Report No: Meeting Date:

Alameda-Contra Costa Transit District

STAFF REPORT TO: AC Transit Board of Directors

FROM: David J. Armijo, General Manager

12-314(a) January 23, 2013

SUBJECT: Adopt Resolution No. 13-006 Amending the AC Transit District Employees' Retirement Plan to Comply with Public Employees' Pension Reform Act of 2013, also known as Assembly Bill 340

ACTION ITEM

RECOMMENDED ACTION(S):

Adopt Resolution No. 13-006 Approving Amendment 13-A-16 to the AC Transit District Employees' Retirement Plan to Comply with Public Employees' Pension Reform Act of 2013 Also Known As Assembly Bill AB340. (Attachment 1)

EXECUTIVE SUMMARY:

The Public Employees' Pension Reform Act of 2013 (PEPRA) was signed by the Governor on September 12, 2012, and is effective January 1, 2013. Most elements of the statewide pension reforms are applicable only to employees who become members of the pension plan on or after the effective date. The proposed Amendment 13-A-16 (Plan Amendment) incorporates the reforms contained in PEPRA into the District' s pension plan (Attachment 2). Two of the three District unions have agreed with the proposed amendment to the pension plan. ATU Local192 has not specifically commented on the proposed amendment but maintains that PEPRA conflicts with federal 13(c) bargaining rights protections and cannot be applied to transit employees, including the District's employees. The District complied with the actuarial report requirements of California Government Code Section 7507 and has received no public comment on the actuarial report .

BUDGETARY/FISCAL IMPACT:

Initially the reforms contained in PEPRA will have a limited fiscal impact on the District but over time will result in significant savings to the District. The estimated annual savings 10 years out is $7.12 million, 20 years out is $14.61 million, and 30 years out is $22.12 million, as determined by the District's actuary (see Attachment 3}.

BACKGROUND/RATIONALE:

On September 12, 2012, the Governor signed into law the PEPRA, which adopted statewide public pension reforms effective January 1, 2013. Section 7522.10(a) requires that, "On or after January 1, 2013, each public retirement system shall modify its plan or plans to comply with the requirements of this section for each public employer that participates in the system."

Report No. 12-314(a) Page 2 of 4

While some of the changes in the law affect all employees most of the changes affect only employees who become members of the pension plan on or after January 1, 2013.

The reforms applicable to new members of the pension plan include: mandatory employee contributions, lower retirement formula, a cap on pensionable compensation, and restrictions on what income can be counted for pension purposes (e.g. overtime is not included).

The reforms applicable to all members of the pension plan include: implementing limitations on reemployment after retirement, eliminating retroactive pension benefit increases by limiting any pension improvements to future service, and creating a forfeiture of pension benefits for employees with work related felony convictions.

In accordance with Board Policy No. 170, the Plan amendment was submitted to the District's retirement counsel to draft the amendment language, it was submitted to the Retirement Plan Manager and Retirement Board counsel for review and comment as well as the three District unions: AFSCME Local3916; IBEW Locai124S, and ATU Local192. After receipt of comments from these parties a revised amendment was submitted to the Retirement Board for comment.

AFSCME Local 3916 and IBEW Local 1245 both provided comments on the proposed Amendments and have accepted the final version of Amendment 13-A-16. ATU Local 192 did not provide any comments on the proposed amendment and has not agreed with the proposed amendment.

ATU-International has taken the position that PEPRA conflicts with federal 13(c) bargaining rights protections for transit employees and therefore should not be applied to the transit industry in California. ATU Local 192 has made the same objection with respect to the applicability of PEPRA to the District's employees.

ATU International and ATU Local 192 have both indicated that if PEPRA is implemented they will file objections with the federal Department of Labor ("DOL") requesting that the DOL withhold the necessary 13(c) certification for the release of federal grant funding to transit properties in California generally and to the District specifically.

The DOL has not made a final determination on the ATU International objections made with respect to three other California transit properties (Monterey-Salinas Transit, Orange County Transportation Authority, and Los Angeles County Metropolitan Transportation Authority) but requested that the parties engage in 30 days of negotiations with respect to the applicability of PEPRA to those properties. In one case (Monterey-Salinas Transit) federal certification was granted as a result of this process.

The District has twice offered to meet and confer with ATU Local192 with respect to PEPRA but to date ATU Local192 has not accepted that offer.

In a letter dated October 12, 2012, ATU International wrote to the California Transit Association ("CTA"), with copies to 16 California transit agencies including AC Transit, detailing its concerns with PEPRA and inviting the CTA to work with ATU International on a "solution". The solution ATU International is seeking appears to be a legislative exclusion from PEPRA for transit

Report No. 12-314(a) Page 3 of 4

properties in California. As of the date of this report the District is not aware of any legislative action to adopt the exclusion sought by ATU International.

The Retirement Board met on January 14, 2013 and discussed the proposed Plan Amendment. It directed its counsel to provide comments to the District Board and those comments were received on January 16, 2013. Staff is evaluating the comments to determine if any revisions to the proposed Plan Amendment are required. The Retirement Board requested in its letter that the District Board postpone its decision to February 13, 2013 in order to provide additional time for the Retirement Board to review and comment on the proposed Plan Amendment.

Government Code Section 7507 requires an agency, before considering an amendment to a retirement plan, to have an actuarial report prepared of the fiscal impacts of the amendment and to make the report available for public review and comment for at least two weeks in advance of the meeting at which the amendment will be considered. The District's actuarial consultant (BuckConsultants) prepared the necessary report and there have been two public review periods - December 13, 2012 to January 2, 2013 and January 12, 2013 to January 21, 2013. To date, there have been no comments. If any comments are received by January 21, the Board will be advised at your meeting.

An issue has arisen as to the need to proceed with the adoption of the proposed Plan Amendment at this Board meeting, or by the meeting on February 13, 2013, or whether a decision can be delayed pending the passage of state legislation, as discussed earlier in this Staff Report. PEPRA is a duly enacted state law, effective as of January 1, 2013. There are a number of civil and criminal actions that are possible if the District failed to comply with PEPRA. For example, PEPRA requires employee contributions toward the cost of the pension benefit for employees hired on or after January 1, 2013. The willful omission to transfer or refusal to pay over the legally required employee contributions to the Pension Plan may be a violation of Penal Code Section 424 and/or 425, a felony and grounds for disqualification from holding any public office in the state. However, proceeding at this Board meeting or the February 13th meeting is unlikely to be considered a "willful" action, since the Board is still in the deliberative process regarding the adoption of the Plan Amendment.

ADVANTAGES/DISADVANTAGES:

The District is required by PEPRA to "modify its plan ... to comply with the requirements" of the new law. Adopting the amendment to the District pension plan at this time meets the District's obligation to comply with State law.

ATU International and/or ATU Local 192 have not agreed with the proposed plan amendment and may challenge the amendment through legal proceedings and/or may attempt to block upcoming federal grant funding for the District.

ALTERNATIVE ACTIONS:

As the District is required by State law to modify its pension plan to incorporate the provisions of PEPRA there are no viable alternative actions at this time.

Report No. 12-314(a)

Page 4 of 4

PRIOR RELEVANT BOARD ACTIONS/POLICIES:

SR-314 Actuarial Report/Retirement Plan Amendment

ATTACHMENTS: 1: Resolution No. 13-006

2: Amendment 13-A-16

3. Revised actuarial report from BuckConsultants dated January 4, 2013, with attachments

Department Head Approval: David Armijo, General Manager

Reviewed by: Ken Scheidig, Interim General Counsel Lewis Clinton, Chief Financial Officer

Prepared by: Tom Prescott, Chief Performance Officer

SR 12-314a Attachment 1

ALAMEDA-CONTRA COSTA TRANSIT DISTRICT

RESOLUTION NO. 13-006

A RESOLUTION APPROVING AMENDMENT 13-A-16 TO THE ALAMEDA-CONTRA COST A TRANSIT DISTRICT EMPLOYEES' RETIREMENT PLAN TO COMPLY WITH THE PUBLIC EMPLOYEES' PENSION REFORM ACT OF 2013 ALSO KNOWN AS

ASSEMBLY BILL NO. 340

WHEREAS, the Alameda-Contra Costa Transit District Board of Directors (the District) is authorized by the California Public Utilities Code to establish a retirement system; and

WHEREAS, the District has created a retirement system known as the AC Transit Employees' Retirement Plan (the Plan), which Plan may be amended from time to time; and

WHEREAS, the California Legislature sent the Public Employees' Pension Reform Act of 2013 (AB 340 or PEPRA) to Governor Brown on or about August 31, 2012, which he signed on or about September 12, 2012 with an effective date of January 1, 2013; and

WHEREAS, the District has been advised by legal counsel that it is necessary to amend the District's Plan to comply with AB 340; and

WHEREAS, a proposed amendment of the District's Plan (the Plan Amendment) to comply with AB 340 has been prepared by legal counsel as set forth in Attachment A; and

WHEREAS, in accordance with California Government Code Section 7507, the District's actuarial consultant prepared a report, dated December 11, 2012 and a revised report dated January 2, 2013 (the Reports) to estimate the effect on the District's current and future unfunded actuarial accrued liabilities and Annual Required Contributions resulting from PEPRA and by extension the Plan Amendment; and

WHEREAS, the initial Report was placed on the District's website for public review and comment on December 13, 2012 and was available until January 2, 2013. The revised Report was posted to the District's website on January 12, 2013 and was available for public review and comment from that dale to January 21, 2013; and

WHEREAS, no public comments on the Report were received during either of the comment periods; and

WHEREAS, in accordance with Board Policy No. 170, the Plan Amendment has been provided to Retirement Board staff, the affected unions (ATU, Local 192,

Resolution No. 13-006 Page 1

SR 12-314a Attachment 1

AFSCME, Local3916 and IBEW, Local1245) and the Retirement Board for review and comment; and

WHEREAS, in early December 2012, the District offered to engage in good faith negotiations with the aforementioned unions concerning the proposed Plan Amendment; and

WHEREAS, the District on December 21, 2012, received a letter from ATU, Local 192's counsel contending that PEPRA removes mandatory and/or traditional subjects of collective bargaining from consideration by the District and ATU under the provisions of section 13(c) of the Federal Transit Act (49 U.S.C. sec. 5333(b)(2)(B)), case law and the doctrine of federal preemption; and

WHEREAS, by letter of January 7, 2013, to ATU's counsel, the District reaffirmed its readiness to bargain in good faith with ATU regarding the Plan Amendment and identified with specificity issues under PEPRA that require discussion and good faith negotiations; and

WHEREAS, in early January 2013, the Board was advised that authorized representatives of AFSCME Local3916 and IBEW Local1245 informed the District that said labor unions were in agreement with the Plan Amendment; and

WHEREAS, the Retirement Board on January 14, 2013 authorized its staff to provide comments on the proposed Plan Amendment; and

WHEREAS, Retirement Board staff provided comments on the proposed Plan Amendment to the District's legal counsel and District staff on January 16, 2013, and said comments were provided to and duly considered by the District's Board of Directors prior to the consideration and adoption of the Plan Amendment;

NOW, THEREFORE, after giving due consideration to the information provided to it, as outlined in the aforementioned Whereas clauses, the Alameda-Contra Costa Transit District Board of Directors does resolve as follows:

SECTION 1. Amends the AC Transit Employees' Retirement Plan as set forth in Attachment A hereto, which is incorporated by this reference as though set forth fully in the body of this resolution.

SECTION 2. Repeals Resolution No. 12-030 (A Resolution Approving Pension Benefits For Unrepresented District Employees). (This is an option. If this option is adopted the following sections will need to be renumbered)

SECTION 2. Directs staff to begin implementation of the Plan Amendment.

Resolution No. 13-006 Page2

SR 12-314a Attachment 1

SECTION 3. Directs staff to again reaffirm to ATU, Local192 the District's desire and willingness to engage in good faith negotiations to achieve resolution and agreement on issues under PEPRA, which can and will affect ATU's members.

SECTION 4. Further directs staff to continue to monitor any legislation sought to exempt transit employees from the provisions of PEPRA, and to monitor decisions of the United States Department of Labor interpreting the application of Section 13(c) to PEPRA and, as the result of such monitoring, bring to the Board's attention the need to take any action to modify the Plan Amendment as adopted.

SECTION 5. This resolution shall become effective immediately upon its passage by four affirmative votes of the Board of Directors.

RESOLUTION NO. 13-06 WAS PASSED AND ADOPTED this_ day of January 2013.

Greg Harper, President Attest:

Linda A. Nemeroff, District Secretary

I, Linda Nemeroff, District Secretary for the Alameda-Contra Costa Transit District, certify that the foregoing Resolution was passed and adopted at a Regular Meeting of the Board of Directors held on the _day of January 2013, by the following roll call vote:

AYES: DIRECTORS:

NOES: DIRECTORS:

ABSENT: DIRECTORS:

ABSTAIN: DIRECTORS:

Linda A. Nemeroff, District Secretary

Approved As To Form:

Kenneth C. Scheidig, Interim General Counsel

Resolution No. 13-006 Page3

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AMENDMENT 13-A-16

AC TRANSIT EMPLOYEES' RETIREMENT PLAN

SR 12-314A Attachment 2

1/17/13

The AC Transit Employees' Retirement Plan (the "Plan") hereby is amended by adding a new

Article XIII as set forth below. Capitalized terms not defined in this amendment have the same

definitions as in the Plan.

ARTICLE XIII

PUBLIC EMPLOYEES' PENSION REFORM ACT

13.1 Construction.

(a) Effective Date. The provisions of this Article XIII are effective as of the dates set forth below.

(b) Application and Interpretation. As of the applicable effective date, this Article XIII takes precedence over any conflicting provision of the Plan; all other Plan provisions remain in full force and effect. Article XIII will be interpreted and administered in accordance with the applicable requirements of the California Public Employees' Pension Reform Act of 2013, which are codified in Article 4, Chapter 21 of Division 7 of Title 1 of the California Government Code, as amended from time to time ("PEPRA").

(c) Authority to Amend. The District reserves the right to retroactively or prospectively amend this Article XIII as appropriate to (1) incorporate provisions reflecting the District's 2012 collective bargaining agreements (CBA) with the bargaining units represented by IBEW and AFSCME, subject to any collective-bargaining obligations, (2) incorporate the terms of the 2012 resolution of the District's Board of Directors ("District Board") concerning Participants who are Non-Represented Employees, and (3) reflect any amendments to or authoritative guidance under PEPRA affecting the Plan.

13.2 Provisions Applicable to All Participants. This Section 13.2 is effective January 1, 2013, for every Participant, regardless of when his or her participation in the Plan begins.

(a) No Retroactive Benefit Enhancements. Any enhancement to a Participant's Benefit that is adopted on or after January 1, 2013, or that results from a change to the Participant's classification or employment on or after that date, will apply only to Service performed on or after the operative date (as defined in section 7522.44 of the California Government Code) of the enhancement, and will not be applied to any Service performed prior to the operative date of the enhancement.

(b) Purchases of Nonqualified Service Credit Prohibited. The purchase of nonqualified service credit, as defined by section 415(n)(3)(C) of the Internal Revenue Code, is not permitted.

4840992.6

(c) Reinstatement of Retired Participants. Except as provided under Section 13.2(d), if a retired Participant who is receiving a Benefit serves the District, or is employed by, or employed through a contract directly by the District, he or she will be reinstated. If a Participant is reinstated, payment of the Participant's Benefit will cease; and, the Participant will resume participation in the Plan, but only if he or she is eligible to participate under Section 2.1. This Section 13.2(c) applies only to retired Participants who return to employment or service on or after January 1, 2013.

(d) Exception to Reinstatement. A retired Participant will not be reinstated under Section 13.2(c) if all of the following conditions are satisfied:

(1) The District Board appoints the Participant either during an emergency to prevent stoppage of public business or because he or she has skills needed to perform work of a limited duration.

(2) The appointment does not exceed a total of 960 hours in a Plan Year.

(3) The monthly rate of pay for the appointment is neither less than the minimum nor more than the maximum paid by the District to other Employees performing comparable duties, divided by 173.333 to equal an hourly rate.

(4) The Participant does not earn any benefit under the Plan during the appointment.

(5) Upon accepting the appointment, the Participant certifies in writing that he or she did not, during the 12 months preceding the appointment, receive any unemployment-insurance compensation arising out of the Participant's prior employment with the District. If the Participant accepts the appointment after receiving that type of compensation, the District must terminate the Participant's employment or service on the last day of the current pay period; and, this Section 13.2(d) will not apply to the Participant for 12 months after the termination date.

(6) The appointment may not begin during the 180-day period after the Participant's retirement under the Plan, unless (A) the District certifies the nature of the employment or service and that the appointment is necessary to fill a critically needed position before 180 days has passed, (B) the District Board approves the appointment at a public meeting (the appointment may not be placed on a consent calendar), and (C) the Participant did not receive a retirement incentive at retirement.

(e) Felony Convictions. If a Participant who is subject to section 7522.70, 7522.72 or 7522.7 4 of the California Government Code is convicted of a felony described in the applicable section or sections, he or she will forfeit his or her accrued rights and benefits, and will not accrue further benefits, in the Plan to the extent provided in the applicable section or sections. This subsection will be interpreted and administered in accordance with the requirements of sections 7522.70, 7522.72 and 7522.7 4 of the California Government Code, including, but not limited to, any applicable rules governing return of Participant contributions, notice, and reversal of conviction, which requirements are herein incorporated by this reference.

2 4840992.6

13.3 Provisions Applicable to New Participants. Except as otherwise specified below, this Section 13.3 is effective on the following dates: January 1, 2013, for each Represented Employee who first becomes a Participant on or after January 1, 2013; and, [July 1, 2012, for each Non-Re resented Employee who first becomes a Participant on or after July 1, 2012]. This Section 13.3 will apply only to Participants described in the preceding sentence.

(a) Definition of Compensation. For purposes of determining the Participant's Benefit, "Compensation" means the normal monthly rate of pay or base pay of the Participant paid by the District in cash to similarly situated Employees of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules. Deferred amounts will be included in Compensation when earned rather than when paid. The following amounts are excluded from Compensation:

(1) Any amount that the Board determines has been paid to increase the Participant's Benefit.

(2) Any amount that is (A) paid in kind to the Participant, or was paid directly to a third-party (other than the Plan) for the Participant's benefit, and (B) subsequently converted to and received by the Participant in cash.

(3) Any one-time or ad hoc payments to the Participant.

(4) Severance or any other payment that is granted or awarded to the Participant in connection with, or in anticipation of, a separation from employment, but is received by the Participant while employed.

(5) Any payments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off, however denominated.

(6) Any payments for additional services rendered outside of normal working hours.

(7) Any employer-provided allowance, reimbursement, or payment, including, but not limited to, one made for housing, vehicle, or uniforms.

(8) Compensation for overtime work, other than as defined in Section 207(k) of Title 29 of the United States Code.

(9) District contributions to deferred compensation or defined contribution plans.

(1 0) Any bonus paid in addition to the amounts described in Section 13.3(a).

(11) Any other form of compensation that the Board determines is inconsistent with the requirements of Section 13.3(a).

(12) Any other form of compensation that the Board determines should not be included in Compensation.

3 4840992 .6

(13) For each calendar year, any amount in excess of $113,700, the contribution and benefit base specified in section 430(b) of Title 42 of the United States Code on January 1, 2013. The Board will adjust the annual Compensation limit described in the preceding sentence after each annual actuarial valuation of the Plan based on changes to the Consumer Price Index for All Urban Consumers. The adjustment will be effective on the January 1 following each such annual valuation.

(b) Definition of Monthly Average Earnings. For purposes of determining the Participant's Benefit, "Monthly Average Earnings" means the highest average annual Compensation earned by the Participant during a period of at least 60 consecutive months (36 consecutive months, in the case of an Eligible Age Employee) immediately preceding his or her Retirement, or during any other period of at least 60 consecutive months (36 consecutive months, in the case of an Eligible Age Employee) during the Participant's applicable service that the Participant designates on the application for retirement.

(c) Participant Contributions.

(1) For a Participant who is a Non-Represented Employee, this Section 13.3(c) is effective January 1, 2013. For a Participant who is a Represented Employee, this Section 13.3(c) is effective on the later of (i) January 1, 2013, or (ii) the date on which the CBA between the District and the Participant's Union, as in effect on January 1, 2013, expires or, if earlier, the renewal, amendment, or other extension of that CBA.

(2) Each Participant must contribute part of his or her Compensation to the Plan. The initial contribution rate will equal 50% of the normal cost rate, rounded to the nearest quarter of 1%. The District may not pay any portion of this contribution for any Participant. The Participant contribution rate will be expressed as a percentage of Compensation.

(3) Once established, the Participant contribution rate will be adjusted to reflect a change in the normal cost rate, but only if the normal cost rate increases by more than 1% of payroll above or below the normal cost rate in effect on the later of: (i) the date the Participant contribution rate is first established, or (ii) the date of the last adjustment to the Participant contribution rate under this paragraph.

(4) The Participant contribution rate may be more than 50% of the normal cost rate, but only if the requirements of section 7522.30(e) of the Government Code are satisfied.

(5) For purposes of this Section 13.3(c), "normal cost rate" means the total annual actuarially determined normal cost under the entire Plan of Benefits for Participants covered by the Service Retirement Benefit formula under Section 13.3(d), as determined by the Plan's actuary in accordance with the Board's funding policy.

(6) All Participant contributions will be collected by deducting the amounts thereof from the Compensation due to the Participant from the District.

4 4840992.6

Participant contributions will not be deducted from any amount due to a Participant for any calendar year in excess of the limit described in Section 13.3(a)(13).

'

(7) In general, if a Participant's District employment terminates before Retirement, the Participant's total contributions will be returned to the Participant by the Plan. This Section 13.3(c)(7) will be subject to negotiations or further District Board action (as appropriate) addressing various topics, including but not limited to the following: the terms and conditions upon which a Participant, whose employment is terminated for reasons other than death or Retirement, may elect to leave his or her Participant contributions in the Plan, the Participant's corresponding Benefit upon Retirement, and any other aspects of Participant contribution refunds upon termination.

(d) Service Retirement Allowance.

(1) Each Participant who has (A) completed at least five complete Years of Service, (B) reached at least age 52, (C) terminated service as an Employee, and (D) completed and submitted an application for benefits, at the time and manner determined by the Board, may retire for service and receive a Service Retirement Benefit.

(2) The Service Retirement Benefit payable to a Participant upon meeting the requirements in Section 13.3(d)(1) will equal the percentage of the Participant's Monthly Average Earnings, as determined in accordance with the following schedule based on the Participant's age at retirement, taken to the preceding quarter year, multiplied by the Participant's Years of Service.

Age at Retirement Percentage 52 1.000% 52Y. 1.025% 52% 1.050% 52% 1.075% 53 1.100% 53Y. 1.125% 53% 1.150% 53% 1.175% 54 1.200% 54Y. 1.225% 54% 1.250% 54% 1.275% 55 1.300% 55Y. 1.325% 55% 1.350% 55% 1.375% 56 1.400% 56Y. 1.425% 56% 1.450%

5 4840992.6

Age at Retirement Percentage 56% 1.475% 57 1.500% 57Y. 1.525% 57% 1.550% 57% 1.575% 58 1.600% 58Y. 1.625% 58% 1.650% 58% 1.675% 59 1.700% 59Y. 1.725% 59% 1.750% 59% 1.775% 60 1.800% 60Y. 1.825% 60% 1.850% 60% 1.875% 61 1.900% 61Y. 1.925% 61% 1.950% 61% 1.975% 62 2.000% 62Y. 2.025% 62% 2.050% 62% 2.075% 63 2.100% 63Y. 2.125% 63% 2.150% 63% 2.175% 64 2.200% 64Y. 2.225% 64% 2.250% 64% 2.275% 65 2.300% 65Y. 2.325% 65% 2.350% 65% 2.375% 66 2.400% 66Y. 2.425% 66% 2.450% 66% 2.475% 67 2.500%

6 4840992.6

13.4 Funding.

(a) In any Plan Year beginning on or after January 1, 2013, the District's contribution to the Plan, in combination with Participant contributions to the Plan, may not be less than the actuarially determined normal cost of Benefits under the entire Plan for the Plan Year.

occur: (b) The Board may suspend contributions only when all of the following

(1) The Plan is funded by more than 120%, based on the computation by the Plan's actuary in accordance with the Governmental Accounting Standards Board requirements that is included in the annual valuation.

(2) The Plan's actuary determines, based on the annual valuation, that continuing to accrue excess earnings could result in disqualification of the Plan's tax exempt status under the Code.

(3) The Board determines that the receipt of any additional contributions required by this section would conflict with its fiduciary responsibility set forth in Section 17 of Article XVI of the California Constitution.

IN WITNESS WHEREOF, the Plan is hereby amended as set forth above on this_ day of

_____ , 2012.

By:------------

Its: -------------------------

7 4840992.6

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buck consultants·

January 2, 2013

Mr. Lewis Clinton Chief Financial Officer Alameda-Contra Costa Transit District 1600 Franklin Street Oakland, CA 94612-2800

SR 12-314a Attachment 3

A Xerox Company

Complying with California Government Code Section 7507 Regarding Changes to Pension Benefits as of January 1, 2013

Dear Mr. Clinton:

We have been asked to estimate the effect on the District's current and future unfunded actuarial accrued liabilities and Annual Required Contributions resulting from a new benefit structure. The new structure is specified in Assembly Bill 340 (AB340), known also as the California Public Employees' Pension Reform Act of 2013 (PEPRA), which Governor Brown signed into law on September 12, 2012. PEPRA takes effect on January 1, 2013. Generally, for employees who become members of the AC Transit Employees' Pension Plan (the Plan) on or after January 1, 2013, PEPRA legislates a pension formula of 2% at age 62, a 36-month final averaging, a 50/50 cost-sharing between employees and the District of normal cost requirements, and a maximum annual salary amount used for pension calculations of the Social Security Taxable Wage Base ($113,700 for 2013, and adjusted by the Consumer Price Index for future years).

Because this change affects the benefits of future employees only, it will have no effect on the unfunded actuarial accrued liabilities of the current Plan or on the District's amortization payments. Current employees will experience no changes as a result of AB340. We are enclosing a projection of future District normal costs that illustrate the savings due to the implementation of the new tier of benefits. Savings increase each year as fewer employees are subject to pre-PEPRA benefit structures, and the savings reach 8.17% of payroll at the end of our projections.

3200 N. Central Ave., Suite 2200 • Phoenix, AZ 85012-2425 (602) 864-3500 phone • (602) 864-3535 fax

Mr. Lewis Clinton January 2, 2013 Page 2

SR 12-314a Attachment 3

Our projections assume that participants leave the Plan according to the assumptions used in the actuarial valuation. We also assume that the District hires new employees in sufficient numbers to replace the employees who terminate, thus achieving a level active work force. The methods and assumptions used to determine the savings were the same as those used in the 2012 actuarial valuation. We have not reduced pay in our assumptions to reflect PEPRA Section 7522.34 (c)'s exclusions of types of pay that will not count toward pension accruals, e.g., severance payments, one-time payments, unused time off, overtime pay, and bonuses.

Please let me know if you have any questions or need anything more.

Sincerely,

Charles E. Chittenden Principal and Consulting Actuary

En c.

buckconsultants

AC Transit- AB 340 Employer Cost Analysis (in millions) 40.00

35.00 -30.00

25.00

20.00

15.00

10.00

5.00

0.00

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I ~ ..., ~ n _n L D o----'1-fl-1---f}--1 R 1 I ~~ 1 1 l-1 H H H H H R F• Fub_J--i ~· 1 2012 2017 2022 2027 2032 2037 2042

- saving --Current Plan --AB340

2012 2017 2022 2027 2032 2037 2042

- Saving (%of Pay) --current Plan (%of Pay) --AB340 (%of Pay)

Valuation Year ~.llifWIW'.lli!WW'JtltMMt.JtifWW'.lii!:WW'.llitWM'.Jtlf:WW'.llif!WWt.Jtf.ltWW'.tUtJWW'.ltt!WW'.lttJWM'.tUtl!WMI<JttfWMt.tUtJ:WWB•t!W

Valuation Salary 123.42 126.37 129.20 132.27 135.16 137.75 140.98 144.37 147.94 151.82 155.93 160.07 164.39 169.06 173.78 178.65

14.85 15.21 15.54 15.95 16.34 16.73 17.21 17.76 , 18.3J 18.98 19.65 2 0.30 20.97 21.71 22.44 23.19 .,. 12.68% 12.03% 12.04% 12.03% 12.06% 12.09% 12.15% 12.21% 12.30% 12.42% 12.50% 12.60% 12.76% 12.84% 12.91% 12.98%

Current Plan Current Plan (%of Pay)

AB340 14.85 14.56 14.27 14.02 13.75 13.43 13.19 13.00 12.82 12.65 12.53 12.40 12.30 12.25 12.21 12.20

12.03% 11.52% 11.04% 10.60% 10.17% 9.75% 9.36% 9.00",.(, 8.67% 8.33% 8.04% 7.75% 7.48% 7.25% 7.03% 6.83%

0.00 0.65 1.27 1.93 --." 2.59- 3.30~ 4.02 4.76 5.55 6.33 7.12 7.90 8.67 9.46 10.23 10.99 AB340 (%of Pay)

avin

Saving(% of Pay) 0.00% 0.52% 0.99% 1.46% 1.92% 2.40% 2.85% 3.30",.(, 3.75% 4.17"A 4.56% 4.93% - 5.28% 5.59% 5.88% 6.15%

Valuation Year M4,fJ:MMA•f#MM4•€i·MM4•€iMM4•€fMM4•€iMM4•€!MM4•€fWMd·€1WMl•€MMA·€i:MMJ•iPMMA•Et.MM4•&1MM4•§fM Valuation Salary 183.84 189-07 194.52 200.13 205.67 211.40 217.28 223.22 229.27 235.48 242.05 248.80 255.87 263.21 270.87

Current Plan 23.91 24.68 25.46 26.27 27.06 27.89 28.75 29.66 30.60 - 31.56 32.58 33.64 34.75 35.89 37.08 Current Plan (%of Pay) 13.01% 13.05% 13.09% 13.13% 13.16% 13.19% 13.23% 13.29% 13.35% 13.40% 13.46% 13.52% 13.58% 13.64% 13.69%

AB340 12.19 12.22 12.27 12.37 12.45 12.56 12.70 12.89 13.10 13.32 13.60 13.89 14.23 14.58 14.96

AB340 (% of Pay) 6.63% 6.46% 6.31% 6.18% 6.05% 5.94% 5.84% 5.77% 5.71% 5.66% 5.62% 5.58% 5.56% 5.54% 5.52% Savin 11.72 12.46 13.19 13.90 14.61 15.33 16.05 16.77 17.50 18.24 18.98 19.75 20.52 21.31 22.12

Saving(% of Pay) 6.38% 6.59% 6.78% 6.95% 7.11% 7.25% 7.39% 7.52% 7.64% 7.74% 7.84% 7.94% 8.02% 8.10% 8.17%

Notes 1. January 1, 2012 census and assumpt ions are used in the analysis.

2. Level active workforce is assumed. 3. Future new hire profile developed based on the characteristics of post January 1, 2009 hires.

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Nmnc:

Organl7.ation:

From:

nate:

Rc:

AMALGAMATED TRANSIT UNION ~Ol~ Wisoun•in Avenue, NW Wn.shingtun, Dl' 2001~·4139

· Tel. (202) 537·1645 • Fax. (102)"244-7824

Facsimile Transmission

John Haenftling Director of Ad111inistrativc Service~

U.S. l>epartmct1l of Labor

(510) 891·7157

Jessica Chu A~~o~:iute General Counsel

Ja11U31'Y 18,.2013

OB.JECTIONS TO REFERRAl. n;l(l\'lS FTA Applic!ltion Alameda-Contra Cosra Transit District (CA·95·X021)

Number of Pages (including this transmittal sheet): _.!2_

!Joard of Directors Meeting Date: t!J.?Jk3 Hem No:_' ...;,&:Lo.:a..4.:...· -:----

IN THE EV!iNT OF AN INCOMI'LUTE TRANSMISSION OR POOR COPY, PLEASE CONTACT TUii SENDER 1M MEDIATELY AT 202·537-1645,

.

AMALGAMATED TRANSIT UNION 5025 WISCONSIN AVE., N.W. WASHINGTON, D.C. 20016-4139

{202) 537-1545 FAX (202) 244·7824

Ja11uary I 7, 2013

VIA FACSIMILE

Julm Lund Deputy Assist11nt Secretary Ollice of tabor-Management Standards U.S. Dcpartm~nl ufL<tbnr Room N5112 lOU <:onstlturion Avenue, NW Washington, DC 20210

Re: OBJECTIONS TO R'EFERRAI. TF!ItMS FT !\ Appl icatinn Alameda-Contra Cnsta Tmn~it l>i~n·icr CMAQ Funding for 3rd Party Project Managcmcrlt, C'urrstrUl'tiurr, arrd Engine~ring/Design 11f Husw11y

(CA·95-X021)

The undenngned writes on behalf ot; and as special "Section 13(c)" counsel tor, Amalgamated Transit Union Locals 192,265 and I 555 in response to a January 4, 20 i 3, electronic communicalio•l fi·um the Ofticc of Labor·Managcn\cnl Standoro.l~ n.:gurding the ubuvu l:lrant application und the employee protections which ate to auacb in corrrrcctiuu therewith pursuant tuthc lahur rcquircn,cnls nftht l"edentll'ublic Transpot·ration Act, 49 U.S.C. § 5333(b).

R~;;lutivt In the interests of those re~ll'esented by A TU Local 192, the DOL's ccrrification action in respotiSt> w the l:apitulu~sistancc suughLby the Alltmeda-Contnt Cost11 Transit District is based upon tile terms and conditinns set forth in the April9, 1975, Secrron lJ(c) Agreemellt between the local unron and rhc Di~trict, as ~upplemented by the side letters of ATU and AC Transit to DOL dated September 8, 1980, and September 18, 1 '.180, respectively. Next, regarding the protections tor Locals 265 and J.'i55, the DO I.'s proposed cer1ificarion is premised upon the terms and couditions set fl)11h in the January .t 2011, Unifred l'rotectrve Armngement ("l.!PA").

l'lea~e be :1dviscd that, as t•cprcsentotive of AC TnmsiL employees, ATU Ll>cal 192 objects to the prnposed cel'lification action because the following "raises material issues th11t m1ty require alternative employee protections" and/or there have been "clumgcs in l~gal ur tactual circums!ltnces thm may m11terially affect the rights ot· interests of employee~." 29 C.F.R. § 215.3(d)(3)(i).(ii ).

PRINTeD ON UNION MADE PAPER Afllllored With Ametfcan For1fJI'IllhOn oll.obor lltldGrmgmo aflndusWI OJganiulltm~ and Canadian t.o.oour co,... ......

John l.und P11ge 2 of4 Jllnuary I 7. 2013 As an initial matter, the DOL in its current rt:li:rral took notice of the newly enacted Public Employees' Pension Reform Act o1'20 13, All 340 (Furuhmi), Stats. 2012, Chapter 296 ("PI:!PRA ") anti requested tho: parties to inform the DOL of any conllicts between P.EPRA tmd Section 13(c) requirements.

Lly way ufbackground, PEPRA applies to all public employers anti public pension plans un 1md after Jllnllai'Y I. 2013; 11t this time th~ new lawo11ly e.x.t.•mpts the Uni\'CI"Sity of' California and stand t~!onc, inMpeodelll retirement plano offered by charter citic~ and counries that do not palticipatc in the CalPI!RS or the 1937 Act County Retirement Syotems. Tlms, there io no doubt that this law will impact AC Transit employees' pension benefits.

Among other mam.lutcs,thenew PensionRefom1law requires partic.ipatingemployci"S to urlilut~mlly implement ~:hanges to retirement bcnc.fils without first bargaining with their ertlployt:e reprcscnU.Itive(s) by, among other thing;:

• ltaising lln:: minimum retirement agtl~; Reducing pension bcnetits tor new pLlhlic en1ployees;

• lmpo~ing new fonnulas for calculating pensions for new public employees; Impnsing a dcjiniliun of"final comptmsation"; Fixing the vesting st,hedu le; and Adjusting the compensation cap annually and rcqumng certain contribution:; fi"Om employees to cqu;1l to one·half or the nnrmal costs of the phm.

Undc1· Cal itbmia lttw, collective b81'1:\ltining over retiremcm/p~nsion benefits spccifknlly is a 1\llii!Clluory aubject ofbarguining."' ACTra11si! and ATU Local 192lmvejointlyestablished,through collective bargaining, a dclined benefit pension plan for the benefit of AC Transit employees represented by ATU Local 192. Sec attnched Section 21, ATU Local 192 and AC Tran~it MOU, effective November 5, 2010, through June 30, 2013. The plan provides a variety of retirement options und formulas, including a "55 at 2%'' option in which a vested employee is eligible for retirement at age 55, witb a benefit nf' 2% tina I average S11lury (high 3 ycai'S or last 36 mumhs) multiplied by years of service. Also through collective bargaining the parties lmve agreed that employees yest in the pcn~ion plan after eight (8) years of scrvic.e with AC Transit.

fn response to the UUL's request, prior to the J')assage of AB 340, the bargHining parties r~gularly neglltiated over the benefits provided hy the plan, including the asc of normal retirement, the bene lit

l' Alnmeda·Contra Costa Transit is a specutl trnnsit district, created by Calitomia Public Utilities Code Sections 25051-25057. 'Public Utilities Code Section 2505 t states that AC Tmn~il "shall bargain in good faith and make all reasonable etTorts to reach agreement on the terms or a written contract governing wages, sui aries, hours, working conditions !lnd griev1mce procedures.'' Moreover, Pllhlic t fti I itics Code Section 2530 I I'Cquires "ft)he adoption. tt!rrns :tnd conditions ol' uny 1\:tiremenr sys1crn covenng employees of the district frcpresenred by a lttbor organization.! shall he pursuunt to a co!lcctiw bargaining ngr~ement betwccJl ~uch labor Ol'ganiza'tilm 11nd the disuict."

John Ltmd Page 3 of4 January 17. 20 I J formula, and the ~:~xistence of programs such as "55 aL 2%." AB 340, hmvever, mandates that new employeeR may only rcccivo n "2%" benefit at age 62, a fi.1ll seven years later· than the par·tics have negotiated for existing employees. AD 340 also mandall'S that vesting must occur after five (5) years ofsctviec with <In employer, whereas the current plan has an eight (8) year vesting requirement. AI:! 340 thus elimimltes the parties' ability to address retirement costs by agreeing to u longer vesting srbcdulc chan would be imposed by law. Negotiations over all these benel·it featun:s have been ccmral LU public sector collective bat·gaining in Caliiilmia - and ut AC Transit - for dccudcs, allowing parties to trade off val'ious changes in pension benefits for other econo1111C Items of importance.

AB 340 has thus stripped A TU and uther union~ representing tr~nsit employees of the rigbt to negotiate over any nf theRe cr·itical asp~cts of th~ir pe11siol1 benefits. Indeed, the parties can no longer ncgotiote the benefit formtJin, definition oflinal cortrplmsatiun, applicability of the formula to pa~t and/or t\m1rc service, the employer pick-up, or other bcnctit t'canu·cs, cffcctlvcly putting an end to collective bargaining relative to the core subject of retirement bene lit~.

Thus, under AB 340, pension be11efits for current employees arc ct1l:ctivcly "thm:n" and no b~;ncfit improvements (over a very low cost threshold) can be n~gutiatt:d after December 31, 2012. And the benelitli:atures for "new" employees (those hirecl on or after Janunry 1, 2013) tire now entirely dctcm•ined hy st;·Jtute: tbr new employees, the Jlmnula is lixed at "2% at ti2"; all compensation is meusured with respect to the tinalthrcc years of employment; amendments related to benefit ac.cnrals are reslricted to future service; the employee share is increused, ami ~mployers are prohibited lrom picking up any part of it. Fur'lhcrmore, lor both cutremand new employees, AB 340 prohibits the purchase ofairlimc nfl~,r De.L·ember 31, 2012. ALI340 eliminates all discretionary authority with respect to these matter~. thus relieving transit agencies of the duty to bargain over them which is contwry to Section 13(c) I'CQ.ttircmcms.

Indeed. the DOT. luts already found that PEPRA "appem11 to have removed mandatory ;md/or traditional subjects of collective barg~ir1ing from the COtlSidcrittion of the pttrtios and may prevent ltransit syst~ms in Califomia] from continuing rbe collective bargtlining •·ights or employees, us required by Section 13(c)(2) of the Federal Transit Act, coditicd as 49 U.S.C. 5333(h)(2)(B)." See e.g., DOL's November 29, 2012, Respnn~e to Objections tbr OCTA Grant (CA-90-¥942); November 30, 2012, Response to Objel,tions for MST (.lrant (CA-90-Z022); December 6, 20'12, Rt:sponse to Objections tor LACMTA Grant (CA-95-X042) #2; and January 10, 2013, Response to Obj~ctions forSRTJ) (CA-03-0806) #3. Moret~ver, Federal transit law docs not permit rhc Secretary ofLabor to ce1tify a granrcc's employee protection !tgreements whcr·c workCI'S prcvi011Sly cr~oycd collective bar·gaining rights butl!mse rights were subsequently diminished or climiltatccl altogether bptuLe law. See generally Amalgamated Trun:rit Union v. Donovan, 76 7 F .2d 939 (D.C. Cil', 1985).

Despite the DOL's rulings and ATU's I'Cpcatcd requests to AC Transit that it not act in haste, AC Transit has giv~'ll notice tn ATU Local 192 that it is moving forward with implementation of I'EI'RA. See attached AC Transit's ,lanuary 7, l013,lctter to Ma•·got A. Rosenberg, Counsel tbr

John Lund l'age4 nf4 Januat:y 17. 20 I 3 ATU Lul:al 192. AC Transit's unilateral implementation ot'PEPRA directly undermines federally protected collective bllrgaining rights and collective bargaining agreements a11d thus poses severe consequences to its continued eligibility to receive fi:deml tbnds under Section '13(c).:Y Moreover, !\C 'J'runsit's offer to negotiate over the ej]e('/s of PilPRA dues not cure the deprivation of future collective bargaining rights. Sec DOL's Jan1.1ary 10,2013, Response to Objections fur SRTil (CA-03-0806) #3, footllote 1, wherein the DOL fn1.1nd, in response to SRTD's otler to bargain over the impacts ofPEI'RA, that "such docs not ncccssarilyobvime the 49U.S.C. S333(b)(2)(B) requiremem to continue the collective bargaining rights nf employees over mandatory subjects, which is the principal issue in this matter."

Accordingly, the r>OL must now wke the necessary actiun to ensure that the l'ightR afforded to cmploycc.s under Section I;J(c) are, ancl will continue tube, protected.

*** Lftllc Do:-partment of Lahur shnuld determine it needs fut'thcr derail in order to make a determination as to the validity of the foregoing objections, please provide us with prompt wrinen notice of the information desired. Otherwise, we will look fo1ward to notification as to the "status of [ourj ohjectionij" by no later than Friday, J7cbmaly 1-, 2012. Sec Jnnuary 4, 2013, relerral at p. 2.

F.nclosures

yre

c: Y. Willi;lms, Locall92 L. Springer, Lucal 265 A. Bry~nt, Lucltl IS 55 W. McLean, ATU A. Withington, ATU

Sincerely, ~·­...

Jc.ssicu M. Chu Associate General Counsel

C. Hudson, ATU M. Rosenberg, Esq. tl. Ot·oad, I!sq. D. Lunch, Iisq. J. Henftling, AC Tmnsit

3 Jt is impmtant to note that the Retirement Plan explicitly provides that "any amendment ... will be subjccttu cullcc.tivt:lmrguining." (Retirement Plan, Section 10.1, atlachcd hereto.) The l'lan itselfspecttieally provides that amendments must be in writing executed by "the District and the. Union," that "[a]ll such amendments will b~ ~u11iect l.o collective bargaining," and that "no arr~endment will he applicable to Rcprese11led Employees without the consent of the Union." (Retirement f'lan, Section IO.l(.a)(i).)

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lli.07 Q,;kl &: F.ldu Care- De~eodenl C... T<>!5r

The Disuia shan pwridc a p<Ogtam for employ<:es whereby cbild .00 tkb o:are will be paid for witL !he ~'s pre-Ux dollar. al tho lkeosed child <n

elder •= iadlity of tho e.aployee's choice.

llf.(.dive July I, 2008, lb.<! Dimict .hall ioacaoc the oonttibation &om $.03 to $.OS per boou per cm­ploJ'l"' for all houts wodced by employees iD ATU cla.ssific;atioas. The _purpme of this C011ttibucio•1 is to assist ATIJ ..,.,.~lei-. with th.tt dcpeodent caa: nccdo. Tb. Dcpeudmr.C... Commitloe &hall be '"'!"'llliblc fo< ..... IW>g- .r.. cletails OD how. fO impi<m.ent: pro­grams.

The -rru.c ... of the Mcdi<:al 1'rust .haU dcr.mrioo how the depeaul<m can: pwtion will be added to the TrDSL ~

st:.cnON 20.0.

SR\'ERA.NCB PAY

20.01 Any employee will> three (J) yea~> or mon: of ""'me bid off due to teduaioo in foae shaU '"'"'n'C S.SOO.OO for each full )'<OJ: or major &attion thueol ofsenice.

20,02 Any employee who by.....,.. of pbysical disability ia­<.mred through illness or ""n-«<:upational iujUJy, and =tilied by a physi<ian"s. Rl'on; who has three (3) or mO<e yeam of oontiJmous sen-icc aod wbo can­DOl quaJ;fy for a pensimJ shall receive sewzance pay at the rare of $500.00 per l""' or majo.r fta<tiou "-eof of servia:.

60

20.03 Any employee laid off doe to te<lmnon in !'om: shan have: the option of:

!a) Accepting his/her sevcra""" pay,~ w-;11 be a fiDal temlinaoo&·of emplopm:ot,wim the o;so:iot.

(b:· A=pting an =i&n"""'' io order: of sonlority.

(c) l.earing !Usll= sevaaru:e pay wilh the Dl!ittia aod remsiniag 011 the roll• fo.r a call-back. If not caDecl bad withiD one (l) ......., the emplnyee bas the option o£ ft<luestins and teceiving hislhet sev~ pay.

SECTION2l.O

Pl!NSJON

21.0 I All fomter eGlployees of Key s,...,.. Thmrit Linea. its predceesscu; aod alfiliae cmnpam.s, who m:e on pen-5icm pw:soaru: "' the pc!ISioD plm dat<d. Jamwy l, 1~l3,sha0.....,.;,. on _.ionwilh aD bcnelin, rights and privileges ...:ei-...1 by tbcm at tbe aimc Of tbe Im­ract's asowtlptiDB of ope<aboOS OP Octobe£ l, :lll6().

21.02 Tho Diittlct will.ptoYide a pension plan in aa:oc· dance wilh rbe '"""' and couditioos of the Pensio:t Agre<nu:ol between dre parties as &ei forth in &hibir • A. • This includes an increase of two (2.) )M'IceD!age

poin1s ro the.e:xistiog pension tables 1m diaselca.mg District omploymcnt be.."WetOR.july 1, 19.90 and .fwle 30, 1!197.

Effeaive July l, 1..990, the ontside esming> limita!ion fm Occupotiooal Disability Pe:nsiom shaU be eli!W­nared.

(a) Fo< ernployoes-wbo ........mate employmem on or afru

61

~--"-- .. ·---·-···-- ..

:~; .. _.:, :o __ ~-.·-···"' .. ---

]nne. 30, 2008, the .~:cquired yeats of ccmrlnaous ser­vi«! far ~ Death Benefit Sl>all be oipt (8),.... ...

tb) Vested un~ who are at least age SS aldie rime of doarh, shall be eligible fo< a p<o ...u.-.....,., death beaelit far swv.iving eligible <hildren as out- lined in the P<!JIIiou plan dowment-

(c) F~ employ ... who iennioag employn=t au or a &a ]lmo 30, 2008, oenice relilmwtt beacfiro shall be 2.% at ag1: 55, 2-li% at"'!" 60 aud :U% a! ago65-

(dJ ForemployoeswlootmninatoemploJIIIOiltonorafret June 30~ 2008, at age SS, (ot' older) redr:enrmt beru:- . fils shall be de<ernrined by the .. ,-.rage of tho highest tbue Ill rear• or the laot 3~ D1011thl,_wbich """' is g<Oa!er-

(e) For empl.oy<es who tuminare employment on 01 a&et June 30, 2008, Sorke R- shall ... , after S yearo (a reductio" from tO year&) A T.ml arul Per­.......,. Disa~ will also vest ·a&:er 8 years aod ..,_ quire 8 JOOE• of Sem<e (a n:duction &om 10 yoa.c;~ Oorupali<mal disability mi<emeut l.ewdits shall oon­Eimle to vest "" roo (10] yoan and ""'uire ten (lO) years of service.

(fl For employees who terminate cmpiOJIIl<ntDO or a&or Juao 30, 2008 tho District w;o p<...W. a "pop-up• optioo usiDg 'Illble 4 aod l'~ble S in the retiraomt pian, and •be Pion will be ameoded io a JllaDI!U simi­lor ro i\menc!mont 07-A-11 of the AC Tr .. wr B:n­ployee's RetiRment :l'f..._ The emplojre's bcaeficiarr

Q

-. ~-: ;·:·-... . / ~~(.;."' .. """!! .. ;;!J!'!lJ!II!!IIIOI:!!!'4011'10t;OI(II!-!'\!OH!O!O"ii'!1. !!!.li!60!i;i.!!l.4~i Olili!.XP.~!i!!A,!!!-!IIJii#)!'ilii!Jj'ljj~!!!lJPjj_!IJj!iJil\l_li! .. -._ --· - •: . ,: .:--~· . .-~~-~:~3-~

cmdu dais •pilp"'!Jp• option must be .bigoatOO on 0:1

before th: employee's nlir""""" date. lJ elected, •mo OFtioo au not be cllaaged or rescinded ,&er the em­ployee~ ""'iretnellrda!E-

(gl I'm: employoe> Who...,... ... employm<mf oo or af<er l'ebroary 29, 2008 [note' board """" app.., .. <aWer date] a Rerir<:mem Disabilicy redpiem wiD bove the opdon of <hooslog a SO% Joint Survivor Benefu foJ: lkeir spouse, domestic pannet o.r if dtey 4o not have. a spow• or dom<sciCpartiiA'I: thq• moy elect an Jmgt'br. Child(renl. "This bcndit v.ill ,.. a toble agteed upon by tho l'anios "' ~ the amouor for the spooseldomesrio P""""" For th< l!ligible Cbildlrenl the l'ian will compute a ~ io th~ same Jmlilllel' it does fo< tbe Pr...&<i....- Dealh lledeflt. l!uliridP­als who bep...:eiving a Disability Reliremcnr on ~r after 3/liOR Lut befo<e tho Plan ..,....,; ameaded .,ill be given & Doc tima opponus'lir:y to s.;:lect a beneficWy once the I'Jao is ammded.

21.03 The District agrees to continue to pay «he inc:reases i.n tbe IJUlDthly p.....-... b..,.fits givon ;,. priot cor,aaa ntogO'tiations.

:U-04 Eff=ive July 1, 19~0, the Dilstd<< furthel "B<""5 to increase the. monthly benefits to those ol'\ lhe peosion rolls. prior ro Jwie 301 m&.a as foU.o~=

(a} !>rinr 10 """' 30, 1974, ingease of tJu.., and se¥­cmr-6~• i>=""' (3-7S%).

(b) B"""'"" ]011£ 10, 197~. omd prio< ro Jw>e 30, 1978, """-oftb,.. pem:nt (3%]

(c) Between Junc 30. 1978, and vrio:' ro June 30, ~83,

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iru:n!ase of 1W0 and one-half pur=t i~%).

(d) Bet....., Jum: 30, U83, aad ptior ro June 30, 1986, im:=se of""" pewont.(l %).

21-as FuU-tiw Union officials and 3DJ1 tJuioa eG1ployeo on of&:ial Uniou business BhaB COidinue to acn1m•dare creclils for their ..,.;,.,_ based on ••farr r...:ivod from the U..iaR. This S<cticm shall- apply ro Shop St.w-.W. wJ..m p..rormillg tb<ir nDDIIal dories.

21.06 Th<R wiU ~o a mioir.nJm ...-hly p<DSIOD b<lldit of $400.00 for all.,....,... and fntwe ... -

21.07 l'eosiDil<rS'

{a) effect;ve July J, 200G, the Di.strid: will e<mttibuce $80.00 a montb I'm- eaclt pensi<:neJ aad apousc who ""' eligible for and enrolkd in Pans a A • (Hospital) and "B" (Jiro!Wion.d Senices) of Medicare.

(b) lifka:ive July 1, 2000, the Owict will eo111ribure $40.00 a month for ..d. peoWonel only (ao spawej wbo is eligible for and earon.d io Parts • A • (Hospi­oal) aDd •s• (Pcofes.ional Services) of M<dicaze.

(c:} All pli!D!Iioned m.em.bem of t...oe:Jl 192 Y.ito were rC": ·tired bd"ore l'cbluary i, 1978, and who ....., P"'vi­oosly ., .. rod by Group Life losatauce shall have ptemi=s plld for br the Disb:U:t to the foU....-ing ex-

'""" (l) 'Those who p.-efio~y elected SI,QOO <DY""l!" will

ha..:$1,000 """"'""ll" plld for by the District.

t2l Those who pnmoosly elecred $4,000 am:cag<' shall

6-1

!lave $2,000 covemge plld for by the DistricL The otba S2,000 <""""'C" v.-ill have toile paid fo:: by tbe pmsioElet.

(3) Those who retired oo ar after Fehrnaq l, 1~78, -the Dimkt will pay tbe peomium for S2,0DD life im;ur­aDGC cOYerage.. T.be mstria will pennit any pensioner to purchase ao additional 810,000 covecap: under the Diotrict's C.oop Lire k>smanoo Po&y.

2LOII Retiree Medical

t•l Reti:re<S who opt ro maiDtain .coven!!" d.ro!J&h AC Transit shoD. II<: allowed ro <hoooe a .-...J' plan whieh inclucL:a a prescript!oc beOdit. lo addi<ioo. tbe p'ao wi!l cover lwuing aids and durable med:cal equipmeot. -

[b) The Disttic:t shall provide ,-,.ion "'''' for the r..:..e ooly, the "'tiree may pmclw;c covezage for hislh« spouse.

1'be Dimia shaU subsidize totinre dental witb a-.,.., payment of $20.00 per IDDllth per «liree.

21.~ M<di<:al 'Uust

The UnioSl and the Ol5tri.ct ha¥c established aad joiotly ..dmioistet a ,..., lund" inle:uled for use by ._.,. lil<es for pometirc:menl medical. Ia (19971 the IM­ukt C<lllltibuted Sl,OOO,DOD to tbe trust. Ehtl•• N""""be' 1,2005, tho Disui<:tconaib""'d$1.00 per bout per employee for all homs worked. EHective July 1, 2008. the District ODntribuoed SL30 per bow per employee for al! hoars worked. ii!fective Noloem-

6S

. ---~-----·-··- -···------- ---··---·-··-·

It

. . .

·.:' , ..

:.:~

.. ·~ ....... _,

b..- S, 2010', the Distrirt's <Gncdbulion will be 51.10 per bOUt por emplo,ee for ail boutS wvrkul. The District coomb..uo" of $1.10 p..- bam- to tb< ltetiree Healtb.aod Welfote. Pl.,. is limimd tu 6S "''"' pu hom tbrougb ,..,.. ;lO, 2.013.

Effective Nwombu 1, ZOOS the pa.n:ies, through the All!f;'\C li:azWt posr rebremc:nt ~In-, will pay 80% of the Siogle Ksioer medi<:a1 ptemmm in d'­f<ct on July 1, 2.00.5, or appt""""""'ly $47S fm cor­rent and future reti= between 55 aod 64. Alter age 65, the mmlnusemcnt will he SO% of the sinsJe K.U... soaior •"""'<age, or approximately $275.

.Eifoctlve july • 1.. :ZOOS, the partiiS, thmogb the Ani/AC 'f<'lasi< post leDremen< Medical Tcu.4, wiD pay 80% of me <in~• K.U... medical p«mium iD ef­let:< on July 1, 2008, m: approsin>a!Oiy $635 fur au­rent and lutwe rem... bet=elt SS aod 64, Afttr ago 65, tbe .reimbursemem ..ru he 80% of the ociogle Kaiser smior advootage, or app1_..ty SJ3S.

Both parties have a dury lo poteet the .All.J/AC T.mn­.U Tnist. Mon:Oftl', tho patties WISh 10 provide run ..,,;,.., m..tkal foe the ldiree and spOI!lle in the fu· """- Up<m .;ping, the parti<S agee to imm<:dia!ely ~q;., &""ions ... ways .., ptovido run ...oical fm the retir~ and spOYR .....Nhio dre aw'CI:It funding lev­el&.

11.10 l!llective July I. 2000, the suvi<e '-of aD acme bus dri...,.. """ btpn cmploymenc a& part rime opet· ators will he m.luded in the J>I'BSI"" plan. for pu1'­

poses of this sec1ion 2080 """'" shall equal one year of servke aedi:t. Fo[ pcmion parposa, District hire

66 .

da ... will be sdji!Stcd to iru:luole the hours prio< to be-eomiag full a- .

2l.11 llffecfu>e ].Jy I, 2000 farmer pan time opetato.s arc oiesignaled .. "Peak Opera ..... • aod will he induded m the ~""~Simi pla.n. Peak Opor:acws wtll._,. pen1i<m credit at the """ of 2080 bows equals mui (ll ycao

·11.11 No"""' thai. Jotre 30, zoot. the Di.stru:r shall dis· ·per•o oae rilll£ iSOO,OOO ad hoc paymalt fot p<e 1998 ....;.,.., The~ for each cethee s/W1 bo detem>inccl by a !omwla, agreed io by the paaies, eo­lill<d the "Wayoe NeiSOll" loiX!IU!a sod shall benefit retkees a«ordldg 10 leogtb of tilDe retfu>d •

~1.13 RE'I11t£MlNI EDUCATIO~

The partieS woderstand .hat the AC TJODBit pei!Sioo plait is the Clelllapi.~ of a VCI:Ca"aa employee\. assu:­ance of ....,.;,y aftei retire..-. Jly conuaar, pew

employees may CDter .....X:e .mh the District with only a slight interest in mir......,._ Notwithstanding tho level of 1ni-.., both groups o{ employees benefit from RSO-Iar aod ongoiog edocatioo aboUI the Dis­ui<t's poruioo piau, and how m ptB -thor a pia» for a high quality retircmem.. '!'be Union and the Di&­ttla: will~ de..lop (in con=t with l1u: R<rire­"""" Depanrlltnt) a x..m.meot education propam, keyed DD tbe two most critiod cime.s in the workm"s career.

F'ttsr, duclog initial training, WOJ:ke.<s will re<>elve in­fottnatloo nogard;,g tb< oxiaen<le of tbe plan and genemlly wb;or benefits are ar.~ilable. Durlog tbe litor ei!jht years, eroployoe; will receive perrodl< writlm illfor.natio_n and apdateo an the piM.

~~

-.~- --~-- -· ~~> ~- .. :·

~~: ··-~:··

Just prior K> the eigb.c-year vesting point. employees . w:ill ...,.,;,. :m .;ght bolD" ....;.,. m iDdude c!dailed 6nancial """'"'olliog. S,bjeas •uch as 'l'l"" of cle­bnid CCJcn~on~ sick leave aa::rual .-oJl.ov~ flexible benefi< plans, bdp in eStimating bow moch money will be oeeded dm:mg retirement. arul aosis­tan<.e in setting "P ~ thai the employee may se­leca will be <overed.

SECTION 22.0

COST -OF-LIVING

22.01 Escalam< Clause:

(a) In addiWm ro the ~ ,...ge """' <ODtaincd in this Agreement. all emplcyees <AW«ed by dlis o\greemenc shall be entitled co a ...,.....,f-liring allowsna:, •• set forth in cbis Sei:tinn.

22.02 The bad<: ""''!• nces as «n>lDined in this Agreement sboll ""' be m!uced by appli<:alion of this ~mg provision. The CAJOH>f-lirinjl al­!mvanu:·..ba-11 DOt be detecmined aod re-<letmninod in aca><dana: with dlaap, if any, in the-Co...._ l'xi<:e lodes Jot Urho ~ &.m.ro aod Clerical Workers, U.S. Cities~ 1.%7=1DO, publislled by the B..-eau of Laboi Sta<istks, United St.,.. De­pant!H!nt of lAbor (hereinafter Rkrred ro as the .. Sndex"}, m. tl-..e mann~:~ dm:dbcd in this Section and aw&ed ro """" or tbe hourly ....... set fo<tb in the va:dcm s.ectioJUI of dx Ago!emeut.

22.03 The fuS< <O&t-OI'-tivitJ8 adj.....,.OI: will be based oD

the pot1>::1tage <bang ill the index h-the Tndes p>lblished f<>< themontli ofMardt arul cbe Tndes pub-

68

lisllt:d for the m<mth of Jua<.

2~04 Quane<ly-annual adj._..... &boll be made there­aft« throughom: and ..,;j the &al •diusm=t prid commeadsg wkb the lim parroll period a&.!r publi· cation of lbe.Jndex for the rnoulh of March in the laat calend..- you .,£ tbis Aga:ar.- Quamdy Odj,.,. menrs effective in july aod tlreteafta will oo based Oil

the <baagt:s iil the Conao!ll<r Pm Index ICPii on a tloatiog bas: aooordi<;g to the follow;j,g tablo.

(a) Frcm the CPI m the mm>!h of Macch to the CPi EM the mouth of june, allowaro<e paid in the "'oulh of Jn&r. .

!b) from~ CPI{D.r ~ mom:b of june to tbe CPl fa< d1e numlh of S.pt<mber, ............ paitfin the mon-.h of o.:tobci

'(c)

'(d)

FrDEII the CPJ for th.e month of Sepwnber to d,. CPl lol" the moo.lb. of Doccm.be:r, aUowance paid in tbe month of ]aDUary,

Ftom the Cl'l for tit< momb .,£u-mber to the CPI for the mO.uh of Ma«~ allowa<Ke paid in the Diontb

· ofAI""il.

22.05 The c--of.liviD& ollowaoce shall be used in ~ romputation of scraigltt-time and overtime pay .,.. . at1iy as <hougb the wage """' had b= i1=<ased by tt.. a!lo-RSD<e. H.-.-.r. ~ aBowart<le sbaD not be added to the basfc ..-..gc '"'"" bur only to each em· ployee's ..,;,g.. EaCh quarterly to<1-t>Hivlog ad­justment sbaD be combinod with du: cost-<>f-liwog ~being prid &om the poior pa7od and the combmed all10Uilt sball be paid until the """'

69

. -·-··---· ·- ... ·-·-·-·----·· ..

(a) Ia error u a result of a mlatab ill faot •

. (b) The pennisSlbloRCOVOI)' under(a)mus&belll8dO'wilbiAOlUI JOIII' &om the date the COII!n'butiDll wu mado to till PlaD. · ·

(c) .Rmniolla'llueto mlslalre offici wiU be permitted Ollly .if the IUII'OlandiDa. filctl and cln:umstarlcea iadlCII&o that the COiddlllllion of tho IIIIOUIIItllal _aubsequeidy . revirtl to the District is lll1ribu1ablo to I &0041iit1J mlatake of fact;

(d) Tbe llllldmum IIIIOlllll that :ma.y In: roturllcd to filii Dillriet Ill the aile ora mistake at kt Is tb8IIXCelll of (I) 1lle IIIIIDUIIt CDI1Idbuted. over (ia) the IIIIDlllil tbat 1VOllld haYO been mmD'butod Jwl DO miSfako oftut ooaumd.

·ell> ~~~ldlribulable to the .... COIIIIibuii•IDIY aot bo ~to the District, but louea lltributald.e to such aontribulioa will.recluco the 111101111t nlllmed.

(t) lftbo 1etun1 ott&a &I1IOUIIt IIUribulablo to the I'Distake would C8lliO the Accru.eiiBeJiellt of any Partlcipallt to k reducecl to 1111111101111t wblch is Ius tbU. dlo 11111011111. whick would bave been. the Accnllld·Beaellt ofiUOh Participlllt lwllho llliataka 1111t Clllliurred, the lll!OUJlt l'etl.1rllal to the Plllzlct wiU be nmlted so as to avoid 8UOh reduotlon. .

9.4 SmmJ!!IIliopa by 'PuticjJ)e. Pll'licpata ~ .110t be~. ~permiLtQI k1 make COD&ributiliu to.tbo Plan. . . . . .

!it.cS '· Tmmfium OCher QmU!!pl Plw, No lnlllfin iom Dlhor nliromeat or pCIIIion plans will be acc:opaecl uadei' tbia P.laiL

9. 7 Bpl!PY« pmr,i!p,ttiow No IOIIIIWII' CCIIdn'lllllio~~J tom adlor llllireiaem or p1111slon plans will be BCipted'illlder 1bls Pllil. ·

·ARncLEX

AMENDMI:MT,MERGEROR TDMINATION

10.1 Bishtm AgMmd, ForN~ Bmplopea, the DlstriGt bas llleriabt to · amead this Plm &om time to time and to llllllllld tllldllll' or-t lillY IUGb lllllllllmeDI. For RepJuelllod ~loyees, 1111 imcudal=ote~nceuadoa will be apbjecit to aoDIIlllw ll•£1il!.ins Ally ,lllCII ameadlllllll!l will be lll8lld iD ID·iDslnameat Iii writlna.....uted ~Y the Diltrlci, ':'!' thD· Diatriclllld the lJDloo, 11111 lbis PlaD wDl be dlliiiMI to 11M beeD ..-IIlii Ia tho IIIIIIIIICf IDd at the diDo tbcrala act lbith, ·11111 tho DiSirict, IIIII all Employaes, JbiDier Employees, Panloipala

~ -and Banetiolaries will be bolula thetcby; pmvided;-bowOYeF,Ihatl-·-·· .: ____ ;.. ... --

-27. 90116.14

(a) All such amenclmiii!IS Win be IUbject 10 coUecllvo blrga!Diag.

(b) No 111cb .81'11011dmelll will be elfeclive until adopted by tho Board of . Directors ofthe Dillriot. · .

(c) . No sudaamead111em will be elll!ctiw which lllempll to CIIUI8111Y of the U88l8 of the Fwad 10 k 1I8Cd far ar di\llltld 10 pwposea Oilier diaD tbr tbe ea:luslve benllftt olthel'al:ddpallla orthcrit Bcae&clariel, orto dday maonabloPiaa CIIPI'IIISIII, exceptiiUilh cbaiiBCI> Ifill)', u may be~ to pena1t IIIia Plan to meet tbo apptioeblo reqllln!meatsoftbeCoclo; . ' ' '

· · (d) No 111Gb amondmea!a win haVe lilY RlrOallllve ell'= eo as to dqlrivo uy · Parllcipllll of~ny Belleflt ~,valed,.cxcept such clwJ&es.lfany, u may bl!nquired

. . to permit tbls Pluto II1CCt the applicablfl requiremeill8 of tho Code;

Coclo;' (e) No llldllrlleiUiment will affeet tho quallflod 11ta1u1 of the Plan UDder tbe

(f) No IIIChiiiiiiiUfmlllt will rodur. or cllllllinaleuy Participant's n,&t ta 1ho availabil:ity of a Beaelh UDder this Pllll if that ~Jllllt bad already aati.sticd tlao requlnmemt fortllll Bmetlt u of tho dele ofthe ameedmoat;

· (B) No.IIJCb ~will olllllillate lilY Benelita ICiliUOII u of1he cia" of ·the ameadment.

(h) Subject to appUc:able law,u unOadmeal UDder tbla Scadoa 10.1 may be made effcoiiV. obi dati.Prior to thdllllt dsy ofaPJaa Yea_r In which II ia adopted

(1). NOlWhhu""ifts tho prOcediD& DO lllltlldme.at wiU be applicable to ... aio4 Bmplo,_ withoul tho-I!OJIII!Il ofthelhdoD.

10.2 Rkr1li tn Tmn'n• lA tcCarclaacewlth tis. proeedureuidonh herela llld . · lillbjectto tbe tonaa of lillY CIOlkotiwlilrpiDias apeeiiliDIIlOVIriDs BepnseateciiiiDploJeca of·

. tho ~c:t, tho Diflrict 1111y...._lba l'laD It uy time. Tlllt llllinlmel¢ Board 1111111 dileGt ~he dlsposirioa otthalllllll oflhdlllld iux:ordlllco with thlw•oin•dmnesohdlmt ID tbe CMJDt of' tho diiiiOlulioa. Jllllr&lr, CDIJIDlldaliaD or reoipn!atlon oftbe Dillriat without a tetmiJiatloD resollllioll, the Pllll wiU tenaialte and ..... of lin! Jlullcl wiD be Uquidatad llllless tho Pllll f& Olllltimaed by IIIIIX'M&or 10 tho Dillrfat. .

. 10.3 • .., otlhe fund. Upon lhllaatioa oflh; 1'1811, eiGb Plltliclpaat's Acc.ruod Bud' baled OIIYIIII at'SeMcopriortothodslsoftenn!•lli~ willb=ame tUUyveatedllld ~~~~ totheextallzd1&1.

··-----=--- ···----- ·-

-aa.

available optiDIIIIl fblms of payment which were aot available uadar tho Plan prior to itll tennlaatloll. · · · .

ARTICLE XI

LIMITATIONS ON BENDlTS

11.1 Maximum Bptjmmw Bwftt.

(a) Subjeatto tbo aubaequeat pRivisiDDS oftbia· .Miele XI. the lllllliiiiWD lllllllllllBODe.fltpayable to a Participant willnotacceed SI60,000;1Sil\jlllfed ~1 by t.bo GOit ofUYing adjiiStolllllt 6rctor ~bed by tbe'SecleWy oftbll Treasury lo IICCOJ'dae with Seclloa 415(dXl) Dfthe Code. · ·

(b) ~llltlllmit for OptioMl Fonnt ofBoaafit. If a Putleipaal'i IIIIIIWII . Be!lefit Js paid 11114« Olle"l,lftbe oplioMJ B111111&t fOI'IIII daciibed under SeciiDD 5,3, for pwpoa of .pplyloa tbll delnecl beaelit dollu llmilalloa lo Seclioil ll.l(a), the am01111t ofdul Jeaefit will be llljusted. to the Utltlrld equiva!Pt ofaliJiale life IIIOillhl, Annuity for the Pirticlipant'a H_., .In ~ wltll Secdoa 41S(b)(2)(B) oftbe Code. lor pUrpoies of this adju&1meat, thll appWit111011811lY table it tho 1abio pmarill'lld by lleveaueltuliDS2001-6a(oruJIIIJ1111Cdlllnuldaa=)~udthoiJIIaatllde~DD il S%. 1'bi1 Section II. t(b) wllliiCillpply to uy Benefit payable Wider 1D op1ioDal Beiefit formtbat eoDStltulea a qualiJiedjolllllnd survivor 8llllllity uadcr Sccdcm 417 of the C.

(o) Adjutmrnt for Blllllfill Co!llllleiiCiq Belin Ap 62. JfBoocllt JIBFIDeatl to a Paltlciput COIIimence bet'ort tbe Pll1iciplnt llltallls 1181 62, tht deliaed . 'bead cloDar li.mltaliolllmdct Slll\tloll.ll.t(a) wiU ba a4iUatcd illiCCOIIIIDce with Sllllliqa 415(bXZXC) o(1be Code; pNYided, however, thlliiiiGh llljullmeat will Dot~

. 1D a :Disabilitr lt.etircmllal Bellllftt OJ: I Benefll palll IS I mult of1ho Pllticipmt'a 4eath.

. (d) AdjuatmeDt :tbr Beaati!l CommeDCios A1ler Aae 65. lfBeaeftt jii)'IIIOIItt · ·to a Panlcipaat OOJ11111tliW after tho PutiDipallt lltlim aae CiS, tho delhlllll beaolh doDar liaiitatilllllllldar Soclion ll.l(a) will beld,iullted lD iccQnlaDGo witll Sectioa415{b)(2)(D) C!flho Code.

(e) If tho District malntelns, out ODe time llllbddaed, ll1lltblr qlllliftecl do&Ged baaclt plul, tbe Dmiladou or IIIII AIIK!o XI wllf.aot be weeded whea all111oh de&acd "-ftt pJalla 1Rt uatecl IS IIIII plul.

(f) Tbo IIIIXillDJI!I pemdui'ble .IIDOUIII clelenaiJiad ill ucordance wit)l tills ·. Saltloa 11. J fbr •Y Penicipaat·Willaot be leu tlim die Cllmllll accrued beadt ror IIICh P&Jtilliltui. Por tldl purpose. the tonll •llf"'!!lt ~ bCIIOfit" 111C11111 the P8111cip8Dt's accrued beH&t UDder Sllllh Plaat, deterJainecl IS it the Plltiolpet bad !llpll1ltetl th:!Ja Slniaalll tboclosc of die 1111 BmitatiDD,.VbeshmiiiS bi1brduly 1, 198'7, uxp1 sse d. u e lllll1iaJ lieaeBt withiD tJae m~ ofSeodon415(b)(2) of1bo Code. Tbe Jll!ll*llns .. · &e11!inGe only appllet If IIUCb c!eJIJied beDdlt plaD& met tho~ of'SectlDD 415 of ttiil c~ ror·illlliliha'cicm·je8i'S b'ejiiii]lili lltiifiiiiiV r, 'J'9B '· m &tfiiiliiilg die

·29·

FA~~ Alameda-Contra Costa Tniris;i"oistrict

January 7, 2013

Leonard Carde~·, LLP l 330 Droadway, Suite 1450 Oakland, CA 94612

Attention: Marsot /\.. Rosenberg

Re: J>l:!PRA Implementation

Dear MatQOt,

We arc in receipt of your leuer of December 21, 2012, wherein, on behalf of A Ttl, Local192, you decline the District's offer, made in its letter of December 13, 2012, to conune.o.cc oegotiatlons with respect to changes In state law for public employee pensions contained in PEPRA. We will addt·ess the issues· raised in yout· Decembet· 21" letter by separate attachment to this letter. ·

We are ulso in receipt of your letter dated Jauuary 3, 2013, diHcussing uurmeeting of December 21, 2012, betweenMs Orl.i:G, Buard President, Mr. 1\.nnijo, General Managet·, and me on behalf of the District and you, Ms Williams, Pt-esidem of ATU Local 192, and Mr. Withington, A TU· lntematlonal Representative, on behalf of the Union.

We did mention during the December 21" meeting thut cotttribuliuns !or new employee may not he I'C(Iuired until July I, 2013, in which case there was ample time to conduct negotiations related .to l'I:li'RA. We also indicated that we were moving fotWIII'd with implementation of the new l11w, murc specifically with unrepresented employees and by continuilll:! our negotintions with AFSCME and IBEW.

We tonk ~way from uur December 21" meeting tlmt ATU is nul prepared to bargain with I'CSpect t·o the issues raised by PBPRA until either it is successful l~ obtaining 'li-om the State l.egislature an exemption from the new law or the Department nf Labor issues a final ruling upholding 1\.TU's objections unde-r 13(c). Mr. Withington was clear that 1\'l'U will nut bargain about l'El'.RA during negotiations for a renewal of the collective bat·gaining agreement that will commence in April of this year if a resolution11s described ubove has nul been achieved by t11at time.

Clea!'ly the applicability ofPEPRA In the transit industry in California is an issue outside the control of the District. We note that/\. TU has demonstrated some tlcxibility in its position with respect to J>EP!tA as it appears that its objection to the grant fw1ding for Montl."l\'>y·Salinas Trilllsit was resolved so that the funding could be released to the agency. We hope tl!at similar fleKibility can be demon8trated in otu· situation.

Although during out· meetitlg ofllecember 2151 ATU indicated that it does not wish to engage in bargaining at this time on issues related to PEPRA, if A TU ha.q a change of heart and would like

1600 I'I'QRklht Sli'Oet • Ooklond, CA 94612 • TEL (Stu) 891· 7Z21 • WW\Y,Oetmnsit org

10 meet and confer with tl1e District cunceming the issues outlined abuve the District will be pleru;ed to have thnse diSCLI8SiOrlS. While the OOT, ty_pically reqllh'eS 30 days of negotiatiOllS, the District is prepared to e~ttend these neglltiatinns beyond 30 days if time are signs that progress is being made and further diSCliSsions would be helpful. Please let us know if ATU is willing to engage in bargaining with the District.

Encl. cc: David ArmiJo, l<en Scheldlg

Pug< 2 of6

Attachment I

Set out below is the District's response to the specific issues t·aised in your Jetter uf December 21,2012.

);f!.~.t~ g.(~;EJ.>~

We t•espectt\tlly disagt-ee with A TU's P•lsition that "PEPRA removes the subject ofp~:n~ion from collective bargaining". There is wide room for bargaining on pensions tbr newly hired etnployees, including all of the items set out below.

I. Jn the Distl'ict's col't'espondence of December 13111 we listed eight issues left unanswered by l'l:ll'RA that require bargaining between the p;u·ties. We repeaL thu~e here for your co!lveui~nce:

u) Will employee contl'ibutions be made 011 a 11re-tax or nfter b1x b"sis'l (A ~SCME and IB'f:.W both ngn:cd that the c.ontribtttions should be made ''" a pre-lux basis).

b) Will employees he required to contt•lbute to the defined benefit pion lor ~11rnings i11 cxccs.q of the $113,700 cap?

c) What, ifuny, intcr011t will be paid on the refunded Cn1pi<Jycc contributions for employees who leave Distritt employment priot• to feti•·ement? (sea PUC § 25336)

d) What "terms and Cllltditions" will be applicable to employees who leave the District prior l\1 t'CLhcmcnt bul clectlQ leave their conu·ibutions in the t·eth·ement plan? (see PUC§ 25336)

e) What, if any, contribution to a defined contribution 11ian will be mode by ctnployees andlot· the Disn·ict with t'Eispectto compensation in excess ufthe C!lp'l

f) Wit AI, If AnJI, survlvm· hcncl'irs arc available to Cllljlloyees receiving the AB 340 benefits'/ (AB 340 is silent on ••n·vivor bcndits).

g) Are there any cunent contracts that would be "impairod" by tho Al:l341l employee contribution req,tli·ement?

h) Which delluitions or plan provisions In the AC Transit l.imployee !Wtlt-ement Plan r\:tluire amendtnenLt!) conlbt·m to Afl :140'1

2. While I' £I' ItA restricts the ~q~t and risk of the defined benefit plan that must be offered to new memhm-s on or l'l'itct• .lanuaay I, 2013, the henetit furmula is .!Jill "fixed at2% ul 62" by I'EJ"RA 11s you state i11 your letter. Specificully, Section 7522.02 (d) provides as .tbllows:

... 1 lowever, if the employeo· adopts a new defined benetit!ormttlll on or atl:cr January 1, 20 13, that formula must conlbrm to the I'CtJUirc:ntcnts of this at•ticle .ru: nmst be dete1·mlned and certil'i~d by the t'Clit·cmcnl system·~ chicl' aclun•y Hnd the retirement board to have no greater rislt and no greater cost to the employer than th~ delincd lx:ncfit formula rcq~tirod by this article and rnLlSt be approved by the Legislature. (emphasis added)

P11go 3 ol'6

Tn other word~, the pttrties m·e free to negotiate whatever p11.nsion benefit lhcy dcsil·e, pro videu tbe agreed up1111 benefit has "no gr~11lcr dsk and no 1:!NIIlc1· cost to the employ~r" than the 2% at 62 plan contained in PIJPRA.

3. The "employee shure of the cost of the benefit" is llQ! "set by statute" as your letter claims. Section 7522.30 (a) cstabliNhe~ a "standard" that employees pay SO pe1·cent of the normal cost ot'rhc d~:~lined pension plan und Section 7522.30 (c) •·equio'CS lhut new employees' "have 1111 initial c11ntributionrate of at least SO percent of the nurmul cost l'atc".

There is nothing in PEPRA that restricts the parties from negotiating a contrib11tion l'!lte tllat is equal to or greater than the SO% of' nonnal cost standurd. In fact, Section 7522.30 (e) Rpecitical.ly contemplates such negotiations between the pm1ies.

In addition, PEPRA creates u potential conllict between the requirement to pay "allca~t" 50% of the nom1al cost and to ruum.l the share paid by tltu employee tO the nearest 0.25%. Tnc partivs need to discuss and agree what happons whe1·e, as in our ca.qe, a normal cos! of 12.71% can result in an employee contribution that is less than. 50% of tho nm1nal cost when rounded to the nearest 0.45% (i.e. 6.25%) or i~ at least SO% of the normal cost but nut •·ounded to the nearest 0.?.5% (i.e. 6.50%).

4. PF.PRA contains a dil'le•-e•1t definition of"corr~pensalion" tb1· pension pul')luses applicable to new members than that cuntained ln the District's existing plan. While this new de.finition is Rtatutory, there are certain types ofcnmpensati011 payable to ATU members that may Ol' may not he covered by the new detiniliun. Discussion to clarify what falls within and what faiiR wllhllul the definition would be advantageous.

In addition, many transit agenclcs i1'1 California participNie in CalPF:R.S. For these agencies i:hc definition 1lf "~umpensation" is set out ili the Rtatl\e. So tuo are the l'etii'Crncnt formulas available to participants in Call'cRS (a pa11icipating agency cannot negotiate whatever plan it llkes). Despite these statutory limits on p~msion plan tealure.~ c<lntained in the Government Code, we 3l"C unaware of ATU ever taking the p(l8ilion that tl1is I'Cilluves the su~ject ol' pensions from !he 1-ealm of coUccti ve bargaining. Ncithur are we awa1'1l of any situation where the DOL refused tO ccrlify u grant because !he 11ensioJJ 1i:a1urcs ofCall'RRS are conll'lined in State law.

5. i'EI'R.A CO!IIains u cap 011 pe!lslonable eamings tor new members. From a practical perspective it is diffic11it to imagine how this PI'Cjudiees in any way A TU's b111·gaining l'ights b~cause the CBJ) l~r exceeds the potential earnings of any newly hired employees in the ATU ba1·gaining unit. However, even iflhere we1·c SOIUC prejudice to ATU members, I'RPRA specifically po·ovides that the llaoties may negotiate a defined contribution be.nc!it fur earnings in excess of the ~ap, su't\ject to certain restrictions.

6. VotU: letter Sillies that I'UPRA tlllows "the unilateral increase of the employee share of the cost of the [pensinn] benefit''. However, that is not the case. Section 7522.30 (a) includes u stl'ltemcnt uflhe "standa1·d" applicuble to all public employees thallhey "pay at least 50 percent of normal costs and that employer~ 11ut pay any ofti\C relluired employee cuutributiun." However, there is nothing in PEPitA thnt allows the Dlstricl to act unilaterolly

1 Sl'l I J propo•c• lo amend fhls to r••d 'i1cw member" l'aa~ 4 of6

IJI implemelll' these "standm'ds". These will only he imtllen1e11ted through the collective hao·gaining po·ocess. The ubilily lo unilaterally implement thcac ptovfslons in 2018 applic~ only 1o CnJl>BRS agencies and 1937 Act agencies.'

7. In that same sentence you contend that "PEPRA sets terms and conditions all'ecting pension _ l'ights and benefits of currcnllrunsil district employees, including fr-eezing benefits at current levels''. Again, this is not c:o•·rcct The parLies ~~re able to negotiate improvements to the plan applicable to pre-2013 employees; the only ctl"cct ofPEPRA kthut such benefit elllmnccmCIIt::l would apply solely to ftttuo·e seo"Vice and not to pas! service.

8. Conh11ry to the ~uggestion in your letteo·, PilPRA does .!12! lirnillhe pw:ties' ltbilily to negotiate another pension vehil'lle, such a.1 a supJlleonental defined contrlbutlotl plan, to offset uny nf the 11erceived nceative consequences associ!tled wilh PEPllA. If ATU has concems ahout the p~n~ion benefits available to new members, it ce11alnly has ways to address those

. concems through collo:clive hao·flaining.

9. l'inally, even wher-e legislative action cllminales lh~ duly to bargain, ATU ulways has the ability to negotiate the effect1 of the chan~e on its membership. ATU bas expressed concem 11bout the new Jaw ancllts Impact on cutTCnl and future employees. The way to ndd1-ess those co11c:ems is through collective bat·gaining .

. ~'ompliance with Oofl.rd Po!iqy Nu. 170

ATIJ contends thai the Dislrict has not complied with 13oat·d Policy No. 1.70, Procedure for Revie~i!!!! Amendments to the Alameda·Conlra Costa Transit District Retiremept Plan .. That is not the ca.qe. As discussed below, the Ol.strlct is 1ollowing Bourd Policy No. 170 to the letter.

The Di~tdct 's Interim General CounReiLlotified the Pisto·ic1's o·e1io·ernent wunscllhallhe Disu·icl !'I an needed to be amended as a result ofl>El'ltA and a copy of this notice was provide to Mr. Wildnumn for his infmmation.

An initial d1·afl was pre)lllred by the l)iRto·ict's ,·ctio·cme~t counsel and sent to M~srs. Wildmann and Richeda for their review and comment. Cba11ges were made to the proposed amendment as a mull of these discussions and the updated draft was sent to alllbree uniolllS ft•r their coromCJII8. A time tor responding was set ini!lally for December 5, 2012, but was RLthsequently extended until J.)ecember 21, 2012.

Comments on the content of the amendmem. were received from both AFSCME and ll·mw and a t'IICCtlng wus held with Al;SCME and IRI'iW to discuss their commenw. These collllllCnls were provided to both Mr. Wildmann and Mr. Ricbcda. To date ATU has objected ta the whole proc:edu1·e llut hus nol provided uny comments specifically about the dl'llft l'lan Amendment despite being invited to do so.

You1·lctter incorrectly asserlslhal., "The decision, in the first instance, whether to amend the Plan rests with the Retirement Boa!'d". While the Retirement Board Is tesponsible for operating and administering the I'IHn, it has 110 a11thority whatsoever ta amend the Plan. Rather, the District has

2 Sec Sec. 2501GS.S (c) and Sec. 31631.~ (o)(2) ~•ses of6

sole authority to ~mend the Plan, subject to applicable requirements of state law and the !'ion's tennx.

The Di~tricl, however, has long recognized that any amendmenTS to the Plan atlbct the Retirement Board's tllllctions. Accordingly, the I>i.strict adorJted Hoard l'olicy No. 170 in order w give the Retirement Board the oppottunity to provide feedbllCk on proposed Plan amendments.

The fmal draft of the Plan Amendment is nearing completion. Once comjlleted, the Oistrict will advi~e MeR~t·~. Wild mann and Richeda so that the amcndmunl cftn be placed on the Retirement Board's Agenda for curu~ideratiot1ln accordance with Boat'd .Policy No. 170. Although the Retirement lloard does not 8()pr·ove the amendment, we anticipate tlml Mr. Wildmatm will advise the District of any comments by the Relireme;~nt 8o11rd prio1·1o the Plan Amendment being placed on the appml'riatc Boar-d committee agenda.

Pag~ 6 oF6

california legislature—2013–14 regular session

ASSEMBLY BILL No. 160

Introduced by Assembly Member Alejo

January 22, 2013

An act to amend Section 7522.04 of the Government Code, relatingto public employees’ retirement.

legislative counsel’s digest

AB 160, as introduced, Alejo. California Public Employees’ PensionReform Act of 2013: exceptions.

The California Public Employees’ Pension Reform Act of 2013(PEPRA), on and after January 1, 2013, requires a public retirementsystem, as defined, to modify its plan or plans to comply with the act,as specified. Among other things, PEPRA prohibits a public employerfrom offering a defined benefit pension plan exceeding specifiedretirement formulas, requires new members of public retirement systemsto contribute at least a specified amount of the normal cost, as defined,for their defined benefit plans, and prohibits an enhancement of a publicemployee’s retirement formula or benefit adopted after January 1, 2013,from applying to service performed prior to the operative date of theenhancement.

This bill would except from PEPRA, by excepting from the definitionof public retirement system, certain multiemployer plans authorizedunder federal law and retirement plans for public employees whosecollective bargaining rights are protected by a specified provision offederal law.

Vote: majority. Appropriation: no. Fiscal committee: yes.

State-mandated local program: no.

99

The people of the State of California do enact as follows:

line 1 SECTION 1. Section 7522.04 of the Government Code is line 2 amended to read: line 3 7522.04. For the purposes of this article: line 4 (a)  “Defined benefit formula” means a formula used by the line 5 retirement system to determine a retirement benefit based on age, line 6 years of service, and pensionable compensation earned by an line 7 employee up to the limit defined in Section 7522.10. line 8 (b)  “Employee contributions” means the contributions to a public line 9 retirement system required to be paid by a member of the system,

line 10 as fixed by law, regulation, administrative action, contract, contract line 11 amendment, or other written agreement recognized by the line 12 retirement system as establishing an employee contribution. line 13 (c)  “Federal system” means the old age, survivors, disability, line 14 and health insurance provisions of the federal Social Security Act line 15 (42 U.S.C. Sec. 301 et seq.). line 16 (d)  “Member” means a public employee who is a member of line 17 any type of a public retirement system or plan. line 18 (e)  “New employee” means either of the following: line 19 (1)  An employee, including one who is elected or appointed, of line 20 a public employer who is employed for the first time by any public line 21 employer on or after January 1, 2013, and who was not employed line 22 by any other public employer prior to that date. line 23 (2)  An employee, including one who is elected or appointed, of line 24 a public employer who is employed for the first time by any public line 25 employer on or after January 1, 2013, and who was employed by line 26 another public employer prior to that date, but who was not subject line 27 to reciprocity under subdivision (c) of Section 7522.02. line 28 (f)  “New member” means any of the following: line 29 (1)  An individual who becomes a member of any public line 30 retirement system for the first time on or after January 1, 2013, line 31 and who was not a member of any other public retirement system line 32 prior to that date. line 33 (2)  An individual who becomes a member of a public retirement line 34 system for the first time on or after January 1, 2013, and who was line 35 a member of another public retirement system prior to that date, line 36 but who was not subject to reciprocity under subdivision (c) of line 37 Section 7522.02.

99

— 2 —AB 160

line 1 (3)  An individual who was an active member in a retirement line 2 system and who, after a break in service of more than six months, line 3 returned to active membership in that system with a new employer. line 4 For purposes of this subdivision, a change in employment between line 5 state entities or from one school employer to another shall not be line 6 considered as service with a new employer. line 7 (g)  “Normal cost” means the portion of the present value of line 8 projected benefits under the defined benefit that is attributable to line 9 the current year of service, as determined by the public retirement

line 10 system’s actuary according to the most recently completed line 11 valuation. line 12 (h)  “Public employee” means an officer, including one who is line 13 elected or appointed, or an employee of a public employer. line 14 (i)  “Public employer” means: line 15 (1)  The state and every state entity, including, but not limited line 16 to, the Legislature, the judicial branch, including judicial officers, line 17 and the California State University. line 18 (2)  Any political subdivision of the state, or agency or line 19 instrumentality of the state or subdivision of the state, including, line 20 but not limited to, a city, county, city and county, a charter city, a line 21 charter county, school district, community college district, joint line 22 powers authority, joint powers agency, and any public agency, line 23 authority, board, commission, or district. line 24 (3)  Any charter school that elects or is required to participate line 25 in a public retirement system. line 26 (j)   (1)    “Public retirement system” means any pension or line 27 retirement system of a public employer, including, but not limited line 28 to, an independent retirement plan offered by a public employer line 29 that the public employer participates in or offers to its employees line 30 for the purpose of providing retirement benefits, or a system of line 31 benefits for public employees that is governed by Section 401(a) line 32 of Title 26 of the United States Code. line 33 (2)  “Public retirement system” does not include: line 34 (A)  A multiemployer plan authorized by Section 302(c)(5) of line 35 the Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public line 36 employer began participation in that plan prior to January 1, 2013, line 37 and that plan is regulated by the Employee Retirement Income line 38 Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.). line 39 (B)  A retirement plan for public employees whose collective line 40 bargaining rights are protected by Section 5333(b) of Title 49 of

99

AB 160— 3 —

line 1 the United States Code and the agreements entered pursuant to line 2 that provision.

O

99

— 4 —AB 160