BILL ANALYSIS                                                                                                                                                                                                    


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                              UNFINISHED BUSINESS

          Bill No:  SB 973
          Author:   Kuehl (D), et al
          Amended:  8/25/05
          Vote:     21

           SENATE PUBLIC EMP. & RET. COMMITTEE  :  3-2, 5/09/05
          AYES:  Soto, Alarcon, Dunn
          NOES:  Ashburn, Hollingsworth

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :
          AYES:  Alarcon, Alquist, Bowen, Cedillo, Chesbro, Ducheny,  
            Dunn, Escutia, Figueroa, Kehoe, Kuehl, Lowenthal,  
            Machado, Migden, Murray, Ortiz, Perata, Romero, Scott,  
            Simitian, Soto, Speier, Torlakson, Vincent
          NOES:  Aanestad, Ackerman, Ashburn, Battin, Campbell, Cox,  
            Denham, Dutton, Florez, Hollingsworth, Maldonado,  
            Margett, McClintock, Poochigian, Runner
          NO VOTE RECORDED:  Morrow

           ASSEMBLY FLOOR  :  Not available 

           SUBJECT  :    Public employees retirement:  domestic partners

           SOURCE :     Equality California

           DIGEST  :    This bill amends the Public Employees Retirement  
          System (PERS), the State Teachers Retirement System (STRS),  
          and the County Employees Retirement Act of 1937 to entitle  


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          retired members to elect to change optional retirement  
          allowances to provide for their domestic partners.

           Assembly Amendments  recast the provisions of the bill with  
          the same intent as it left the Senate, and make the  
          necessary conforming changes to PERS, STRS and the County  
          Employees Retirement Law of 1937 law.

           ANALYSIS  :    

           Existing Law
          1.Provides that registered domestic partners of public  
            employees have the same retirement survivor rights as the  
            spouses of married public employees.

          2.Provides that domestic partners of public employee  
            members have a right to an "automatic" survivor benefit  
            even if the member retires with an unmodified benefit  
            (meaning the member retired without choosing an option to  
            make their domestic partner a beneficiary).

          3.Provides that when a member is not married when they  
            retire, but who marries after retirement, is allowed to  
            choose an optional survivor benefit (and experience an  
            actuarial reduction in their monthly benefit  
            prospectively, as long as the member does not die within  
            12 months of the marriage.  Under these circumstances,  
            the new spouse is also eligible for the "automatic"  
            survivor benefit if the member does not choose an  
            optional survivor benefit.

          4.Provides the same rights to public employees, but there  
            are uneven interpretations of the new law as it relates  

             A.    Public employees with registered domestic partners  
                who retire before January 1, 2005.

             B.    Single public employees who retired before January  
                1, 2005, who subsequently enter into domestic  

           Spousal Survivor Benefits  .  The Public Employees'  


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          Retirement System (PERS) and the County Employees  
          Retirement Act of 1937 ('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 percent of the member's  
          benefit.  If, before retirement, the member chooses to  
          provide more than 25 percent 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 percent to 100 percent of the  
          member's actuarially reduced benefit.

           Non-spousal Survivor Benefits  .  PERS 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.

           The State Teachers Retirement System (STRS) is the  
          Exception and Does Not Provide "Automatic" Survivor  
          Benefits  .  Existing STRS law does not contain any  
          "automatic" survivor benefit.

          If a married STRS member retires with an "unmodified"  
          benefit, even the spouse would get no survivor benefit.   
          However, because the STRS benefit is community property,  
          the spouse has to sign the member's STRS retirement  
          application, confirming approval that the STRS member is  
          not to providing a survivor benefit).

          In order for the spouse of a STRS member to receive a  
          survivor benefit, the STRS member must choose one of the  


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          optional benefits and have the actuarial reduction apply to  
          their monthly benefit.  Optional survivor benefits can be  
          chosen by the STRS member for any person, but if the STRS  
          member is married and wants to provide a survivor benefit  
          to someone other than the spouse, the spouse must sign the  
          election form.

          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 is 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 PERS, 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 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 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  

          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  


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              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  

          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.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          It is PERS position that this bill is not expected to have  
          an impact on PERS' actuaries' current assumption that 85  
          percent on non-safety members and 90 percent of safety  
          members are married or in a domestic partnership.  PERS'  
          staff states that the "slight increase in domestic  
          partners' entitlement to benefits would be captured at the  
          end of each year's unrealized actuarial loss and will not  
          trigger an increase in employer rates or a revision of the  
          actuarial assumption."

           SUPPORT  :   (Verified  8/30/05)

          Equality California (source)
          American Civil Liberties Union
          American Federation of State, County and Municipal  
          California Federation of Teachers
          California Public Employees Retirement System
          California School Employees Association
          California State Employees Association


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          Los Angeles County Employees Retirement Association
          National Association of Social Workers
          Service Employees International Union, Local 1000

           OPPOSITION  :    (Verified  8/30/05)

          Department of Finance

          JJA:cm  8/30/05   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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