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8/31/2008
In
this Alert:
…LEGISLATIVE SESSION ENDS WITHOUT A
BUDGET
…BILLS SIGNED BY THE GOVERNOR INTO LAW
…BILLS SENT TO THE GOVERNOR
…BILLS
THAT HAVE RECENTLY DIED
…LEGISLATIVE CALENDAR
LEGISLATIVE SESSION ENDS WITHOUT A BUDGET
The California State
Legislature finished their session Sunday, August 31, but for the
first time ever did not pass a budget.
State law allows the Legislature to work past Sunday's
constitutional deadline for passing bills but only until Nov. 15 and
only on urgency measures – such as a budget – that require a
two-thirds vote. Sen. President Pro Tem Don Perata, D-Oakland and
Assembly Speaker Karen Bass, D-Los Angeles have ordered their houses
to meet this week to put pressure on budget negotiations.
Following a failed Assembly budget vote, at a special press
conference on Wednesday, Aug. 20, Governor Schwarzenegger announced
an “August Revise” of his budget proposal. The state is now in month
two of its new fiscal year operating without a budget. The Governor
has stated that the new budget compromise includes additional cuts,
new revenues in the form of a temporary sales tax increase, budget
reform, and expansion of the rainy day fund as well as economic
stimulus mechanisms. The Governor continued to reiterate his belief
that it would be irresponsible to balance the budget by borrowing
local government or transportation revenues although the proposal
includes a plan to divert redevelopment tax revenues for three years
to fund schools.
At the beginning of
August, the Governor also signed an executive order cutting nearly
200,000 employees’ pay to the federal minimum wage of $6.55 an hour,
with full salary reimbursed once a budget is signed. More than
10,000 were slated to lose their jobs before union protests and
lawsuits between the Governor’s Office and the Controller’s office
followed. Schwarzenegger also limited overtime and imposed a hiring
freeze.
In the meantime,
California’s prison medical receiver has asked a Federal judge to
force the State to pay $8 billion to fix the state's correctional
healthcare crisis. The request would add an additional $3.1 billion
to the $15.2 billion budget deficit in this fiscal year.
AB 1963 (Carter) Same Service Credit for 2 Retirement Systems
This bill would broaden the exception to the prohibition on
receiving credit for the same service in two retirement systems to
permit concurrent participation and credit for service in a defined
benefit plan supported by public funds provided by systems other
than PERS and a supplemental defined benefit plan offered by the
employer. This bill was enacted into law on August 4th as
Chapter 219, Statutes of 2008.
AB 2202 (Caballero) PERS Part-time, Seasonal, Temporary Employee
Information
AB 2202 would mandate that every state agency, school employer, or
contracting agency of PERS provide information and data regarding
its employees who are not members of PERS. Currently, PERS can only
require data on PERS members. There are no details in the bill about
what data PERS will require or the regulatory procedures it will put
in place, so costs and administrative burdens to local government
are difficult to gauge. This bill was enacted into law on August 4th
as Chapter 261, Statutes of 2008.
BILLS SENT TO THE GOVERNOR
The following key bills were sent to the Governor to sign before the
Legislature ended its session. The Governor has until September 30
to sign these bills into law. We will provide a final disposition
of the bills in the September and October Alerts.
AB 1480 (Mendoza) STRS Roth IRA
This bill would permit STRS to administer a Roth IRA to accept a
rollover from an annuity contract or custodial account offered by
the system. This bill has passed both houses and has been sent to
the Governor.
AB 1844 (Hernandez) Commission Bill on Fraud and OPEB Reporting
This Governor’s Commission bill establishes penalties for fraud
related to STRS, PERS, and County retirement system benefits and
requires public agencies to report information on post-retirement
healthcare to the State Controller every year. This bill has passed
both houses and has been sent to the Governor.
AB 2390 (Karnette) STRS Post-Retirement Earnings
This bill extends the post-retirement earnings limit exemption of
STRS members for one year until June 30, 2009. There were several
issues being considered by the CalSTRS Post-Retirement Earnings
Limitations Working Group as possible amendments to this bill but
the issues being considered did not make it into the bill this year.
The bill has now passed both houses and has been sent to the
Governor.
AB 3041 (Comm. on Public Employees, Ret. and Soc. Sec.) PERS
Housekeeping Bill
This bill would provide that a PERS employee serving less than
full-time for 6 months be required to join PERS at the time the
person completes 125 days or 1,000 hours of work, instead of the
current language that vaguely states that the person must join some
time “after” exceeding the threshold. A recent amendment also
revises the threshold to include in PERS any employee working 20
hours or more a week for a period of more than 1 year. PERS believes
that these changes will close up “loopholes” and clarify exactly
when an employee is mandated into PERS. This bill has passed both
houses and has been sent to the Governor.
SB 1123 (Wiggins) Retiree Health Benefits and California Actuarial
Advisory Panel
This Governor’s Commission bill requires local entities to prepare
an actuarial study and make it public at least two weeks before
changes to post-employment benefits (and not on consent calendar).
It also creates the California Actuarial Advisory plan to provide
expert and independent information to encourage greater transparency
and understanding of actuarial methodologies and assumptions. This
bill has passed both houses and has been sent to the Governor.
BILLS THAT HAVE
RECENTLY DIED
The following bills have died since the July Legislative Alert was
sent out:
AB 789 (Mullin) STRS Purchase Power Payments
This bill requires that 2.5% of creditable compensation be credited
to the Supplemental Benefit Maintenance Account (SBMA) each year for
4 years commencing July 1, 2008 to fund “purchase power protection”
payments to STRS retirees as an inflation protection.
This bill was introduced to protect the state contribution to the
SBMA. The Governor’s budget proposal attempts to make an
“unconditional guarantee” of the 80%-of-purchasing-power benefit in
exchange for lowering the current state contribution to SBMA from
2.5% to 2.2% as a budgetary savings device. Fearing a situation
similar to the state’s withholding of the contribution in 2003-2004,
this bill counters the Governor’s proposal and guarantee that the
account will be funded at its current rate.
AB 2716 (Ma) Mandated Sick Leave
This bill mandated that all California employers – including public
employers – provide paid sick leave for any employee who works seven
or more days in a calendar year. The days are set to accrue at a
rate of at least one hour for every 30 hours worked. Sick time would
carry over from year to year but medium-to-large employers could
limit annual paid sick days to nine, small employers to five. This
bill was killed due to strong opposition from private industry.
AB 2940 (de Leon) PERS IRAs for Private Sector
This bill would create the California Employee Savings Program,
allowing PERS to offer individual retirement accounts (IRAs) to
employees of private sector companies. This bill died due to
concerns raised by PERS and others about this major expansion in the
purpose and services of PERS.
LEGISLATIVE CALENDAR
Following are important dates/deadlines for the rest of the 2008
legislative year:
August 31 – Last day for the Legislature to pass bills and send to
the Governor
September 30 – Last day for the Governor to sign or veto legislation
November 4 – Statewide General Election
December 1 – New Legislature reconvenes for the 2009-2010 session.
Feel
free to contact PARS with any question or requests for further
information. Additional news, and an archive of past Legislative Alerts,
is available on the PARS website at
www.pars.org.
Thank
you,
Maureen Toal
Vice President, Public Affairs
Public Agency Retirement Services (PARS)
mtoal@pars.org
(800) 540-6369
ext. 135
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