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SPONSOR: |
Maes |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Municipal Detention Officer Retirement |
SB |
591/aSPAC |
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ANALYST: |
Gilbert |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04
|
|
|
|
|
|
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$0.1
See Narrative |
Recurring |
PERA |
|
|
|
|
$0.1
See Narrative |
Recurring |
Local
Government |
(Parenthesis
( ) Indicate Expenditure Decreases)
Relation to SB 577, HB 116, HB 611
LFC Files
Responses
Received From
Public
Employees Retirement Association (PERA)
SUMMARY
Synopsis
of SPAC Amendment
The Senate Public Affairs Committee amendment to
Senate Bill 591 makes several technical corrections to the original bill and
clarifies that in order to retire under municipal detention officer member
coverage plan 1, members shall be employed as a municipal detention officer
for three years immediately preceding the date of retirement.
Synopsis
of Original Bill
Senate Bill 591 adds a new Public Employees
Retirement Association (PERA) coverage plan for municipal detention
officers employed by an affiliated-public employer, other than the state. Municipal detention officer plan 1, if
approved by an election of the affected membership, would enhance service
credit benefits by 20 %, sets a 3% percent pension factor, and an 80% of final
average salary maximum pension annuity.
Contribution rates proposed in this bill are
16.65 % of salary from employees and 16.65 % of salary from employers, for a
total of 33.3%. For detention officers currently covered by Municipal General
Plan 3, this represents a 3.5 % increase in employee contributions and a 7.5 %
increase in employer contributions.
Members must participate in municipal detention
officer plan 1 for three years prior to being eligible for the improved
retirement benefits.
Significant
Issues
Currently, statewide detention officers employed
by public-affiliated employers other than the state are covered under municipal
general coverage plans 1, 2 and 3. All
statewide detention officers are eligible to retire at any age with 25 or more
years of service credit and, depending on which plan they are under, pay
between 7% and 13.15% of their salary in contributions. Employers pay between 7 % and 9.15% of salary
in contributions, depending on the relevant coverage plan.
PERA’s actuary
completed a study to determine the actuarial cost of the increased benefits contained
in SB 591. The actuaries calculated an
11 % increase in contributions would be required, in addition to what is
currently paid, to adequately fund the enhanced benefits for detention officers
now covered by municipal general plan 3.
Since SB 591 mandates
the required 11 % contribution increase, this new plan would be adequately
funded. However, this bill could result
in a significant fiscal impact to local governments adopting this new plan.
If this bill is
adopted, PERA must implement the new plan, amend its regulations and update
member informational publications. PERA
believes that it can absorb this impact.
SB 591 adds another
coverage plan to the 27 coverage plans currently administered by PERA. Since PERA is in the process of implementing
a new computer information system, the addition of another coverage plan may
result in a change order to the existing vendor contract. PERA would be required
to absorb the costs of this change.
TECHNICAL ISSUES
Page 3, line 16, removes “a state policeman” from the definition of “hazardous duty member.” According to PERA, “State policeman” is considered a “hazardous duty member” for federal Social Security Act purposes.
HB 116 and HB 611
improve retirement benefits for hazardous duty members.
SB 577 also creates a
new municipal detention officers retirement plan.
RLG/sb/njw