THE QUESTION Should the State Constitution be amended to allow state legislators to participate in the California Public Employees' Retirement System (PERS)? PROVISIONS This Measure:
BACKGROUND The California Legislature has 120 members--80 in the Assembly and 40 in the Senate. The State Constitution currently provides that an independent commission annually establishes the salaries and benefits (other than retirement) of legislators. In November of 1990, the voters approved an initiative measure (Proposition 140) that imposed limitations on the terms of elected state officials. Additionally, it capped and controlled expenditures pertaining to the legislatures own institutional budget and prohibited legislators from accruing pension or retirement benefits (other than social security) as a result of their service after November 1, 1990. The justification for the prohibition of retirement benefits was that under term limits, legislative service was no longer considered a "career" option. CalPERS voiced support of the measure, arguing that the proposal would eliminate an inequity created by Proposition 140. CalPERS noted that it is asking too much of elected officials to forego a retirement plan while serving four or more years of potentially high earnings while in the California Legislature. Noting that retirement savings are an important aspect of an employee's compensation, CalPERS asserted that the proposal would not interfere with the role of the California Citizens Compensation Commission, which establishes legislators' salaries. It would simply permit a public pension to be considered as part of the overall compensation package. The Department of Finance voiced opposition to the measure arguing that it would result in an ongoing indeterminate General Fund cost to provide retiree health benefits for legislators. It also argued that it would be inequitable since legislators would become eligible for full retirement benefits upon vesting in the Miscellaneous Tier I retirement category in five years, while state employees could be required to work 20 years to earn the same benefit. FISCAL EFFECT The state cost to provide PERS retirement benefits to legislators would depend on the number of legislators who chose to participate and the annual employer PERS contribution rate. These costs would vary each year. Currently, PERS investments are performing well and the employer's costs are projected to be zero through fiscal year 2000-01. Starting in fiscal year 2001-02 the rate is projected to be around 4.5 percent. According to the Legislative Analyst, the cost would be under $1 million each year. These costs would be paid out of the annual budget for the legislature and would not increase the overall expenses for the state. IMPACT OF YES OR NO VOTE A YES vote means that state legislators would be allowed to participate in the PERS retirement system. A NO vote retains the provision that state legislators elected after November 1990 may not participate in the PERS retirement system, and are limited to participation in the federal Social Security program. SUPPORTERS SAY
OPPONENTS SAY
SUPPORT AND OPPOSITION Official ballot arguments in favor are signed by Peter Szego, State Legislative Committee Chair, American Association of Retired Persons; Allen Zaremberg, President, California Chamber of Commerce; Dan Terry, President, California Professional Firefighters. Official ballot arguments in opposition are signed by Ernest F. Dynda, President, Unitied Organization of Taxpayers; Lewis K. Uhler, President, National Tax Limitation Committee. For more information: Supporters: Yes on Prop 33 c/o Western Group, 909-795-9722 Opponents: Lewis Uhler, President, The National Tax-Limitation Committee, 916-786-9400
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