State Controller to Sponsor Reform Legislation for CalPERS, CalSTRS

State Controller John Chiang last week announced his sponsorship of two bills he believes will raise public confidence in and the performance of the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). The bills will be introduced by the end of next week.

The first piece of legislation, by Senator Gloria Negrete-McLeod who serves as Chair of the Senate Public Employment and Retirement Committee, would lower the monetary limit on the amount of gifts CalPERS and CalSTRS members and staff may receive under the Political Reform Act. The current limit of $420 would be lowered to $50.

The second piece of legislation authored by the Chair of the Assembly Public Employees, Retirement and Social Security Committee, Assembly Member Warren Furutani, would prohibit CalPERS and CalSTRS board members and employees from working with any employer who had substanial contracts or investments with either fund in the most recent five years the board member or employee worked with the fund. Additionally, the bill would prohibit employees or board members of the funds who worked with placement agents during the 10 years prior to leaving CalPERS or CalSTRS from going to work for those agents or the agents’ firms for two years.

We will keep you apprised on the status of this legislation as it moves through the process.

Employee Rights

AB 195 (Hernandez/Allen) - Request for Comment
As Introduced on January 28, 2011

AB 195, by Assembly Members Roger Hernandez and Michael Allen, would codify unfair labor practices under the Meyers-Milias Brown Act (MMBA). Specifically, this bill prohibits public agencies from:

• discriminating against, imposing or threatening to impose reprisals on, coerce or interefere with employees who exercise their rights under MMBA.
• denying employee organizations the rights guaranteed to them under MMBA.
• refusing or failing to meet and negotiate in good faith with a recognized employee organization.
• contributing financial or other support to any employee organization, encouraging employees to join one organization over another, or dominating or interfering with the formation or administration of such an employee organization.
• refusing to participate in good faith in an applicable impasse procedure.

Counties should be aware that current law prohibits not only the employer, but the employee organization from discriminating against or intimidating employees. This language is deleted by AB 195 and replaced with language that only prohibits the employer from doing so.

AB 195 is awaiting assignment to a policy committee.

Health Benefits

AB 36 (Perea) – Watch
As amended on January 27, 2011

AB 36, by Assembly Member Henry Perea, would provide state conformity to federal income tax laws by adopting specified provisions of the federal Patient Protection and Affordable Care Act (PPACA).

In last week’s The CSAC Bulletin, we brought forth the issue that California did not pass the necessary legislation that would provide federal tax breaks under PPACA for employees paying for health care plan premiums for a nondependent child who has not reached age 27 by December 31 of any calendar year. Accordingly, the portion of the insurance premium attributable to the nondependent adult child would be wages and subject to all California state payroll taxes. AB 36 specifically adopts the federal tax breaks provided in PPACA which provide that employees will not be taxed on premiums paid by an employee for a nondependent child 

AB 36 will be heard in the Assembly Revenue and Taxation Committee today.

Legislative Analyst’s Office Releases Webcast on Public Retirement Benefits

The Legislative Analyst’s Office (LAO) has posted on its website a webcast titled, “Public Retirement Benefits: Options for the Future.”

In the 15-minute video, LAO State Finance Director Jason Sisney describes why public employee retirement costs have risen substantially in recent years for California governments and the Legislature’s options for creating new types of retirement benefits for future state and local employees. At the same time, as Sisney discusses, the Legislature may have to identify new funding soon to address substantial unfunded liabilities in the teachers’ and University of California retirement systems, among others. 

This video is available on the LAO website