Bill Text: CA AB2375 | 2015-2016 | Regular Session | Chaptered
Bill Title: Public Employees' Retirement System: omnibus bill.
Sponsorship: Slight Partisan Bill (Democrat 5-2)
Status: (Passed) 2016-09-21 - Chaptered by Secretary of State - Chapter 415, Statutes of 2016. [AB2375 Detail]
Download: California-2015-AB2375-Chaptered.html
BILL NUMBER: AB 2375 CHAPTERED
BILL TEXT
CHAPTER 415
FILED WITH SECRETARY OF STATE SEPTEMBER 21, 2016
APPROVED BY GOVERNOR SEPTEMBER 21, 2016
PASSED THE SENATE AUGUST 23, 2016
PASSED THE ASSEMBLY AUGUST 30, 2016
AMENDED IN SENATE AUGUST 8, 2016
AMENDED IN SENATE JUNE 20, 2016
AMENDED IN ASSEMBLY MAY 4, 2016
INTRODUCED BY Committee on Public Employees, Retirement, and Social
Security (Assembly Members Bonta (Chair), Cooley, Cooper, Cristina
Garcia, O'Donnell, Wagner, and Waldron)
FEBRUARY 18, 2016
An act to amend Section 87483 of the Education Code, and to amend
Sections 7502, 7504, 7507, 7507.2, 20034, 20035, 20035.5, 20037,
20037.6, 20037.7, 20037.8, 20037.9, 20037.10, 20037.11, 20037.12,
20037.13, 20037.15, 20229, 20537, 20572, 20577.5, 20578, 20638,
20900, 21499, 21626.5, and 22820 of, and to repeal and amend Sections
20037.5 and 20037.14 of, the Government Code, relating to the Public
Employees' Retirement System.
LEGISLATIVE COUNSEL'S DIGEST
AB 2375, Committee on Public Employees, Retirement, and Social
Security. Public Employees' Retirement System: omnibus bill.
(1) Existing law requires all state and local retirement systems
to secure, not less than triennially, the services of an enrolled
actuary, who is required to perform a valuation of the system.
Existing law requires all state and local public retirement systems
to submit audited financial statements to the Controller at the
earliest practicable opportunity within 6 months of the close of each
fiscal year. Existing law requires the Controller to review these
reports and to publish an annual report on the financial condition of
all state and local public retirement systems, as specified.
Existing law requires the Controller to establish an advisory
committee, including enrolled actuaries, to assist state and local
systems with their reporting duties. Existing law requires the
Legislature and local legislative bodies, when considering changes in
retirement benefits or other postemployment benefits, to secure the
services of an actuary to provide a statement of the actuarial impact
upon future annual costs, except as specified. Existing law
establishes the California Actuarial Advisory Panel, which consists
of a specified membership that includes enrolled actuaries. Existing
law requires the panel to provide impartial and independent
information on pensions, other postemployment benefits, and best
practices to public agencies.
This bill would delete references to enrolled actuaries for
purposes of the provisions described above. The bill would substitute
for this designation, for purposes of establishing the advisory
committee and the actuarial advisory panel, as described above,
actuaries who have attained the designation of Associate or Fellow of
the Society of Actuaries. The bill would substitute for the enrolled
actuaries designation, for purposes of the triennial valuation and
the reporting requirements described above, actuaries who satisfy the
qualification standards for actuaries issuing statements of
actuarial opinion in the United States with regard to pensions or
other postemployment benefits.
(2) Existing law, the Public Employees' Retirement Law, creates
the Public Employees' Retirement System (PERS) for the purpose of
providing pension benefits to state employees and employees of
contracting agencies and prescribes the rights and duties of members
of the system and their beneficiaries. Existing law vests management
and control of PERS in its board of administration. PERS provides a
defined benefit to members of the program, based on final
compensation, credited service, and age at retirement, subject to
certain variations.
Existing law prescribes various definitions of final compensation
based on employment classification, bargaining unit, date of hire,
and date of retirement, among other things.
This bill would revise these definitions to remove redundant
language and make technical and style changes.
(3) Existing law requires the board to provide the Legislature,
the Governor, and the Chair of the California Actuarial Advisory
Panel a specified report in connection with state employee retirement
plans. Existing law requires the Chair of the California Actuarial
Advisory Panel, within 30 days of receipt of the report, at a
specified, publicly noticed hearing, to make a presentation on
certain issues relating to investment returns and amortization.
This bill would require that the presentation described above to
be made each legislative session and that the presentation be based
on the report made by the board.
(4) Existing law authorizes the board to charge interest, at the
actuarial interest rate, on the amount of any payment due and unpaid
by a contracting agency until payment is received.
This bill would instead permit the board to charge interest on
payments due and unpaid at the greater of the annual return on the
system's investments for the year prior to the year in which payments
are not timely made or a simple annual rate of 10%.
(5) In addition to the above, existing law authorizes the board to
assess a contracting agency that fails to make contributions when
due interest at an annual rate of 10% and the costs of collection,
including reasonable legal fees. In the case of repeated
delinquencies, the board may assess the contracting agency a penalty
of 10% of the delinquent amount.
This bill would recast these provision to authorize the board, if
a contracting agency fails to fully pay any installment of
contributions when due, to assess a penalty of 10% of the total
amount due and unpaid, including accrued and unpaid interest. The
bill would permit the penalty to be assessed once during each 30-day
period that the outstanding amount remains unpaid. The bill would
also specify that the contracting agency may be assessed the costs of
collection, including reasonable legal fees and litigation costs,
including, without limitation, legal fees and legal costs incurred in
bankruptcy, when necessary to collect any amounts due.
(6) Existing law authorizes the board to terminate a local agency
contract if the contracting agency fails for 30 days after demand by
the board to pay any installment of required contributions or fails
for three months after demand to file any information required for
administration of the agency's employees. Existing law permits the
board to reduce benefits in certain instances when contributions are
inadequate to fund them. Existing law authorizes the board to merge a
plan that has been terminated into the terminated agency pool
without benefit reduction or with a lesser reduction if certain
conditions are met.
This bill would delete references to merging a plan and instead
specify that the board may elect to not impose a reduction on a plan,
or to impose a lesser reduction on a plan, that has been terminated
if those acts will not impact the actuarial soundness of the
terminated agency pool. The bill would make related changes by
deleting administrative provisions relating to the sequence for
transferring assets in relation to the reduction of benefits.
(7) Existing law authorizes certain members who are either
academic employees of the California State University or certificated
employees of school districts employed on a part-time basis to
receive full-time service credit and the benefits related to that
status if both the member and employer elect to make the appropriate
additional contributions and other requirements are met. Existing law
limits the application of these provisions to 5 years of part-time
status.
This bill would extend the authorization described above to
academic employees of community college districts. The bill would
also make a correctional change in this regard.
(8) Existing law requires payment of interest on a preretirement
or postretirement death allowance or a preretirement or
postretirement lump-sum benefit if not paid within a specified time
after the date of death of an annuitant. Existing law prescribes the
method of calculating interest for this purpose.
This bill would instead require that interest be calculated at 7%,
pursuant to the California Constitution.
(9) Existing law requires a surviving domestic partner be treated
in the same manner as a surviving spouse for purposes of
postretirement survivor's allowances if certain conditions are met.
This bill would require that an individual who is the same gender
as a member be treated in the same manner as a surviving spouse for
purposes of postretirement survivor's allowances if certain
conditions are met.
(10) Existing law, the Public Employees' Medical and Hospital Care
Act (PEMHCA), which is administered by the Board of Administration
of the Public Employees' Retirement System, authorizes the board to
contract for health benefit plans for employees and annuitants, as
defined, which may include employees and annuitants of contracting
agencies. Existing law grants eligible, uninsured family members of
specified firefighters or peace officers whose deaths are the result
of injury or disease arising out of their duties the status of
annuitants for purposes of receiving benefits under PEMHCA. Existing
law requires employers to notify the board within 10 business days of
the death of the employee in this context if a spouse of family
member may be eligible for enrollment in a health benefit plan in
this regard.
This bill would revise the duty of employers to notify the board
to also require that they provide updated contact information of the
surviving spouse or family member if that person may be eligible for
enrollment.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 87483 of the Education Code is amended to read:
87483. Notwithstanding any other provision, the governing board
of a community college district may establish regulations that allow
academic employees to reduce their workload from full-time to
part-time duties. The regulations shall include, but shall not be
limited to, the following if the employees wish to reduce their
workload and maintain retirement benefits pursuant to Section 22713
of this code or Section 20900 of the Government Code:
(a) The employee shall have reached the age of 55 prior to
reduction in workload.
(b) The employee shall have been employed full time in an academic
position or a position requiring certification qualifications, or
both, for at least 10 years of which the immediately preceding five
years were full-time employment.
(c) During the period immediately preceding a request for a
reduction in workload, the employee shall have been employed full
time in an academic position or a position requiring certification
qualifications, or both, for a total of at least five years without a
break in service. For purposes of this subdivision, sabbaticals and
other approved leaves of absence shall not constitute a break in
service. Time spent on a sabbatical or other approved leave of
absence shall not be used in computing the five-year full-time
service requirement prescribed by this subdivision.
(d) The option of part-time employment shall be exercised at the
request of the employee and can be revoked only with the mutual
consent of the employer and the employee.
(e) The employee shall be paid a salary which is the pro rata
share of the salary he or she would be earning had he or she not
elected to exercise the option of part-time employment but shall
retain all other rights and benefits for which he or she makes the
payments that would be required if he or she remained in full-time
employment.
The employee shall receive health benefits as provided in Section
53201 of the Government Code in the same manner as a full-time
employee.
(f) The minimum part-time employment shall be the equivalent of
one-half of the number of days of service required by the employee's
contract of employment during his or her final year of service in a
full-time position.
(g) The period of this part-time employment shall not exceed five
years for employees subject to Section 20900 of the Government Code
or 10 years for employees subject to Section 22713 of this code.
(h) The period of part-time employment of employees subject to
Section 20815 of the Government Code shall not extend beyond the end
of the college year during which the employee reaches his or her 70th
birthday. This subdivision shall not apply to any employee subject
to Section 22713 of this code.
SEC. 2. Section 7502 of the Government Code is amended to read:
7502. The Controller shall review the annual financial report of
each state and local public retirement system submitted pursuant to
Section 7504 giving particular consideration to the adequacy of
funding of each system. The Controller shall also review the
triennial valuation of each public retirement system submitted
pursuant to Section 7504 and shall give particular consideration to
the assumption concerning the inflation element in salary and wage
increases, mortality, service retirement rates, withdrawal rates,
disability retirement rates, and rate of return on total assets.
The Controller shall establish an advisory committee that shall
include actuaries who have attained the designation of Associate or
Fellow of the Society of Actuaries and state and local public
retirement system administrators to assist in carrying out the duties
imposed by this section.
SEC. 3. Section 7504 of the Government Code is amended to read:
7504. (a) All state and local public retirement systems shall,
not less than triennially, secure the services of an actuary. For the
purposes of this section, "actuary" means an actuary who satisfies
the qualification standards for actuaries issuing statements of
actuarial opinion in the United States with regard to pensions or
other postemployment benefits and who has demonstrated experience in
public retirement systems. The actuary shall perform a valuation of
the system utilizing actuarial assumptions and techniques established
by the agency that are, in the aggregate, reasonably related to the
experience and the actuary's best estimate of anticipated experience
under the system. Any differences between the actuarial assumptions
and techniques used by the actuary that differ significantly from
those established by the agency shall be disclosed in the actuary's
report and the effect of the differences on the actuary's statement
of costs and obligations shall be shown.
(b) All state and local public retirement systems shall secure the
services of a qualified person to perform an attest audit of the
system's financial statements. A qualified person means any of the
following:
(1) A person who is licensed to practice as a certified public
accountant in this state by the California Board of Accountancy.
(2) A person who is registered and entitled to practice as a
public accountant in this state by the California Board of
Accountancy.
(3) A county auditor in any county subject to the County Employees
Retirement Law of 1937 (Chapter 3 (commencing with Section 31450) of
Part 3 of Division 4 of Title 3).
(4) A county auditor in any county having a pension trust and
retirement plan established pursuant to Section 53216.
(c) All state and local public retirement systems shall submit
audited financial statements to the Controller at the earliest
practicable opportunity within six months of the close of each fiscal
year. However, the Controller may delay the filing date for reports
due in the first year until the time as report forms have been
developed that, in his or her judgment, will satisfy the requirements
of this section. The financial statements shall be prepared in
accordance with generally accepted accounting principles in the form
and manner prescribed by the Controller. The penalty prescribed in
Section 53895 shall be invoked for failure to comply with this
section. Upon a satisfactory showing of good cause, the Controller
may waive the penalty for late filing provided by this subdivision.
(d) The Controller shall compile and publish a report annually on
the financial condition of all state and local public retirement
systems containing, but not limited to, the data required in Section
7502. The report shall be published within 12 months of the receipt
of the information, and in no case later than 18 months after the end
of the fiscal year upon which the information in the report is
based.
SEC. 4. Section 7507 of the Government Code is amended to read:
7507. (a) For the purpose of this section:
(1) "Actuary" means an actuary as defined in Section 7504.
(2) "Future annual costs" includes, but is not limited to, annual
dollar changes, or the total dollar changes involved when available,
as well as normal cost and any change in accrued liability.
(b) (1) Except as provided in paragraph (2), the Legislature and
local legislative bodies, including community college district
governing boards, when considering changes in retirement benefits or
other postemployment benefits, shall secure the services of an
actuary to provide a statement of the actuarial impact upon future
annual costs, including normal cost and any additional accrued
liability, before authorizing changes in public retirement plan
benefits or other postemployment benefits.
(2) The requirements of this subdivision do not apply to:
(A) An annual increase in a premium that does not exceed 3
percent under a contract of insurance.
(B) A change in postemployment benefits, other than pension
benefits, mandated by the state or federal government or made by an
insurance carrier in connection with the renewal of a contract of
insurance.
(c) (1) (A) With regard to local legislative bodies, including
community college district governing boards, the future costs of
changes in retirement benefits or other postemployment benefits, as
determined by the actuary, shall be made public at a public meeting
at least two weeks prior to the adoption of any changes in public
retirement plan benefits or other postemployment benefits. If the
future costs of the changes exceed one-half of 1 percent of the
future annual costs, as defined in paragraph (2) of subdivision (a),
of the existing benefits for the legislative body, an actuary shall
be present to provide information as needed at the public meeting at
which the adoption of a benefit change shall be considered. The
adoption of any benefit to which this section applies shall not be
placed on a consent calendar.
(B) The requirements of this paragraph do not apply to:
(i) An annual increase in a premium that does not exceed 3 percent
under a contract of insurance.
(ii) A change in postemployment benefits, other than pension
benefits, mandated by the state or federal government or made by an
insurance carrier in connection with the renewal of a contract of
insurance.
(2) With regard to the Legislature, the future costs as determined
by the actuary shall be made public at the policy and fiscal
committee hearings to consider the adoption of any changes in public
retirement plan benefits or other postemployment benefits. The
adoption of any benefit to which this section applies shall not be
placed on a consent calendar.
(d) Upon the adoption of any benefit change to which this section
applies, the person with the responsibilities of a chief executive
officer in an entity providing the benefit, however that person is
denominated, shall acknowledge in writing that he or she understands
the current and future cost of the benefit as determined by the
actuary. For the adoption of benefit changes by the state, this
person shall be the Director of Human Resources.
(e) The requirements of this section do not apply to a school
district or a county office of education, which shall instead comply
with requirements regarding public notice of, and future cost
determination for, benefit changes that have been enacted to regulate
these entities. These requirements include, but are not limited to,
those enacted by Chapter 1213 of the Statutes of 1991 and by Chapter
52 of the Statutes of 2004.
SEC. 5. Section 7507.2 of the Government Code is amended to read:
7507.2. (a) There is hereby enacted the California Actuarial
Advisory Panel. The panel shall provide impartial and independent
information on pensions, other postemployment benefits, and best
practices to public agencies and shall meet quarterly.
(b) The responsibilities of the California Actuarial Advisory
Panel shall include, but are not limited to:
(1) Defining the range of actuarial model policies and best
practices for public retirement plan benefits, including pensions and
other postemployment benefits.
(2) Developing pricing and disclosure standards for California
public sector benefit improvements.
(3) Developing quality control standards for California public
sector actuaries.
(4) Gathering model funding policies and practices.
(5) Replying to policy questions from public retirement systems in
California.
(6) Providing comment upon request by public agencies.
(c) The California Actuarial Advisory Panel shall consist of eight
members. Each member shall be an actuary who has attained the
designation of Associate or Fellow of the Society of Actuaries and
who has demonstrated experience with public sector clients. Members
shall be appointed by the entities listed below, and each member
shall serve a three-year term, provided that, in the initial
appointments only, the panelists named by the University of
California, the Senate, and one of the panelists named by the
Governor shall serve two-year terms. The Governor shall appoint two
panelists, and one panelist shall be appointed by each of the
following:
(1) The Teachers' Retirement Board.
(2) The Board of Administration of the Public Employees'
Retirement System.
(3) The State Association of County Retirement Systems.
(4) The Board of Regents of the University of California.
(5) The Speaker of the Assembly.
(6) The Senate Committee on Rules.
(d) The California Actuarial Advisory Panel shall be located in
the Controller's office, which shall provide support staff to the
panel.
(e) The opinions of the California Actuarial Advisory Panel are
nonbinding and advisory only. The opinions of the panel shall not, in
any case, be used as the basis for litigation.
(f) A member of the California Actuarial Advisory Panel shall
receive reimbursement for expenses that shall be paid by the
authority that appointed the member.
(g) The California Actuarial Advisory Panel shall report to the
Legislature on or before February 1 of each year.
SEC. 6. Section 20034 of the Government Code is amended to read:
20034. The highest annual average compensation during any
consecutive 12- or 36-month period of employment as a member of any
retirement system maintained by the university shall be considered
compensation earnable by a member of this system for purposes of
computing final compensation for the member providing he or she
retires concurrently under both systems.
SEC. 7. Section 20035 of the Government Code is amended to read:
20035. (a) Notwithstanding Section 20037, "final compensation"
for the purposes of determining any pension or benefit with respect
to a state member who retires or dies on or after July 1, 1991, and
with respect to benefits based on service with the state, means the
highest annual compensation which was earnable by the state member
during any consecutive 12-month period of employment preceding the
effective date of his or her retirement or the date of his or her
last separation from state service if earlier.
(b) With respect to a state member who retires or dies on or after
July 1, 1991, and who was a managerial employee, as defined by
subdivision (e) of Section 3513, or a supervisory employee, as
defined by subdivision (g) of Section 3513, whose monthly salary
range was administratively reduced by 5 percent because of the salary
range reductions administratively imposed upon managers and
supervisors during the 1991-92 fiscal year, "final compensation"
means the highest annual compensation the state member would have
earned had his or her salary range not been reduced by the 5-percent
reduction. This subdivision shall only apply if the period during
which the state member's salary was reduced would have otherwise been
included in determining his or her final compensation. The costs, if
any, that may result from the use of the higher final compensation
shall be paid for by the employer in the same manner as other
retirement benefits are funded.
SEC. 8. Section 20035.5 of the Government Code is amended to read:
20035.5. Notwithstanding Section 20037, "final compensation" for
the purposes of determining any pension or benefit with respect to a
school member who retires or dies on or after January 1, 2000, and
with respect to benefits based on service with a school employer,
means the highest annual compensation that was earnable by the school
member during any consecutive 12-month period of employment
preceding the effective date of his or her retirement or the date of
his or her last separation from service if earlier.
SEC. 9. Section 20037 of the Government Code is amended to read:
20037. For a state member, or for a local member who is an
employee of a contracting agency that is subject to this section,
"final compensation" means the highest annual average compensation
earnable by a member during any consecutive 36-month period of
employment preceding the effective date of his or her retirement or
the date of his or her last separation from state service if earlier,
including any or all of the period or periods of (a) service
required for qualification for membership, or (b) prior service which
qualifies for credit under this system, if any, immediately
preceding membership, or (c) time prior to entering state service at
the compensation earnable by him or her in the position first held by
him or her in that service, as may be necessary to complete three
consecutive years. For the purposes of this section, periods of
service separated by a period of retirement or breaks in service may
be aggregated to constitute a period of three consecutive years, if
the periods of service are consecutive except for such a period of
retirement or breaks. If a break in service did not exceed six months
in duration, time included in the break and compensation earnable
during that time shall be included in computation of final
compensation. If a break in service exceeded six months in duration,
the first six months thereof and the compensation earnable during
those six months shall be included in computation of final
compensation, but time included in the break which is in excess of
six months and the compensation earnable during that excess time
shall be excluded in computation of final compensation. On and after
November 13, 1968, this section shall apply to all contracting
agencies and to the employees of those agencies whether or not those
agencies have previously elected to be subject to this section,
except that this section shall not apply to an employee of a
contracting agency which has not elected to be subject to this
section whose death occurred or whose retirement was effective prior
to November 13, 1968.
SEC. 10. Section 20037.5 of the Government Code, as added by
Section 56 of Chapter 88 of the Statutes of 1998, is repealed.
SEC. 11. Section 20037.5 of the Government Code, as added by
Section 56 of Chapter 91 of the Statutes of 1998, is amended to read:
20037.5. Notwithstanding Section 20035, "final compensation" for
a state member who has elected to be subject to Section 21353.5, for
the purposes of determining any pension or benefit based on service
credited under that section, means the highest average annual
compensation earnable by the member during any consecutive 36-month
period preceding the effective date of his or her retirement or the
date of his or her last separation from state service if earlier.
SEC. 12. Section 20037.6 of the Government Code is amended to
read:
20037.6. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after July 1,
2006, and is represented by State Bargaining Unit 2, means the
highest average annual compensation earnable by the member during any
consecutive 36-month period preceding the effective date of his or
her retirement or the date of his or her last separation from state
service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 2.
(c) This section does not apply to:
(1) Former state employees who return to state employment on or
after July 1, 2006.
(2) State employees hired prior to July 1, 2006, who were subject
to Section 20281.5 during the first 24 months of state employment.
(3) State employees hired prior to July 1, 2006, who become
subject to representation by State Bargaining Unit 2 on or after July
1, 2006.
(4) State employees on an approved leave of absence who return to
active employment on or after July 1, 2006.
SEC. 13. Section 20037.7 of the Government Code is amended to
read:
20037.7. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 1, 3, 4, 11, 14,
15, 17, 20, or 21, means the highest average annual compensation
earnable by the member during any consecutive 36-month period
preceding the effective date of his or her retirement or the date of
his or her last separation from state service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21.
(c) This section does not apply to:
(1) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 1, 3, 4, 11, 14,
15, 17, 20, or 21 on or after January 1, 2007.
(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 14. Section 20037.8 of the Government Code is amended to
read:
20037.8. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 12 or 13, means the
highest average annual compensation earnable by the member during
any consecutive 36-month period preceding the effective date of his
or her retirement or the date of his or her last separation from
state service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 12 or 13.
(c) This section does not apply to:
(1) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 12 or 13 on or
after January 1, 2007.
(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 15. Section 20037.9 of the Government Code is amended to
read:
20037.9. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 16 or 19, means the
highest average annual compensation earnable by the member during
any consecutive 36-month period preceding the effective date of his
or her retirement or the date of his or her last separation from
state service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 16 or 19.
(c) This section does not apply to:
(1) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 16 or 19 on or
after January 1, 2007.
(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 16. Section 20037.10 of the Government Code is amended to
read:
20037.10. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 7, means the
highest average annual compensation earnable by the member during any
consecutive 36-month period immediately preceding the effective date
of his or her retirement or the date of his or her last separation
from state service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 7.
(c) This section does not apply to:
(1) Service credit accrued while classified as a state peace
officer/firefighter while a member of State Bargaining Unit 7.
(2) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(3) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(4) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 7 on or after
January 1, 2007.
(5) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 17. Section 20037.11 of the Government Code is amended to
read:
20037.11. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 10, means the
highest average annual compensation earnable by the member during any
consecutive 36-month period preceding the effective date of his or
her retirement or the date of his or her last separation from state
service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 10.
(c) This section does not apply to:
(1) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 10 on or after
January 1, 2007.
(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 18. Section 20037.12 of the Government Code is amended to
read:
20037.12. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after January 1,
2007, and is represented by State Bargaining Unit 18, means the
highest average annual compensation earnable by the member during any
consecutive 36-month period preceding the effective date of his or
her retirement or the date of his or her last separation from state
service if earlier.
(b) This section applies to service credit accrued
while a member of State Bargaining Unit 18.
(c) This section does not apply to:
(1) Former state employees previously employed before January 1,
2007, who return to state employment on or after January 1, 2007.
(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 18 on or after
January 1, 2007.
(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or after
January 1, 2007.
SEC. 19. Section 20037.13 of the Government Code is amended to
read:
20037.13. (a) Notwithstanding Sections 20035 and 20037, for the
purposes of determining any pension or benefit with respect to
benefits based on service with the state, "final compensation" means
the highest annual compensation that was earnable by the state member
during any consecutive 36-month period of employment preceding the
effective date of his or her retirement or the date of his or her
last separation from state service if earlier.
(b) This section shall only apply to a member appointed to a
career executive assignment, as defined in Section 18546, who at the
time of appointment meets one or more of the following criteria:
(1) He or she previously had, but does not currently have,
permanent status in the civil service.
(2) He or she is a person described in Section 18990 who was not,
within the past 12 months, employed by the Legislature for two or
more consecutive years.
(3) He or she is a person described in Section 18992 who was not,
within the past 12 months, holding a nonelected exempt position in
the executive branch.
(c) A state entity that employs a person described in subdivision
(b) in a career executive assignment shall notify the Controller of
this person's employment status and the Controller shall forward this
information to the system.
SEC. 20. Section 20037.14 of the Government Code, as amended by
Section 127 of Chapter 296 of the Statutes of 2011, is repealed.
SEC. 21. Section 20037.14 of the Government Code, as added by
Section 11 of Chapter 163 of the Statutes of 2010, is amended to
read:
20037.14. (a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the first
time and becomes a state member of the system on or after October 31,
2010, and is represented by State Bargaining Unit 5 or 8, means the
highest average annual compensation earnable by the member during any
consecutive 36-month period preceding the effective date of his or
her retirement or the date of his or her last separation from state
service if earlier.
(b) This section applies to service credit accrued while a member
of State Bargaining Unit 5 or 8 or in a class related to State
Bargaining Unit 5 or 8 as an employee who is excepted from the
definition of "state employee" in subdivision (c) of Section 3513, or
an officer or employee of the executive branch of state government
who is not a member of the civil service.
(c) This section does not apply to:
(1) Former state employees previously employed before October 31,
2010, who return to state employment on or after October 31, 2010.
(2) State employees hired prior to October 31, 2010, who were
subject to Section 20281.5 during the first 24 months of state
employment.
(3) State employees hired prior to October 31, 2010, who become
subject to representation by State Bargaining Unit 5 or 8 on or after
October 31, 2010.
(4) State employees on an approved leave of absence employed
before October 31, 2010, who return to active employment on or after
October 31, 2010.
SEC. 22. Section 20037.15 of the Government Code is amended to
read:
20037.15. (a) Notwithstanding Sections 3517.8, 20035, and 20037,
final compensation for a person who is employed for the first time
and becomes a member of the system on or after January 15, 2011,
means the highest average annual compensation earnable by the member
during any consecutive 36-month period preceding the effective date
of his or her retirement or the date of his or her last separation
from state service if earlier.
(b) This section applies to the following:
(1) Service credit accrued while a member of State Bargaining Unit
6 or 9 or in a class related to State Bargaining Unit 6 or 9 as an
employee who is excepted from the definition of "state employee" in
subdivision (c) of Section 3513, or an officer or employee of the
executive branch of state government who is not a member of the civil
service.
(2) Service credit accrued while a peace officer/firefighter
member represented by State Bargaining Unit 7 or in a class related
to peace officer/firefighter members in State Bargaining Unit 7 as an
employee who is excepted from the definition of "state employee" in
subdivision (c) of Section 3513, or an officer or employee of the
executive branch of state government who is not a member of the civil
service.
(3) Service credit accrued as an employee who is excepted from the
definition of "state employee" in subdivision (c) of Section 3513,
or an officer or employee of the executive branch of state government
who is not a member of the civil service.
(4) Service credit accrued as an employee of the Legislature, the
judicial branch, or the California State University.
(c) This section does not apply to:
(1) Former employees previously employed before January 15, 2011,
who return to employment on or after January 15, 2011, and who were
previously subject to a 12-month average.
(2) State employees hired prior to January 15, 2011, who were
subject to Section 20281.5 during the first 24 months of state
employment, and who were previously subject to a 12-month average.
(3) State employees hired prior to January 15, 2011, who become
subject to representation by State Bargaining Unit 6, 7, or 9 on or
after January 15, 2011, and who were previously subject to a 12-month
average.
(4) Employees on an approved leave of absence employed before
January 15, 2011, who return to active employment on or after January
15, 2011, and who were previously subject to a 12-month average.
(d) If this section is in conflict with a memorandum of
understanding that is current and in effect on January 15, 2011, the
memorandum of understanding shall be controlling while it remains in
effect. Upon expiration of the memorandum of understanding that is in
effect and current on January 15, 2011, this section shall be
controlling and may not be superseded by a subsequent memorandum of
understanding.
SEC. 23. Section 20229 of the Government Code is amended to read:
20229. (a) The board, notwithstanding Section 10231.5, shall
provide the Legislature, the Governor, and the Chair of the
California Actuarial Advisory Panel, established pursuant to Section
7507.2, with an annual report that includes all of the following, as
these items apply to state employee retirement plans:
(1) (A) A description of the investment return assumption utilized
by the board when determining the contribution rates.
(B) A calculation of the contribution rates utilizing an
investment return assumption 2 percentage points above and 2
percentage points below the investment return assumption utilized by
the board.
(2) (A) A description of the amortization period for any unfunded
liabilities utilized by the board when determining the contribution
rates.
(B) A calculation of the contribution rates based on an
amortization period equal to the estimated average remaining service
periods of employees covered by the contributions.
(3) (A) A description of the discount rate utilized by the board
for reporting liabilities.
(B) A calculation of those liabilities based upon a discount rate
that is 2 percent below the long-term rate of return actually assumed
by the board.
(4) The market value of the assets controlled by the board and an
explanation of how the actuarial value assigned to those assets
differs from the market value of those assets.
(b) Each legislative session, the Chair of the California
Actuarial Advisory Panel, or his or her designee, shall, during a
publicly noticed joint hearing of the Senate Committee on Public
Employment and Retirement and the Assembly Committee on Public
Employees, Retirement and Social Security, do all of the following
based on information received in the report required by subdivision
(a):
(1) Explain the role played by the investment return assumption
and amortization period in the calculation of the contribution rates.
(2) Describe the consequences for future state budgets should the
investment return assumption not be realized.
(3) Report whether the board's amortization period exceeds the
estimated average remaining service periods of employees covered by
the contributions.
(c) The report required by subdivision (a) shall be submitted in
compliance with Section 9795.
SEC. 24. Section 20537 of the Government Code is amended to read:
20537. The board may charge interest on the amount of any payment
due and unpaid by a contracting agency until payment is received.
Interest shall be charged at the greater of the annual return on the
system's investments for the year prior to the year in which payments
are not timely made or a simple annual rate of 10 percent. The
interest shall be deemed interest earnings for the year in which the
late payment is received.
SEC. 25. Section 20572 of the Government Code is amended to read:
20572. (a) If a contracting agency fails for 30 days after demand
by the board to pay in full any installment of contributions
required by its contract, or fails for three months after demand
therefor by the board to file any information required in the
administration of this system with respect to that contracting agency'
s employees, or if the board determines that the contracting agency
is no longer in existence, the board may terminate that contract by
resolution adopted by a majority vote of its members effective 60
days after notice of its adoption has been mailed by registered mail
to the governing body of the contracting agency.
(b) In addition to the interest obligations set forth in Section
20537, if a contracting agency fails to pay in full any installment
of the contributions when due and the failure continues for a period
of three months, the contracting agency may be assessed a penalty of
10 percent of the total amount due and unpaid, including any accrued
and unpaid interest. The penalty may be assessed once during each
30-day period that the outstanding amount remains unpaid. In
addition, the contracting agency may be assessed the costs of
collection, including reasonable legal fees and litigation costs,
including, without limitation, legal fees and legal costs incurred in
bankruptcy, when necessary to collect any amounts due.
SEC. 26. Section 20577.5 of the Government Code is amended to
read:
20577.5. Notwithstanding Section 20577, the board may elect not
to impose a reduction, or to impose a lesser reduction, on a plan
that has been terminated pursuant to Section 20572 if (a) the board
has made all reasonable efforts to collect the amount necessary to
fully fund the liabilities of the plan and (b) the board finds that
not reducing the benefits, or imposing a lesser reduction, will not
impact the actuarial soundness of the terminated agency pool.
SEC. 27. Section 20578 of the Government Code is amended to read:
20578. (a) Except as provided in subdivision (b), on and after
January 1, 1991, the rights and benefits of a former employee of a
contracting agency which terminated on or before January 1, 1991, or
of his or her beneficiary, shall be the same as if the agency had
continued as a contracting agency. Any monthly allowance of that
individual, or of his or her beneficiary, that was reduced pursuant
to Section 20577 because the contracting agency failed to pay the
board the amount of the difference shall not be subject to continued
reduction on or after January 1, 1991. As of January 1, 1991,
benefits shall be paid at the level provided in the contract prior to
that reduction. However, if a former employee of a contracting
agency that terminated on or before January 1, 1991, becomes employed
by another covered employer after the date of termination, including
an employer subject to reciprocity, the benefits shall be calculated
by using the highest compensation earned by the individual.
In accordance with Section 20580, an individual who has withdrawn
his or her accumulated contributions from the terminated agency shall
not be permitted to redeposit any withdrawn contributions upon again
becoming a member of this system.
(b) If a contracting agency has not paid the system for any
deficit in funding for earned benefits, as determined pursuant to
Section 20577, members shall be entitled to the benefits to which
members of the plan were entitled 36 months prior to the date the
agency notified the board of its intention to terminate its contract
or 36 months prior to the date the board notified the agency of its
intent to terminate the contract, whichever is earlier. Entitlement
to earned benefits under this subdivision shall be subject to Section
20577.5.
SEC. 28. Section 20638 of the Government Code is amended to read:
20638. The highest annual average compensation during any
consecutive 12- or 36-month period of employment as a member of a
county retirement system shall be considered compensation earnable by
a member of this system for purposes of computing final compensation
for the member provided:
(a) (1) Entry into employment in which he or she became a member
in one system occurred on or after October 1, 1957, and within 90
days of discontinuance of employment as a member of the other system.
(2) This subdivision shall not deny the benefit of this section to
any person retiring after October 1, 1963, who entered membership
prior to October 1, 1957, if he or she entered the employment in
which he or she became a member within 90 days of termination of
employment in which he or she was a member of the other system, and
he or she became a member within seven months of entry into
employment, or, if an employee of a district as defined in Section
31468, became a member at the time the district was included in a
county retirement system.
(b) He or she retires concurrently under both systems and is
credited with the period of service under the county system at the
time of retirement.
SEC. 29. Section 20900 of the Government Code is amended to read:
20900. (a) Notwithstanding any other provision of this part, a
member employed on a part-time basis on and after January 1, 1976,
shall, for the period of part-time employment, receive the credit the
member would receive if he or she was employed on a full-time basis
and have his or her retirement allowance, as well as any other
benefits the member is entitled to under this part, based upon the
salary that he or she would have received if employed on a full-time
basis, if the member and his or her employer both elect to contribute
to the retirement fund the amount that would have been contributed
if the member was employed on a full-time basis. Prior to the
reduction of an employee's workload under this section, the district
personnel responsible for the administration of this program, in
conjunction with the administrative staff of the State Teachers'
Retirement System and this system, shall verify the eligibility of
the applicant for the reduced workload program. This section shall be
applicable only to a member who meets the following criteria:
(1) The member is one of the following:
(A) An academic employee of the California State University.
(B) A certificated employee of a school district.
(C) An academic employee of a community college district.
(2) The member meets the criteria provided in Sections 44922 and
87483 of the Education Code or Section 89516 of the Education Code.
(3) The member is not older than 70 years of age and is limited to
a period of five years of part-time status.
(b) The employer shall maintain the necessary records to
separately identify each employee receiving credit pursuant to this
section.
SEC. 30. Section 21499 of the Government Code is amended to read:
21499. (a) Notwithstanding Section 21498, when either an initial
payment of a preretirement or postretirement death allowance or a
preretirement or postretirement lump-sum benefit is payable in an
amount of ten dollars ($10) or more, it shall be authorized to the
Controller within 45 days of receipt by this system of all the
necessary information, including the return of warrants issued or any
overpayment outstanding after the date of the death of the
annuitant.
(b) If any payment is not made within that time limitation, the
payment shall also include interest at the default interest rate
established in Section 1 of Article XV of the California Constitution
for time following the expiration of that time limitation.
SEC. 31. Section 21626.5 of the Government Code is amended to
read:
21626.5. (a) For purposes of Section 21624, 21626, 21627, 21629,
or 21630, a surviving domestic partner shall be treated in the same
manner as a surviving spouse if either:
(1) The domestic partnership was registered for one year prior to
the member's service retirement date or at the disability retirement
date and continuously until the date of the member's death.
(2) The member retired prior to January 1, 2006, and both the
member and his or her domestic partner, who currently are in a
state-registered domestic partnership, sign an affidavit stating
that, at the time prescribed by the retirement system for married
spouses to qualify for survivor continuance, the member and the
domestic partner would have qualified to be registered as domestic
partners pursuant to Section 297 of the Family Code.
(b) For purposes of Section 21624, 21626, 21627, 21629, or 21630,
an individual who is the same gender as the member shall be treated
in the same manner as a surviving spouse if the following conditions
are satisfied:
(1) The individual entered into marriage with the member on or
after the date when individuals of the same gender were legally
allowed to enter into marriage and was married continuously until the
date of the member's death.
(2) Either of the following applies:
(A) The member retired prior to the date when individuals of the
same gender were legally allowed to enter into marriage, and both the
member and his or her spouse, who are currently married, sign an
affidavit stating that, at the time prescribed by the retirement
system for spouses to qualify for a survivor continuance, the member
and the individual would have qualified to be legally married had it
been legally possible for people of the same gender to marry.
(B) The individual originally qualified to become a surviving
spouse under subdivision (a).
SEC. 32. Section 22820 of the Government Code is amended to read:
22820. (a) Upon the death, on or after January 1, 2002, of a
firefighter employed by a county, city, city and county, district, or
other political subdivision of the state, a firefighter employed by
the Department of Forestry and Fire Protection, a firefighter
employed by the federal government who was a resident of this state
and whose regular duty assignment was to perform firefighting
services within this state, or a peace officer as defined in Section
830.1, 830.2, 830.3, 830.31, 830.32, 830.33, 830.34, 830.35, 830.36,
830.37, 830.38, 830.39, 830.4, 830.5, 830.55, or 830.6 of the Penal
Code, if the death occurred as a result of injury or disease arising
out of and in the course of his or her official duties, the surviving
spouse or other eligible family member of the deceased firefighter
or peace officer, if uninsured, is deemed to be an annuitant under
Section 22760 for purposes of enrollment. All eligible family members
of the deceased firefighter or peace officer who are uninsured may
enroll in a health benefit plan of the surviving spouse's choice.
However, an unmarried child of the surviving spouse is not eligible
to enroll in a health benefit plan under this section if the child
was not a family member under Section 22775 and regulations pertinent
thereto prior to the firefighter's or peace officer's date of death.
The employer of the deceased firefighter or peace officer shall
notify the board within 10 business days of the death of the employee
and any updated contact information of the surviving spouse or
family member if that spouse or family member may be eligible for
enrollment in a health benefit plan under this section.
(b) Upon notification, the board shall promptly determine
eligibility and shall forward to the eligible spouse or family member
the materials necessary for enrollment. In the event of a dispute
regarding whether a firefighter's or peace officer's death occurred
as a result of injury or disease arising out of and in the course of
his or her official duties as required under subdivision (a), that
dispute shall be determined by the Workers' Compensation Appeals
Board, subject to the same procedures and standards applicable to
hearings relating to claims for workers' compensation benefits. The
jurisdiction of the Workers' Compensation Appeals Board under this
section is limited to the sole issue of industrial causation and this
section does not authorize the Workers' Compensation Appeals Board
to award costs against the system.
(c) (1) Notwithstanding any other provision of law, and except as
otherwise provided in subdivision (d), the state shall pay the
employer contribution required for enrollment under this part for the
uninsured surviving spouse of a deceased firefighter or peace
officer for life, and the other uninsured eligible family members of
a deceased firefighter or peace officer, provided the family member
meets the eligibility requirements of Section 22775 and regulations
pertinent thereto.
(2) The contribution payable by the state for each uninsured
surviving spouse and other uninsured eligible family members shall be
adjusted annually and be equal to the amount specified in Section
22871.
(3) The state's contribution under this section shall commence on
the effective date of enrollment of the uninsured surviving spouse or
other uninsured eligible family members. The contribution of each
surviving spouse and eligible family member shall be the total cost
per month of the benefit coverage afforded him or her under the plan
less the portion contributed by the state pursuant to this section.
(d) The cancellation of coverage by an annuitant, as defined in
this section, shall be final without option to reenroll, unless
coverage is canceled because of enrollment in an insurance plan from
another source.
(e) For purposes of this section, "surviving spouse" means a
spouse who was married to the deceased firefighter or peace officer
on the deceased's date of death and either was married for a
continuous period of at least one year prior to the date of death or
was married to the deceased prior to the date the deceased
firefighter or peace officer sustained the injury or disease
resulting in death.
(f) For purposes of this section, "uninsured" means that the
surviving spouse is not enrolled in an employer-sponsored health plan
under which the employer contribution covers 100 percent of the cost
of health care premiums.
(g) The board has no duty to identify, locate, or notify any
surviving spouse or eligible family member who may be or may become
eligible for benefits under this section.
