Government Code, Section 7507 requires with regard to local legislative boards, that the future costs of changes in retirement benefits or other post employment benefits as determined by the actuary, shall be made public at a public meeting at least two weeks prior to the adoption of any changes in public retirement plan benefits or other post employment benefits. The code also requires that an actuary be present to provide information as needed at the public meeting at which the adoption of a benefit change shall be considered.
Assembly Bill 340 (AB340), known as the California Public Employees' Pension Reform Act of 2013 (PEPRA), took effect January 1, 2013. Generally, for employees who become miscellaneous members of the Contra Costa County Employees’ Retirement Association (CCCERA) on or after January 1, 2013, PEPRA requires a pension formula of 2% at age 62, 36 month final compensation averaging, and a maximum salary amount used for pension calculation of $110,100 (plus CPI). Under PEPRA the safety retirement benefit is generally 2.7% at age 57, 36 month final compensation averaging, and a maximum salary amount used for pension calculation of $132,000 (plus CPI). PEPRA does not address Cost of Living Adjustments (COLAs).
In the future, the Board of Supervisors may consider and may take formal action with respect to a proposed change in the COLA to the pension benefit. The Board of Supervisors is taking no action today other than accepting the reports. Should an agreement be negotiated in regards to this and other bargaining issues, the Board of Supervisors will be able to more quickly adopt the resulting Memoranda of Understanding, without an additional two week delay for compliance with Government Code Section 7507.
Six 7507 reports from Buck Consultants are attached:
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Professional and Technical Engineers IFPTE, Local 21 (dated February 12, 2014)
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Public Employees Union Local One (dated February 13, 2014)
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SEIU, Local 1021 (dated February 14, 2014)
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District Attorney Investigators Association (dated February 17, 2014)
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Western Council of Engineers (dated February 18, 2014)
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Professional and Technical Engineers AFSCME 512 (dated February 19, 2014)
The reports explain that this change affects only future employees; it will have no effect on the unfunded actuarial accrued liabilities of CCCERA. The expressed savings are in annual dollar amounts and as percentages of covered payroll for calendar years 2014, 2015, 2016, and 2017. For calendar year 2014, the start date is assumed to be July 1, 2014; therefore the savings are shown for a six month period. The savings shown are combined employee and employer normal costs. The savings are equal to the excess of the normal cost for the PEPRA structure and a 3.00% COLA to the pension benefit over the normal cost of a PEPRA structure and a 2.00% pension COLA.
Possible delay in the adoption of memoranda of understanding and in the future implementation of the pension COLA reduction, resulting in loss of savings.