May 5, 2017

Committee Votes Down Senate Bill to Ban COLAs and Increase Contribution Rates

BY: Joshua Morrison, Nate Kowalski, Jorge Luna

As reported by the Sacramento Bee, last week the California Senate’s Public Employment and Retirement Committee voted down by a three-two margin Senate Bill 32, which had been aimed at reducing public pensions’ unfunded liabilities. Republican Senator John Moorlach from Costa Mesa brought the bill; many union representatives testified against it.

SB 32 was modeled after last year’s climate change bill, also called SB 32, which aimed to reduce greenhouse gas emissions to 40 percent below 1990 levels by 2030. Senator Moorlach’s bill demanded that CalPERS and CalSTRS reduce their unfunded liability to 1980 levels by 2030. To attain that goal, pensioners’ cost-of-living increases would be frozen, local governments would be required to increase their contribution rates by 10 percent, public employers would have to offer hybrid plans combining traditional pensions and defined contribution plans, and pensions for members joining the system after January 1, 2018 would be calculated based on their highest average compensation over 60 consecutive months or five consecutive school years, rather than the current 12 or 36 consecutive months.

Comment

Although many people assert the Public Employees’ Pension Reform Act of 2013 (PEPRA) did not go far enough to reduce unfunded liabilities, Senator Moorlach’s bill may have gone too far. It is impossible to satisfy everyone. However, one can hope to achieve a middle ground which both secures future pension funds and fairly compensates public employees and retirees.

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Attorney Bio(s)

Joshua Morrison

Joshua Morrison

Senior Counsel

(562) 653-3200

jmorrison@aalrr.com

Joshua Morrison is a senior counsel in the Cerritos office of Atkinson, Andelson, Loya, Ruud & Romo. Mr. Morrison represents California public school districts in all aspects of general education law. His areas of specialty practice include public employee discipline/dismissal, administrative hearings, matters before the Public Employment Relations Board, petitions for writ of mandate, retirement health benefits, PERS/STRS, and school district audit appeals.

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nkowalski

Nate Kowalski

Partner

562-653-3200

nkowalski@aalrr.com

Nate Kowalski is a Partner in the Cerritos office and Chair of the firm’s Public Entity Labor and Employment Practice Group. He is an accomplished litigator who represents employers in both the private and public sectors. Mr. Kowalski has litigated hundreds of sensitive and complex labor and employment cases in state and federal courts and has achieved remarkable results for his clients in hearings, arbitrations, trials and appeals.

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jluna

Jorge Luna

Partner

562-653-3200

jluna@aalrr.com

Jorge Luna is a partner in the Cerritos office of Atkinson, Andelson, Loya, Ruud & Romo. Mr. Luna has been practicing law since 1996 in a variety of areas, including employment, construction, business litigation, intellectual property and entertainment. For the past 12 years, Mr. Luna has focused his practice exclusively on employment matters, with an emphasis on litigation.

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