Bill Text: CA SB1251 | 2013-2014 | Regular Session | Chaptered
Bill Title: California Public Employees' Pension Reform Act of 2013: joint powers authority: employees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2014-09-28 - Chaptered by Secretary of State. Chapter 757, Statutes of 2014. [SB1251 Detail]
Download: California-2013-SB1251-Chaptered.html
BILL NUMBER: SB 1251 CHAPTERED
BILL TEXT
CHAPTER 757
FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2014
APPROVED BY GOVERNOR SEPTEMBER 28, 2014
PASSED THE SENATE AUGUST 27, 2014
PASSED THE ASSEMBLY AUGUST 26, 2014
AMENDED IN ASSEMBLY AUGUST 22, 2014
AMENDED IN ASSEMBLY JUNE 18, 2014
AMENDED IN SENATE APRIL 24, 2014
AMENDED IN SENATE APRIL 21, 2014
AMENDED IN SENATE APRIL 2, 2014
INTRODUCED BY Senator Huff
FEBRUARY 20, 2014
An act to amend Section 7522.02 of the Government Code, relating
to public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 1251, Huff. California Public Employees' Pension Reform Act of
2013: joint powers authority: employees.
The California Public Employees' Pension Reform Act of 2013
(PEPRA) requires a public retirement system, as defined, to modify
its plan or plans to comply with the act and, among other provisions,
establishes new retirement formulas that may not be exceeded by a
public employer offering a defined benefit pension plan for employees
first hired on or after January 1, 2013. PEPRA authorizes
individuals who were employed by any public employer before January
1, 2013, and who became employed by a subsequent public employer for
the first time on or after January 1, 2013, to be subject to the
retirement plan that would have been available to employees of the
subsequent employer who were first employed by the subsequent
employer on or before December 31, 2012, if the individual was
subject to reciprocity, as specified.
Existing law, the Joint Exercise of Powers Act, generally
authorizes 2 or more public agencies, by agreement, to jointly
exercise any common power, which may include hiring employees and
establishing retirement systems.
This bill would authorize a joint powers authority formed by the
Cities of Brea and Fullerton on or after January 1, 2013, to provide
employees who are not new members under PEPRA with the defined
benefit plan or formula that was received by those employees from
their respective employers on December 31, 2012, if they are employed
by the joint powers authority without a break in service of more
than 180 days. The bill would authorize up to 3 cities in Orange
County, as specified, to join the authority. This bill would prohibit
the formation of a joint powers authority on or after January 1,
2013, in a manner that would exempt a new employee or a new member
from the requirements of PEPRA.
This bill would incorporate additional changes to Section 7522.02
of the Government Code proposed by AB 1783, to be operative only if
AB 1783 and this bill are both chaptered and become effective on or
before January 1, 2015, and this bill is chaptered last.
The bill would make a statement of findings with regard to the
need for a special law.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7522.02 of the Government Code is amended to
read:
7522.02. (a) (1) Notwithstanding any other law, except as
provided in this article, on and after January 1, 2013, this article
shall apply to all state and local public retirement systems and to
their participating employers, including the Public Employees'
Retirement System, the State Teachers' Retirement System, the
Legislators' Retirement System, the Judges' Retirement System, the
Judges' Retirement System II, county and district retirement systems
created pursuant to the County Employees Retirement Law of 1937
(Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of
Title 3), independent public retirement systems, and to individual
retirement plans offered by public employers. However, this article
shall be subject to the Internal Revenue Code and Section 17 of
Article XVI of the California Constitution. The administration of the
requirements of this article shall comply with applicable provisions
of the Internal Revenue Code and the Revenue and Taxation Code.
(2) Notwithstanding paragraph (1), this article shall not apply to
the entities described in Section 9 of Article IX of, and Sections 4
and 5 of Article XI of, the California Constitution, except to the
extent that these entities continue to be participating employers in
any retirement system governed by state statute. Accordingly, any
retirement plan approved before January 1, 2013, by the voters of any
entity excluded from coverage by this section shall not be affected
by this article.
(3) (A) Notwithstanding paragraph (1), this article shall not
apply to a public employee whose interests are protected under
Section 5333(b) of Title 49 of the United States Code until a federal
district court rules that the United States Secretary of Labor, or
his or her designee, erred in determining that the application of
this article precludes certification under that section, or until
January 1, 2015, whichever is sooner.
(B) If a federal district court upholds the determination of the
United States Secretary of Labor, or his or her designee, that
application of this article precludes him or her from providing a
certification under Section 5333(b) of Title 49 of the United States
Code, this article shall not apply to a public employee specified in
subparagraph (A).
(4) Notwithstanding paragraph (1), this article shall not apply to
a multiemployer plan authorized by Section 302(c)(5) of the federal
Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer
began participation in that plan prior to January 1, 2013, and the
plan is regulated by the federal Employee Retirement Income Security
Act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(b) The benefit plan required by this article shall apply to
public employees who are new members as defined in Section 7522.04.
(c) (1) Individuals who were employed by any public employer
before January 1, 2013, and who became employed by a subsequent
public employer for the first time on or after January 1, 2013, shall
be subject to the retirement plan that would have been available to
employees of the subsequent employer who were first employed by the
subsequent employer on or before December 31, 2012, if the individual
was subject to concurrent membership for which creditable service
was performed in the previous six months or reciprocity established
under any of the following provisions:
(A) Article 5 (commencing with Section 20350) of Chapter 3 of Part
3 of Division 5 of Title 2.
(B) Chapter 3 (commencing with Section 31450) of Part 3 of
Division 4 of Title 3.
(C) Any agreement between public retirement systems to provide
reciprocity to members of the systems.
(D) Section 22115.2 of the Education Code.
(2) An individual who was employed before January 1, 2013, and
who, without a separation from employment, changed employment
positions and became subject to a different defined benefit plan in a
different public retirement system offered by his or her employer
shall be subject to that defined benefit plan as it would have been
available to employees who were first employed on or before December
31, 2012.
(d) If a public employer, before January 1, 2013, offers a defined
benefit pension plan that provides a defined benefit formula with a
lower benefit factor at normal retirement age and results in a lower
normal cost than the defined benefit formula required by this
article, that employer may continue to offer that defined benefit
formula instead of the defined benefit formula required by this
article, and shall not be subject to the requirements of Section
7522.10 for pensionable compensation subject to that formula.
However, if the employer adopts a new defined benefit formula on or
after January 1, 2013, that formula must conform to the requirements
of this article or must be determined and certified by the retirement
system's chief actuary and the retirement board to have no greater
risk and no greater cost to the employer than the defined benefit
formula required by this article and must be approved by the
Legislature. New members of the defined benefit plan may only
participate in the lower cost defined benefit formula that was in
place before January 1, 2013, or a defined benefit formula that
conforms to the requirements of this article or is approved by the
Legislature as provided in this subdivision.
(e) If a public employer, before January 1, 2013, offers a
retirement benefit plan that consists solely of a defined
contribution plan, that employer may continue to offer that plan
instead of the defined benefit pension plan required by this article.
However, if the employer adopts a new defined benefit pension plan
or defined benefit formula on or after January 1, 2013, that plan or
formula must conform to the requirements of this article or must be
determined and certified by the retirement system's chief actuary and
the system's board to have no greater risk and no greater cost to
the employer than the defined benefit formula required by this
article and must be approved by the Legislature. New members of the
employer's plan may only participate in the defined contribution plan
that was in place before January 1, 2013, or a defined contribution
plan or defined benefit formula that conforms to the requirements of
this article. This subdivision shall not be construed to prohibit an
employer from offering a defined contribution plan on or after
January 1, 2013, either with or without a defined benefit plan,
whether or not the employer offered a defined contribution plan prior
to that date.
(f) (1) If, on or after January 1, 2013, the Cities of Brea and
Fullerton form a joint powers authority pursuant to the provisions of
the Joint Exercise of Powers Act (Article 1 (commencing with Section
6500) of Chapter 5), that joint powers authority may provide
employees the defined benefit plan or formula that those employees
received from their respective employers on December 31, 2012, to any
employee of the City of Brea, the City of Fullerton, or a city
described in paragraph (2) who is not a new member and subsequently
is employed by the joint powers authority without a break in service
of more than 180 days.
(2) On or before January 1, 2017, a city in Orange County that is
contiguous to the City of Brea or the City of Fullerton may join the
joint powers authority described in paragraph (1) but not more than
three cities shall be permitted to join.
(3) The formation of a joint powers authority on or after January
1, 2013, shall not act in a manner as to exempt a new employee or a
new member, as defined by Section 7522.04, from the requirements of
this article. New members may only participate in a defined benefit
plan or formula that conforms to the requirements of this article.
(g) The Judges' Retirement System and the Judges' Retirement
System II shall not be required to adopt the defined benefit formula
required by Section 7522.20 or 7522.25 or the compensation
limitations defined in Section 7522.10.
(h) This article shall not be construed to provide membership in
any public retirement system for an individual who would not
otherwise be eligible for membership under that system's applicable
rules or laws.
(i) On and after January 1, 2013, each public retirement system
shall modify its plan or plans to comply with the requirements of
this article and may adopt regulations or resolutions for this
purpose.
SEC. 2. Section 7522.02 of the Government Code is amended to read:
7522.02. (a) (1) Notwithstanding any other law, except as
provided in this article, on and after January 1, 2013, this article
shall apply to all state and local public retirement systems and to
their participating employers, including the Public Employees'
Retirement System, the State Teachers' Retirement System, the
Legislators' Retirement System, the Judges' Retirement System, the
Judges' Retirement System II, county and district retirement systems
created pursuant to the County Employees Retirement Law of 1937
(Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of
Title 3), independent public retirement systems, and to individual
retirement plans offered by public employers. However, this article
shall be subject to the Internal Revenue Code and Section 17 of
Article XVI of the California Constitution. The administration of the
requirements of this article shall comply with applicable provisions
of the Internal Revenue Code and the Revenue and Taxation Code.
(2) Notwithstanding paragraph (1), this article shall not apply to
the entities described in Section 9 of Article IX of, and Sections 4
and 5 of Article XI of, the California Constitution, except to the
extent that these entities continue to be participating employers in
any retirement system governed by state statute. Accordingly, any
retirement plan approved before January 1, 2013, by the voters of any
entity excluded from coverage by this section shall not be affected
by this article.
(3) (A) Notwithstanding paragraph (1), this article shall not
apply to a public employee whose interests are protected under
Section 5333(b) of Title 49 of the United States Code until a federal
district court rules that the United States Secretary of Labor, or
his or her designee, erred in determining that the application of
this article precludes certification under that section, or until
January 1, 2016, whichever is sooner.
(B) If a federal district court upholds the determination of the
United States Secretary of Labor, or his or her designee, that
application of this article precludes him or her from providing a
certification under Section 5333(b) of Title 49 of the United States
Code, this article shall not apply to a public employee specified in
subparagraph (A).
(4) Notwithstanding paragraph (1), this article shall not apply to
a multiemployer plan authorized by Section 302(c)(5) of the federal
Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer
began participation in that plan prior to January 1, 2013, and the
plan is regulated by the federal Employee Retirement Income Security
Act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(b) The benefit plan required by this article shall apply to
public employees who are new members as defined in Section 7522.04.
(c) (1) Individuals who were employed by any public employer
before January 1, 2013, and who became employed by a subsequent
public employer for the first time on or after January 1, 2013, shall
be subject to the retirement plan that would have been available to
employees of the subsequent employer who were first employed by the
subsequent employer on or before December 31, 2012, if the individual
was subject to concurrent membership for which creditable service
was performed in the previous six months or reciprocity established
under any of the following provisions:
(A) Article 5 (commencing with Section 20350) of Chapter 3 of Part
3 of Division 5 of Title 2.
(B) Chapter 3 (commencing with Section 31450) of Part 3 of
Division 4 of Title 3.
(C) Any agreement between public retirement systems to provide
reciprocity to members of the systems.
(D) Section 22115.2 of the Education Code.
(2) An individual who was employed before January 1, 2013, and
who, without a separation from employment, changed employment
positions and became subject to a different defined benefit plan in a
different public retirement system offered by his or her employer
shall be subject to that defined benefit plan as it would have been
available to employees who were first employed on or before December
31, 2012.
(d) If a public employer, before January 1, 2013, offers a defined
benefit pension plan that provides a defined benefit formula with a
lower benefit factor at normal retirement age and results in a lower
normal cost than the defined benefit formula required by this
article, that employer may continue to offer that defined benefit
formula instead of the defined benefit formula required by this
article, and shall not be subject to the requirements of Section
7522.10 for pensionable compensation subject to that formula.
However, if the employer adopts a new defined benefit formula on or
after January 1, 2013, that formula must conform to the requirements
of this article or must be determined and certified by the retirement
system's chief actuary and the retirement board to have no greater
risk and no greater cost to the employer than the defined benefit
formula required by this article and must be approved by the
Legislature. New members of the defined benefit plan may only
participate in the lower cost defined benefit formula that was in
place before January 1, 2013, or a defined benefit formula that
conforms to the requirements of this article or is approved by the
Legislature as provided in this subdivision.
(e) If a public employer, before January 1, 2013, offers a
retirement benefit plan that consists solely of a defined
contribution plan, that employer may continue to offer that plan
instead of the defined benefit pension plan required by this article.
However, if the employer adopts a new defined benefit pension plan
or defined benefit formula on or after January 1, 2013, that plan or
formula must conform to the requirements of this article or must be
determined and certified by the retirement system's chief actuary and
the system's board to have no greater risk and no greater cost to
the employer than the defined benefit formula required by this
article and must be approved by the Legislature. New members of the
employer's plan may only participate in the defined contribution plan
that was in place before January 1, 2013, or a defined contribution
plan or defined benefit formula that conforms to the requirements of
this article. This subdivision shall not be construed to prohibit an
employer from offering a defined contribution plan on or after
January 1, 2013, either with or without a defined benefit plan,
whether or not the employer offered a defined contribution plan prior
to that date.
(f) (1) If, on or after January 1, 2013, the Cities of Brea and
Fullerton form a joint powers authority pursuant to the provisions of
the Joint Exercise of Powers Act (Article 1 (commencing with Section
6500) of Chapter 5), that joint powers authority may provide
employees the defined benefit plan or formula that those employees
received from their respective employers on December 31, 2012, to any
employee of the City of Brea, the City of Fullerton, or a city
described in paragraph (2) who is not a new member and subsequently
is employed by the joint powers authority without a break in service
of more than 180 days.
(2) On or before January 1, 2017, a city in Orange County that is
contiguous to the City of Brea or the City of Fullerton may join the
joint powers authority described in paragraph (1) but not more than
three cities shall be permitted to join.
(3) The formation of a joint powers authority on or after January
1, 2013, shall not act in a manner as to exempt a new employee or a
new member, as defined by Section 7522.04, from the requirements of
this article. New members may only participate in a defined benefit
plan or formula that conforms to the requirements of this article.
(g) The Judges' Retirement System and the Judges' Retirement
System II shall not be required to adopt the defined benefit formula
required by Section 7522.20 or 7522.25 or the compensation
limitations defined in Section 7522.10.
(h) This article shall not be construed to provide membership in
any public retirement system for an individual who would not
otherwise be eligible for membership under that system's applicable
rules or laws.
(i) On and after January 1, 2013, each public retirement system
shall modify its plan or plans to comply with the requirements of
this article and may adopt regulations or resolutions for this
purpose.
SEC. 3. The Legislature finds and declares that a special law is
necessary and that a general law cannot be made applicable within the
meaning of Section 16 of Article IV of the California Constitution
because of the need to clarify the benefit eligibility rules under
the California Public Employees' Pension Reform Act of 2013 and
maintain the integrity of that act and further its purpose.
SEC. 4. Section 2 of this bill incorporates amendments to Section
7522.02 of the Government Code proposed by this bill and AB 1783. It
shall only become operative if (1) both bills are enacted and become
effective on or before January 1, 2015, (2) each bill amends Section
7522.02 of the Government Code, and (3) this bill is enacted after AB
1783, in which case Section 7522.02 of the Government Code, as
amended by AB 1783, shall remain operative only until the operative
date of this bill, at which time Section 2 of this bill shall become
operative, and Section 1 of this bill shall not become operative.
