Provides for a sixty-month average compensation period for members of state retirement systems. (6/30/12) (OR -$233,000,000 UAL)
Impact
The impact of SB42 is significant as it modifies the provisions related to how average compensation is determined for state employees. By extending the average compensation period for benefit calculations, the bill is expected to result in higher retirement benefits for individuals who have more stable and consistent earnings over a longer employment period. However, this change will also have implications on the financial obligations of state retirement systems, potentially affecting employer contribution rates and the overall funding status of these systems.
Summary
Senate Bill No. 42, introduced by Senator Cortez, aims to revise the calculation of retirement benefits for members of state retirement systems by instituting a sixty-month average compensation period instead of the existing thirty-six months. This change is designed to affect the way retirement benefits are calculated, particularly for those members who are retiring or entering the Deferred Retirement Option Plan after the bill's effective date of June 30, 2012. The objective of the bill is to provide more equitable retirement benefits that reflect longer periods of compensation and to ensure the financial stability of the state’s retirement systems.
Sentiment
The sentiment surrounding SB42 appears to be mixed. Supporters argue that the bill is a necessary adjustment to better reflect the contributions of long-serving state employees and to improve their retirement security. Opponents, however, have raised concerns about the financial implications of increased retirement benefits on the state budget, questioning whether the enhanced benefits are sustainable in the long term. This division reflects broader debates about how to balance fair employee compensation with fiscal responsibility.
Contention
The central point of contention regards the financial sustainability of implementing a sixty-month average compensation calculation. Critics highlight that the implementation could exacerbate existing unfunded liabilities within state retirement systems, with estimates projecting an increased financial strain on these systems. Additionally, the transitional provisions of the bill, which allow for phased changes affecting those retiring within specific timeframes, also sparked debate about fairness and equity among current and future retirees.
Provides a sixty-month final average compensation period for members of state and statewide retirement systems. (7/1/13) (OR -$107,000,000 FC GF LF EX)
Provides a regular schedule for permanent benefit increases for retirees of the state retirement systems. (2/3 - 10s29(F)) (6/30/12) (OR -$4,700,000,000 APV)
Allows members of the Firefighters' Retirement System to allocate Deferred Retirement Option Plan funds between two separate interest bearing accounts (EN NO IMPACT APV)
Provides for a five-year deferred retirement option plan for certain members of the Firefighters' Retirement System and provides relative to retirement benefits of certain probation and parole officers in the office of adult services in the Department of Public Safety and Corrections
Provides relative to the payment of accrued liabilities of retirement systems and other retirement obligations from minimum foundation program funds allocated to charter schools (OR DECREASE FC LF EX)