BILL ANALYSIS SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1667 Lou Correa, Chair Hearing date: June 28, 2010 AB 1667 (Swanson) as amended 5/06/10 FISCAL: NO PUBLIC EMPLOYMENT: COUNTY OF ALAMEDA COLLECTIVE BARGAINING HISTORY : Sponsor: County of Alameda Prior Legislation: none ASSEMBLY VOTES : Assembly Rules 10-0 3/11/10 PER & SS 6-0 5/05/10 Assembly Floor 72-0 5/20/10 SUMMARY : Would allow implementation of the memorandum of understanding (MOU) between Alameda County and the Alameda County Deputy Sheriffs' Association. The MOU eliminates the current 3% at age 50 retirement formula for new hires and replaces it with the choice between 2 new retirement formulas: 2% at age 50, or 3% at age 55 with increased member contributions. URGENCY BILL . BACKGROUND AND ANALYSIS : 1) Existing law : a) allows public employers and employee representatives to collectively bargain over wages, including benefits, and working terms and conditions. b) authorizes various safety retirement formulas, including the 3% at age 50 safety retirement formula, which is the retirement formula for currently-employed deputy sheriff members of the Alameda County Employees Retirement Association (ACERA). c) sets forth the required member contributions for Pamela Schneider Date: 6/21/10 Page 1 safety retirement benefits but allows those contributions to be higher (i.e., employer pays less) or lower (i.e., employer pays more), as agreed to in a MOU. 2) This bill will allow implementation of the collective bargaining agreement between the Alameda County Deputy Sheriffs' Association and Alameda County. Specifically, this bill: a) allows the Alameda County Board of Supervisors, as agreed to in an MOU with a safety employee group, to offer different safety retirement formulas to safety employees hired after the effective date of a resolution to that effect. b) requires new safety employees hired after the effective date of the resolution to choose between two other existing retirement formulas: 2% at age 50 or 3% at age 55. c) requires that new employees make this election within 45 days of beginning employment, or they will automatically be placed in the 2% at age 50 formula. d) requires that the employee election be irrevocable. e) allows the resolution to require specific member contribution rates, which may or may not include part of the employer contribution. f) prohibits the resolution from requiring that a bargaining unit be divided solely for the reason of providing different retirement benefits. g) provides that this is an urgency statute in order to timely implement the terms of the MOU between the County of Alameda and the Deputy Sheriffs' Association. Pamela Schneider Date: 6/21/10 Page 2 COMMENTS : 1) Arguments in support According to the author: Alameda County recognizes the need to address what has been identified as a looming statewide problem in need of a timely fix: the future costs associated with the provision of retirement benefits to public sector employees. In its effort to avoid negative consequences or runaway retirement costs, Alameda County has conscientiously pursued modifications to the retirement benefits for its respective employee bargaining units. To that end, the County recently reached agreement with the Deputy Sheriff's Association (DSA) that will result in substantial long-term savings to County taxpayers. Based on information provided to the Assembly Public Employment, Retirement, and Social Security Committee, the terms of the bargaining agreement are as follows: The DSA contract expired on March 7, 2009. There are four classes represented by the DSA. They are: Deputy Sheriff Recruit; Deputy Sheriff I; Deputy Sheriff II; and Sergeant. There are 1,004 total authorized positions. The County and DSA began negotiating a successor memorandum of understanding (MOU) in May 2009. The new MOU was adopted by the Board on January 26, 2010. The new six-year contract that expires on March 14, 2015 provides for no salary increases for the contract's first three years and then incrementally aligns the DSA salaries with the median of similarly-sized law enforcement agencies during the final three years. The DSA also agreed to share in 10% of the health premium costs, effective plan year 2010. Furthermore, the contract will eliminate the current 3% at 50 safety pension arrangement for all new deputies hired after April 17, 2010, replacing it with the basic Pamela Schneider Date: 6/21/10 Page 3 2% at 50 formula. New deputies may opt for a 3% at 55 formula which will require an additional employee contribution of 5% of salary annually for five years until vested and 3% of salary annually thereafter until retirement. Currently, deputies pay up to 15% of salary towards their pensions. The DSA agreed to jointly support state legislation necessary to accomplish this change in the retirement formula. 2) SUPPORT : County of Alameda (Sponsor) Deputy Sheriffs' Association of Alameda County 3) OPPOSITION : None to date ##### Pamela Schneider Date: 6/21/10 Page 4