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AB-2310 Public Employees’ Retirement System: contracting members. (2017-2018)

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Date Published: 03/20/2018 09:00 PM
AB2310:v98#DOCUMENT

Amended  IN  Assembly  March 20, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2310


Introduced by Assembly Member Aguiar-Curry

February 13, 2018


An act to amend Section 20469 Section 20516 of the Government Code, relating to public employees’ retirement.


LEGISLATIVE COUNSEL'S DIGEST


AB 2310, as amended, Aguiar-Curry. Public Employees’ Retirement System: contracting members.
Existing law, the Public Employees’ Retirement Law (PERL), establishes the Public Employees’ Retirement System (PERS), which provides a defined benefit to members of the system, based on final compensation, credited service, and age at retirement, subject to certain variations. PERL authorizes a public agency to contract to make its employees members of PERS, and prescribes a process for this. PERL authorizes a public agency wishing to participate in PERS to request a quotation of the approximate contributions that would be required in this regard. If the governing body intends to approve the proposed contract, PERL requires the body to adopt a resolution giving notice of that intention and prohibits approval of the contract until an election has been held that permits the employees to be included in PERS to express their approval or disapproval. Under PERL, a contracting agency and its employees may agree in writing to share the costs of the employer contribution in accordance with specified procedures. Existing law requires, in these circumstances, the collective bargaining agreement for a contracting agency and its employees to specify the exact percentage of member compensation that is to be paid toward the current service costs of the benefits by members.
This bill would make nonsubstantive changes to the provisions requiring a governing body to adopt a resolution and conditioning contract approval on holding an election, as described above. revise that provision to also refer to a memorandum of understanding ratified by the employee bargaining unit and the governing body of the contracting agency. The bill would require these agreements, as an alternative to specifying the exact percentage of member compensation to be paid toward the current service cost of the benefit by members, to specify the methodology for calculating that cost-sharing rate.
Under PERL, the above-described provision regarding cost sharing does not apply to a contracting agency or its employees until the agency elects to be subject to this provision by contract or contract amendment. Existing law further specifies that contributions are withheld from member compensation or otherwise collected when the contract amendment becomes effective.
This bill would specify that once a contracting agency elects to be subject to the cost-sharing provision, contract amendments are not required to effectuate cost sharing in subsequent collective bargaining agreements or memoranda of understanding ratified by the employee bargaining unit and the governing body of the agency. The bill would, however, further require the contracting agency, if a collective bargaining agreement or memorandum of understanding sets forth a methodology for calculating the cost-sharing rate instead of an exact percentage, to provide the retirement system with a signed side letter ratified by the employee bargaining unit and the agency indicating the exact percentage at least 90 days prior to the effective date of the cost-sharing rate as set forth in the signed side letter.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 20516 of the Government Code is amended to read:

20516.
 (a) Notwithstanding any other provision of this part, with or without a change in benefits, a contracting agency and its employees may agree, in writing, to share the costs of the employer contribution. The cost sharing pursuant to this section shall also apply for related nonrepresented employees as approved in a resolution passed by the contracting agency.
(b) The collective bargaining agreement or memorandum of understanding ratified by the employee bargaining unit and the governing body of the contracting agency shall specify the exact percentage of member compensation that shall be paid toward the current service cost of the benefits by members. members or the methodology for calculating that cost-sharing rate. The member contributions shall be contributions over and above normal contributions otherwise required by this part and shall be treated as normal contributions for all purposes of this part. The contributions shall be uniform, except as described in subdivision (c), with respect to all members within each of the following classifications: local miscellaneous members, local police officers, local firefighters, county peace officers, and all local safety members other than local police officers, local firefighters, and county peace officers. The balance of any costs shall be paid by the contracting agency and shall be credited to the employer’s account. An employer shall not use impasse procedures to impose member cost sharing on any contribution amount above that which is authorized by law.
(c) Member cost sharing may differ by classification for groups of employees subject to different levels of benefits pursuant to Sections 7522.20, 7522.25, and 20475, or by a recognized collective bargaining unit if agreed to in a memorandum of understanding reached pursuant to the applicable collective bargaining laws.
(d) This section shall not apply to any contracting agency nor to the employees of a contracting agency until the agency elects to be subject to this section by contract or by amendment to its contract made in the manner prescribed for approval of contracts. Contributions provided by this section shall be withheld from member compensation or otherwise collected when the contract amendment becomes effective. Once the contracting agency elects to be subject to this section, contract amendments shall not be required to effectuate cost sharing in subsequent collective bargaining agreements or memoranda of understanding ratified by the employee bargaining unit and the governing body of the agency; provided, however, that if a collective bargaining agreement or memorandum of understanding sets forth a methodology for calculating the cost-sharing rate instead of an exact percentage, the contracting agency shall provide the retirement system with a signed side letter ratified by the employee bargaining unit and the agency indicating the exact percentage at least 90 days prior to the effective date of the cost-sharing rate as set forth in the signed side letter.
(e) For the purposes of this section, all contributions, liabilities, actuarial interest rates, and other valuation factors shall be determined on the basis of actuarial assumptions and methods that, in the aggregate, are reasonable and that, in combination, offer the actuary’s best estimate of anticipated experience under this system.
(f) Nothing in this section shall preclude a contracting agency and its employees from independently agreeing in a memorandum of understanding to share the costs of any benefit, in a manner inconsistent with this section. However, any agreement in a memorandum of understanding that is inconsistent with this section shall not be part of the contract between this system and the contracting agency.
(g) If, and to the extent that, the board determines that a cost-sharing agreement under this section would conflict with Title 26 of the United States Code, the board may refuse to approve the agreement.
(h) Nothing in this section shall require a contracting agency to enter into a memorandum of understanding or collective bargaining agreement with a bargaining representative in order to increase the amount of member contributions when such a member contribution increase is authorized by other provisions under this part.

SECTION 1.Section 20469 of the Government Code is amended to read:
20469.

If, after receiving the approximate contribution quotation, the governing body intends to approve the proposed contract, it shall adopt a resolution giving notice of that intention. The resolution shall contain a summary of the major provisions of the proposed retirement plan. The contract shall not be approved unless an election has been held to permit the employees proposed to be included in this system to express by secret ballot their approval or disapproval of the retirement proposal. Prior to the election, each governing body shall be furnished with a schedule of rates of contribution of members, which shall be made available by the governing body to each employee proposed to be included in this system. The ballot at the election shall include the summary of the retirement plan as set forth in the resolution. The election shall be conducted in the manner prescribed by the governing body and shall be such as to permit the firefighters, the police officers, the county peace officers, and the other employees proposed to be included in this system to express separately their approval or disapproval.