BILL NUMBER: AB 979 CHAPTERED 09/10/04 CHAPTER 441 FILED WITH SECRETARY OF STATE SEPTEMBER 10, 2004 APPROVED BY GOVERNOR SEPTEMBER 10, 2004 PASSED THE ASSEMBLY AUGUST 16, 2004 PASSED THE SENATE AUGUST 9, 2004 AMENDED IN SENATE APRIL 14, 2004 AMENDED IN ASSEMBLY JANUARY 16, 2004 AMENDED IN ASSEMBLY JANUARY 6, 2004 INTRODUCED BY Assembly Member Negrete McLeod FEBRUARY 20, 2003 An act to amend Sections 31520.5, 31704, and 31789.5 of, to amend and renumber Section 31537 of, and to add Sections 31764.5, 31764.6, and 31764.7 to, the Government Code, relating to county employees' retirement. LEGISLATIVE COUNSEL'S DIGEST AB 979, Negrete McLeod. County employees' retirement. (1) Under the County Employees Retirement Law of 1937, the retirement board in specified counties is comprised of 9 members. In those counties, the board is authorized to appoint an alternate retired member to the office of the 8th member of the board. Under this bill, the alternate retired member in those counties would be entitled to the same compensation, rights, and privileges, and would have the same responsibilities and access to closed sessions, as the 8th member of the board, except as specified. (2) Existing law authorizes members of retirement systems subject to the County Employees Retirement Law of 1937 to elect, at retirement, one of 3 optional settlements that provide a reduced retirement allowance to the member for life and a specified allowance to his or her designated beneficiary. Existing law also provides a survivor allowance to the surviving spouse of a member who dies after retirement if specified conditions are met. This bill would authorize a retired member to elect to receive a reduced allowance to provide a benefit to his or her spouse who is not otherwise eligible for the survivor allowance. The bill would also, upon adoption by the county board of supervisors, authorize a member who elects one of the optional settlements to also elect to receive the allowance the member would have received had he or she not made that election if the member's spouse or beneficiary predeceases him or her. The bill would make related technical changes. (3) The County Employees Retirement Law of 1937 authorizes the county board of supervisors to provide a postretirement death benefit for members of the county retirement system in an amount determined by the board, up to $5,000, if the board of retirement determines that some or all of the benefits may be financed from surplus earnings of the retirement fund. This bill would authorize the board of retirement to elect to provide those benefits through a group life insurance policy if the cost of that policy to the system, county, or district is equal to or less than the cost of other methods of providing the benefit. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 31520.5 of the Government Code is amended to read: 31520.5. (a) Notwithstanding Section 31520.1, in any county subject to Articles 6.8 (commencing with Section 31639) and 7.5 (commencing with Section 31662), the board of retirement may, by majority vote, appoint, from a list of nominees submitted by a qualified retiree organization, an alternate retired member to the office of the eighth member, who shall serve until the expiration of the current term of the current eighth member. Thereafter, the alternate retired member shall be elected separately by the retired members of the association in the same manner and at the same time as the eighth member is elected. An organization shall be deemed to be a "qualified retiree organization" for purposes of this subdivision if a majority of the members of the organization are retired members of the system. (b) The term of office of the alternate retired member shall run concurrently with the term of office of the eighth member. The alternate retired member shall vote as a member of the board only in the event the eighth member is absent from a board meeting for any cause. If there is a vacancy with respect to the eighth member, the alternate retired member shall fill that vacancy until a successor qualifies. Except as provided in subdivision (c) and as otherwise provided in this subdivision, the alternate retired member shall be entitled to the same rights and privileges and shall have the same responsibilities and access to closed sessions as the eighth member. (c) The alternate retired member may hold positions on committees of the board independent of the eighth member and may participate in the deliberations of the board or its committees whether or not the eighth member is present, unless prohibited by resolution or regulation of the board. (d) The alternate retired member shall be entitled to the same compensation as the eighth member for attending a meeting, pursuant to Sections 31521 and 31521.1, whether or not the eighth member is in attendance at those meetings. (e) If this section is made applicable in any county, by the appointment of an alternate eighth member, the alternate safety member may not sit and act for the eighth member. SEC. 2. Section 31537 of the Government Code, as added by Section 1 of Chapter 191 of the Statutes of 2003, is amended and renumbered to read: 31592.5. The board shall provide to any organization that is recognized by the board as representing the retired employees of the county or district reasonable advance notice of any proposed changes to the retirement benefits offered by the system or the use or uses of excess funds of the retirement system. The organization shall have a reasonable opportunity to comment prior to any formal action by the board on the proposed changes. SEC. 3. Section 31704 of the Government Code is amended to read: 31704. If any member elects to have his or her deferred retirement allowance calculated in accordance with Section 31762, 31763, 31764, or 31764.5, he or she shall present his or her election in writing to the board at least six months prior to the effective date of his or her deferred retirement allowance. SEC. 4. Section 31764.5 is added to the Government Code, to read: 31764.5. (a) At retirement, a member who elects an optional settlement pursuant to Section 31762, 31763, or 31764 may elect to reduce his or her allowance to provide that if the named beneficiary predeceases the member, the member's allowance shall be adjusted to the amount he or she would have been entitled to receive at retirement if his or her benefit had not been modified by an optional settlement, adjusted by any cost-of-living increases that would have been added to the monthly allowance. The adjusted allowance shall be effective on the first day of the month following the month in which notification of the beneficiary's death is received by the board. (b) This section may not become operative if, in the opinion of the retirement board and the actuary, the allowances payable under this section would place an additional financial burden on the retirement system. (c) This section may not become operative until the board of supervisors elects, by resolution adopted by a majority vote, to make this section operative in the county. SEC. 5. Section 31764.6 is added to the Government Code, to read: 31764.6. (a) Notwithstanding Sections 31481 and 31760, optional settlement 5 consists of a retired member's right to elect in writing to have his or her retirement allowance reduced and to designate his or her spouse who is not otherwise eligible to receive a survivor allowance. The survivor allowance shall be determined on an actuarial basis by the reduction in the member's allowance and may not, in the opinion of the board and the actuary, place any additional financial burden on the retirement system. (b) A member who elected to receive an optional settlement under Section 31762, 31763, or 31764, involving a life contingency of a beneficiary, may elect optional settlement 5 if the beneficiary predeceases the member or, if a former spouse was named, in the event of a dissolution or annulment of the marriage or a legal separation in which the judgment dividing the community property awards the total interest in the retirement system to the retired member. (c) A member who married at least 12 months prior to the date this section becomes operative may file an election with the board of retirement within 60 days after the operative date. The election shall become effective the first day of the month following receipt of the election by the board. A member who fails to elect within that 60-day period shall retain the right to make an election under this section subject to the waiting period provided in subdivision (d). (d) Except as provided in subdivision (c), the election under this section shall become effective 12 months after the date it is filed with the board, provided that neither the member nor his or her spouse dies prior to the effective date of the election. (e) An election under this section is irrevocable. (f) This section may not become operative until the board of supervisors elects, by resolution adopted by a majority vote, to make this section operative in the county. SEC. 6. Section 31764.7 is added to the Government Code, to read: 31764.7. (a) Notwithstanding any other provision of this chapter, if a retired member elects to have his or her retirement allowance reduced pursuant to Section 31764.6 and if, thereafter, the member's spouse predeceases the member, the member's allowance shall be adjusted to the amount he or she received at retirement, adjusted by any cost-of-living increases that were or would have been added to the monthly allowance. The adjusted allowance shall be effective on the first day of the month following the month in which notification of the spouse's or beneficiary's death is received by the board. (b) This section may not become operative if, in the opinion of the retirement board and the actuary, the allowances payable under this section would place an additional financial burden on the retirement system. (c) This section may not become operative until the board of supervisors elects, by resolution adopted by a majority vote, to make this section operative in the county. SEC. 7. Section 31789.5 of the Government Code is amended to read: 31789.5. (a) Upon the death of any person after retirement and while receiving a retirement allowance from this system, or any superseded system, there shall be paid to his or her estate, or to the beneficiary as he or she shall nominate by written designation duly executed and filed with the board, an amount determined by the board of supervisors. The board of supervisors shall, by resolution adopted by majority vote, fix and determine an amount that may not exceed five thousand dollars ($5,000). (b) This section applies to every member who dies after this section becomes operative whether he or she has retired before or after the operative date or effective date of this section. (c) The death benefit provided by this section shall be paid in lieu of a payment under Section 31789 or 31789.1 and may be paid in part, from contributions of the county or district in accordance with Section 31789, and in part, from surplus earnings of the retirement system in accordance with Section 31789.1. (d) The death benefit provided by this section may, at the election of the board of retirement, be provided through a group life insurance policy if the cost of that policy to the system is the same or less than the cost to the system, county, or district of other methods of providing the benefit. (e) This section may not be operative in any county until the board of supervisors, by resolution adopted by a majority vote, makes this section applicable in the county and the board of retirement, by resolution adopted by a majority vote, determines that its portion of the cost of the benefits may be financed from surplus earnings of the retirement fund. (f) Upon adoption, by any county providing benefits pursuant to this section, of Article 5.5 (commencing with Section 31610), only that portion of those benefits that is paid from surplus earnings described in Section 31592.2 shall be paid, instead, from the Supplemental Retiree Benefits Reserve established pursuant to Section 31618.