To: Honorable Mayor and Members of City Council
From: Steve Potter, City Manager
Prepared By: Tiffany Carranza, City Clerk
TITLE:
Title
Opposition to California Senate Bill 266 "Public Employees' Retirement System: Disallowed Compensation: Benefit Adjustments"
LABEL
RECOMMENDED ACTION:
Recommendation
Authorize the Mayor to sign a Letter of Opposition to SB-266, which would require the City to make direct payments to retirees for disallowed retirement payments under the Public Employees' Retirement System.
Body
DISCUSSION:
The League of California Cities is recommending cities to oppose California Senate Bill 266 - Public Employees' Retirement System: disallowed compensation: benefit adjustments. If SB 266 is enacted into law, it would require a public agency to directly pay retirees any shortfall of a retirement benefit if CalPERS determines that a retiree or their beneficiary has received disallowed compensation. This would result in new retirement liabilities for the City, and could result in unanticipated increases in the City's General Fund costs.
The Public Employees Pension Reform Act (PEPRA,) which took effect January 1, 2013, limited what types of compensation can be counted in the calculation of pension benefits for the new members. While the reforms were significant, they led to some confusion as to what may lawfully be offered as employee pension benefits. As a result, some public agencies and their represented employee organizations came to agreements on benefit packages and submitted to CalPERS for approval. Only after these agreements were approved and administered did CalPERS determine that these forms of compensation were unlawful. Those future retirement benefits, which were being paid for by employers and employees into pension systems such as the California Public Employees Retirement System (CalPERS), were at some point determined to violate the law and were terminated. Terminated benefits that violate PEPRA are considered "...
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