CSAC, Coalition Oppose JPA Pension Bill
CSAC is a leading member of a coalition of organizations against a measure that would significantly increase local government financial responsibility for Joint Powers Authorities (JPAs). Assembly Bill 1912, by Assemblymember Freddie Rodriguez, would make local governments responsible for the retirement and Other Post Employment Benefits (OPEB) incurred by JPAs. The added debt burden could push some local governments over their constitutional debt limits.
“The impacts of the proposal are grossly underestimated,” said Dorothy Johnson, CSAC’s Legislative Representative for Government Finance and Administration issues. “Because of the retroactive aspect of the bill, as currently written, local government entities that entered into JPA’s many years ago could be financially liable for millions of dollars in JPA employee benefits that they did not directly approve, and cannot now afford to manage.”
AB 1912 places substantial burdens and new unworkable requirements on local and state agencies. It applies retroactive as well as prospective joint and several liability for all retirement-related obligations to any current or former member of a JPA since inception. Such obligations include active employee normal pension costs, retiree unfunded accrued liabilities (UAL), as well as both active and retiree healthcare and OPEBs.
These costs cannot be overstated. According to the State Controller’s Office’s most recently available data, the unfunded liability of California’s 130 state and local government pension plans stand at $241.3 billion and $125 billion for retiree healthcare costs.
“We share the same goal as the bill’s sponsors – to ensure pension benefits are not swept out from under retirees without any warning,” Johnson said. “That’s where the common ground ends.”
More information is available in our joint opposition letter.