Pension Reform Task Force Update - December 2012

December 18, 2012

By Ron Bates, Pico Rivera city manager

Our work on the committee will continue this next year as we review regulations drafted by CalPERS and as cleanup legislation is introduced on AB 340.


We will have our next conference call in January. This should give us some time to figure out what CalPERS is going to do and to review the cleanup legislation, which is expected to be introduced in the next week or two.

Other areas that will be up for discussion are the following:

  1. Prospective Benefits: The committee should discuss the overall question of pension sustainability. AB 340 garners savings in the long-term, but the short-term should also be addressed. The committee should discuss addressing current employee’s prospective benefits.
  2. JPAs Need an Exception: Newly formed JPAs will be required to offer the new benefits provided in AB 340. The Monterey Bay city managers have raised a concern that current city employees that are transferred to the newly formed JPAs will be given these lower benefits. This will make it more difficult for cities to join together into JPA’s to save costs.  League staff has discussed this issue with legislative staff and there seems to be a willingness to address this issue.
  3. CalPERS Board: AB 340 did not address creating a more balanced CalPERS Board. This was not only a League policy goal but was also addressed in Gov. Jerry Brown’s 12-Point Plan. We should continue efforts toward this goal.
  4. EPMC: Discuss eliminating EPMC for current employees.
  5. Fifty Percent of Normal Cost: Discuss applying 50 percent of normal costs to current employees.
  6. Second Tier for Lateral Hires: In the drafting of AB 340 the ability to adopt a second tier after Jan. 1 for lateral hires will no longer be available. So, those agencies that have been seeking to adopt second tiers but have not yet been successful, will no longer have the ability to do so after Jan. 1.  The committee should discuss this issue and help provide guidance to League staff for lobbying purposes.  
  7. Significant Compensation Increases: How will this be defined?
  8. Six-month Break in Service: The six-month break in service that determines if an individual is a new member should be extended to one year.

Any other ideas please give me a call at (562) 801-4379.

Happy Holidays!
Ron Bates
Pico Rivera City Manager

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