BILL NUMBER: AB 3044 CHAPTERED 07/21/08 CHAPTER 164 FILED WITH SECRETARY OF STATE JULY 21, 2008 APPROVED BY GOVERNOR JULY 21, 2008 PASSED THE SENATE JUNE 30, 2008 PASSED THE ASSEMBLY JULY 3, 2008 AMENDED IN SENATE JUNE 17, 2008 AMENDED IN ASSEMBLY APRIL 3, 2008 INTRODUCED BY Committee on Public Employees, Retirement and Social Security (Hernandez (Chair), Mullin, Soto, and Torrico) FEBRUARY 25, 2008 An act to amend Sections 31458.3, 31458.4, 31459, 31522.5, 31529.9, 31663.25, 31663.26, 31664.15, 31664.65, and 31808.6 of, to add Section 31836.2 to, and to repeal Section 31639.4 of, the Government Code, relating to county employees' retirement. LEGISLATIVE COUNSEL'S DIGEST AB 3044, Committee on Public Employees, Retirement and Social Security. County employees' retirement. (1) The County Employees Retirement Law of 1937 governs retirement plans for county employees. This bill would make various technical, nonsubstantive changes to the County Employees Retirement Law of 1937 by deleting obsolete provisions and updating references. (2) Existing law, applicable to the County of Los Angeles and any other county that has elected to apply this provision, provides that a member's ex-spouse who is receiving or is entitled to receive payments under the above retirement system pursuant to an order of the court dividing the community property interest in the member's retirement allowance may designate one or more beneficiaries who shall receive those payments following the death of the ex-spouse. This bill would provide, in addition, that if there is no designated beneficiary, payment shall be made to the estate of the ex-spouse. (3) Existing law requires that certain expenses relating to administration of a county retirement system be charged against the earnings of the retirement fund. Existing law, applicable in certain counties, including the Counties of Orange and San Bernardino, provides that the board of retirement pay, from system assets, reasonable compensation for legal services. Existing law, applicable to the Counties of Orange and San Bernardino, allows the board of retirement to appoint specified administrative personnel, including legal counsel, and requires that compensation of personnel so appointed be an expense of administration of the retirement system. This bill would clarify the requirement that the boards of retirement for the Counties of Orange and San Bernardino pay reasonable compensation for legal services from system assets. This bill would also incorporate an additional technical change in the provisions described above that would be operative only if AB 2666 and this bill are both operative and become effective on or before January 1, 2009, and AB 2666 adds a specified section to the Government Code. (4) Under existing law, a board of supervisors may, by resolution, require that the retirement allowance of safety members in a specified category within a county employee retirement plan be computed based on a member's eligibility for federal old age and survivors' insurance coverage. This bill would allow a board of supervisors, in addition, to require that the retirement allowance of safety members in another specified category within a county employee retirement plan be computed based on a member's eligibility for federal old age and survivors' insurance coverage. (5) Existing law permits the board of supervisors of a county to make different, specified pension benefit formulas applicable to members who are classified as safety members. Certain of these pension benefit formulas prohibit a safety member from continuing to make employee contributions to the retirement fund if the member has credit for 30 years continuous service. Existing law provides for reciprocity of retirement benefits for a member of a retirement system established under the County Employees Retirement Law of 1937 and other specified public retirement systems who retires concurrently from those retirement systems, as specified. This bill would provide, in Los Angeles, that service for the purposes of specified pension benefit formulas applicable to safety members includes service as an employee of the state, a contracting agency under the Public Employees' Retirement System, another county having a retirement system established under the County Employees Retirement Law of 1937, or another public agency, as specified. The bill would specify that these provisions are declaratory of existing law. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 31458.3 of the Government Code is amended to read: 31458.3. (a) A member's ex-spouse who is receiving or is entitled to receive payments from the system, including a portion of the surviving spouse's allowance, pursuant to an order of the court dividing the community property interest in the member's retirement allowance may designate one or more beneficiaries who shall receive those payments following the death of the ex-spouse. If there is no designated beneficiary, payment shall be made to the estate of the ex-spouse. Those payments shall terminate upon the death of the member or the surviving spouse. (b) This section applies only to a county of the first class, as defined by Section 28020, as amended by Chapter 1204 of the Statutes of 1971, and Section 28022, as amended by Chapter 43 of the Statutes of 1961. SEC. 2. Section 31458.4 of the Government Code is amended to read: 31458.4. (a) A member's ex-spouse who is receiving or is entitled to receive payments from the system, including a portion of the surviving spouse's allowance, pursuant to an order of the court dividing the community property interest in the member's retirement allowance may designate one or more beneficiaries who shall receive those payments following the death of the ex-spouse. If there is no designated beneficiary, payment shall be made to the estate of the ex-spouse. Those payments shall terminate upon the death of the member or the surviving spouse. (b) This section shall not be operative in any county until the board of supervisors, by resolution, makes this section applicable in the county. SEC. 3. Section 31459 of the Government Code is amended to read: 31459. (a) In a county in which a board of investments has been established pursuant to Section 31520.2: (1) As used in Sections 31453, 31453.5, 31454, 31454.1, 31454.5, 31472, 31588.1, 31589.1, 31591, 31592.3, 31594, 31595.1, 31595.9, 31596, 31596.1, 31601.1, 31607, 31611, 31616, 31625, 31784, and 31872, "board" means a board of investments. (2) As used in the first paragraph of Section 31592.2, "board" means a board of investments. (3) Sections 31510.4, 31522, 31523, 31524, 31525, 31528, 31529, 31529.5, 31595, 31618, 31680, and 31680.1 apply to both the board of retirement and board of investments, and "board" means both "board of retirement" and "board of investments." (b) In Article 17 (commencing with Section 31880), "board" means the Board of Administration of the Public Employees' Retirement System. (c) In all other cases, "board" means the board of retirement. SEC. 4. Section 31522.5 of the Government Code is amended to read: 31522.5. (a) In a county in which the board of retirement has appointed personnel pursuant to Section 31522.1, the board of retirement may appoint an administrator, an assistant administrator, a chief investment officer, senior management employees next in line of authority to the chief investment officer, subordinate administrators, senior management employees next in line of authority to subordinate administrators, and legal counsel. (b) Notwithstanding any other provision of law, the personnel appointed pursuant to this section may not be county employees but shall be employees of the retirement system, subject to terms and conditions of employment established by the board of retirement. Except as specifically provided in this subdivision, all other personnel shall be county employees for purposes of the county's employee relations resolution, or equivalent local rules, and the terms and conditions of employment established by the board of supervisors for county employees, including those set forth in a memorandum of understanding. (c) Except as otherwise provided by Sections 31529.9 and 31596.1, the compensation of personnel appointed pursuant to this section shall be an expense of administration of the retirement system, pursuant to Section 31580.2. (d) The board of retirement and board of supervisors may enter into any agreements as may be necessary and appropriate to carry out the provisions of this section. (e) Section 31522.2 is not applicable to any retirement system that elects to appoint personnel pursuant to this section. (f) This section shall apply only in Orange County. (g) This section shall apply to the retirement system established under this chapter in San Bernardino County at such time as the board of retirement, by resolution, makes this section applicable in that county. SEC. 5. Section 31529.9 of the Government Code is amended to read: 31529.9. (a) In addition to the powers granted by Sections 31522.5, 31529, 31529.5, 31614, and 31732, the board of retirement and the board of investment may contract with the county counsel or with attorneys in private practice or employ staff attorneys for legal services. (b) Notwithstanding Sections 31522.5, 31529.5, and 31580, the board shall pay, from system assets, reasonable compensation for the legal services. (c) This section applies to any county of the 2nd class, 7th class, 14th class, 15th class, or the 16th class as described by Sections 28020, 28023, 28028, 28035, 28036, and 28037. (d) This section shall also apply to any other county if the board of retirement, by resolution adopted by majority vote, makes this section applicable in the county. SEC. 5.5. Section 31529.9 of the Government Code is amended to read: 31529.9. (a) In addition to the powers granted by Sections 31522.5, 31522.7, 31529, 31529.5, 31614, and 31732, the board of retirement and the board of investment may contract with the county counsel or with attorneys in private practice or employ staff attorneys for legal services. (b) Notwithstanding Sections 31522.5, 31522.7, 31529.5, and 31580, the board shall pay, from system assets, reasonable compensation for the legal services. (c) This section applies to any county of the 2nd class, 7th class, 14th class, 15th class, or the 16th class as described by Sections 28020, 28023, 28028, 28035, 28036, and 28037. (d) This section shall also apply to any other county if the board of retirement, by resolution adopted by majority vote, makes this section applicable in the county. SEC. 6. Section 31639.4 of the Government Code is repealed. SEC. 7. Section 31663.25 of the Government Code is amended to read: 31663.25. Except as provided in Section 31663.26, any safety member who has reached the applicable compulsory age of retirement, if any, or any safety member who has completed 10 years of continuous service and who has reached the age of 50, or any safety member who has completed 20 years of service regardless of age, may be retired upon filing with the board a written application setting forth the date upon which he or she desires his or her retirement to become effective which shall be not more than 60 days after the date of filing the application. SEC. 8. Section 31663.26 of the Government Code is amended to read: 31663.26. Notwithstanding Section 31663.25, any safety member who has reached the applicable compulsory age of retirement, if any, or any safety member who is a full-time employee, has completed 10 years of service, has reached the age of 50, and has no service break which exceeds 12 months, or any safety member who has completed 20 years of service regardless of age, may be retired upon filing with the board a written application setting forth the date upon which he or she desires his or her retirement to become effective which shall be not more than 60 days after the date of filing the application. This section shall not be operative in any county until such time as the board of supervisors shall, by ordinance, make this section applicable in the county. SEC. 9. Section 31664.15 of the Government Code is amended to read: 31664.15. Notwithstanding any other provisions of this chapter, a safety member who enters the system with credit for prior service and retires upon completion of 20 years of continuous service and a total of 25 years of service after attaining age 50 whose retirement allowance is less than one-half of his or her final compensation, his or her prior service pension shall be increased so as to cause his or her total retirement allowance to amount to one-half of that final compensation. SEC. 10. Section 31664.65 of the Government Code is amended to read: 31664.65. If a member retires with credit for time during which he or she was not a safety member or a member of a system established pursuant to either Chapter 4 (commencing with Section 31900) or Chapter 5 (commencing with Section 32200), he or she shall receive for that time: (a) A retirement allowance calculated pursuant to Section 31664 for time during which he or she was employed principally in active law enforcement or active fire suppression as described in Section 31470.2 or Section 31470.4 by a county, or by a district or court organized or existing within such county, or was a member of a system established pursuant to either Chapter 4 (commencing with Section 31900) or Chapter 5 (commencing with Section 32200), plus a retirement allowance calculated under either subdivision (b) or (c), whichever is applicable. (b) A retirement allowance calculated pursuant to Section 31664 for all prior county service with such county, and for any public service credit for which the member has elected to receive pursuant to Section 31641.1 or 31641.5. This subdivision shall apply only to a member who, when the board of supervisors pursuant to Section 31695.1 provides that provisions of this chapter relating to safety members shall apply to all employees of the county whose principal duties consist of active law enforcement or active fire suppression as defined in Section 31470.2 or 31470.4, was employed by the county principally in active law enforcement or active fire suppression as defined by such sections and who elected to be included within such safety member provisions at the time and in the manner prescribed by Section 31695.2. (c) A retirement allowance calculated pursuant to Article 8 (commencing with Section 31670) for time during which he or she was not engaged principally in active law enforcement or active fire suppression as described in Section 31470.2 or 31470.4, nor a member of a system established pursuant to either Chapter 4 (commencing with Section 31900) or Chapter 5 (commencing with Section 32200). This subdivision shall apply to any member to whom subdivision (b) is not applicable. The provisions of this section shall be applicable irrespective of whether a member is, at the time of retirement, a safety member or a general member. SEC. 11. Section 31808.6 of the Government Code is amended to read: 31808.6. (a) Notwithstanding any other provision of law, in any county or district first subject to the provisions of Section 31676.1 or 31695.1 on or after July 1, 1969, having members performing the duties of safety members as defined in Sections 31470.2 and 31470.4, if the board of supervisors adopts this section and as to those members adopts or has already adopted the provisions of this article, then the retirement allowance of those safety members shall be computed according to the applicable provisions of this subdivision, as selected by the board of supervisors. (1) The retirement allowance shall be computed according to the provisions of Section 31664 or 31664.1, and federal old age and survivors' insurance coverage shall be on an additive or supplemental basis. (2) If Section 31664 applies, the retirement allowance shall equal the total of both of the following: (A) The retirement allowance for service rendered prior to the effective date of the resolution specified in Section 31800 shall be computed in accordance with the provisions of Section 31664. (B) The retirement allowance for service performed after the effective date of the resolution shall equal the total of both of the following: (i) The fraction of one seventy-fifth of the first three hundred fifty dollars ($350) monthly of the member's final compensation set forth in the table appearing in Section 31664 in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service as provided in that section. (ii) The fraction of one-fiftieth of any remaining portion of the member's final compensation set forth in the table appearing in Section 31664 in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service. (3) If Section 31664.1 applies, the retirement allowance shall equal the total of both of the following: (A) The retirement allowance for service rendered prior to the effective date of the resolution specified in Section 31800 shall be computed in accordance with the provisions of Section 31664.1. (B) The retirement allowance for service rendered after the effective date of the resolutions shall equal the total of both of the following: (i) The fraction of one seventy-fifth of the first three hundred fifty dollars ($350) monthly of the member's final compensation set forth in the table appearing in Section 31664.1 in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service as provided in that section. (ii) Three percent of any remaining portion of the member's final compensation set forth in the table appearing in Section 31664.1 in the column applicable to his or her age at retirement taken to the preceding completed quarter year multiplied by the number of years of creditable service. (b) Notwithstanding any other provision of law, in counties which have adopted the provisions of this section and have voted to apply the provisions of this chapter relating to safety members as provided by Section 31695.1, the retirement benefits as well as the contributions of eligible members subject to this article who do not elect pursuant to Section 31695.2 to come under the safety member provisions of this chapter, shall be the same as the retirement benefits and contributions of members other than safety members in the county. (c) The retirement allowance for any safety member who is not subject to this article shall be computed in accordance with the provisions of Section 31664. (d) Any member who becomes a safety member after the effective date of the selection of the method of computing the retirement allowance by the board of supervisors shall be subject to that selection and to the provisions of this article. (e) Any member subject to the selection described in subdivision (d) made by the board of supervisors may elect deferred retirement pursuant to Article 9 (commencing with Section 31700). SEC. 12. Section 31836.2 is added to the Government Code, to read: 31836.2. (a) "Service," for the purpose of qualifying members for the discontinuance of contributions pursuant to Section 31664, 31664.1, or 31664.2 shall also include service as an employee of the state, a contracting agency under the Public Employees' Retirement System, another county having a retirement system established under this chapter, or any other public agency if the compensation for the service constitutes compensation earnable by a member under Section 31835. (b) This section shall apply only in a county of the first class, as defined by Section 28020, as amended by Chapter 1204 of the Statutes of 1971. (c) This section is declaratory of existing law. SEC. 13. Section 5.5 of this bill makes changes to Section 31529.9 of the Government Code to reference a section that AB 2666 proposes to add. Section 5.5 of this bill shall only become operative if (1) AB 2666 and this bill are both enacted and become effective on or before January 1, 2009, and (2) AB 2666 adds Section 31522.7 to the Government Code, in which case Section 5 of this bill shall not become operative.