BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 973
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          SB 973 (Kuehl)
          As Amended August 25, 2005
          Majority vote

           SENATE VOTE  :   24-15
           PUBLIC EMPLOYEES    4-2         APPROPRIATIONS      12-5        
          |Ayes:|Torrico, Jones, Mullin,   |Ayes:|Chu, Bass, Berg,          |
          |     |Negrete McLeod            |     |Calderon, Laird, Klehs,   |
          |     |                          |     |Leno, Nation, Levine,     |
          |     |                          |     |Saldana, Yee, Mullin      |
          |     |                          |     |                          |
          |Nays:|Huff, Niello              |Nays:|Sharon Runner, Emmerson,  |
          |     |                          |     |Haynes, Nakanishi,        |
          |     |                          |     |Walters                   |
          |     |                          |     |                          |
           SUMMARY  :  Amends the various laws governing the California  
          Public Employees' Retirement System (CalPERS), the California  
          State Teachers' Retirement System (CalSTRS), and the 20 County  
          Employees Retirement Systems to entitle retired members to elect  
          to change optional retirement allowances to provide for their  
          domestic partners.  Specifically,  this bill  :   

          1)Revises and recasts the provisions of the State Teachers  
            Retirement Law regarding pre-retirement elections to require  
            the form include the signature of the member's spouse or  
            domestic partner, as specified, and be received at the  
            system's headquarters.
          2)Provides that a spouse or registered domestic partner who  
            fails to meet specified criteria are prohibited from receiving  
            a distribution of contributions until the member separates  
            from employment.  

          3)Provides, for purpose of the provision of certain  
            postretirement death benefits under CalPERS, that a surviving  
            domestic partner shall be treated in the same manner as a  
            surviving spouse if the domestic partner is in a registered  
            domestic partnership that meets specified criteria or if the  
            retired member and his or her domestic partner, who are  


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            currently in a registered domestic partnership, sign an  
            affidavit that makes specified statements. Because moneys in  
            the Public Employees' Retirement Fund would be used for a new  
            purpose, this bill would make an appropriation.  

          4)Revises and recasts the provisions in the Public Employees'  
            Medical and Hospital Care Act (PEMHCA) regarding the extension  
            of the rights and duties of marriage to domestic partnerships  
            on and after 2005.  Because moneys in the Public Employees'  
            Health Care Fund would be used for a new purpose, this bill  
            would make an appropriation. 

          5)Entitles a retired member and his or her domestic partner to  
            the same entitlements as described above, if specified  
            criteria are satisfied, including providing an affidavit  
            signed by the member and domestic partner under penalty of  
            perjury relative to the member's service retirement effective  
            date or disability retirement date.  

          6)Expands provisions regarding conservatorship to provide that a  
            conservatee retains the capacity to enter into a domestic  
            partnership, as specified.  

          7)Provides that no reimbursement is required by this bill.

          8)States legislative intent regarding the implementation of AB  
            205 (Goldberg) Chapter 421 Statutes of 2003.

          9)Makes various minor technical changes to existing law  
            regarding domestic partners.

          10)    Makes various technical changes to the provisions of the  
            State Teacher's Retirement Law which implemented AB 205  
            (Goldberg) Chapter 421, Statutes of 2003.
          EXISTING LAW  : 

          1)Provides that any member retiring from service may elect to  
            receive his or her retirement allowance pursuant to specified  
            options. A member may make a pre-retirement election by filing  
            a form with the system's office in Sacramento within 30 days  
            of the date of signature. 

          2)Requires a court to address certain community property issues  
            and rights under the CalPERS system upon the legal separation  


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            or dissolution of marriage of a member.

          3)Defines the term surviving spouse for the purpose of providing  
            postretirement death benefits.  These benefits are funded by  
            the Public Employees' Retirement Fund, a continuously  
            appropriated fund.

          4)Extends the rights and duties of marriage to persons  
            registered as domestic partners on and after January 1, 2005. 

          5)Authorizes, under PEMHCA, the Board of Administration of  
            CalPERS to contract with carriers for health benefit plans and  
            major medical plans for employees and annuitants, as defined,  
            and approve other plans.  PEMHCA defines domestic partnership  
            for these purposes and provides that a domestic partner is a  
            family member for specified purposes.  PEMHCA permits certain  
            persons are eligible to enroll their domestic partners as  
            family members in health plans, subject to collective  
            bargaining, as specified.  PEMHCA allows an employer to  
            require an employee or annuitant to be responsible for certain  
            increased costs or associated with covering the domestic  
            partner, as specified.  PEMHCA permits a contracting agency to  
            offer health benefits to domestic partners of employees and  
            annuitants at its option.  The benefits provided under the act  
            are funded by the Public Employees' Health Care Fund, a  
            continuously appropriated fund. 

          6)Provides under the County Employees Retirement Law of 1937  
            ('37 Act), any member retiring from service may elect to  
            receive his or her retirement allowance pursuant to specified  

          7)Specifies the capacity of a conservatee and the powers of a  
            conservator and, among other things, provides that a  
            conservatee retains the capacity to marry.  

          8)The California Constitution requires the state to reimburse  
            local agencies and school districts for certain costs mandated  
            by the state.  Statutory provisions establish procedures for  
            making that reimbursement. 

           FISCAL EFFECT  :  All of the retirement systems affected by this  
          bill report minor or no costs created by the provisions of the  


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           COMMENTS  :   

          1)Spousal survivor benefits:  CalPERS and the '37 Act have an  
            "automatic" spousal survivor benefit with an unmodified  
            benefit.  For example, if a state employee who participates in  
            Social Security dies after retirement, their spouse receives a  
            lifetime monthly benefit of 25% of the member's benefit.  If,  
            before retirement, the member chooses to provide more than 25%  
            to the spouse upon the member's death, the member can elect to  
            take a permanent actuarial reduction in their monthly benefit  
            (based on the age and sex of the beneficiary) to provide an  
            optional survivor benefit of 50% to 100% of the member's  
            actuarially reduced benefit.
           2)Non-spousal survivor benefits:  CalPERS and '37 Act system  
            members who are not married may also provide survivor benefits  
            to non-spousal beneficiaries.  However, any election of an  
            option of a beneficiary requires an actuarial reduction of the  
            members benefit based on the age and sex of the beneficiary.   
            In addition, the actuarial reduction charged to a non-married  
            member for providing a survivor continuance to a beneficiary  
            is significantly greater than the corresponding reduction  
            experienced by a married member, because the "automatic"  
            spousal survivor continuance is factored into the actuarial  
            reduction calculations made for married members when they  
            choose an optional survivor continuance for their spouses.

          3)CalSTRS is the exception and does not provide "automatic"  
            survivor benefits.  Existing CalSTRS law does not contain any  
            automatic survivor benefit.  If a married CalSTRS member  
            retires with an "unmodified" benefit, even the spouse would  
            get no survivor benefit.  However, because the CalSTRS benefit  
            is community property, the spouse has to sign the member's  
            CalSTRS retirement application, confirming approval that the  
            CalSTRS member is not to providing a survivor benefit).  In  
            order for the spouse of a CalSTRS member to receive a survivor  
            benefit, the CalSTRS member must choose one of the optional  
            benefits and have the actuarial reduction apply to their  
            monthly benefit.  Optional survivor benefits can be chosen by  
            the CalSTRS member for any person, but if the CalSTRS member  
            is married and wants to provide a survivor benefit to someone  
            other than the spouse, the spouse must sign the election form.
           4)Argument in support:  According to the author, with the  
            passage of AB 205 in 2003 and which went into full effect in  


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            January of 2004, domestic partners in the state of California  
            now have many of the same benefits and responsibilities  
            afforded under state law to married couples. SB 973 is a  
            simple clean-up bill to bring certain provisions of our  
            retirement law and our probate code into compliance with AB  

           Analysis Prepared by  :    Clem Meredith / P.E., R. & S.S. / (916)  

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