Bill Text: CA SB520 | 2011-2012 | Regular Session | Amended
Bill Title: Public employees' retirement: hybrid plan.
Spectrum: Partisan Bill (Republican 6-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB520 Detail]
Download: California-2011-SB520-Amended.html
BILL NUMBER: SB 520 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 21, 2011
INTRODUCED BY Senator Walters
( Coauthor: Senator Runner
)
( Coauthors: Assembly Members
Garrick, Harkey, Mansoor, and
Silva )
FEBRUARY 17, 2011
An act to add Section 20139 to the Government Code,
relating to public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 520, as amended, Walters. Public employees'
retirement. retirement: hybrid plan.
Existing law creates the Public Employees' Retirement System which
provides a defined benefit to its members based on age at
retirement, service credit, and final compensation.
This bill would require the Board of Administration of the Public
Employees' Retirement System to create a hybrid retirement plan for
public employees who become members on or after January 1, 2012, that
offers a defined contribution plan and defined benefit plan for
retirement for service and a defined benefit plan for retirement for
disability or for death. The bill would prohibit those plans from
creating a vested property right for the member with respect to any
employer contributions before retirement, as specified. The bill
would prohibit those members from being eligible to enroll in the
defined benefit plan for retirement for service that existed before
January 1, 2012.
The State Teachers' Retirement System, the Public Employees'
Retirement System, and the Judges' Retirement System and the Judges
Retirement System II provide pension benefits based in part upon
credited service. Under existing law, counties and districts, as
defined, may provide retirement benefits to their employees pursuant
to the County Employees Retirement Law of 1937.
This bill would declare the intent of the Legislature to enact
legislation to reform California's unsustainable pension system by
incorporating a defined-contribution program into California's
system. The bill would also make related findings and declarations.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 20139 is added to the
Government Code , to read:
20139. (a) The Board of Administration of the Public Employees'
Retirement System shall create a hybrid retirement plan for public
employees who become members on or after January 1, 2012, that has
the following characteristics:
(1) The plan shall have both a defined contribution plan and a
defined benefit plan for retirement for service. The defined benefit
plan shall have formulas that yield a lower benefit than the formulas
in effect on January 1, 2011.
(2) The plan shall have a defined benefit plan for disability
retirement and death benefits.
(3) The plan shall not create a vested property right for the
member with respect to any employer contributions before the date of
retirement for service or disability.
(b) Public employees who become members on or after January 1,
2012, shall not be eligible to enroll in the defined benefit plan for
service retirement that existed before January 1, 2012.
SECTION 1. (a) The Legislature finds and
declares the following:
(1) California's public pension and retiree health and dental care
expenditures have quintupled since the 1998-99 fiscal year, from
about $1 billion to $5 billion this year. Retirement spending is
expected to triple within the next decade, bringing the expenditures
to $15 billion.
(2) Since 1998, California's state workforce has grown by 31
percent and taxpayers now pay for expenses relating to the employment
of more than 356,000 state workers.
(3) Since 2008, California has added over 13,000 employees to the
state payroll during this recession.
(4) California taxpayers are paying pensions that exceed $100,000
a year to over 12,000 former state and local government workers,
including more than 9,000 state and local employees covered by the
California Public Employees' Retirement System (CalPERS) and over
3,000 former school administrators or teachers covered under the
California State Teachers' Retirement System (CalSTRS).
(5) California taxpayers pay 85 percent of the health care
premiums for most active state workers, 100 percent of the health
care costs for most state retirees, and 90 percent of health care
costs for their families.
(6) CalPERS reported a loss of $56.2 billion for the 2009-10
fiscal year. CalSTRS posted a loss of $43.4 billion in 2009.
California taxpayers are on the hook for funding shortfalls not made
up by pension fund performance or employee contributions, so
taxpayers will be paying more to make up for these pension investment
losses.
(7) California is one of several states that permit part-time
locally elected officials to receive pension benefits.
(8) The public pension benefit increases passed with Senate Bill
400 of the 1999-2000 Regular Session, which offered retroactive
benefit increases to government workers, were supposed to cost $650
million in 2010. That figure was based on CalPERS's assessment of its
"superior return on system assets."
(b) It is the intent of the Legislature to enact legislation to
reform California's unsustainable pension system by incorporating a
defined-contribution program into California's system.
