BILL NUMBER: AB 1166 CHAPTERED 09/22/05 CHAPTER 328 FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2005 APPROVED BY GOVERNOR SEPTEMBER 22, 2005 PASSED THE ASSEMBLY AUGUST 29, 2005 PASSED THE SENATE AUGUST 22, 2005 AMENDED IN SENATE AUGUST 15, 2005 AMENDED IN ASSEMBLY APRIL 13, 2005 INTRODUCED BY Assembly Member Canciamilla FEBRUARY 22, 2005 An act to amend Sections 20098, 20163, 20281.5, 20340, 20752, 20908, 21151, 21220, 21221, 21224, 21225, 21226, 21227, 21359, 21492, 21540.5, 21582, 22009.1, 22150, 22155, 22202, 22203, 22208, 22302, 22308, 22560, 22873, 22874, 22875, 22876, 22892, 22958, and 75071 of, and to add Sections 21690, 21691, 21692, 22009.03, and 22156 to, the Government Code, relating to public employees' benefits, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1166, Canciamilla Public employees' benefits. (1) Under existing law, the Board of Administration of the Public Employees' Retirement System is authorized to appoint and fix the compensation of certain employees of the system whose positions are designated as managerial, notwithstanding specified provisions of law. This bill would clarify the board's ability to make appointments and fix compensation notwithstanding several provisions establishing salary limits. (2) The Public Employees' Retirement Law permits certain adjustments to be made with respect to employer and employee contributions if more or less than the correct amount is paid, and further specifies that losses or gains resulting from errors within the limits set by the State Board of Control for automatic writeoff shall be debited or credited to specified reserves, losses, or contingencies. This bill would change references to the State Board of Control to the Victim Compensation and Government Claims Board. (3) Under existing law, state employees who become members of the Public Employees' Retirement System after a certain date do not immediately make contributions nor receive service credit for their service during their first 24 months of employment. This bill would clarify that a member who separates from state employment shall remain subject to that provision for the duration of the 24-month period prescribed if he or she returns to state employment within that period, as specified. (4) Existing law refers to the University of California Retirement System. This bill would change those statutory references to the University of California Retirement Plan. (5) Under existing law, patrol, state safety, state industrial, state peace officer/firefighter, or local safety members, among others, who are incapacitated as a result of an industrial disability are retired for disability, except as specified. This bill would exclude from that provision state safety members who are state prosecutors or state public defenders. (6) The Public Employees' Retirement Law establishes the circumstances in which a retired person may serve without reinstatement from retirement or loss or interruption of benefits. Under that law, certain appointments may be made of limited duration if they do not exceed 960 hours in any calendar year. This bill would change the basis for calculating the maximum number of hours a retired person may serve from a calendar year to a fiscal year and would make related changes to those provisions. (7) Existing law authorizes a special death benefit for deceased state, school, or local miscellaneous members and for specified local safety members, if the death of the member was a direct consequence of a violent act that arose during his or her official duties. This bill would make that provision applicable to state safety members who are state prosecutors and state public defenders. (8) The Public Employees' Retirement Law establishes the Public Employees' Retirement System, and sets forth the provisions for its administration and the delivery of benefits to its members. This bill would authorize any retired member whose allowance is not sufficient to pay his or her contributions for health benefit plan coverage provided by his or her employer to continue that coverage by paying the Board of Administration of the Public Employees' Retirement System the balance of the contributions plus the related administrative costs. Participating retired members would be required to make these payments quarterly in advance. The bill would authorize the system to charge participating retired members a one-time setup charge and a monthly maintenance charge in amounts sufficient to ensure the ongoing support of the program. All moneys received under those provisions would be deposited in the Public Employees' Contingency Reserve Fund, which is established in the Public Employees' Medical and Hospital Care Act, thereby making an appropriation. (9) The Public Employees' Retirement Law defines the term "public agency" for purposes of certain provisions relating to the federal Social Security Act. Until January 1, 2005, that definition included a school district, a county superintendent of schools, and a regional occupational center or program established pursuant to specified provisions, with respect to employees eligible for membership in the State Teachers' Retirement Plan. This bill would again include those entities within the definition of that term. The bill would also authorize the State Teachers' Retirement Plan to provide Medicare coverage for employees of a public agency, as so defined, upon request of the public agency. The bill would also specify the conditions by which a member of such a public agency may elect Medicare coverage. (10) Existing law establishes the Public Employees' Medical and Hospital Care Act. This bill would revise the definition of state service as used within the act, would specify the percentage of employer contributions for certain postretirement health benefits, and would make other related changes to that act, including changes related to the judicial branch and beneficiary designations. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 20098 of the Government Code is amended to read: 20098. (a) The board shall appoint and, notwithstanding Sections 19816, 19825, 19826, 19829, and 19832 shall fix the compensation of an executive officer, a chief actuary, a chief investment officer, and other investment officers and portfolio managers whose positions are designated managerial pursuant to Section 18801.1. (b) The executive officer, deputy executive officers, and the assistant executive officers may administer oaths. (c) When fixing the compensation for the positions specified in subdivision (a), the board shall be guided by the principles contained in Sections 19826 and 19829, consistent with its fiduciary responsibility to its members to recruit and retain highly qualified and effective employees for these positions. (d) When a position specified in subdivision (a) is filled through a general civil service appointment, it shall be filled from an eligible list based on an examination that was held on an open basis, and tenure in the position shall be subject to the provisions of Article 2 (commencing with Section 19590) of Chapter 7 of Part 2 of Division 5 of Title 2. In addition to the causes for action specified in that article, the board may take action under the article for causes related to its fiduciary responsibility to its members, including the employee's failure to meet specified performance objectives. (e) An individual who held a position designated in subdivision (a) for less than five years may not, for a period of two years after leaving that position, for compensation, act as agent or attorney for, or otherwise represent, any other person, except the state, by making any formal or informal appearance before or any oral or written communication to the Public Employees' Retirement System, or any officer or employee thereof, if the appearance or communication is made for the purpose of influencing administrative or legislative action or any action or proceeding involving the issuance, amendment, awarding, or revocation of a permit, license, grant, contract, or sale or purchase of goods or property. SEC. 2. Section 20163 of the Government Code is amended to read: 20163. If more or less than the correct amount of contribution required of members, the state, or any contracting agency, is paid, proper adjustment shall be made in connection with subsequent payments, or the adjustments may be made by direct cash payments between the member, state, or contracting agency concerned and the board or by adjustment of the employer's rate of contribution. Adjustments to correct any other errors in payments to or by the board, including adjustments of contributions, with interest, that are found to be erroneous as the result of corrections of dates of birth, may be made in the same manner. Adjustments to correct overpayment of a retirement allowance may also be made by adjusting the allowance so that the retired person or the retired person and his or her beneficiary, as the case may be, will receive the actuarial equivalent of the allowance to which the member is entitled. Losses or gains resulting from error in amounts within the limits set by the Victim Compensation and Government Claims Board for automatic writeoff, and losses or gains in greater amounts specifically approved for writeoff by the Victim Compensation and Government Claims Board, shall be debited or credited, as the case may be, to the reserve against deficiencies in interest earned in other years, losses under investments, and other contingencies. No adjustment shall be made because less than the correct amount of normal contributions was paid by a member if the board finds that the error was not known to the member and was not the result of erroneous information provided by him or her to this system or to his or her employer and the failure to adjust shall not preclude action under Section 20160 correcting the date upon which the person became a member. The actuarial equivalent under this section shall be computed on the basis of the mortality tables and actuarial interest rate in effect under this system on December 1, 1970, for retirements effective through December 31, 1979. Commencing with retirements effective January 1, 1980, and at corresponding 10-year intervals thereafter, or more frequently at the board's discretion, the board shall change the basis for calculating actuarial equivalents under this article to agree with the interest rate and mortality tables in effect at the commencement of each 10-year or succeeding interval. SEC. 3. Section 20281.5 of the Government Code is amended to read: 20281.5. (a) Notwithstanding Section 20281, a person who becomes a state miscellaneous or state industrial member of the system on or after the effective date of this section because the person is first employed by the state and qualifies for membership shall be subject to the provisions of this section. (b) Members subject to this section shall not accrue credit for service in the system and shall not make employee contributions to the system, including the contributions set forth in Section 20677.4, for employment with the state until the first day of the first pay period commencing 24 months after becoming a member of the system. (c) Notwithstanding subdivision (a), this section shall not apply to any of the following: (1) Persons who are already members or annuitants of the system at the time they are first employed by the state. (2) Employees of the California State University, or the legislative or judicial branch of state government. (3) Members of the Judges' Retirement System, the Judges' Retirement System II, the Legislators' Retirement System, the State Teachers' Retirement System, or the University of California Retirement Plan. (4) Persons who are members of a reciprocal retirement system and whose employment was subject to a reciprocal retirement system within the six months prior to membership in this system. (5) Persons whose service is not included in the federal system. (6) Persons who are employed by the Department of the California Highway Patrol as students at the department's training school established pursuant to Section 2262 of the Vehicle Code. (7) Persons who had ceased to be members pursuant to Section 20340 or 21075. (d) A separation of employment does not alter the 24-month period described by subdivision (b). A member who separates from state employment shall remain subject to this section if he or she returns to state employment as a state miscellaneous or state industrial member within that 24-month period. (e) Any regulations adopted by the board to implement the requirements of this section shall not be subject to the review and approval of the Office of Administrative Law, pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3. The regulations shall become effective immediately upon filing with the Secretary of State. SEC. 4. Section 20340 of the Government Code is amended to read: 20340. A person ceases to be a member: (a) Upon retirement, except while participating in reduced worktime for partial service retirement. (b) If he or she is paid his or her normal contributions, unless payment of contributions is the result of an election pursuant to paragraph (1) of subdivision (b) of Section 21070, or unless, after reducing the member's credited service by the service applicable to the contributions being withdrawn, the member meets the requirements of Section 21075 or if he or she is paid a portion of his or her normal contributions where more than one payment is made, or these contributions are held pursuant to Section 21500. For the purposes of this subdivision, deposit in the United States mail of a warrant drawn in favor of a member, addressed to the latest address of the member on file in the office of this system, electronic fund transfer to the person's bank, savings and loan association, or credit union account, constitutes payment to the person of the amount for which the warrant is drawn or electronically transferred. (c) If the member has less than five years of service credit and no accumulated contributions in the retirement fund at the time of termination of service, unless the member establishes membership in the Judges' Retirement System, the Judges' Retirement System II, the Legislators' Retirement System, the State Teachers' Retirement System, or the University of California Retirement Plan, or establishes reciprocity with a reciprocal retirement system. SEC. 5. Section 20752 of the Government Code is amended to read: 20752. (a) A member of the Judges' Retirement System, the Judges' Retirement System II, the Legislators' Retirement System, the State Teachers' Retirement Plan, the University of California Retirement Plan, or a county retirement system, who has withdrawn accumulated contributions from this system shall have the right to redeposit those contributions, subject to the same conditions as imposed for redeposits of accumulated contributions by Section 20750, including the rights that he or she would have had under Section 20638 had he or she not withdrawn his or her contributions. (b) Provisions of this section extending a right to redeposit accumulated contributions withdrawn from this system shall also apply to members of any retirement system established under Chapter 2 (commencing with Section 45300) of Division 5 of Title 4 with respect to which an ordinance complying with Section 45310.5 has been filed with, and accepted by, the board or any retirement system established by, or pursuant to, the charter of a city or city and county or by any other public agency of this state which system, in the opinion of the board, provides a similar modification of rights and benefits because of membership in this system and with respect to which the governing body of the city, city and county or public agency and the board have entered into agreement pursuant to Section 20351. (c) A member who elects to redeposit under this section shall have the same rights as a member who has elected pursuant to Section 20731 to leave his or her accumulated contributions on deposit in the fund. SEC. 6. Section 20908 of the Government Code is amended to read: 20908. (a) A member who, pursuant to Section 20281.5, did not accrue service credit with respect to his or her service to the state may elect to receive credit for that service within the period of time beginning on the first day of the 47th month and ending on the last day of the 49th month after the date on which the member became a member of the system. (b) Any member electing to receive credit for service under this section shall cause to be transferred to the system the accumulated contributions, including earnings, standing to the member's credit in the retirement program established pursuant to Chapter 8.6 (commencing with Section 19999.3) of Part 2.6. Upon transfer of the accumulated contributions, including earnings, the member shall receive credit for all service that, pursuant to Section 20281.5, was not credited. (c) A member who does not make the election within the period specified in subdivision (a), may elect at any time prior to retirement to receive credit for the service that otherwise would have been credited if the member was not subject to Section 20281.5, by making the contributions specified in Sections 21050 and 21052. SEC. 7. Section 21151 of the Government Code is amended to read: 21151. (a) Any patrol, state safety, state industrial, state peace officer/firefighter, or local safety member incapacitated for the performance of duty as the result of an industrial disability shall be retired for disability, pursuant to this chapter, regardless of age or amount of service. (b) This section also applies to local miscellaneous members if the contracting agency employing those members elects to be subject to this section by amendment to its contract. (c) This section also applies to all of the following: (1) State miscellaneous members employed by the Department of Justice who perform the duties now performed in positions with the class title of Criminalist (Class Code 8466), or Senior Criminalist (Class Code 8478), or Criminalist Supervisor (Class Code 8477), or Criminalist Manager (Class Code 8467), Latent Print Analyst I (Class Code 8460), Latent Print Analyst II (Class Code 8472), or Latent Print Supervisor (Class Code 8473). (2) State miscellaneous members employed by the Department of the California Highway Patrol who perform the duties now performed in positions with the class title of Communications Operator I, California Highway Patrol (Class Code 1663), Communications Operator II, California Highway Patrol (Class Code 1664), Communications Supervisor I, California Highway Patrol (Class Code 1662), or Communications Supervisor II, California Highway Patrol (Class Code 1665). (3) State miscellaneous members whose disability resulted under the conditions specified in Sections 20046.5 and 20047. (4) State miscellaneous members in State Bargaining Unit 12 employed by the Department of Transportation, if a memorandum of understanding has been agreed to by the state employer and the recognized employee organization making this paragraph applicable to those members. (d) This section does not apply to local safety members described in Section 20423.6, unless this section has been made applicable to local miscellaneous members pursuant to subdivision (b). (e) This section does not apply to state safety members described in Section 20401.5. SEC. 8. Section 21220 of the Government Code is amended to read: 21220. (a) A person who has been retired under this system, for service or for disability, may not be employed in any capacity thereafter by the state, the university, a school employer, or a contracting agency, unless the employment qualifies for service credit in the University of California Retirement Plan or the State Teachers' Retirement Plan, unless he or she has first been reinstated from retirement pursuant to this chapter, or unless the employment, without reinstatement, is authorized by this article. A retired person whose employment without reinstatement is authorized by this article shall acquire no service credit or retirement rights under this part with respect to the employment. (b) Any retired member employed in violation of this article shall: (1) Reimburse this system for any retirement allowance received during the period or periods of employment that are in violation of law. (2) Pay to this system an amount of money equal to the employee contributions that would otherwise have been paid during the period or periods of unlawful employment, plus interest thereon. (3) Contribute toward reimbursement of this system for administrative expenses incurred in responding to this situation, to the extent the member is determined by the executive officer to be at fault. (c) Any public employer that employs a retired member in violation of this article shall: (1) Pay to this system an amount of money equal to employer contributions that would otherwise have been paid for the period or periods of time that the member is employed in violation of this article, plus interest thereon. (2) Contribute toward reimbursement of this system for administrative expenses incurred in responding to this situation, to the extent the employer is determined by the executive officer of this system to be at fault. SEC. 9. Section 21221 of the Government Code is amended to read: 21221. A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system, as follows: (a) As a member of any board, commission, or advisory committee, upon appointment by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, director of a state department, or the governing board of the contracting agency. However, the appointment shall not be deemed employment within the meaning of Division 4 (commencing with Section 3200) and Division 4.5 (commencing with Section 6100) of the Labor Code, and shall not provide a basis for the payment of workers' compensation to a retired state employee or to his or her dependents. (b) As a school crossing guard. (c) As a juror or election officer. (d) As an elective officer on and after September 15, 1961. However, all rights and immunities which may have accrued under Section 21229 as it read prior to that section's repeal during the 1969 Regular Session of the Legislature are hereby preserved. (e) As an appointive member of the governing body of a contracting agency. However, the compensation for that office shall not exceed one hundred dollars ($100) per month. (f) Upon appointment by the Legislature, or either house, or a legislative committee to a position deemed by the appointing power to be temporary in nature. (g) Upon employment by a contracting agency to a position found by the governing body, by resolution, to be available because of a leave of absence granted to a person on payroll status for a period not to exceed one year and found by the governing body to require specialized skills. The temporary employment shall be terminated at the end of the leave of absence. Appointments under this section shall be reported to the board and shall be accompanied by the resolution adopted by the governing body. (h) Upon appointment by the governing body of a contracting agency to a position deemed by the governing body to be of a limited duration and requiring specialized skills or during an emergency to prevent stoppage of public business. These appointments, in addition to any made pursuant to Section 21224, shall not exceed a total for all employers of 960 hours in any fiscal year. When an appointment is expected to, or will, exceed 960 hours in any fiscal year, the governing body shall request approval from the board to extend the temporary employment. The governing body shall present a resolution to the board requesting action to allow or disallow the employment extension. The resolution shall be presented prior to the expiration of the 960 hour maximum for the fiscal year. The appointment shall continue until notification of the board's decision is received by the governing body. The appointment shall be deemed approved if the board fails to take action within 60 days of receiving the request. Appointments under this subdivision may not exceed a total of 12 months. (i) Upon appointment by the Administrative Director of the Courts to the position of Court Security Coordinator, a position deemed temporary in nature and requiring the specialized skills and experience of a retired professional peace officer. SEC. 10. Section 21224 of the Government Code is amended to read: 21224. (a) A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system upon appointment by the appointing power of a state agency or public agency employer either during an emergency to prevent stoppage of public business or because the retired employee has skills needed in performing work of limited duration. These appointments shall not exceed a total for all employers of 960 hours in any fiscal year, and the rate of pay for the employment shall not be less than the minimum, nor exceed that paid by the employer to other employees performing comparable duties. (b) (1) This section shall not apply to any retired person otherwise eligible if during the 12-month period prior to an appointment described in this section the retired person received any unemployment insurance compensation arising out of prior employment subject to this section with the same employer. (2) A retired person who accepts an appointment after receiving unemployment insurance compensation as described in this subdivision shall terminate that employment on the last day of the current pay period and shall not be eligible for reappointment subject to this section for a period of 12 months following the last day of employment. The retired person shall not be subject to Section 21202 or subdivision (b) of Section 21220. SEC. 11. Section 21225 of the Government Code is amended to read: 21225. A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system as a substitute in a position requiring certification qualifications, pursuant to Section 59007 or 59113 of the Education Code, at the California School for the Deaf or the California School for the Blind, if that service does not exceed a total for all employers of 960 hours in any fiscal year. SEC. 12. Section 21226 of the Government Code is amended to read: 21226. A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system as a member of the academic staff of a California community college or of the University of California, if that service does not exceed a total for all employers of 960 hours in any fiscal year. SEC. 13. Section 21227 of the Government Code is amended to read: 21227. A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system as a member of the academic staff of a California State University, if that service does not exceed, a total for all employers of 960 hours in any fiscal year or 50 percent of the hours the member was employed during the last fiscal year of service prior to retirement. SEC. 14. Section 21359 of the Government Code is amended to read: 21359. Notwithstanding Section 21357, in determining the method of calculation of subsequent retirement benefits for a university employee who, on the date of reemployment and reinstatement from retirement, did not have the right to elect membership in this system, the service rendered under the University of California Retirement Plan after reemployment and reinstatement shall be considered service rendered under this system. SEC. 15. Section 21492 of the Government Code is amended to read: 21492. The designation of a beneficiary under optional settlements 2 and 3, or if a benefit involving the life contingency of the beneficiary is provided under optional settlement 4, is irrevocable from the time of the first payment on account of any retirement allowance. Otherwise a designation of beneficiary under this system is revocable at the pleasure of the member who made it. A member's marriage, dissolution of marriage, annulment of his or her marriage, the birth of his or her child, or his or her adoption of a child shall constitute an automatic revocation of his or her previous revocable designation of beneficiary. A member's termination of employment and withdrawal of contributions shall constitute an automatic revocation of the previous revocable designation of beneficiary. Subsequent reemployment or reinstatement from retirement to employment covered by this system shall not reinstate the previous designation of beneficiary. Upon revocation of any beneficiary designation, a member may designate the same or another beneficiary by a writing filed with the board, except as otherwise provided in Section 21490. SEC. 16. Section 21540.5 of the Government Code is amended to read: 21540.5. (a) The special death benefit is also payable if the deceased was a state, school, or local miscellaneous member, a local safety member described in Section 20423.6, or a state safety member described in Section 20401.5, if the death of the member was a direct consequence of a violent act perpetrated on his or her person that arose out of and was in the course of his or her official duties and there is a survivor who qualifies under paragraph (2) of subdivision (a) of Section 21541. The Workers' Compensation Appeals Board, using the same procedure as in workers' compensation hearings, shall, in disputed cases determine whether the member's death was a direct consequence of a violent act perpetrated on his or her person that arose out of and in the course of his or her official duties. (b) A natural parent of surviving children eligible to receive an allowance payable under this section is not required to become the guardian of surviving unmarried children under 18 years of age in order to be paid the benefits prescribed for those children. (c) The jurisdiction of the Workers' Compensation Appeals Board shall be limited solely to the issue of industrial causation, and this section may not be construed to authorize the Workers' Compensation Appeals Board to award costs against this system pursuant to Section 4600 or 5811 or any other provision of the Labor Code. (d) This section does not apply to a contracting agency nor its employees unless and until the agency elects to be 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. SEC. 17. Section 21582 of the Government Code is amended to read: 21582. Notwithstanding any other provision of this article, if so agreed to in a memorandum of understanding reached pursuant to Chapter 12 (commencing with Section 3560) of Division 4 of Title 1, as it pertains to represented employees of the California State University, the employer may pay, in addition to the employer contributions, all or a portion of the employee contributions required for the benefit payable pursuant to Section 21574.7 or the employees may pay, in addition to the employee contributions, all or a portion of the employer contributions required for the benefit payable pursuant to Section 21574.7. SEC. 18. Section 21690 is added to Chapter 17 (commencing with Section 21690) of Part 3 of Division 5 of Title 2 of the Government Code, to read: 21690. As used in this part, "complementary health premium" means the additional premium paid by retired members whose health insurance premiums are paid under Section 21264 and whose allowances fall below the premium required to continue the health benefit plan coverage provided by their employers. SEC. 19. Section 21691 is added to Chapter 17 (commencing with Section 21690) of Part 3 of Division 5 of Title 2 of the Government Code, to read: 21691. (a) Any retired member whose health insurance premium is paid under Section 21264 and whose allowance is not sufficient to pay his or her contributions for the health benefit plan coverage provided by his or her employer may continue that coverage by paying to the board the balance of the premium owed plus administrative costs, as determined by the board. (b) The retired member shall pay the complementary health premium by remitting to the board quarterly payments in advance. (c) The board has no duty to identify, locate, or notify any retired member who may be eligible for programs established by this chapter. (d) All moneys received pursuant to this chapter shall be deposited in the Public Employees' Contingency Reserve Fund established by Section 22910. SEC. 20. Section 21692 is added to Chapter 17 (commencing with Section 21690) of Part 3 of Division 5 of Title 2 of the Government Code, to read: 21692. (a) The board may charge each participating retired member who elects to pay the complementary health premium a one-time setup charge and a monthly maintenance charge, in amounts sufficient to ensure the ongoing support of the program. (b) All development and administrative costs of the program shall be paid by the participating retired members. SEC. 21. Section 22009.03 is added to the Government Code, to read: 22009.03. "Public agency" also includes a school district, a county superintendent of schools, and a regional occupational center or program established pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1, with respect to employees eligible for membership in the State Teachers' Retirement Plan. SEC. 22. Section 22009.1 of the Government Code is amended to read: 22009.1. "Retirement system" includes: (a) A pension, annuity, retirement or similar fund or system established by a public agency and covering only positions of that agency. (b) The Public Employees' Retirement System with respect only to employees of the state and employees of the University of California in positions covered by that system. (c) The Public Employees' Retirement System with respect to employees of all school districts in positions covered under each contract entered into by a county superintendent of schools and the system. (d) The State Teachers' Retirement System with respect to all employees in positions subject to coverage under the Defined Benefit Program of the State Teachers' Retirement Plan except employees of a public agency having any employees in positions covered by that system who are also in positions covered by a local retirement system for the retirement of teachers, or for membership in which public school teachers are eligible, operated by a city, city and county, county or other public agency or combination of public agencies of the state. (e) The Legislators' Retirement System with respect to all employees in positions covered by that system. (f) The Judges' Retirement System with respect to all employees in positions covered by that system. (g) The University of California Retirement Plan only with respect to all employees in positions covered by that system. (h) The San Francisco City and County Employees' Retirement System with respect to all employees in positions covered by that system. (i) Any other retirement system with respect only to employees of any two or more of the public agencies having employees in positions covered by that system, as designated by the board and with regard to which the board authorizes conduct of a referendum. (j) Any retirement system with respect only to employees of a hospital that is an integral part of a city incorporated between January 15, 1898 and July 15, 1898 in positions covered by the system, as designated by the board on request of the city. (k) Except as otherwise provided in subdivisions (b) to (j), inclusive, any retirement system with respect to employees of each of the public agencies having employees in positions covered by the system. (l) The State Teachers' Retirement System with respect to all employees of each public agency, as defined by Section 22009.03, in positions covered by the State Teachers' Retirement Plan. (m) Each division or part of a retirement system, as defined in subdivisions (a), (b), (c), (e), (g), (h), (i), (j), (k), and (l) of this section, that is divided pursuant to this chapter into two parts: (1) The part composed of the positions of members of the system who desire coverage under the federal system. (2) The part composed of the positions of members of the system who do not desire coverage under the federal system. SEC. 23. Section 22150 of the Government Code is amended to read: 22150. Unless otherwise provided in this article, the board shall authorize a division of a retirement system upon the request of any public agency having employees in positions covered by the system or upon authorization of the Legislature. An election among members of the system shall not be required. A retirement system as defined in subdivisions (d) and (f) of Section 22009.1 shall be divided pursuant to this article only if the division is otherwise authorized by the Legislature. The board shall designate the person to conduct the division, as defined in subdivision (m) of Section 22009.1, of a retirement system. For purposes of this section and all coverage procedures under this part subsequent to division of the retirement system defined in subdivision (g) of Section 22009.1 the University of California shall be deemed to be a public agency. SEC. 24. Section 22155 of the Government Code is amended to read: 22155. Whenever, on the request of the governing body of a public agency, a retirement system has been divided pursuant to this article, the board, on the request of the governing body, shall execute in conformity with Section 218 of the Social Security Act and applicable federal regulations a modification to the agreement providing for transfer to the system as defined in paragraph (1) of subdivision (m) of Section 22009.1 created by the division, the position of any member included in the system, as defined in paragraph (2) of subdivision (m) of Section 22009.1, who requests a transfer pursuant to Section 218(d)(6)(F) of the Social Security Act and board rules. SEC. 25. Section 22156 is added to the Government Code, to read: 22156. (a) A division of the State Teachers' Retirement Plan is hereby authorized by the Legislature to provide Medicare coverage for employees of a public agency, as defined in Section 22009.03, upon the request of the public agency. (b) The division authorized by subdivision (a) shall be conducted pursuant to this article. (c) A member of the State Teachers' Retirement Plan on whose behalf a request is made pursuant to subdivision (a) may elect to be covered by Medicare, pursuant to Section 218 of the federal Social Security Act (42 U.S.C. Sec. 418), and applicable federal regulations if all of the following apply: (1) The member was employed in a position covered by the plan on March 31, 1986. (2) The member has not since been mandated into Medicare coverage due to the enactment of Public Law 99-272. (3) The member is in a position covered or the member is eligible to elect to be covered by the retirement system on the date of the division. (d) The public agency shall immediately make an application pursuant to Chapter 2 (commencing with Section 22200) of this part for Medicare coverage for those members who have elected to receive Medicare coverage. (e) The effective date of the coverage may be retroactive, but not earlier than the last day of the sixth calendar year preceding the year in which the agreement or modifications, as the case may be, is submitted to the Commissioner of Social Security. SEC. 26. Section 22202 of the Government Code is amended to read: 22202. With respect to employees in the coverage group defined in subdivision (a) of Section 22100, the application shall be deemed to be made by a public agency if made by the Adjutant General. With respect to employees in positions covered by the retirement system set forth in subdivision (d) of Section 22009.1, the application shall be deemed to be made by a public agency if made by the Teachers' Retirement Board. With respect to employees in positions covered by the retirement system set forth in subdivision (g) of Section 22009.1, the application shall be deemed to be made by a public agency if made by the Regents of the University of California. With respect to employees in the coverage group defined in subdivision (l) of Section 22009.1, the application shall be deemed to be made by a public agency if made by the governing body of the public agency, as defined in Section 22009.03. SEC. 27. Section 22203 of the Government Code is amended to read: 22203. Notwithstanding Section 22201, before the board shall execute on behalf of the state an agreement with the federal agency as provided in this chapter, the public agency and the board shall enter into a written agreement, that shall include provisions not inconsistent with this part that the board deems necessary in the administration of the federal system as it affects the state and the public agency and its employees. For the purposes of this section, the state shall not be deemed to be a public agency, but nevertheless an agreement entered into pursuant to this part by the board and the Teachers' Retirement Board or the Adjutant General or the Regents of the University of California or the governing body of a public agency, as defined in Section 22009.03, shall be deemed to be entered into by the board and a public agency. SEC. 28. Section 22208 of the Government Code is amended to read: 22208. With respect to each retirement system coverage group, the legislative or governing body of every public agency having employees in positions covered by a retirement system, may, upon the affirmative vote of a majority of eligible retirement system employees of the retirement system coverage group at a referendum conducted in accordance with Article 2 (commencing with Section 22300) of this chapter and the rules and regulations promulgated by the board pursuant to this part, make formal application to the board for the inclusion of the employees in each retirement system coverage group in the agreement. SEC. 29. Section 22302 of the Government Code is amended to read: 22302. In the case of employees in positions covered by the retirement system set forth in subdivision (d) of Section 22009.1, the Teachers' Retirement Board shall conduct the referendum; if the referendum is authorized by the Legislature. In the case of employees in positions covered by the retirement system set forth in subdivision (g) of Section 22009.1 the board shall authorize the referendum upon the request of the Regents of the University of California and the regents shall conduct the referendum. In the case of employees in positions covered by the retirement system set forth in subdivision (l) of Section 22009.1, the board shall authorize the referendum upon the request of the governing body of a public agency, as defined by Section 22009.03. SEC. 30. Section 22308 of the Government Code is amended to read: 22308. This article does not apply to a retirement system composed of the positions of members of a divided system who desire coverage under the federal system as defined in subdivision (m) of Section 22009.1 and wherever in this part the conduct of a referendum is made a condition, the condition shall be fully satisfied by compliance with Article 2.5 (commencing with Section 22150) of Chapter 1 as to that retirement system. SEC. 31. Section 22560 of the Government Code is amended to read: 22560. The board may charge or assess each public agency as defined in Section 22009.03 and each public agency shall pay and reimburse the state at the times and in the amounts as the board may determine, the approximate cost to the state, of any and all work, services, equipment, and other administrative costs relating to a division under Article 2.5 (commencing with Section 22150) of Chapter 1 of this part or the referendum provided by Article 2 (commencing with Section 22300) of Chapter 2 of this part and requested by the agency. The charges may differ from public agency to public agency. SEC. 32. Section 22873 of the Government Code is amended to read: 22873. (a) Notwithstanding Section 22871, a state employee first hired on or after January 1, 1985, may not be vested for the full employer contribution payable for annuitants unless he or she has 10 years of credited state service at the time of retirement. The employer contribution payable for annuitants with less than 10 years of service shall be prorated based on credited state service at the time of retirement. This section shall apply only to state employees who retire for service. For purposes of this section, "state service" includes all municipal, superior, and justice court services rendered by a justice of the Supreme Court or court of appeal, or by a judge of the superior court. (b) This section does not apply to employees of the California State University or of the Legislature. SEC. 33. Section 22874 of the Government Code is amended to read: 22874. (a) Notwithstanding Sections 22870, 22871, and 22873, a state employee, defined by subdivision (c) of Section 3513, who becomes a state member of the system after January 1, 1989, may not receive any portion of the employer contribution payable for annuitants unless the person is credited with 10 years of state service at the time of retirement. (b) The percentage of the employer contribution payable for postretirement health benefits for an employee subject to this section shall be based on the completed years of credited state service at retirement as shown in the following table: Credited Percentage of Years Employer of Service Contribution 10 50 11 55 12 60 13 65 14 70 15 75 16 80 17 85 18 90 19 95 20 or more 100 (c) This section shall apply only to state employees that retire for service. For purposes of this section, "state service" means service rendered as an employee of the state or an appointed or elected officer of the state for compensation. Notwithstanding Section 22826, for purposes of this section, credited state service includes service to the state for which the employee, pursuant to Section 20281.5, did not receive credit. (d) This section does not apply to employees of the California State University, the judicial branch, or the Legislature. SEC. 34. Section 22875 of the Government Code is amended to read: 22875. (a) Notwithstanding Sections 22870, 22871, 22873, and 22874, a state employee who becomes a state member of the system after January 1, 1990, and is either excluded from the definition of a state employee in subdivision (c) of Section 3513, or a nonelected officer or employee of the executive branch of government who is not a member of the civil service, may not receive any portion of the employer contribution payable for annuitants, unless the employee is credited with 10 years of state service, as defined by this section, at the time of retirement. (b) The percentage of the employer contribution payable for postretirement health benefits for an employee subject to this section shall be based on the completed years of credited state service at retirement as shown in the following table: Credited Percentage of Years Employer of Service Contribution 10 50 11 55 12 60 13 65 14 70 15 75 16 80 17 85 18 90 19 95 20 or more 100 (c) This section shall apply only to state employees who retire for service. (d) Benefits provided to an employee subject to this section shall be applicable to all future state service. (e) For the purposes of this section, "state service" means service rendered as an employee or an appointed or elected officer of the state for compensation. Notwithstanding Section 22826, for purposes of this section, credited state service includes service to the state for which the employee, pursuant to Section 20281.5, did not receive credit. (f) This section does not apply to employees of the California State University, the judicial branch, or the Legislature. SEC. 35. Section 22876 of the Government Code is amended to read: 22876. (a) For the purpose of meeting the vesting requirements of Section 22873, employees of the County of Merced who became employees of the state as a result of the state's assuming firefighting functions for that county shall be credited with state service for each completed year of service with the county that would have been credited by the county for the vesting of postretirement health benefits. The definition of "state service" does not apply to employees of the County of Merced who became employees of the state as a result of the state assuming firefighting functions for the county on or before August 1, 1988. (b) Notwithstanding Section 22875.5, for the purposes of meeting the vesting requirements of Section 22873, 22874, or 22875, employees of the Cities of Rubidoux and Coachella who become employees of the state, on or before December 31, 1990, as a result of the state's assuming firefighting functions for the city, shall be credited with state service for each completed year of service with the city. The city shall identify those employees and provide the corresponding service credit information to the board. (c) No employee whose firefighting function was transferred to the state after December 31, 1990, shall receive credit toward postretirement health benefits vesting unless the former employer agrees to reimburse the state for the costs of that credit in accordance with Section 22875.5. SEC. 36. Section 22892 of the Government Code is amended to read: 22892. (a) The employer contribution of a contracting agency shall begin on the effective date of enrollment and shall be the amount fixed from time to time by resolution of the governing body of the agency. The resolution shall be filed with the board and the contribution amount shall be effective on the first day of the second month following the month in which the resolution is received by the system. (b) (1) The employer contribution shall be an equal amount for both employees and annuitants, but may not be less than the following: (A) Prior to January 1, 2004, sixteen dollars ($16) per month. (B) During calendar year 2004, thirty-two dollars and twenty cents ($32.20) per month. (C) During calendar year 2005, forty-eight dollars and forty cents ($48.40) per month. (D) During calendar year 2006, sixty-four dollars and sixty cents ($64.60) per month. (E) During calendar year 2007, eighty dollars and eighty cents ($80.80) per month. (F) During calendar year 2008, ninety-seven dollars ($97) per month. (2) Commencing January 1, 2009, the employer contribution shall be adjusted annually by the board to reflect any change in the medical care component of the Consumer Price Index and shall be rounded to the nearest dollar. (c) A contracting agency may, notwithstanding the equal contribution requirement of subdivision (b), establish a lesser monthly employer contribution for annuitants than for employees, provided that the monthly contribution for annuitants is annually increased by an amount not less than 5 percent of the monthly employer contribution for employees, until the time that the employer contribution for annuitants equals the employer contribution paid for employees. This subdivision shall only apply to agencies that first become subject to this part on or after January 1, 1986. SEC. 37. Section 22958 of the Government Code is amended to read: 22958. (a) Notwithstanding Sections 22953 and 22957, the following employees may not receive any portion of the employer contribution payable for annuitants, unless the person is credited with 10 or more years of state service, as defined by this section, at the time of retirement: (1) A state employee, as defined by subdivision (c) of Section 3513, in State Bargaining Unit 5, 6, 8, or 16 who becomes a state member of the system after January 1, 1999. (2) A state employee, as defined by subdivision (c) of Section 3513, in State Bargaining Unit 19 who becomes a state member of the system after July 1, 1998. (3) A state employee, as defined by subdivision (c) of Section 3513, who becomes a state member of the system after January 1, 2000, and is a member of a state bargaining unit that has agreed to this section. (4) A state employee who becomes a state member of the system after January 1, 2000, and is either excluded from the definition of a state employee in subdivision (c) of Section 3513, or a nonelected officer or employee of the executive branch of government who is not a member of the civil service. (b) The percentage of the employer contribution payable for postretirement dental care benefits for an employee subject to this section shall be based on the funding provision of the plan and the completed years of credited state service at retirement as shown in the following table: Credited Percentage of Years Employer of Service Contribution 10 50 11 55 12 60 13 65 14 70 15 75 16 80 17 85 18 90 19 95 20 or more 100 (c) This section only applies to state employees who retire for service. (d) Benefits provided to an employee subject to this section shall be applicable to all future state service. (e) For purposes of this section, "state service" means service rendered as an employee or an appointed or elected officer of the state for compensation. Notwithstanding Section 22826, for purposes of this section, credited state service includes service to the state for which the employee, pursuant to Section 20281.5, did not receive credit. (f) In those cases where the state has assumed from a public agency a function and the related personnel, service rendered by that personnel for compensation as employees or appointed or elected officers of that public agency may not be credited as state service for the purposes of this section, unless the former employer has paid or agreed to pay the state the amount actuarially determined to equal the cost for any employee dental benefits that were vested at the time that the function and the related personnel were assumed by the state, and the Department of Finance finds that the contract contains a benefit factor sufficient to reimburse the state for the amount necessary to fully compensate for the postretirement dental benefit costs of those personnel. For noncontracting public agencies, the state agency that has assumed the function shall certify the completed years of public agency service to be credited to the employee as state service credit under this section. (g) This section does not apply to employees of the California State University or the Legislature. SEC. 38. Section 75071 of the Government Code is amended to read: 75071. (a) Optional settlement one consists of the right to have a retirement allowance paid to the judge for life and if he or she dies before receiving the amount of his or her accumulated contributions at retirement, to have the balance at death paid to his or her designated beneficiary or, if no beneficiary designation is in effect on the date of death, to his or her estate. (b) (1) Optional settlement two consists of the right to have a retirement allowance paid to him or her for life and thereafter to his or her designated beneficiary for life. (2) If the judge's designated beneficiary 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 beneficiary 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 annulled or if the retired judge and his or her beneficiary spouse are legally separated and the judgment dividing their community property awards the total interest in this system to the retired judge, 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 him or her for life, and thereafter to have one-half of his or her retirement allowance paid to his or her designated beneficiary for life. (2) If the judge's designated beneficiary 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 beneficiary 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 annulled or if the retired judge and his or her beneficiary spouse are legally separated and the judgment dividing their community property awards the total interest in this system to the retired judge, 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. (d) Optional settlement four consists of other benefits that are the actuarial equivalent of his or her retirement allowance, that he or she may select subject to the approval of the Judges' Retirement System. (e) When a judge elects, on or after January 1, 2003, to receive benefits provided by paragraph (2) of subdivision (b) or paragraph (2) of subdivision (c), and the judge and his or her optional settlement beneficiary both die before receiving in annuity payments the full amount of the judge's accumulated contributions at retirement, the balance of the judge's accumulated contributions shall be paid to the beneficiary designated by the judge. If the judge had no designated beneficiary in effect on the date of death, payment shall be made to the judge's estate.