Bill Text: CA SB885 | 2023-2024 | Regular Session | Introduced

California Senate Bill 885

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Public employees’ retirement.

Spectrum: Committee Bill

Status: (Passed) 2023-09-01 - Chaptered by Secretary of State. Chapter 159, Statutes of 2023. [SB885 Detail]

Download: California-2023-SB885-Introduced.html

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 885

Introduced by Committee on Labor, Public Employment and Retirement (Senators Cortese (Chair), Durazo, Laird, Smallwood-Cuevas, and Wilk)

March 14, 2023

An act to add Section 22338 to the Education Code, to amend Sections 20537, 75571, and 75571.5 of, and to add Section 21714.5 to, the Government Code, relating to public employees’ retirement, and making an appropriation therefor.

LEGISLATIVE COUNSEL'S DIGEST

SB 885, as introduced, Committee on Labor, Public Employment and Retirement. Public employees’ retirement.

(1) The Teachers’ Retirement Law establishes the State Teachers’ Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administrated by the Teachers’ Retirement Board. The Defined Benefit Program is funded by employer and employee contributions, as well as investment returns and state appropriations, which are deposited or credited to the Teachers’ Retirement Fund, which is continuously appropriated for the purposes of the system.

Existing law, the California Fair Employment and Housing Act (FEHA), prohibits an employer from engaging in various defined forms of discriminatory employment practices. Existing law makes it an unlawful employment practice under FEHA for an employer with 5 or more employees to, among other things, include on any application for employment any question that seeks the disclosure of an applicant’s conviction history, to inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer, and, when conducting a conviction history background check, to consider, distribute, or disseminate information related to specified prior arrests, diversions, and convictions. Existing law specifies situations an employer is authorized to request this information, including when hiring for a position for which a state or local agency is otherwise required by law to conduct a conviction history background check.

This bill would authorize STRS to collect specified criminal history information in the prescribed manner for employees of STRS and each applicant for employment while a tentative offer is still pending if the position includes specified duties.

(2) Existing law, the Public Employees’ Retirement Law (PERL), 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. Under PERL, benefits are funded by investment income and employer and employee contributions, which are deposited into the Public Employees’ Retirement Fund, a continuously appropriated trust fund administered by the system’s board of administration. 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 permits the board to charge interest on payments due and unpaid by a contracting agency 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%.

This bill would remove the board’s option to charge interest at the annual return on the system’s investments for the year prior in which payments are not timely made, and instead require the board to charge interest at a simple annual rate of 10%.

(3) Existing law creates the California Employers’ Pension Prefunding Trust Program and the California Employers’ Pension Prefunding Trust Fund to allow state and local public agency employers that provide a defined benefit pension plan to their employees to prefund their required pension contributions. Existing law authorizes an employer, upon terms and conditions set by the board, to elect to participate in the prefunding plan by entering into a contract with the board relative to the prefunding plan.

This bill would authorize an employer participating in the program, upon terms and conditions established by the board, to request a disbursement of funds from its account in the California Employers’ Pension Prefunding Trust Fund and transfer those funds directly into the Public Employees’ Retirement Fund. By authorizing the transfer of funds from the continuously appropriated California Employers’ Pension Prefunding Trust Fund to the continuously appropriated Public Employees’ Retirement Fund, this bill would make an appropriation.

(4) The Judges’ Retirement System II is administered by the board of PERS. Existing law permits a member of this retirement system to select from various optional settlements for the purpose of structuring their retirement benefits. Existing law, under optional settlement 1, provides for payment of a retirement allowance until death and the payment of any remaining contributions at death to their surviving spouse or estate.

Under an optional settlement 1 retirement, this bill would allow, if there is no surviving spouse, for the remaining contributions at death to be paid to a judge’s designated beneficiary.

This bill would also make other technical, nonsubstantive changes to these provisions.

Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: NO

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

SECTION 1.

Section 22338 is added to the Education Code, to read:

22338.

(a) For purposes of this section, the following definitions apply:

(1) “Department” means the Department of Justice, as described in Section 15000 of the Government Code.

(2) “FBI” means the Federal Bureau of Investigation.

(b) In addition to requesting state summary criminal history information pursuant to Section 11105 of the Penal Code and local agency criminal history information pursuant to Section 13300 of the Penal Code, the system may obtain national criminal history check information from the FBI.

(c) The system shall submit a request for national criminal history check information to the department in a manner specified by the department. Each employee of, and applicant for employment while a tentative offer is still pending with, the system shall electronically submit or cause to be electronically submitted fingerprint images and related information directly to the department. The department shall transmit those fingerprint images and related information received to the FBI for the purpose of obtaining national criminal history check information.

(d) Upon receipt of the national criminal history check information from the FBI, the department shall compile and disseminate a response to the system. If national criminal history check information has not been recorded, the department shall provide the system with a statement of that fact.

(e) The system shall request from the department subsequent disposition notification service, as described in Section 11105.2 of the Penal Code, for an employee of, or applicant for employment while a tentative offer is still pending with, the system. The department shall only provide subsequent disposition information to the system if the disposition resulted in a conviction.

(f) The system shall use the records and information received from the FBI pursuant to subdivisions (d) and (e) exclusively for the purposes of employment subject to Section 19572 of the Government Code and to screen applicants for employment while a tentative offer is still pending with the system.

(g) The department may charge a fee, payable by the system, sufficient to cover the reasonable administrative costs of processing requests pursuant to this section.

(h) (1) This section applies to current employees of the system as a condition of their employment as well as applicants who apply to become employees of the system while a tentative offer is still pending.

(2) The criminal history check authorized by this section is limited to those employees and applicants whose duties include, or would include, any of the following:

(A) Access to confidential or sensitive information and data maintained by the system or submitted to the system by its members and others.

(B) Executive, managerial, supervisorial, career executive assignment, specialist, and exempt classifications.

(D) Actuarial, investment, audit, accounting, and financial services.

(E) A position that requires driving as an essential function of the position.

SEC. 2.

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. 3.

Section 21714.5 is added to the Government Code, to read:

21714.5.

Pursuant to terms and conditions established by the board, an employer may request a disbursement of funds from its account in the California Employers’ Pension Prefunding Trust Fund, as set forth in Section 21711, and transfer those funds directly into the Public Employees’ Retirement Fund, as set forth in Section 20170. The board shall certify to the Controller the total amount to be transferred and the Controller shall transfer that amount from the California Employers’ Pension Prefunding Trust Fund to the Public Employees’ Retirement Fund

SEC. 4.

Section 75571 of the Government Code is amended to read:

75571.

This section shall apply to any judge who retires on or before December 31, 2017.

(a) Optional settlement one consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and if ~~he or she dies~~ they die before ~~he or she receives~~ they receive the amount of ~~his or her~~ their accumulated contributions at retirement, to have the balance at death paid to ~~his or her~~ their surviving ~~spouse or~~ spouse, or if none, to their designated beneficiary, or if none, to their estate.

(b) (1) Optional settlement two consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and thereafter to ~~his or her~~ their surviving spouse for life.

(2) If the judge’s spouse predeceases the judge and the judge elected this optional settlement to be effective on or after January 1, 2002, the judge’s allowance shall be adjusted effective the first day of the month following the death of the spouse to reflect the benefit that would have been paid had the judge not elected an optional settlement.

(3) If the marriage of a retired judge is dissolved or a legal separation is filed, and the judgment dividing the community property between the judge and the surviving spouse awards the total interest in this system to the retired judge, or the marriage is annulled and confirmed by a court, and the retired judge elected this optional settlement to be effective on or after January 1, 2002, the retired judge’s allowance shall be adjusted effective the first day of the month following the filing of the judgment with the board to reflect the benefit that would have been paid had the judge not elected an optional settlement.

(c) (1) Optional settlement three consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death, and thereafter to have one-half of ~~his or her~~ their retirement allowance paid to ~~his or her~~ their surviving spouse for life.

(d) Optional settlement four consists of other benefits that are the actuarial equivalent of ~~his or her~~ their retirement allowance, that ~~he or she~~ they may select subject to the approval of the board.

SEC. 5.

Section 75571.5 of the Government Code is amended to read:

75571.5.

This section shall apply to any judge who retires on or after January 1, 2018.

(a) The unmodified allowance consists of the right to have the maximum retirement allowance paid to the judge for ~~his or her~~ their life alone. A continuing allowance to the surviving spouse, other than the benefit provided in subdivision (b) of Section 75590, is not provided and there is not a return of unused accumulated contributions after the death of the judge.

(b) The Return of Remaining Contributions Option 1 consists of the right to have a retirement allowance paid to the judge for ~~his or her~~ their life alone and if ~~he or she dies~~ they die before ~~he or she receives~~ they receive in annuity payments the amount of ~~his or her~~ their accumulated contributions at retirement, to have the balance at death paid to ~~his or her~~ their surviving spouse, or if none, to ~~his or her~~ their designated beneficiary, or if none, to their estate.

(c) (1) The 100 Percent Beneficiary Option 2 consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and thereafter to have the same monthly allowance paid to ~~his or her~~ their surviving spouse for life; provided that with respect to a judge subject to subdivision (b) of Section 75590, the surviving spouse shall receive that portion of the judge’s monthly allowance that exceeds the amount of the allowance deemed payable pursuant to subdivision (b) of Section 75590.

(2) Upon the death of both the judge and the surviving spouse, any remaining balance of the judge’s accumulated contributions at retirement not used to fund the allowances paid to the judge and the surviving spouse pursuant to this subdivision will be paid in a lump sum to the estate of the deceased.

(d) (1) The 100 Percent Beneficiary Option 2 with Benefit Allowance Increase consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and thereafter to have the same monthly allowance paid to ~~his or her~~ their surviving spouse for life; provided that with respect to a judge subject to subdivision (b) of Section 75590, the surviving spouse shall receive that portion of the judge’s monthly allowance that exceeds the amount of the allowance deemed payable pursuant to subdivision (b) of Section 75590.

(2) If the judge’s spouse predeceases the judge and the judge elected this optional settlement, the judge’s allowance shall be adjusted effective the first day of the month following the death of the spouse to reflect the benefit that would have been paid had the judge not elected an optional settlement.

(3) If the marriage of a retired judge is dissolved or a legal separation filed, and the judgment dividing the community property between the judge and the surviving spouse awards the total interest in this system to the retired judge, or the marriage is annulled and confirmed by a court, the retired judge’s allowance shall be adjusted effective the first day of the month following the filing of the judgment with the board to reflect the benefit that would have been paid had the judge not elected an optional settlement.

(e) (1) The 50 Percent Beneficiary Option 3 consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and thereafter to have one-half of the monthly allowance paid to ~~his or her~~ their surviving spouse for life; provided that with respect to a judge subject to subdivision (b) of Section 75590, the surviving spouse shall receive one-half of that portion of the judge’s monthly allowance that exceeds the amount of the allowance deemed payable pursuant to subdivision (b) of Section 75590.

(f) (1) The 50 Percent Beneficiary Option 3 with Benefit Allowance Increase consists of the right to have a retirement allowance paid to the judge until ~~his or her~~ their death and thereafter to have one-half of the monthly allowance paid to ~~his or her~~ their surviving spouse for life; provided that with respect to a judge subject to subdivision (b) of Section 75590, the surviving spouse shall receive one-half of that portion of the judge’s monthly allowance that exceeds the amount of the allowance deemed payable pursuant to subdivision (b) of Section 75590.

(g) The Flexible Beneficiary Option 4 consists of the right to have a retirement allowance paid to a judge until ~~his or her~~ their death, and thereafter to have a monthly allowance paid to ~~his or her~~ their surviving spouse for life. Subject to Section 75570.5, the judge may select the monthly allowance payable to the surviving spouse from the options below:

(1) Specific Dollar Amount to a Surviving Spouse. The judge may specify that upon ~~his or her~~ their death after retirement, a monthly allowance in an amount determined by the judge be paid to ~~his or her~~ their surviving spouse for life.

(2) Specific Percentage to a Surviving Spouse. The judge may specify that upon ~~his or her~~ their death after retirement, a monthly allowance in an amount equivalent to a specified percentage of the judge’s allowance be paid to ~~his or her~~ their surviving spouse for life.