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8/31/2010
…CITY OF BELL SCANDAL SPURS LEGISLATION Public anger has skyrocketed over disclosures that Bell was paying its council members nearly $100,000 per year and other top officials even more, including former city Manager Robert Rizzo, whose base salary of nearly $800,000 was sweetened by about $700,000 in other benefits. As a result, a number of last-minute bills have been introduced in the form of “gut and amends” to address the situation. As the last day to pass bills this session is August 31, these bills are expected to move rapidly without the normal legislative review process, and are endorsed by both Democrat and Republican leadership. Below are details on the individual bills in the package and actions that will also be taken by the State Controller and PERS. SB 501 (Correa) Local Government Compensation Disclosures This bill requires officers and employees (of a county, city, city and county, school district, special district, or joint powers agency) who already file form 700 (conflict of interest statement) to also annually file a compensation disclosure form. The form will be developed by the Secretary of State and will include “at a minimum” salaries, stipends, reimbursements, and the employer's cost of providing benefits. The bill requires the filed forms to be posted on websites of the public agencies. AB 192 (Gatto) PERS Excess Compensation Under this bill, obligations for retirement benefits attributable to excess compensation earned by an unrepresented employee who was employed by one or more public agencies will be made the sole obligation of the subsequent contracting agency that paid the excess compensation. "Excess compensation" is defined as final compensation of an employee received from the current contracting agency in excess of 15% of the salary paid by the prior contracting agency. This means that a PERS contracting agency wouldn’t be on the hook for retirement benefits for non-represented, terminated employees based on “excess compensation” in the subsequent contracting agency of that employee. This bill deals with the City of Glendale issue with picking up part of the pension tab for the City Manager of Bell, who had previously worked there. AB 194 (Torrico) Government Employee Retirement Cap This bill would institute a cap on benefits for a person who first becomes a member of a public retirement system on or after January 1, 2011. The maximum pay upon which retirement benefits can be based would be set at 125% of the Governor’s Dec 7, 2009 recommended salary ($173,987) – or $217,483.75. Annual COLAs would be allowed going forward based on the All Urban California Consumer Price Index. AB 827 (De La Torre) Local Unrepresented Employee Contracts For unrepresented individuals who report directly to a legislative body of a local agency, AB 827 prohibits contracts with automatic renewal clauses, automatic salary increases (except for COLA), and severance payments more than one year’s salary. The bill also requires a performance review to be discussed at open session (and publicly available) prior to increasing the salary beyond a COLA. AB 1955 (De La Torre) Local Government Compensation This bill requires any individual contract of employment with an employee employed by, and reporting directly to, the legislative body of a local agency be ratified in an open session and after the contract is made available on the agency's website, no later than 7 days prior to the meeting to ratify the contract. Contract information is to include, but is not limited to, “the employee's name, the position, and the total amount of salary, benefits, retirement, and any other forms of compensation.” The bill also establishes sanctions against “excess compensation” cities, cities that pay their council members more than general law limits. AB 2064 (Huber) State and Local Government Salary Disclosure AB 2065 requires each general law or charter city, county, city and county, special district, school district, and joint powers agency to post on its official website, and update annually, the annual salary of each elected or appointed official, superintendent, deputy superintendent, assistant superintendent, associate superintendent, general manager, city manager, county administrator, and other similar chief administrative officer or executive officer. This is a companion bill to SB 501, but differs in that it includes compensation disclosures for legislative, constitutional officers, and deputies at the state level. State Controller Actions The Controller has announced that all cities and counties will be required to report payroll data to his office for employees and elected officials. Disclosure information will be part of a summary of fiscal information required to be submitted in October, and will be posted on the Controller's website in November. Details of the specific information that would be submitted are under development. PERS Actions PERS has announced it will post audit reviews of public agency membership and payroll data submitted to the retirement system. PERS will highlight significant findings of public agency reviews and regularly report them to the PERS Board. They are also working on establishing procedures and guidelines for PERS working-level staff to notify supervisors and senior management of unusually high compensation and salary increases such as those that occurred in Bell. In addition, the PERS Board’s Benefit and Program Administration Committee was briefed on 8/17 on the establishment of the Public Employee Compensation and Benefits Task Force, which includes PERS staff and representatives of all major constituent groups, including public employer organizations such as the League of California Cities and the California State Association of Counties, employee and labor organizations, and legislative staff. The task force will focus on three key areas:
Legislation The two bills that deal with the issues of pension spiking and double dipping (AB 1987 and SB 1425) have both stalled in the Legislature. This is the last week of the legislative session however, so if there is any movement on the bills it will happen quickly, and we will update you on that and any other retirement related bills that make it through to the Governor in next month’s Legislative Alert. News reports came out recently stating that, in the case of AB 1987, reform advocates and State Controller John Chiang are pulling support from the bill because it has become watered down and would now do little to prevent California public employees from boosting their pensions, due to amendments allowing unions to negotiate whether such things as education incentives, uniform allowances and shift differentials can be used to determine final compensation on which retirement benefits are based. Local Governments Since losing billions of dollars in investments during the economic crisis, public pension funds in California are seeking to pare back the retirement benefits they provide to government workers. Reportedly, about 70 local governments are attempting to change benefit formulas for calculating pensions for future hires. In San Francisco, enough signatures were gathered to put a measure on the November ballot to require city employees to pay more toward their retirement funds. Newport Beach approved a contract with firefighters and lifeguards that used planned pay raises to cover pension costs and required lifeguards to pay 3.5% of their pay toward retirement. Orange County has approved a contract with the deputy sheriff's union that moves the retirement age from 50 to 55 for new hires and requires deputies to contribute part of their pension costs. In Los Angeles, former Mayor Richard Riordan has called for a series of reforms after predicting that rising pension and health benefits will push the city into bankruptcy within five years. Similar negotiations are also happening in Sacramento. Jerry Brown Outlines Pension Reform Plan Gubernatorial Candidate recently posted on his website his plan to reform pension benefits and related abuses. The plans details are as follows:
Following are important dates/deadlines for the rest of the 2010 legislative year:
The last day for any bills to pass is today. Those that pass will go to the Governor. We will have a summary of bills that have gone to the governor in the next Alert. 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,
PARS HAS ESTABLISHED TWO INNOVATIVE MULTIPLE-EMPLOYER TRUSTS TO ASSIST PUBLIC AGENCIES WITH PRE-FUNDING THEIR OPEB (POST RETIREMENT HEALTH CARE) OBLIGATIONS UNDER GASB 45. FOR MORE INFORMATION, CONTACT: MAUREEN TOAL The contents of this publication reflect PARS’ understanding of the facts. Before taking any action based on this information, consult professional advisors regarding your agency’s specific objectives and circumstances. For further information, contact PARS. |
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