State leaders had not agreed upon a budget at press time, but with the end of the legislative session Aug. 31, key pension legislation is awaiting the governor’s signature.

Two bills that aim to address the notion of government employees retiring with highly inflated pensions have passed the Legislature. The bills are Assembly Bill 1987, Ma, D-San Francisco, and Senate Bill 1425, Simitian, D-Palo Alto. 

AB 1987 is a companion measure to SB 1425 and is specifically intended to strengthen anti-spiking provisions in the 1937 Act. AB 1987 will not apply to school employees, but because it’s tied to SB 1425 it can’t become law without SB 1425 and vice versa. 

As amended Aug.19, SB 1425 institutes uniform laws for the state’s public retirement systems – both the California Public Employees Retirement System and State Teachers Retirement System. These new laws are intended to curtail civil servants, including school employees, from taking extraordinary steps to enhance their retirement benefits.

Specifically, the bill establishes minimum standards with respect to final compensation, ongoing audits by the state with penalties for noncompliance, and a six-month prohibition against a retiree immediately returning to work with a public employer on a part-time or contract basis.

The official start date for the prohibition on returning back to work after retirement would be Jan. 1, 2012. All other provisions of the measure would become operative for all active and future members of CalPERS and CalSTRS beginning July 1, 2011.

These two bills will most likely be considered as part of the overall pension reform legislation, which includes the City of Bell bills. AB 827 and AB 194 are the only two of that six-bill package to pass the Legislature.

AB 827, De La Torre, D-South Gate, prohibits, after Jan. 1, 2011, any contract executed between a local agency and an excluded employee who reports directly to the local agency from automatic renewal provisions in the contract unless it is a cost-of-living increase. Future contracts would not be allowed to include an automatic renewal of the contract, an automatic increase in compensation that exceeds a COLA or an automatic increase that is linked to another contract. It further requires a local agency to conduct a performance evaluation prior to increasing compensation above a COLA. 

ACSA successfully advocated for a stipulation to be removed from the bill that would have required a summary of a superintendent evaluation to be conducted in open session of a school board and that the documents be made available as public record.

AB 194, Torrico, D-Fremont, would cap salary contributions for public pensions for all newly hired public employees after Jan. 1, 2011 to 125 percent of the governor’s salary. Currently, this is around $218,000. EdCal erroneously reported last week that AB 194 would not be heard this session.

On a positive note, AB 1955, De La Torre, was defeated. The bill would have required that five days prior to ratifying or amending a contract, an employee’s name, position, salary, benefits, retirement and any other forms of compensation be posted on the local agency website. 

The governor has 30 days to sign, veto or allow bills to pass without action. He may also call a special legislative session in which pension reform bills could come up for further debate.

Additional legislation

Among the others bills ACSA has been working on that passed out of the Assembly by the Aug. 31 deadline are:

• SB 857, Steinberg, D-Sacramento, an urgency statute that would authorize the expenditure of federal Jobs Bill funds. Apparently California could not use a straight ADA formula. Instead the funds will be provided to districts, county offices and charter schools proportionally on the basis of total revenue limit funding received in 2010-11. The 90 percent preliminary allocation must go out within 14 days of enactment.

• AB 185, Buchanan, D-San Ramon, another urgency statute would provide appropriation authority to eligible LEAs that recently had their SIG applications approved by the State Board of Education Aug. 24. Funds will be provided over a three-year period to implement one of the four turnaround models selected by the LEA as required by the U.S. DOE. AB 187 also provides appropriation authority for the last phase of ARRA/SFSF Phase 2 grants for K-12 and higher education.

• SB 1381, Simitian, the Kindergarten Readiness Act of 2010, which increases the minimum age for entering kindergarten from 5 years old by Dec. 2 of the school year to 5 years old by Sept. 1. For children born between Sept. 2 and Dec. 2, a new Transitional Kindergarten would be established funded by money that would have been spent on regular kindergarten.

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