SACRS Legislative Report May 12, 2016
Legislative Committee Richard Stensrud Chair Yves Chery Art Goulet David Lantzer Maya Gladstern Kristina Maxwell Steven Rice Tracy Towner Larry Walker Julie Wyne Andy Yeung Berry Lew Bob Gaumer Jim Lites - Consultant Mike Robson Lobbyist Trent Smith Lobbyist Sacramento CERS Los Angeles CERA Ventura CERA Orange CERS Marin CERA San Diego CERA Los Angeles CERA Ventura County San Bernardino CERA Sonoma CERA Segal Consulting Los Angeles CERA Sacramento CERA California Strategies Edelstein Gilbert Robson & Smith Edelstein Gilbert Robson & Smith
Political Overview Did you notice that it is an election year? Presidential politics a concern in California The Trump Effect How will voter turnout impact state races? Open Primaries Incumbent vs. Incumbent Races Up to 20 Ballot Measures? Pot not Pensions
SACRS Sponsored Bills
AB 2376 Assembly Committee PERSS AB 2376 is the Assembly PERSS Committee Omnibus bill dealing with the County Employee Retirement Law (CERL). At this time, it is a four-part bill dealing with what are considered technical, non-controversial changes to the CERL, including a SACRS sponsored provision pertaining to sworn statements.
AB 2376 Part 1 Sworn Statements Currently, the law requires regulations of every board to include a provision for the filing of a sworn statement by every person who is or becomes a member to include information such as date of birth, designated beneficiary and other information as is required by the board. Historically, 1937 Act systems have utilized a signed, hard copy document as the sworn statement. However, with advances in technology, some systems are now obtaining the same information via an electronic payroll feed from the participating employer. For those systems that do this, having to collect a signed, hard copy document from the member can be viewed as duplicative, unnecessary, and an inefficient use of resources. At the same time, however, there are some systems that view the continued collection of a signed document as valuable, for example, in a situation where there is a dispute regarding the age of the member. AB 2376 would accommodate both approaches by allowing each system to designate whether it will collect the pertinent information via the traditional sworn statement or via some other format, including electronically from the employer.
AB 2376 Part 2 Alternative Board Members Under current law, counties are authorized to appoint an alternate retired member to the office of the eighth member of the board and authorizes the alternate retired member to vote as a member of the board only in the event the eighth member is absent from a board meeting for any cause. AB 2376 would additionally authorize the alternate retired member to vote as a member of the board if the eighth member is present and both the second and third, both the second and seventh, or both the third and seventh members are absent for any cause. This proposal was brought forth by the California Retired County Employees Association
AB 2376 Part 3 Safety Employee Credit This section of AB 2376 would update the CERL to ensure that safety members under PEPRA who get credit for prior service in safety, fire, or military service are able to calculate their safety benefit based on the formula in effect on the date of the member s initial safety membership. This provision was brought forward by the Ventura County Retirement System and is supported by the SACRS Legislative Committee.
AB 2376 Part 4 LACERA Fix This section of AB 2376 would amend provisions of CERL specifically applicable to Los Angeles County to provide that the concurrent retirement exception applies to a member of the retirement system in Los Angeles County eligible to retire at 55 years of age and would state that the amendment is declaratory of existing law.
AB 1853 Assemblyman Jim Cooper Alternative Operating Authority AB 1853 authorizes the retirement boards operating under the CERL to modernize the operating authority structure for their system so that they can continue to fulfill their mission and meet the fiduciary responsibilities they owe to their stakeholders. As originally written, the bill gave the 1937 Act Boards of Retirement the optional authority to be the direct employer of personnel within the system based on one of several existing statutory frameworks. The options available would be the OCERS, SBCERA, or CCCERA models. AB 1853 removes the need for pursuing ongoing piecemeal modernization of operating authority by putting in place a standing mechanism for system s to adopt. The bill strives to continue protecting the rights of the retirement personnel that would shift from county employment to system employment and the governing structure of the boards would not change. This bill will bring a needed level of system autonomy while maintaining all transparency, budgeting accountability, and fiduciary responsibility.
Let the Negotiations Begin AB 1853 allows the retirement systems to decide if they want to pursue a different operating authority. County Boards of Supervisors would not have a vote in the matter. Thus, counties oppose. AB 1853 also included several employer protections requested by organized labor. Despite the employee protections labor was opposed in the first policy committee. However, recent talks with labor have been encouraging. Discussions are focused on requiring retirement systems to meet and confer with unions and counties before moving forward with a new operating model. Bill is on Assembly Floor and must be passed by June 3..
Bills of Interest
AB 1234 De Leon Retirement Savings Plans In 2012, SB 1234 (De Leon) was passed to create the California Secure Choice Retirement Savings Program. The bill also created a Board to perform a feasibility study to determine whether the legal and practical conditions for implementation of the Program could be met. The Board studied four distinct areas of focus: program design, market analysis, financial feasibility, and legal feasibility.
AB 1234 Board Determinations The Board determined that approximately 6.8 million workers are potentially eligible for the Program. Likely participation rates (70 to 90 percent) are sufficiently high to enable the Program to achieve broad coverage well above the minimum threshold for financial sustainability. Eligible participants in California are equally comfortable with a 3 percent to 5 percent contribution rate. The vast majority of likely participants are also comfortable with auto-escalation in one percentage point increments, up to 10 percent. To start, the Program should offer a default investment option consisting of a diversified portfolio with long-term growth potential and the choice to opt into a low-risk investment. Program should have a lower incidence of rollovers and cash-outs than employer-sponsored 401(k) plans,
AB 1234 What does the bill do? AB 1234 makes the necessary changes in law needed to implement the California Secure Choice Retirement Savings Program. The bill takes into account the findings of the Board. Business groups are opposed, expressing concerns that they could be required to implement the program or even make financial contributions on behalf of their employees. Some investment firms are also opposed. The Department of Finance estimates that it will cost approximately $134 million in General Funds costs and loans to establish the program. Bill is in the Senate Appropriations Committee Suspense File
AB 2833 Cooley Fee Disclosure Requires every public pension or retirement system to require each alternative investment vehicle in which it invests to disclose specified fees, expenses, and the gross and net rate of return associated with these vehicles and the underlying investments on a form prescribed by the system. The bill expresses the intent of the legislature to increase the transparency of fees paid by public pension funds to alternative investment vehicles. Because fees paid to alternative investment vehicles reduce returns, public fund trustees need to see and understand all fees they are changed. Sponsored by State Treasurer and supported by labor Bill is on the Assembly Appropriations Committee Suspense File
AB 2348 Levine Infrastructure Investment Authorizes the Department of Finance (DOF) to identify infrastructure projects in California where DOF can guarantee a rate of return on investments made by the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS) or a 1937 Act County Retirement System ('37 Act Retirement System). Bill is supported by the construction trades. AB 2348 is pending a hearing in the Assembly Appropriations Committee
AB 2650 Nazarian Prohibited Investments - Turkey This bill prohibits California State Teachers' Retirement System (CalSTRS) and the California Public Employees' Retirement System (CalPERS) from making additional or new investments or renewing investments, in any investment vehicle issued, owned, controlled, or managed by the government of Turkey. AB 2650 is currently on the Assembly Appropriations Suspense File
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