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LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND	Nonpartisan Pros & Cons of PROPOSITION 33 LEGISLATURE. PARTICIPATION IN PUBLIC EMPLOYEES' RETIREMENT SYSTEM.
	Legislative Constitutional Amendment

THE QUESTION

Should the State Constitution be amended to allow state legislators to participate in the California Public Employees' Retirement System (PERS)?

THE SITUATION

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. Retirement benefits for service in the legislature are limited to participation in the federal Social Security System.

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 legislature's 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.

THE PROPOSAL

This proposition would amend the State Constitution to allow legislators to participate in the Public Employees' Retirement System (PERS), which provides retirement benefits to a majority of state government workers.

Proposition 33 would:

1. allow members of the California Legislature the option to participate in PERS.

2. allow any legislator that was elected or serving on or after November 1, 1990 to participate in any state retirement plan that has been set up for a majority of other state employees.
   

FISCAL EFFECT

The state cost to provide PERS retirement benefits to legislators would depend on (1) how many legislators would choose to participate and (2) the annual employer PERS contribution rate. These costs, however, would be under $1 million each year, according to the Legislative Analyst.

This expense would have to be paid out of the annual amount provided for support of the legislature. As such, this proposition would not result in additional state costs, but would instead replace other types of spending in that budget.

SUPPORTERS SAY

• This measure would allow legislative participation in PERS on the same terms and conditions as the average government employee.

• The proposal eliminates the inequity created by Proposition 140 in 1990.
  

• This proposition would result in an ongoing indeterminate General Fund cost to provide retiree health benefits for legislators.

• It creates inequity since legislators would become eligible for full retiree health benefits upon vesting in the Miscellaneous Tier I retirement category in five years, while state employees can be required to work 20 years to earn the same benefit.
  

Analysis prepared by the League of Women Voters of California Education Fund
for the November 7, 2000 Election.