may.

Yes.

I don't want to take up too much of the committee's time. This still has to go to appropriations and as understanding and from here as our steam colleague has stated early on it's going to be some time to go from January to the end of session.

And persistent has always been a strong partner for developers in the state of California and it also is in charge of our financial security for our state employees who are residents in Assembly of Winds District.

I just wanted to talk to the author and have your commitment that in the event that this does pass Committee that you'll continue to work hard, as you always do, to look at methods in which we can reach a compromise, a discussion, legislative amendments with our friends on the other side of this legislation.

No, absolutely. Thank you, Assemblymember. And I just want to share. I recently met with BIA and their issue as well is affordability. And so they talked about how they do construction really taking everything into account, how they make it make things affordable for for folks that are just trying to enter the housing market.

And so but like I said, I think quality construction is a big goal and I think everybody wins out in the end. So that's why I strongly feel that labor standards haven't been in place especially for these pension funds is not going to negatively impact, but positively impact. Thank you.

Thank you. Any more comments or questions? Yes, sir.

Thank you, Madam Chair. So this one's a real tough one for me as all the things that have been brought up here today. While I support the author's desire in protecting workers, I hear what our friends in the business world, including Mr. Stern and Ms. Chavez are saying. And it's no joke.

This bill can't come at a worse time when businesses are nervous to invest in the state that loves regulations and fees. There are a lot of remaining questions and I know obviously a lot of them were asked today and I'm sure there's going to be more in the future.

But I also trust the process and that's only because of the author. I know that on some of my bills a lot of you here sitting next to me also believe that I will stay true to what I'm going. To do with the bill.

And so I have that same trust with the author and that he'll make sure that the process continues working and to find a workable solution obviously with the opponents and everyone else.

So I won't, I won't make any commitments that I will vote on this on the floor, but that this vote that I will be giving you today will be allowing you to work on this further. And I do. I fully trust you.

I know some of you Member Chen also asking as well and I look forward to seeing this happen if we can be any part of this and would like to help facilitate anything that we can on helping with it as well. We will. Thank you, Madam Chair.

Thank you. Thank you. Thank you. No more comments or questions for me. This was a hard one for me as well because I absolutely believe in labor standards. I absolutely believe in skilled in trade. But as you Assembly Member Garcia I am a, I'm actually a purse retiree.

I know I look young, but I am a retiree and I do get my payments and my insurance and so protecting those retirees are extremely important to me. I also asked to be on this Committee because of that.

But you know, as I look at this as AB 1439, it raises unresolved concerns regarding cost pressures, implementation complexities and potential impacts on the stability and predictability of CalPERS and CalSTRS. Without a clear data demonstrating that these changes won't be absorbed, without increasing employer contributions or undermining the system's integrity, I cannot support this Bill today.

That said, I appreciate the author's engagement and I'm willing to continue working with you to address these concerns. And with that you can close.

Well, thank you so much, Madam Chair. I really appreciate, appreciate the comments. I want to thank everybody here on the Committee for your thoughtful discussion and your great questions. I think we all have an understanding that this is the early stage and so there is a lot of specificity that needs to be hammered out.

And so I appreciate the trust in me in order to get that done. But you have my commitment and so I'm looking forward to working with every way to get this bill right and to make sure that everybody feels comfortable that their pensions are secure and, and they're in the good hands. So thank you so much.

I and I respectfully ask for an Aye vote.

Thank you. We had a motion. We have a motion.

And a second, please call the roll. Item number two. AB 1439. Garcia, the motion is do pass and we refer to the Committee on Appropriations. [Roll Call] That bill is out 5 to 0. Thank you.

Thank you, everyone.

Before we adjourn, Assemblymember Alanis will have a—have some remarks.

Yes, Madam Chair. As a matter, as a matter of point of personal privilege, please, if I could, for those who don't know, our consultant here to my left, Lauren, is going to be leaving us. This will be her last meeting with us. She will be moving to the Senate, and we're all very sad that she's leaving.

I just literally found out right before this hearing. So, apparently, I'm not that important for them to tell me ahead of time. But we appreciate all the work that you've been doing and everything that you put in for these hearings to make sure that you educate us on everything that we're voting on and hearing.

I am going to miss you here. I already told you that. But I'm sure we'll see you in passing in the hallways, and I congratulate you and have a great time over on the Senate side, although they're not as much fun as we are.

Yes, yes, Mr. Chen.

Madam Chair, I just wanted to also say some things about Lauren. I've had the privilege and pleasure of working with her in Labor Committee.

It's been an absolute honor, and I appreciate you trying to keep me on my toes for me sometimes going a bit too left with my good friends across the aisle, and that's always been great.

I don't know why you want to work for Senator Strickland, a person of dubious character at best, but perhaps you can class up the place. But I appreciate your wisdom, I appreciate your foresight, and I do appreciate your careful consideration of policy.

I think we have so many women and men here in the State Capitol that are behind the scenes, and for better or worse, we get the harshest criticism and also the highest praise in the Legislature. And they don't see the work that you're doing, but it's felt every day for generations to come in the state of California.

We thank you, and so glad that you're still in the building working with us. Thank you.

Well, thank you. I would like to also thank you for all the work that you've done. And being here with me for three years—is going to be my fourth year as Chair. And so, I thank you for keeping these guys educated and, you know, keeping them in a little bit control. And we'll miss you.

And I have no idea why you want to go over there to the Senate. You should stay over here with us. But congratulations. And I wish you all the best of luck. Thank you. And with that, we'll join this meeting.