Report 2017-113 Recommendation Responses
Report 2017-113: South Orange County Wastewater Authority: It Should Continue to Improve Its Accounting of Member Agencies' Funds and Determine Whether Members Are Responsible for Its Unfunded Liabilities (Release Date: March 2018)
Recommendation for Legislative Action
The Legislature should require new JPA agreements to hold the members responsible for the JPA's unfunded pension and other postemployment benefits obligations and to specify the manner of apportioning those liabilities.
Description of Legislative Action
Assembly Bill (AB) 1912 (Chapter 383, Statutes of 2018), in part, eliminates an authorization for a party to a joint powers agreement (JPA) to separately contract or assume responsibilities for specific debts, liabilities, or obligations of the agency. Further, this statute requires member agencies of an agency established by a JPA that participates in or contracts with a public retirement system, prior to a termination or a decision to dissolve or cease the operations of the agency, to mutually agree as to the apportionment of the agency's retirement obligations among themselves, provided that the agreement equals 100 percent of the retirement liability of the agency. If the member agencies are unable to mutually agree to the apportionment, the board is required to apportion the retirement liability of the agency to each member agency based on the share of service received from the agency, or the population of each member agency, and establish procedures allowing a member agency to challenge the board's determination through the arbitration process. The statute further provides that if a judgment is rendered against an agency or a party to the agreement for a breach of its obligations to the retirement system, the time within which a claim for injury may be presented or an action commenced against the other party that is subject to the liability determined by the judgment begins to run when the judgment is rendered. Those provisions apply retroactively to both a member agency, or current and former member agency, that has an agreement with the board on or before January 1, 2019, and to new agreements with the board on or after that date.
- Legislative Action Current As-of: October 2018
California State Auditor's Assessment of 6-Month Status: Legislation Enacted
Description of Legislative Action
Assembly Bill 1912 (Rodriguez) would, in part, specify that if an agency established by a joint powers agreement participates in or contracts with a public retirement system, member agencies, both current and former to the agreement, would be required, prior to a termination or a decision to dissolve or cease the operations of the agency, to mutually agree as to the apportionment of the agency's retirement obligations among themselves, provided that the agreement equals 100 percent of the retirement liability of the agency. If the member agencies are unable to mutually agree to the apportionment, the bill would require the board to apportion the retirement liability of the agency to each member agency based on the share of service received from the agency or the population of each member agency, and it would establish procedures allowing a member agency to challenge the board's determination through the arbitration process. The bill would further provide that if a judgment is rendered against an agency or a party to the agreement for a breach of its obligations to the retirement system, the time within which a claim for injury may be presented or an action commenced against the other party that is subject to the liability determined by the judgment begins to run when the judgment is rendered. The bill would specify that those provisions apply retroactively to both a member agency, or current and former member agency, that has an agreement with the board on or before January 1, 2019, and to new agreements with the board on or after that date.
- Legislative Action Current As-of: August 2018