HomeMy WebLinkAbout06.a.3. REVIEW OF RETIREMENT BENEFIT COMPENSATION LEGISLATION S61425 BY SENATORS SIMITIAN AND CORREA INTRODUCED ON 2/19/2010 AND AB 1987 BY ASSEMBLYMAN HERNANDEZ ON 2/17/20106.a.3)
Central Contra Costa Sanitary District
April 29, 2010
TO: HONORABLE BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: RANDALL M. MUSGRAVES, DIRECTOR OF ADMINISTRATION I"
SUBJECT: REVIEW OF RETIREMENT BENEFIT COMPENSATION LEGISLATION
S61425 BY SENATORS SIMITIAN AND CORREA INTRODUCED ON
2/19/2010 AND AB 1987 BY ASSEMBLYMAN HERNANDEZ ON 2/17/2010
These two bills propose to eliminate spiking and provide consistency in calculating the
retirement benefit for public sector retirement systems. They both have the same provisions
and limitations and require that the other bill must be enacted and take effect by January 1,
2011 in order for the bill to become operative.
Summary
Purpose is to eliminate "spiking" and standardize retirement benefit compensation.
Bills to be enacted and effective January 1, 2011 and operable July 1, 2011.
SB 1425 requires passage of AB 1987, and vice versa.
• Defines retirement benefit compensation salary earned and paid in final year.
• Public sector retirees cannot work for California governments for 180 days, effective
January 1, 2011..
• The bills would end spiking July 1, 2011.
Bills Review
These bills will redefine the final compensation computation for retirees. The bills as written
would elimination spiking and create consistent calculation of an employee's retirement
benefit for all California public sector retirement systems. Legislative's intent is to ensure
provisions are implemented by all state and local public retirement systems. The new
definition would become operative July 1, 2011, if both bills are enacted by January 1, 2011.
AB 1987 amendment recognizes FLSA and Ventura compensation requirements. The bill is
unclear on exact impact for FLSA and Ventura settlement compensation to employee
retirement benefit.
The bills would require the Contra Costa County Employees' Retirement Association
(CCCERA) to establish accountability provisions that would include an ongoing audit
process to protect against spiking or enhancing a member's retirement benefits. The bills
also provides for penalties for non-compliance established by CCCERA Board. An employer
or individual who knowingly or willfully reports compensation in an inconsistent manner may
be subject to prosecution.
._.._.Bill establishes that a retired person may not perform services for any employer covered by a
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state or local retirement system until that person has been separated from service for a
period of at least 180 days (amended 6 months). This would apply to all who retire on and
after January 1, 2011.
Legislature may adopt more restrictive provisions applicable to a state or local public
retirement system.
Review Process
SENATE BILL 1425
• Received unanimous approval (6-0) from Committee on Public Employment and
Retirement Committee
• Referred to Senate Appropriations Committee fora 5/10/10 hearing.
ASSEMBLY BILL 1987
• Received unanimous approval (6-0) from Committee on Public Retirement and Social
Security on 4/21/10 and amended on 4/29/10.
• Referred to Committee on Appropriations fora 4/26/10 hearing, then postponed
without a hearing date.
Support for bills
Glendale City Employees' Association.
Organization of SMUD Employees
San Bernadino County Employees' Association.
San Luis Obispo County Employees' Association
Santa Rosa City Employees' Association
Service Employees' International Union -Local 1000
California School Board (if amended)
Opposition to bills
California State Association of Counties (unless amended)
Judicial Council of California, Administrative Office of the Courts (unless amended)
Bill Impact Uoon District
Passage of these bills could result in 80 to 90 retirements between now and
July 1, 2011. This, plus the 77 new employees hired in the past five years, could lead to
approximately 60% of District employees being with the District six years or less.
These Bills could result in a substantial reduction in payments to CCCERA due to the
elimination of spiking. Staff is working to develop a more qualitative estimate of the
reduction of payments to CCCERA.
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