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TWO CALPERS BOARD MEMBERS Al-rEND PUBLIC AGENCY MEETING On Wednesday, February 6, 2002, a group of public AB 616 Clean-Up (3% at 60 et al retirement fonnu- agencies met with our CalPERS representative, San Fran- las). The applicability provisions of the new 2.5% @ 55, cisco Mayor Willie Brown, along with Board Member 2.7% @ 55 and 3% @ 60 retirement benefit fon~ulas need Michael Flaherman, in San Francisco. Discussions centered to be changed so that they work in the same way as all other on four topics: retirement formula cor~ amendmmts. For instance, the formulas need to allow public agencies to extend benefits to /~t~-(4oolitan Water District v. 34~erior Court (Cargill), inactive employees. This is important because without it, it 92 Cal. App. 4th 1112, 112 Cal. Rptr. 2d732 (2d Dist. Oct.will ray difficult to at'tract employees from other agencies 16, 2001), rev. ~ranted (Jan. 23,2002). The issue in this that have ene of the newer formulas. This is especially critical case is whether a water district's temporary employees may be for reouiting higher-level positions. Mayor Brown asked that classified as "common law employees" for CalPERS enrollment we wa*, with his staff and CalPERS staff to a~ive at practical purposes. The employees joined in a class action suit to be clean-up language. retroactively classified as "common law employees," arguing that the water district conOolled their manner and means of Economic Erow~h and Tax Relief Reconciliat~ Act of production, The disb-ict contends that the employees do not 2001 (EGIT~,A) (P.I. 107.16). The federal government fit the statut~y definition of employee u3der the PERS law. significantly ovahauled retirement plans in June 2001, The trial court ruled temporary employees should be enrolled paving the way for increased contributions to self- and in CalPER5, The water district petitioned for a writ of mandate employer-funded accounts, added benefit options and on this issue to the court of appeal. The court of appoal "caleb-up" provisions. Unfortunately for Californians, state found for the employees. The California Supreme Court has laws do not conform to the federal changes, It is important granted review, to our cities and counties, for purposes of administering deferred compensation programs, to achieve conformity. Public agencies expressed concern over the fact that the There are several bills in print to achieve this goal, The appeals court decision holds employem to a standard of Governor has also added full conformity funding in his "common law employees" that has never been discussed or 2002-2003 proposed budget. However, public agencies t~elt defined in the Public Employees' Retirement Law (PEP, L). For it was necessary to raise this issue with Mayor Brown in hopes years, cities have been making decisions on the hiring of that he may help if full conformity is not reached, temporary employees in good faith based on a variety of standards such as those contained in the state unemploy- Asset Re-Valuations Related to Contract Amend- ment insurance code or the Internal Revenue Code. The merits. Public agencias do not favor an extension of the effect of the Cargill ruling is to retroactively apply ast, andard benefits incentive resolution when it expires on June 30, that has never been articulated to all public agency employ- 2002. The actuarial value of assets should not be used as a ers, This could result in major financial liabilities for cities bargaining tool, particularly during times when the invest- throughout the state. An additional concern of the League is mere portfolio is experiencing losses, The use of asset re- with newly incorporated or small cities that cannot afford to valuation as an incentive to offer enhanced retirement hire full-time permanent employees right av~y. Following the benefits exposes plans to increased costs and greater rate discussion, Mayor Brown asked us to frame our question volatility in the future. Public agencies hope that Mayor regarding full-time vs. contract employees and work with his Brown will raise this position of not extending the benefits staff to develop a solution to the issue, incentive resolution when the CalPERS Board discusses this topic. Our Mission Restore and protect local control for cities through education and advocacy to enhance the quafity oF life ?or all Californians, PAGE 2/PRIORITY FOCUS Visit the League's Official Web Site--www. cacities.org