BILL NUMBER: AB 616 CHAPTERED 10/13/01 CHAPTER 782 FILED WITH SECRETARY OF STATE OCTOBER 13, 2001 APPROVED BY GOVERNOR OCTOBER 12, 2001 PASSED THE SENATE SEPTEMBER 13, 2001 PASSED THE ASSEMBLY SEPTEMBER 13, 2001 AMENDED IN SENATE SEPTEMBER 7, 2001 AMENDED IN SENATE JULY 2, 2001 AMENDED IN SENATE JUNE 21, 2001 INTRODUCED BY Assembly Member Calderon FEBRUARY 22, 2001 An act to amend Sections 20677 and 31621.11 of, and to add Sections 21354.3, 21354.4, 21354.5, 31621.8, 31676.17, 31676.18, 31676.19, and 31808.9 to, the Government Code, relating to public employees' retirement, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 616, Calderon. Local government employees' retirement: benefits. Under existing law, contracting agencies of the Public Employees' Retirement System may elect to provide service retirement benefits for local miscellaneous members, as defined, based on either a 2% at age 60 formula or a 2% at age 55 formula, as specified. Under existing law, the contribution rate for those members is 7% of compensation. Member contributions are deposited in the Public Employees' Retirement Fund, a continuously appropriated special fund. This bill would authorize contracting agencies to provide service retirement benefits to local miscellaneous members based on a 3% at age 60 formula, a 2.5% at age 55 formula, or a 2.7% at age 55 formula, as specified, and to increase member contributions under those benefit formulae to 8% of compensation, thereby making an appropriation. Existing law, the County Employees Retirement Law of 1937, authorizes adoption of various formulae for calculation of service retirement allowances and adoption of various corresponding contribution rates or a single rate of contributions, as specified. This bill would authorize counties or districts, subject to approval by the county board of supervisors, to provide service retirement allowances for general members based on a 3% at age 60 formula, a 2.5% at age 55 formula, or a 2.7% at age 55 formula, as specified, and to adopt corresponding contribution rates or to apply the single rate of contributions, as specified. The bill also would make a related technical change. The bill would incorporate additional changes to Section 20677 of the Government Code proposed by AB 118, to take effect if this bill and that bill are enacted and become effective on or before January 1, 2002, and this bill is enacted last. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 20677 of the Government Code is amended to read: 20677. (a) (1) The normal rate of contribution for a state miscellaneous member whose service is not included in the federal system shall be 6 percent of the compensation in excess of three hundred seventeen dollars ($317) per month paid that member for service rendered on and after July 1, 1976. (2) The normal rate of contribution for a school member or a local miscellaneous member shall be 7 percent of the compensation paid that member for service rendered on and after June 21, 1971. (3) Notwithstanding paragraph (2), the normal rate of contribution for a local miscellaneous member subject to Section 21354.3, 21354.4, or 21354.5 shall be 8 percent of the compensation paid that member for service rendered on and after the date the member's contracting agency elects to be subject to that section. (4) The normal rate of contribution for a state miscellaneous or industrial member, who has elected to be subject to Section 21353.5 and whose service is not included in the federal system, shall be 6 percent of the member's compensation. (5) The normal rate of contribution as established under this subdivision for a member whose service is included in the federal system, and whose service retirement allowance is reduced under Section 21353, 21353.5, 21354, 21354.1, 21354.3, 21354.4, or 21354.5 because of that inclusion, shall be reduced by one-third as applied to compensation not exceeding four hundred dollars ($400) per month for service after the date of execution of the agreement including service in the federal system and prior to termination of the agreement with respect to the coverage group to which he or she belongs. Notwithstanding the foregoing, effective January 1, 2001, the normal rate of contribution for school members whose service is included in the federal system shall not be reduced pursuant to this paragraph as applied to compensation earned on or after that date. (b) (1) The normal rate of contribution for a state miscellaneous member whose service has been included in the federal system shall be 5 percent of compensation in excess of five hundred thirteen dollars ($513) per month paid that member for service rendered on and after July 1, 1976. (2) The normal rate of contribution for a state miscellaneous or industrial member, who has elected to be subject to Section 21353.5 and whose service has been included in the federal system, shall be 5 percent of compensation, subject to the reduction specified in paragraph (5) of subdivision (a). (c) The normal rate of contribution for a state miscellaneous or state industrial member who is subject to Section 21076 or Section 21077 shall be 0 percent. (d) A member who elected to become subject to Section 21353 solely for service rendered on or after the effective date of the election, as authorized by subdivision (c) of Section 21070 during the period between November 1, 1988, and October 31, 1989, is not required to make the contributions specified in Section 21073. (e) A member who elects to become subject to Section 21353 or 21354.1, as applicable, shall contribute at the rate specified in paragraph (1) of subdivision (a) or paragraph (1) of subdivision (b), as determined by the member's status with the federal system, and the rate shall be applied from the first of the month following the date of the election. A member who makes the election shall also contribute for service prior to the date the contribution rate was applied, in the manner specified in Section 21073 or 21073.1, as applicable. SEC. 1.5. Section 20677 of the Government Code is amended to read: 20677. (a) (1) The normal rate of contribution for a state miscellaneous member whose service is not included in the federal system shall be 6 percent of the compensation in excess of three hundred seventeen dollars ($317) per month paid that member for service rendered on and after July 1, 1976. (2) The normal rate of contribution for a local miscellaneous member shall be 7 percent of the compensation paid that member for service rendered on and after June 21, 1971. (3) The normal rate of contribution for a school member shall be 5 percent of the compensation paid that member for service rendered on and after January 1, 2002. (4) Notwithstanding paragraph (2), the normal rate of contribution for a local miscellaneous member subject to Section 21354.3, 21354.4, or 21354.5 shall be 8 percent of the compensation paid that member for service rendered on and after the date the member's contracting agency elects to be subject to that section. (5) The normal rate of contribution for a state miscellaneous or industrial member, who has elected to be subject to Section 21353.5 and whose service is not included in the federal system, shall be 6 percent of the member's compensation. (6) The normal rate of contribution as established under this subdivision for a member whose service is included in the federal system, and whose service retirement allowance is reduced under Section 21353, 21353.5, 21354, 21354.1, 21354.3, 21354.4, or 21354.5 because of that inclusion, shall be reduced by one-third as applied to compensation not exceeding four hundred dollars ($400) per month for service after the date of execution of the agreement including service in the federal system and prior to termination of the agreement with respect to the coverage group to which he or she belongs. Notwithstanding the foregoing, effective January 1, 2001, the normal rate of contribution for school members whose service is included in the federal system shall not be reduced pursuant to this paragraph as applied to compensation earned on or after that date. (b) (1) The normal rate of contribution for a state miscellaneous member whose service has been included in the federal system shall be 5 percent of compensation in excess of five hundred thirteen dollars ($513) per month paid that member for service rendered on and after July 1, 1976. (2) The normal rate of contribution for a state miscellaneous or industrial member, who has elected to be subject to Section 21353.5 and whose service has been included in the federal system, shall be 5 percent of compensation, subject to the reduction specified in paragraph (6) of subdivision (a). (c) The normal rate of contribution for a state miscellaneous or state industrial member who is subject to Section 21076 or Section 21077 shall be 0 percent. (d) A member who elected to become subject to Section 21353 solely for service rendered on or after the effective date of the election, as authorized by subdivision (c) of Section 21070 during the period between November 1, 1988, and October 31, 1989, is not required to make the contributions specified in Section 21073. (e) A member who elects to become subject to Section 21353 or 21354.1, as applicable, shall contribute at the rate specified in paragraph (1) of subdivision (a) or paragraph (1) of subdivision (b), as determined by the member's status with the federal system, and the rate shall be applied from the first of the month following the date of the election. A member who makes the election shall also contribute for service prior to the date the contribution rate was applied, in the manner specified in Section 21073 or 21073.1, as applicable. SEC. 2. Section 21354.3 is added to the Government Code, to read: 21354.3. (a) The combined current and prior service pensions for a local miscellaneous member is a pension derived from the contributions of the employer sufficient, when added to the service retirement annuity that is derived from the accumulated normal contributions of the member at the date of retirement, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table, multiplied by the number of years of current and prior service except service in a category of membership other than that of local miscellaneous member with which the member is entitled to be credited at retirement: Age at Retirement Fraction 50 ................................... 1.0000 50 1/4 ............................... 1.0125 50 1/2 ............................... 1.0250 50 3/4 ............................... 1.0375 51 ................................... 1.0500 51 1/4 ............................... 1.0625 51 1/2 ............................... 1.0750 51 3/4 ............................... 1.0875 52 ................................... 1.1000 52 1/4 ............................... 1.1125 52 1/2 ............................... 1.1250 52 3/4 ............................... 1.1375 53 ................................... 1.1500 53 1/4 ............................... 1.1625 53 1/2 ............................... 1.1750 53 3/4 ............................... 1.1875 54 ................................... 1.2000 54 1/4 ............................... 1.2125 54 1/2 ............................... 1.2250 54 3/4 ............................... 1.2375 55 ................................... 1.2500 55 1/4 ............................... 1.2625 55 1/2 ............................... 1.2750 55 3/4 ............................... 1.2875 56 ................................... 1.3000 56 1/4 ............................... 1.3125 56 1/2 ............................... 1.3250 56 3/4 ............................... 1.3375 57 ................................... 1.3500 57 1/4 ............................... 1.3625 57 1/2 ............................... 1.3750 57 3/4 ............................... 1.3875 58 ................................... 1.4000 58 1/4 ............................... 1.4125 58 1/2 ............................... 1.4250 58 3/4 ............................... 1.4375 59 ................................... 1.4500 59 1/4 ............................... 1.4625 59 1/2 ............................... 1.4750 59 3/4 ............................... 1.4875 60 and over .......................... 1.5000 (b) The fraction specified in the above table shall be reduced by one-third as applied to that part of final compensation that does not exceed four hundred dollars ($400) per month for all services of a member any of whose service has been included in the federal system. This reduction shall not apply to a member employed by a contracting agency that enters into a contract after July 1, 1971, and who elects not to be subject to this paragraph or with respect to service rendered after the termination of coverage under the federal system with respect to the coverage group to which the member belongs. (c) This section shall supersede Sections 21353 and 21354 with respect to any local miscellaneous member who is employed by a contracting agency on or after the date this section becomes applicable to the contracting agency. (d) This section shall not apply to a contracting agency nor its employees until the contracting agency elects to make all local miscellaneous members subject to it by amendment to its contract made in the manner prescribed for approval of contracts or in the case of a new contract, by express provision of the contract. The operative date of this section with respect to a local miscellaneous member shall be the effective date of the amendment to his or her employer's contract electing to be subject to this section. SEC. 3. Section 21354.4 is added to the Government Code, to read: 21354.4. (a) The combined current and prior service pensions for a local miscellaneous member is a pension derived from the contributions of the employer sufficient, when added to the service retirement annuity that is derived from the accumulated normal contributions of the member at the date of retirement, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table, multiplied by the number of years of current and prior service except service in a category of membership other than that of local miscellaneous member with which the member is entitled to be credited at retirement: Age at Retirement Fraction 50 ................................... 1.0000 50 1/4 ............................... 1.0125 50 1/2 ............................... 1.0250 50 3/4 ............................... 1.0375 51 ................................... 1.0500 51 1/4 ............................... 1.0625 51 1/2 ............................... 1.0750 51 3/4 ............................... 1.0875 52 ................................... 1.1000 52 1/4 ............................... 1.1125 52 1/2 ............................... 1.1250 52 3/4 ............................... 1.1375 53 ................................... 1.1500 53 1/4 ............................... 1.1625 53 1/2 ............................... 1.1750 53 3/4 ............................... 1.1875 54 ................................... 1.2000 54 1/4 ............................... 1.2125 54 1/2 ............................... 1.2250 54 3/4 ............................... 1.2375 55 and over .......................... 1.2500 (b) The fraction specified in the above table shall be reduced by one-third as applied to that part of final compensation that does not exceed four hundred dollars ($400) per month for all service of a member any of whose service has been included in the federal system. This reduction shall not apply to a member employed by a contracting agency that enters into a contract after July 1, 1971, and who elects not to be subject to this paragraph or with respect to service rendered after the termination of coverage under the federal system with respect to the coverage group to which the member belongs. (c) This section shall supersede Sections 21353 and 21354 with respect to any local miscellaneous member who is employed by a contracting agency on or after the date this section becomes applicable to the contracting agency. (d) This section shall not apply to a contracting agency nor its employees until the contracting agency elects to make all local miscellaneous members subject to it by amendment to its contract made in the manner prescribed for approval of contracts or in the case of a new contract, by express provision of the contract. The operative date of this section with respect to a local miscellaneous member shall be the effective date of the amendment to his or her employer's contract electing to be subject to this section. SEC. 4. Section 21354.5 is added to the Government Code, to read: 21354.5. (a) The combined current and prior service pensions for a local miscellaneous member is a pension derived from the contributions of the employer sufficient, when added to the service retirement annuity that is derived from the accumulated normal contributions of the member at the date of retirement, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table, multiplied by the number of years of current and prior service, except service in a category of membership other than that of a local miscellaneous member, with which the member is entitled to be credited at retirement: Age of Retirement Fraction 50 ............................................. 1.0000 50 1/4 ......................................... 1.0175 50 1/2 ......................................... 1.0350 50 3/4 ......................................... 1.0525 51 ............................................. 1.0700 51 1/4 ......................................... 1.0875 51 1/2 ......................................... 1.1050 51 3/4 ......................................... 1.1225 52 ............................................. 1.1400 52 1/4 ......................................... 1.1575 52 1/2 ......................................... 1.1750 52 3/4 ......................................... 1.1925 53 ............................................. 1.2100 53 1/4 ......................................... 1.2275 53 1/2 ......................................... 1.2450 53 3/4 ......................................... 1.2625 54 ............................................. 1.2800 54 1/4 ......................................... 1.2975 54 1/2 ......................................... 1.3150 54 3/4 ......................................... 1.3325 55 and over .................................... 1.3500 (b) The fractions specified in the above table shall be reduced by one-third as applied to that part of final compensation that does not exceed four hundred dollars ($400) per month for all service of a member any of whose service has been included in the federal system. This reduction shall not apply to a member employed by a contracting agency that enters into a contract after July 1, 1971, and elects not to be subject to this paragraph or with respect to service rendered after the termination of coverage under the federal system with respect to the coverage group to which the member belongs. (c) This section shall supersede Sections 21353 and 21354 with respect to any miscellaneous member who is employed by a contracting agency on or after the date this section becomes applicable to the contracting agency. (d) This section shall not apply to a contracting agency nor its employees until the contracting agency elects to make all local miscellaneous members subject to it by amendment to its contract made in the manner prescribed for approval of contracts or in the case of a new contract, by express provision of the contract. The operative date of this section with respect to a local miscellaneous member shall be the effective date of the amendment to his or her employer's contract electing to be subject to this section. SEC. 5. Section 31621.11 of the Government Code is amended to read: 31621.11. Instead of the normal rates of contribution required by Section 31621, 31621.1, 31621.2, or 31621.8 the board may, upon actuarial advice, establish a single rate of contributions applicable to all persons becoming members after this section is made operative in that county by the board. However, this rate shall be such as to provide the average annuity described in Section 31621, 31621.1, 31621.2, or 31621.8. SEC. 6. Section 31621.8 is added to the Government Code, to read: 31621.8. In counties adopting Section 31676.17, 31676.18, or 31676.19, the normal rates of contribution, except for members covered by Article 6.8 (commencing with Section 31639), shall be rates that provide an average annuity at the age of 55 years equal to one one-hundredth of the final compensation of members not covered by Article 6.8, according to the tables adopted by the board of supervisors, for each year of service rendered after entering the system. SEC. 7. Section 31676.17 is added to the Government Code, to read: 31676.17. This section may be made applicable in any county on the first day of the month after the board of supervisors of the county adopts, by majority vote, a resolution providing that this section shall become applicable in the county. Notwithstanding any other provisions of this chapter, the current service pension or the current service pension combined with the prior service pension is an additional pension for members purchased by the contributions of the county or district sufficient, when added to the service retirement annuity, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table multiplied by the number of years of current service or years of current and prior service with which the member is entitled to be credited at retirement, but in no event shall the total retirement allowance exceed the member's final compensation. Age at Retirement Fraction 50 ................................... 1.0000 50 1/4 ............................... 1.0125 50 1/2 ............................... 1.0250 50 3/4 ............................... 1.0375 51 ................................... 1.0500 51 1/4 ............................... 1.0625 51 1/2 ............................... 1.0750 51 3/4 ............................... 1.0875 52 ................................... 1.1000 52 1/4 ............................... 1.1125 52 1/2 ............................... 1.1250 52 3/4 ............................... 1.1375 53 ................................... 1.1500 53 1/4 ............................... 1.1625 53 1/2 ............................... 1.1750 53 3/4 ............................... 1.1875 54 ................................... 1.2000 54 1/4 ............................... 1.2125 54 1/2 ............................... 1.2250 54 3/4 ............................... 1.2375 55 ................................... 1.2500 55 1/4 ............................... 1.2625 55 1/2 ............................... 1.2750 55 3/4 ............................... 1.2875 56 ................................... 1.3000 56 1/4 ............................... 1.3125 56 1/2 ............................... 1.3250 56 3/4 ............................... 1.3375 57 ................................... 1.3500 57 1/4 ............................... 1.3625 57 1/2 ............................... 1.3750 57 3/4 ............................... 1.3875 58 ................................... 1.4000 58 1/4 ............................... 1.4125 58 1/2 ............................... 1.4250 58 3/4 ............................... 1.4375 59 ................................... 1.4500 59 1/4 ............................... 1.4625 59 1/2 ............................... 1.4750 59 3/4 ............................... 1.4875 60 and over .......................... 1.5000 In any county operating under this section any limitations in any provisions of this chapter upon the amount of compensation used for computing rates of contributions shall be disregarded. Wherever in this chapter reference is made to survivorship benefits and rights under Section 31676.1, the same shall apply to this section. This section shall apply to members employed by the county on or after the date this section becomes in the county. SEC. 8. Section 31676.18 is added to the Government Code, to read: 31676.18. This section may be made applicable in any county on the first day of the month after the board of supervisors of the county adopts, by majority vote, a resolution providing that this section shall become applicable in the county. Notwithstanding any other provisions of this chapter, the current service pension or the current service pension combined with the prior service pension is an additional pension for members purchased by the contributions of the county or district sufficient, when added to the service retirement annuity, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table multiplied by the number of years of current service or years of current and prior service with which the member is entitled to be credited at retirement, but in no event shall the total retirement allowance exceed the member's final compensation. Age at Retirement Fraction 50 ................................... 1.0000 50 1/4 ............................... 1.0125 50 1/2 ............................... 1.0250 50 3/4 ............................... 1.0375 51 ................................... 1.0500 51 1/4 ............................... 1.0625 51 1/2 ............................... 1.0750 51 3/4 ............................... 1.0875 52 ................................... 1.1000 52 1/4 ............................... 1.1125 52 1/2 ............................... 1.1250 52 3/4 ............................... 1.1375 53 ................................... 1.1500 53 1/4 ............................... 1.1625 53 1/2 ............................... 1.1750 53 3/4 ............................... 1.1875 54 ................................... 1.2000 54 1/4 ............................... 1.2125 54 1/2 ............................... 1.2250 54 3/4 ............................... 1.2375 55 and over .......................... 1.2500 In any county operating under this section, any limitations in any provisions of this chapter upon the amount of compensation used for computing rates of contributions shall be disregarded. Wherever in this chapter reference is made to survivorship benefits and rights under Section 31676.1, the same shall apply to this section. This section shall apply to members employed by the county on or after the date this section becomes operative in the county. SEC. 9. Section 31676.19 is added to the Government Code, to read: 31676.19. This section may be made applicable in any county on the first day of the month after the board of supervisors of the county adopts, by majority vote, a resolution providing that this section shall become applicable in the county. Notwithstanding any other provisions of this chapter the current service pension or the current service pension combined with the prior service pension is an additional pension for members purchased by the contributions of the county or district sufficient, when added to the service retirement annuity, to equal the fraction of one-fiftieth of the member's final compensation set forth opposite the member's age at retirement, taken to the preceding completed quarter year, in the following table multiplied by the number of years of current service or years of current and prior service with which the member is entitled to be credited at retirement, but in no event shall the total retirement allowance exceed the member's final compensation. Age of Retirement Fraction 50 ............................................. 1.0000 50 1/4 ......................................... 1.0175 50 1/2 ......................................... 1.0350 50 3/4 ......................................... 1.0525 51 ............................................. 1.0700 51 1/4 ......................................... 1.0875 51 1/2 ......................................... 1.1050 51 3/4 ......................................... 1.1225 52 ............................................. 1.1400 52 1/4 ......................................... 1.1575 52 1/2 ......................................... 1.1750 52 3/4 ......................................... 1.1925 53 ............................................. 1.2100 53 1/4 ......................................... 1.2275 53 1/2 ......................................... 1.2450 53 3/4 ......................................... 1.2625 54 ............................................. 1.2800 54 1/4 ......................................... 1.2975 54 1/2 ......................................... 1.3150 54 3/4 ......................................... 1.3325 55 and over .................................... 1.3500 In any county operating under this section any limitations in any provisions of this chapter upon the amount of compensation used for computing rates of contributions shall be disregarded. Wherever in this chapter reference is made to survivorship benefits and rights under Section 31676.1, the same shall apply to this section. This section shall apply to members employed by the county on or after the date this section becomes operative in the county. SEC. 10. Section 31808.9 is added to the Government Code, to read: 31808.9. In any county or district, subject to Section 31676.17, 31676.18, or 31676.19, that adopts or has already adopted the provisions of this article, the retirement allowance of members subject to Section 31676.17, 31676.18, or 31676.19 shall be computed according to either the provisions of subdivision (a) or subdivision (b) of this section as selected by the board of supervisors. (a) The retirement allowance for service rendered prior to the effective date of this article as specified in the resolution mentioned in Section 31800 shall be computed in accordance with the provisions of Section 31676.17, 31676.18, or 31676.19, as applicable. The retirement allowance of any member with respect to service performed after the effective date of this article as specified in the resolution mentioned in Section 31800 shall equal the total of the following: (1) The fraction of one seventy-fifth of the first three hundred fifty dollars ($350) monthly of the member's final compensation set forth in the table appearing in Section 31676.17, 31676.18, or 31676.19, as applicable, in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service as provided therein. (2) The fraction of one-fiftieth of any remaining portion of the member's final compensation set forth in the table appearing in Section 31676.17, 31676.18, or 31676.19, as applicable, in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service. (b) The retirement allowance shall be computed according to the provisions of Section 31676.17, 31676.18, or 31676.19, as applicable, and federal old age and survivors' insurance coverage shall be on an additive or supplemental basis. SEC. 11. Section 1.5 of this bill incorporates amendments to Section 20677 of the Government Code proposed by both this bill and AB 118. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2002, (2) each bill amends Section 20677 of the Government Code, and (3) this bill is enacted after AB 118, in which case Section 1 of this bill shall not become operative.