Public employees’ retirement: reciprocal benefits: actuarial liability.
The implementation of SB 1420 is expected to lead to significant changes in how public agencies manage their employee compensation plans, specifically regarding retirement benefits. The bill stipulates that if multiple agencies are involved in generating increased liability due to higher employee pay, they will share the liability equitably. This could prompt agencies to consider the broader fiscal implications of their compensation decisions, particularly in an era where budget constraints are prevalent.
Senate Bill 1420, introduced by Senator Dahle, aims to modify the Public Employees Retirement Law (PERL) by adding Section 20792 to the Government Code. The bill focuses on the actuarial liability that arises when an agency increases the compensation of a public employee who had previously been employed by another agency. It mandates that the agency which boosts the employee's pay will be responsible for any resultant increase in actuarial liability that exceeds what would be reasonably expected for that member. This means that the financial burden of unanticipated liabilities will squarely fall on the employer that provided the raise.
During discussions surrounding the bill, notable points of contention arose regarding the adequacy of the measures to protect agencies from excessive financial burdens. Critics may argue that the requirements placed on agencies could deter them from offering competitive compensation packages if they fear the long-term fiscal consequences. Proponents, however, assert that it will encourage fair compensation practices across agencies, as costs will be fairly distributed. Another issue raised is the impact this could have on the recruitment and retention of public employees, especially as agencies navigate competitive job markets.
SB 1420 was subject to a vote on April 27, 2022, but it faced a setback as it failed to pass in committee. However, the committee granted reconsideration, indicating ongoing discussions and potential modifications to the bill before it can gain sufficient support to move forward.