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Urge CalPERS to Take No Position on Legislation that Would Take Away Cost Effective and Efficient Service Delivery Model

May 3, 2018
The CalPERS Board of Administration Finance and Administration Committee will be considering a formal position on AB 1912 (Rodriguez) at its meeting on Tuesday, May 15.
 
If this legislation becomes law, Joint Powers Authorities (JPAs) in California would cease to be a viable way for local governments and the state to collaboratively address service needs that cannot be achieved by each agency on its own. JPAs are formed to accomplish a wide range of services such as regional public improvements, local and statewide infrastructure, emergency communications, law enforcement, fire protection, emergency medical response and public financing.
 
Take Action Prior to CalPERS Meeting
 
The League wants cities to participate in a full court press on May 15 at the CalPERS Finance and Administration Committee. City testimony at recent CalPERS meetings on issues affecting cities has been effective in ensuring that action taken by the agency considers the effects on local government.
 
City officials who are interested in testifying with the League to urge CalPERS to take no position on AB 1912, should make plans to come to Sacramento for the meeting. League Legislative Analyst Johnnie Pina is coordinating the League’s participation in the meeting.
 
Cities that are unable to travel to Sacramento for the May 15 meeting should send the president of the CalPERS Board of Administration a letter. Letters should reflect vital role JPAs have in addressing public needs, the impact cities are already grappling with because of rising CalPERS contribution costs and unfunded liabilities and the devastating effect that attaching prospective and retrospective joint and several liabilities to new and current JPAs for all unfunded liabilities. It is important that cities tailor their letter to communicate how this legislation would impact their individual cities.
 
Letters should be sent by Tuesday, May 8 to:
Priya Mathur, President
CalPERS Board of Administration
400 Q Street
Sacramento, CA 95812
 
Scan and send your letter to Brad Pacheco, the deputy executive officer for communications and stakeholder relations, CalPERS.
 
Please also email your letter to the following individuals: What is at Stake?
 
AB 1912 includes new unworkable requirements that would retroactively and prospectively apply joint and several liability for all retirement related obligations to any current or former member of a JPA throughout its existence. The obligations are extensive and include active employee normal pension costs, retiree unfunded accrued liabilities, as well as both active and retiree healthcare and other post-employment retirement benefits (OPEB). According to the most recent data available from the State Controller’s Office, the unfunded liability of California’s 130 state and local government pension plans stand amounts to $241.3 billion and $125 billon for retiree healthcare costs. These costs and their impact on local governments cannot be overstated.  
 
By applying joint and several liability, cities debts would dramatically rise and in many cases will exceed a cities’ annual revenue without being approved by local voters. This is unconstitutional. California’s constitutional debt limit prohibits a local government from incurring indebtedness beyond its ability to repay the debt with revenues from the same fiscal year without two-thirds voter approval. AB 1912 has significant implications for cities unfunded pension and OPEB liabilities. CalPERS contribution rates are increasing and are already straining city budgets. AB 1912 would make already high contributions even more staggering, threatening cities’ ability to deliver services and retain employees.


 
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