AB 1987 Assembly Bill

BILL NUMBER: AB 1987	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 2, 2010
	AMENDED IN ASSEMBLY  JUNE 1, 2010
	AMENDED IN ASSEMBLY  APRIL 29, 2010
	AMENDED IN ASSEMBLY  APRIL 15, 2010

INTRODUCED BY   Assembly Member Ma
   (Principal coauthor: Assembly Member Buchanan)
   (Principal coauthors: Senators Correa and Simitian)
   (Coauthors: Assembly Members Furutani and Torrico)
    (   Coauthor:   Senator
  DeSaulnier   ) 

                        FEBRUARY 17, 2010

   An act to amend Sections  31460 and 31461  
31460, 31461, 31468, and 31522.5  of, to add Sections 7500.5,
31460.2, 31461.8,  31522.8,  31539.5, 31540, 31541, 31569,
31680.10, 45309.6, 45309.7, 50871.6, and 50871.7 to, and to repeal
and add Section 31539 of, the Government Code, relating to public
retirement systems.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1987, as amended, Ma. Public retirement: final compensation:
computation: retirees. 
   The 
    (1)     The  Public Employees'
Retirement Law (PERL) creates the Public Employees' Retirement System
(PERS), which provides a defined benefit to its members based on age
at retirement, service credit, and final compensation. PERL defines
"final compensation" for purposes of calculating a member's
retirement allowance. The State Teachers' Retirement Law, which
applies to specified school employees, and the retirement laws for
county employees and city employees also provide for a defined
benefit based on age at retirement, service credit, and final
compensation.
   This bill would generally provide, effective July 1, 2011, that
any change in salary, compensation, or remuneration principally for
the purpose of enhancing a member's benefits would not be included in
the calculation of a member's final compensation for purposes of
determining that member's defined benefit. The bill would require the
board of each state and local public retirement system to establish,
by regulation, accountability provisions that would include an
ongoing audit process to ensure that a change in a member's salary,
compensation, or remuneration is not made principally for the purpose
of enhancing a member's retirement benefits. This bill would limit
the calculation of a member's final compensation to an amount not to
exceed the average increase in compensation received within the final
compensation period and the 2 preceding years by employees in the
same or a related group as that member. This bill would also require
a board of each state and local public retirement system to
establish, by regulation, a requirement that a retired person may not
perform services for any employer covered by a state or local
retirement system until that person has been separated from service
for a period of at least 180 days. This bill would provide for the
implementation of the changes under the applicable retirement laws
that apply to counties and cities.
   This bill includes legislative findings expressing the public
purpose that would be served by the enactment of this bill. 
   This  
   (2) The County Employees Retirement Law of 1937 (CERL) authorizes
counties and districts, as defined, to provide retirement benefits to
its employees. Existing law generally defines the term "district"
for purposes of CERL, by reference to a specified entity or county
that elects to provide retirement benefits under CERL. CERL
authorizes the board of the retirement systems of Orange County and
San Bernardino County to appoint specified management, investment,
and legal personnel and provides that these appointees are classified
as employees of the retirement board rather than as county
employees, subject to the civil service system.  
   This bill would revise the definition of "district" for purposes
of CERL to include any retirement system that, by resolution, makes
that retirement system subject to the CERL. This bill would require
that new district to elect to have either specified management,
investment, and legal personnel appointed as employees of the
retirement board, rather than as county employees, or elect to have
all personnel appointed to administer that retirement system
appointed as employees of the retirement system, subject to specified
conditions and with specified benefits, rather than as county
employees. 
    (3)     This  bill would, except as
otherwise specified, provide that its provisions would become
operative on July 1, 2011. This bill would further provide that its
provisions would not become operative unless SB 1425 of the 2009-10
Regular Session is also enacted and takes effect on or before January
1, 2011.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  (a) The Legislature finds and declares that:
   (1) State and local public retirement boards have been authorized
under the law to administer retirement systems that provide adequate,
secure retirement benefits to participants who dedicate their life's
work to public service, and their beneficiaries.
   (2) Employees partner with their public agency employers to fund
this benefit.
   (3) Any manipulation of those benefits creates harm for the
employees, beneficiaries, employers, and taxpayers and should not be
permitted.
   (b) The Legislature further finds and declares that:
   (1) The efficacy of the retirement systems is threatened by the
behavior of those who seek to unfairly and unjustifiably enhance or
"spike" their pensions.
   (2) Neither the Legislature nor the courts ever anticipated a
circumstance where the application of the retirement law would result
in a method that permits inequitable application of compensation
rules in order to enhance an individual's retirement allowance.
   (3) It is the responsibility of the Legislature to provide
guidance to every retirement system so that each system can determine
the proper elements that go into calculating a member's retirement
benefit as recognized by the laws governing each retirement system.
   (4) Retirement systems must employ sound principles that provide
consistent treatment of compensation earnable throughout a member's
career and consistent treatment of compensation among all classes of
employees.
   (5) In order to provide consistent treatment across the retirement
systems, the reporting procedures used by each retirement system and
its participating employers must be sufficiently precise so as to
enable the retirement system to distinguish between items of
remuneration that are and are not properly included in a member's
final compensation.
   (c) The Legislature further finds and declares that consistent
administration of state and local public retirement systems is a
matter of statewide concern.
   (d) The Legislature further finds and declares that the procedures
contained in this act provide the appropriate method for resolving
the inequitable application of compensation rules, and therefore,
provide for the consistent administration of state and local
retirement systems that is in the public's best interest.
  SEC. 2.  Section 7500.5 is added to the Government Code, to read:
   7500.5.  (a) In order to safeguard the integrity and soundness of
public retirement systems, ensure prompt delivery of benefits and
related services to the participants and their beneficiaries, and
minimize employer expenses, state and local public retirement systems
shall administer retirement benefits in accordance with the
principles articulated in this section. Nothing in this section shall
be construed to limit the Legislature's authority to adopt more
restrictive benefit provisions applicable to a state or local public
retirement system.
   (b) The board of each state and local public retirement system
shall establish, by statute or regulation, accountability provisions
that shall include an audit process to ensure compliance with the
principles articulated in the provisions of this section. The
accountability provisions shall be enforceable by the imposition of
monetary penalties or fees, including, but not limited to, untimely
or inaccurate submissions of any information that the board may
require in the administration of the system.
   (c) Any payrate, salary, special compensation, or other
remuneration determined by the board of a state or local public
retirement system to have been paid for the principal purpose of
enhancing a member's retirement benefits under that system shall not
be included in compensation earnable. Where the board of a state or
local public retirement system determines that payrate, salary,
special compensation, or other remuneration was paid for the
principal purpose of enhancing a member's benefit, the member or the
employer may present evidence to the contrary. Upon receipt of
sufficient evidence to the contrary, a board may reverse its
determination that payrate, salary, special compensation, or other
remuneration was paid for the principal purpose of enhancing a member'
s retirement benefits.
   (d) Cash conversions of accrued employee benefits in amounts that
exceed the amount that is both earned and payable to the member
during the member's applicable final compensation measurement period
shall not be credited to, or included in, compensation earnable by
any state or local public retirement system.
   (e) Final settlement pay or any similar payment that is received
by a member upon retirement or separation from employment, shall not
be included in compensation earnable by any state or local public
retirement system.
   (f) A retired person, who has not reinstated following retirement,
shall have a separation in service for a period of at least 180 days
before performing service for any employer covered by the state or
local retirement system from which he or she retired, whether as an
employee, through a third party, or as an independent contractor.
This requirement shall apply to all persons who retire on and after
January 1, 2011.
   (g) Any increase in compensation earnable for an employee who is
not in a group or class shall not exceed, during the final
compensation period as well as two years immediately preceding the
final compensation period, the average increase in compensation
earnable during the same period for all similarly situated members in
the closest related group or class of that same employer.
   (h) For the purposes of implementing this section, all state or
local public retirement systems shall have terms or definitions
consistent with the following:
   (1) "A group or class" means a number of employees of the same
employer considered together because they share job similarities,
work location, collective bargaining unit, or other logical work
grouping. Under no circumstance shall one employee be considered a
group or class.
   (2) "Payrate" or "salary" means the normal  monthly
 rate of pay or  monthly  base pay of the
member paid in cash and pursuant to publicly available pay schedules
to similarly situated members of the same group or class for services
rendered on a full-time basis during normal working hours.
   (3) "Payrate" or "salary" for a member who is not in a group or
class means the  monthly  rate of pay or 
monthly  base pay, paid in cash and pursuant to publicly
available pay schedules, for services rendered on a full-time basis
during normal working hours, subject to the limitations of
subdivision (g).
   (4) "Special compensation" includes a payment received for special
skills, knowledge, abilities, work assignment, workdays or hours, or
other work conditions.
   (5) "Compensation earnable" includes payrate, salary, special
compensation, or other remuneration, or any combination of the
foregoing, of the member.
  SEC. 3.  Section 31460 of the Government Code is amended to read:
   31460.  (a) "Compensation" means the remuneration paid out of
funds controlled by the county or district in payment for the member'
s services performed during normal working hours or for time during
which the member is excused from work because of any of the
following:
   (1) Sick leave.
   (2)  Industrial   Service connected 
disability leave, during which benefits are payable pursuant to
Section 4850 of the Labor Code.
   (3) Vacation.
   (4) Compensatory time off.
   (5) Leave of absence.
   (b) When compensation is reported to the board, the county or
district shall identify the pay period in which the compensation was
earned regardless of when reported or paid. Compensation shall be
reported in accordance with Section 31461 and shall not exceed
compensation earnable, as defined in Section 31461.
   (c) Compensation shall not include the monetary value of board,
lodging, fuel, laundry, or other advantages furnished to a member.
   (d) The board may assess a reasonable amount to cover the cost of
audit, adjustment, or correction, where it determines that a county
or district knowingly failed to comply with subdivision (b). A county
or district will be found to have knowingly failed to comply with
subdivision (b) if the board determines that the employer either:
   (1) Knew or should have known that the compensation reported was
not compensation earnable, as defined in Section 31461.
   (2) Failed to identify the pay period in which compensation
earnable was earned as required.
   (e) A county or district shall not pass on to an employee any
costs assessed pursuant to subdivision (d).
  SEC. 4.  Section 31460.2 is added to the Government Code, to read:
   31460.2.  "Labor policy or agreement" means any written policy,
agreement, memorandum of understanding, legislative action of the
board of supervisors or the district board, or any other document
used by the county or district to specify the payrate, special
compensation, and benefits of represented and unrepresented
employees.
  SEC. 5.  Section 31461 of the Government Code is amended to read:
   31461.  (a) "Compensation earnable" by a member means the payrate
and special compensation of the member, as defined by subdivisions
(b) and (c).
   (b) (1) "Payrate"  or "salary"  means the normal 
monthly  rate of pay or  monthly  base pay
of the member paid in cash to similarly situated members of the same
group or class of employment for services rendered on a full-time
basis during normal working hours. "Payrate"  or "salary" 
for a member who is not in a group or class means the 
monthly  rate of pay or base pay of the member, paid in cash
and pursuant to publicly available pay schedules, for services
rendered on a full-time basis during normal working hours. "Payrate"
 or "salary"  includes:
   (A) Any amount deducted from a member's salary for any of the
following:
   (i) Participation in a deferred compensation plan established
pursuant to Article 1.1 (commencing with Section 53212) of Chapter 2
of Part 1 of Division 2 of Title 5.
   (ii) Payment for participation in a retirement plan that meets the
requirements of Section 457 of the Internal Revenue Code.
   (iii) Payment into a money purchase pension plan and trust that
meets the requirements of Section 401(a) of the Internal Revenue
Code.
   (iv) Participation in a flexible benefits program. 
   (B) Any payment in cash by the member's employer to one other than
an employee for the purpose of purchasing an annuity contract for a
member under an annuity plan that meets the requirements of Section
403(b) of the Internal Revenue Code.  
   (C) 
    (B)  Member contributions that meet the requirements of
Section 414(h)(2) of the Internal Revenue Code. 
   (D) 
    (C)  Any disability or workers' compensation payments to
safety members in accordance with Section 4850 of the Labor Code.
   (2) The computation for any leave without pay of a member shall be
based on the compensation earnable by him or her at the beginning of
the absence.
   (3) The computation for time prior to entering county or district
service shall be based on the compensation earnable by him or her in
the position first held by him or her in that service.
   (c) (1) "Special compensation" of a member includes any payment
received for special skills, knowledge, abilities, work assignment,
workdays or hours, or other work conditions.
   (2) "Special compensation" shall be limited to that cash
remuneration in addition to payrate received by a member pursuant to
a labor policy or agreement or as otherwise required by state or
federal law to similarly situated members of a group or class of
employment. If an individual is not part of a group or class,
"special compensation" shall be limited to that cash remuneration, in
addition to payrate, that the board determines is received by
similarly situated members in the closest related group or class,
subject to the limitations of paragraph (2) of subdivision (e).
   (3) "Special compensation" shall be for services rendered during
normal working hours and, when reported to the board, the county or
district shall identify the pay period in which the special
compensation was earned and shall report special compensation
separately from payrate.
   (4) The monetary value of any service or noncash advantage
furnished by the employer to the member, except as expressly and
specifically provided in this chapter, shall not be "special 
compensation" unless regulations promulgated by the board
specifically determine that value to be "special compensation."
  compensation." 
   (5) (A) The board shall promulgate regulations that delineate more
specifically what shall be excluded from "special compensation" as
used in this section. A uniform allowance, the monetary value of
employer-provided uniforms, holiday pay, and premium pay for hours
worked within the normally scheduled or regular working hours that
are in excess of the statutory maximum workweek or work period
applicable to the employee under the Fair Labor Standards Act (29
U.S.C. Sec. 201 et seq.) and those items of remuneration identified
by the board and consistent with Ventura County Deputy Sheriffs'
Assn. v. Board of Retirement (1997) 16 Cal.4th 483 and In re
Retirement Cases (2003) 110 Cal.App.4th 426 and any settlement
agreements thereto, shall be included as "special compensation."
   (B) This paragraph shall not be construed to prevent a county or
district and a recognized bargaining unit from agreeing, pursuant to
a memorandum of understanding made under the Meyers-Milias-Brown Act
(Chapter 10 (commencing with Section 3500) of Division 4 of Title 1),
to eliminate, as "special compensation" those items of remuneration
as previously identified by the board, consistent with Ventura County
Deputy Sheriffs' Assn. v. Board of Retirement (1997) 16 Cal.4th 483
and In re Retirement Cases (2003) 110 Cal.App.4th 426 and any
settlement agreements thereto.
   (6) "Special compensation" does not include any of the following:
   (A) Final settlement pay.
   (B) Payments made for additional services rendered outside of
normal working hours, whether paid in lump sum or otherwise.
   (C) Payments that exceed that which is earned and payable in a
12-month period for unused vacation, annual leave, personal leave,
sick leave, or compensatory time off whether paid in lump sum or
otherwise.
   (D) Any other payments the board has affirmatively determined to
be excluded from "special compensation."
   (d) Notwithstanding any other provision of law, payrate and
special compensation schedules, ordinances, or similar documents
shall be public records available for public scrutiny.
   (e) (1) As used in this part, "group or class of employment" means
a number of employees considered together because they share job
similarities, work location, collective bargaining unit, or other
logical work-related grouping. Under no circumstances shall one
employee be considered a group or class.
   (2) Increases in compensation earnable granted to any employee who
is not in a group or class shall be limited during the final
compensation period applicable to the employee, as well as the two
years immediately preceding the final compensation period, to the
average increase in compensation earnable during the same period
reported by the employer for all similarly situated members in the
closest related group or class who are in the same membership
classification.
   (f) (1) As used in this part, "final settlement pay" means any pay
or cash conversions of employee benefits that are in excess of
compensation earnable, that are granted or awarded to a member in
connection with a separation from employment. The board shall
promulgate regulations to the extent necessary to delineate more
specifically what constitutes final settlement pay consistent with
the decision of the court in Ventura County Deputy Sheriffs' Assn. v.
Board of Retirement (1997) 16 Cal.4th 483 and In re Retirement Cases
(2003) 110 Cal.App.4th 426, and any settlement agreements thereto.
   (2) This subdivision shall not be construed to prevent a county or
district and a recognized bargaining unit from agreeing, pursuant to
a memorandum of understanding made under the Meyers-Milias-Brown Act
(Chapter 10 (commencing with Section 3500) of Division 4 of Title
1), to further eliminate, as "special compensation" those items of
final settlement pay as previously delineated by the board,
consistent with the decisions in Ventura County Deputy Sheriffs'
Assn. v. Board of Retirement (1997) 16 Cal.4th 483 and In re
Retirement Cases (2003) 110 Cal.App.4th 426 and any settlement
agreements thereto. 
   (g) Nothing in this section shall be construed to require a county
or district to include as compensation earnable any remuneration,
whether payrate or special compensation, that the county or district
did not include prior to January 1, 2011. 
  SEC. 6.  Section 31461.8 is added to the Government Code, to read:
   31461.8.  (a)  If   Consistent with Section
31461.6, if  the compensation of a member is a factor in any
computation to be made under this chapter, there shall be excluded
from those computations any compensation based on overtime put in by
a member whose service retirement allowance is a fixed percentage of
final compensation for each year of credited service. For the
purposes of this chapter, overtime is the aggregate service performed
by an employee as a member in all categories of employment in excess
of the hours of work considered normal for employees on a full-time
basis, and for which monetary compensation is paid.
   (b) If a member concurrently renders service in two or more
positions, one or more of which is full time, service in the
part-time position shall constitute overtime. If two or more
positions are permanent and full time, the position with the highest
payrate or base pay shall be reported to the retirement system. This
provision shall apply only to service rendered on or after January 1,
2011.
   SEC. 7.    Section 31468 of the   Government
Code   is amended to read: 
   31468.  (a) "District" means a district, formed under the laws of
the state, located wholly or partially within the county other than a
school district.
   (b) "District" also includes any institution operated by two or
more counties, in one of which there has been adopted an ordinance
placing this chapter in operation.
   (c) "District" also includes any organization or association
authorized by Chapter 26 of the Statutes of 1935, as amended by
Chapter 30 of the Statutes of 1941, or by Section 50024, which
organization or association is maintained and supported entirely from
funds derived from counties, and the board of any retirement system
is authorized to receive the officers and employees of that
organization or association into the retirement system managed by the
board.
   (d) "District" also includes, but is not limited to, any sanitary
district formed under Part 1 (commencing with Section 6400) of
Division 6 of the Health and Safety Code.
   (e) "District" also includes any city, public authority, public
agency, and any other political subdivision or public corporation
formed or created under the constitution or laws of this state and
located or having jurisdiction wholly or partially within the county.

   (f) "District" also includes any nonprofit corporation or
association conducting an agricultural fair for the county pursuant
to a contract between the corporation or association and the board of
supervisors under the authority of Section 25905.
   (g) "District" also includes the Regents of the University of
California, but with respect only to employees who were employees of
a county in a county hospital, who became university employees
pursuant to an agreement for transfer to the regents of a county
hospital or of the obligation to provide professional medical
services at a county hospital, and who under that agreement had the
right and did elect to continue membership in the county's retirement
system established under this chapter.
   (h) "District" also includes the South Coast Air Quality
Management District, a new public agency created on February 1, 1977,
pursuant to Chapter 5.5 (commencing with Section 40400) of Part 3 of
Division 26 of the Health and Safety Code.
   (1) Employees of the South Coast Air Quality Management District
shall be deemed to be employees of a new public agency occupying new
positions on February 1, 1977. On that date, those new positions are
deemed not to have been covered by any retirement system.
   (2) No retirement system coverage may be effected for an employee
of the South Coast Air Quality Management District who commenced
employment with the district during the period commencing on February
1, 1977, and ending on December 31, 1978, unless and until the
employee shall have elected whether to become a member of the
retirement association established in accordance with this chapter
for employees of Los Angeles County or the retirement association
established in accordance with this chapter for employees of San
Bernardino County. The election shall occur before January 1, 1980.
Any employee who fails to make the election provided for herein shall
be deemed to have elected to become a member of the retirement
association established in accordance with this chapter for the
County of Los Angeles.
   (3) The South Coast Air Quality Management District shall make
application to the retirement associations established in accordance
with this chapter for employees of Los Angeles County and San
Bernardino County for coverage of employees of the South Coast Air
Quality Management District.
   (4) An employee of the South Coast Air Quality Management District
who commenced employment with the district during the period
commencing on February 1, 1977, and ending on December 31, 1978, and
who has not terminated employment before January 1, 1980, shall be
covered by the retirement association elected by the employee
pursuant to paragraph (2). That coverage shall be effected no later
than the first day of the first month following the date of the
election provided for in paragraph (2).
   (5) Each electing employee shall receive credit for all service
with the South Coast Air Quality Management District. However, the
elected retirement association may require, as a prerequisite to
granting that credit, the payment of an appropriate sum of money or
the transfer of funds from another retirement association in an
amount determined by an enrolled actuary and approved by the elected
retirement association's board. The amount to be paid shall include
all administrative and actuarial costs of making that determination.
The amount to be paid shall be shared by the South Coast Air Quality
Management District and the employee. The share to be paid by the
employee shall be determined by good faith bargaining between the
district and the recognized employee organization, but in no event
shall the employee be required to contribute more than 25 percent of
the total amount required to be paid. The elected retirement
association's board may not grant that credit for that prior service
unless the request for that credit is made to, and the required
payment deposited with, the elected retirement association's board no
earlier than January 1, 1980, and no later than June 30, 1980. The
foregoing shall have no effect on any employee's rights to reciprocal
benefits under Article 15 (commencing with Section 31830).
   (6) An employee of the South Coast Air Quality Management District
who commenced employment with the district after December 31, 1978,
shall be covered by the retirement association established in
accordance with this chapter for employees of San Bernardino County.
That coverage shall be effected as of the first day of the first
month following the employee's commencement date.
   (7) Notwithstanding paragraphs (2) and (4) above, employees of the
South Coast Air Quality Management District who were employed
between February 1, 1977, and December 31, 1978, and who terminate
their employment between February 1, 1977, and January 1, 1980, shall
be deemed to be members of the retirement association established in
accordance with this chapter for the employees of Los Angeles County
commencing on the date of their employment with the South Coast Air
Quality Management District.
   (i) "District" also includes any nonprofit corporation that
operates one or more museums within a county of the 15th class, as
described by Sections 28020 and 28036 of the Government Code, as
amended by Chapter 1204 of the Statutes of 1971, pursuant to a
contract between the corporation and the board of supervisors of the
county, and that has entered into an agreement with the board and the
county setting forth the terms and conditions of the corporation's
inclusion in the county's retirement system.
   (j) "District" also includes any economic development association
funded in whole or in part by a county of the 15th class, as
described by Sections 28020 and 28036 of the Government Code, as
amended by Chapter 1204 of the Statutes of 1971, and that has entered
into an agreement with the board of supervisors and the county
setting forth the terms and conditions of the association's inclusion
in the county's retirement system.
   (k) "District" also includes any special commission established in
the Counties of Tulare and San Joaquin as described by Section
14087.31 of the Welfare and Institutions Code, pursuant to a contract
between the special commission and the county setting forth the
terms and conditions of the special commission's inclusion in the
county's retirement system with the approval of the board of
supervisors and the board of retirement.
   (l) (1) "District" also includes the retirement system established
under this chapter in Orange County.
   (2) "District" also includes 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. 
   (3) "District" also includes any retirement system established
under this chapter at such time as the board of retirement, by
resolution, makes this section applicable in that county. Adoption of
the resolution shall first be approved in a memorandum of
understanding made under the Meyers-Milias-Brown Act and executed by
the board of supervisors and the employee representatives of the
majority of represented general employees of the retirement system.

                                               SEC. 8. 
 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. 
   (h) This section shall apply only to a retirement system electing
to become a district pursuant to the authority granted in paragraph
(3) of subdivision (l  ) of Section 31468 at such time as the
board of retirement, by resolution, makes that section applicable in
that county.
   SEC. 9.    Section 31522.8 is added to the  
Government Code   , to read:  
   31522.8.  (a) The board of retirement may elect to appoint
personnel, or may authorize the retirement administrator to appoint
personnel, to administer the system as provided in this section.
   (b) (1) Notwithstanding any other law, the personnel appointed
pursuant to this section shall 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.
   (2) All persons who were appointed as county employees to
retirement system personnel positions pursuant to Sections 31522.1,
31522.2, or 31522.3 shall cease to be county employees and shall
become retirement system employees at their existing or equivalent
classifications as of the date the board of retirement makes this
section applicable in the county pursuant to subdivision (f). All of
the following shall apply to those persons who become retirement
system employees pursuant to this paragraph:
   (A) Employment seniority of a retirement system employee,
including an employee's continuous service date used for purposes of
retirement or other benefits, as calculated and used under the county
system in effect prior to the date this section becomes applicable,
shall be calculated and used in the same manner by the retirement
system at the time the county employees become retirement system
employees, subject to any subsequent revisions the retirement board
may make pursuant to regulations governing terms and conditions of
employment.
   (B) Retirement system employees shall have the same status they
had as probationary, permanent, or regular employees under the county
system in effect on the date this section becomes applicable.
   (C) Retirement system employees shall receive their same salary
rates, leaves of absences, leave accrual rates, including all related
compensation rules and provisions applicable to those salary rates,
leaves, and accrual rates, under the county system that existed on
the date this section becomes applicable, subject to any subsequent
revisions the retirement board may make pursuant to regulations
governing terms and conditions of employment. The retirement board
may contract with the county to administer its payroll system for the
retirement system employees.
   (D) Retirement system employees shall be afforded the opportunity
to continue to participate in county benefit plans and programs,
including, but not limited to, group health, dental, and life
insurance, workers' compensation, and deferred compensation, that
existed on the date this section becomes applicable, subject to any
subsequent revisions the retirement board may make pursuant to
regulations governing terms and conditions of employment. The
retirement board shall contract with the county to administer the
county benefit plans and programs for retirement system employees,
and pursuant to that contract shall pay the county for the employer
cost of those benefits. This contract shall remain in place until the
retirement board makes changes to the benefit plans resulting in
retirement system employees no longer receiving the county benefit
plans and programs.
   (3) Retirement system employees appointed to positions pursuant to
paragraph (1), on or after the date the board of retirement makes
this section applicable in the county, shall be subject to the same
terms and conditions of employment, and provided the same
opportunities to participate in the benefit plans and programs, as
the retirement system employees described under paragraph (2).
   (4) The participation of retirement system employees in county
benefit plans or programs, and the county's administration of certain
compensation or benefits for retirement system employees, pursuant
to this subdivision, shall not create, and shall not be construed to
create, a meet and confer obligation between the county and any
employee organization recognized to represent retirement system
employees.
   (c) The compensation of personnel appointed pursuant to this
section shall be an expense of administration of the retirement
system, pursuant to Section 31580.2, except as otherwise provided in
Section 31529.9 or 31596.1.
   (d) The board of retirement and the county may enter into any
agreements as may be necessary and appropriate to carry out the
provisions of this section.
   (e) Sections 31522.1, 31522.2, and 31522.3 shall no longer apply
to a county electing to be covered by this section. The board of
retirement may make regulations not inconsistent with this chapter,
and the provisions of Section 31525 that require approval by the
board of supervisors for retirement board regulations to be effective
shall not apply to a county electing to be covered by this section.
   (f) This section shall apply only to a retirement system electing
to become a district for the first time pursuant to the authority
granted in paragraph (3) of subdivision (l) of Section 31468 at such
time as the board of retirement, by resolution, makes that section
applicable in that county. 
  SEC. 7.   SEC. 10.   Section 31539 of the
Government Code is repealed.
   SEC. 8.   SEC. 11.   Section 31539 is
added to the Government Code, to read:
   31539.  (a) The obligations of the retirement system to its
members continue throughout their respective memberships, and the
obligations of the retirement system to and in respect to retired
members continue throughout the lives of the respective retired
members, and thereafter until all obligations to their respective
beneficiaries under optional settlements have been discharged. The
obligations of the county or district to the retirement system in
respect to members employed by them, respectively, continue
throughout the memberships of the respective members, and the
obligations of the county or district to the retirement system in
respect to retired members formerly employed by them, respectively,
continue until all of the obligations of the retirement system in
respect to those retired members, respectively, have been discharged.
The obligations of any member to the retirement system continue
throughout his or her membership, and thereafter until all of the
obligations of the retirement system to or in respect to him or her
have been discharged.
   (b) For the purposes of payments into or out of the retirement
fund for adjustment of errors or omissions, the period of limitation
of actions shall be three years, and shall be applied as follows:
   (1) In cases in which the retirement system makes an erroneous
payment to a member or beneficiary, the system's right to collect
shall expire three years from the date of payment.
   (2) In cases in which the retirement system owes money to a member
or beneficiary, the period of limitations shall not apply.
   (c) Notwithstanding subdivision (b), in cases in which payment is
erroneous because of the death of the retired member or beneficiary
or because of the remarriage of the beneficiary, the period of
limitation shall be 10 years and that period shall commence with the
discovery of the erroneous payment.
   (d) Notwithstanding subdivision (b), where any payment has been
made as a result of fraudulent reports for compensation made, or
caused to be made, by a member for his or her own benefit or the
member causing his or her final compensation to be improperly
increased or otherwise overstated at the time of retirement, the
period of limitation shall be 10 years and that period shall commence
either from the date of payment or upon discovery of the fraudulent
reporting, whichever date is later.
   (e) The board shall determine the applicability of the period of
limitations in any case, and its determination with respect to the
running of any period of limitation shall be conclusive and binding
for purposes of correcting the error or omission.
   SEC. 9.   SEC. 12.   Section 31539.5 is
added to the Government Code, to read:
   31539.5.  (a) Subject to subdivisions (c) and (d), the board may,
in its discretion and upon any terms it deems just, correct the
errors or omissions of any active or retired member, or any
beneficiary of an active or retired member, if all of the following
facts exist:
   (1) The request, claim, or demand to correct the error or omission
is made by the party seeking correction within a reasonable time
after discovery of the right to make the correction, which in no case
shall exceed six months after discovery of this right.
   (2) The error or omission was the result of mistake, inadvertence,
surprise, or excusable neglect, as each of those terms is used in
Section 473 of the Code of Civil Procedure.
   (3) The correction will not provide the party seeking correction
with a status, right, or obligation not otherwise available under
this part.
   Failure by a member or beneficiary to make the inquiry that would
be made by a reasonable person in like or similar circumstances does
not constitute an "error or omission" correctable under this section.

   (b) Subject to subdivisions (c) and (d), the board shall correct
all actions taken as a result of errors or omissions of the county or
district, or this system.
   (c) The duty and power of the board to correct mistakes, as
provided in this section, shall terminate upon the expiration of
obligations of this system to the party seeking correction of the
error or omission, as those obligations are defined by Section 31539.

   (d) The party seeking correction of an error or omission pursuant
to this section has the burden of presenting documentation or other
evidence to the board establishing the right to correction pursuant
to subdivisions (a) and (b).
   (e) Corrections of errors or omissions pursuant to this section
shall be such that the status, rights, and obligations of all parties
described in subdivisions (a) and (b) are adjusted to be the same
that they would have been if the act that would have been taken, but
for the error or omission, was taken at the proper time. However,
notwithstanding any of the other provisions of this section,
corrections made pursuant to this section shall adjust the status,
rights, and obligations of all parties described in subdivisions (a)
and (b) as of the time that the correction actually takes place if
the board finds any of the following:
   (1) That the correction cannot be performed in a retroactive
manner.
   (2) That even if the correction can be performed in a retroactive
manner, the status, rights, and obligations of all of the parties
described in subdivisions (a) and (b) cannot be adjusted to be the
same that they would have been if the error or omission had not
occurred.
   (3) That the purposes of this part will not be effectuated if the
correction is performed in a retroactive manner.
   SEC. 10.   SEC. 13.   Section 31540 is
added to the Government Code, to read:
   31540.  (a) Each county or district, and the chief administrative
officer of the county or district, or any other person who its
governing body may designate shall report to the Retirement Board in
writing, in a manner prescribed by the board, within 30 days of any
of the following events:
   (1) A new pay item is created.
   (2) There has been a change in either an existing pay item or the
conditions under which the pay item is computed, accrued, or paid.
   (3) A change in status of any member resulting from transfer,
promotion, leave of absence, resignation, reinstatement, dismissal,
or death.
   (4) Any other change that may impact the payrate or special
compensation of any member resulting from an agreement pursuant to a
memorandum of understanding between a county or district and any of
its recognized employee organizations, or a resolution adopted by its
board of supervisors with respect to nonrepresented employees.
   (5) Information concerning any member in the administration of
this system as requested by the board, or the services of the county
or district's officer and departments that the board may request in
connection with claims by members against this system.
   (b) Upon notification pursuant to subdivision (a), the board shall
determine, within 90 days, whether the pay item is included in
compensation as defined in Section 31460 and compensation earnable as
defined in Section 31461. Any determination by the board regarding
an item of compensation may be appealed  within 30 days  by
the county, district, or member.
   (c) The board may assess a reasonable fee upon the county or
district that fails to provide information, as required by this
section, within applicable time limits.
   SEC. 11.   SEC. 14.   Section 31541 is
added to the Government Code, to read:
   31541.  The board, during the course of an audit, may require a
county or district to provide information or make available for
examination or copying at a specified time and place, or both, books,
papers, any data, or records, including, but not limited to,
personnel and payroll records, as deemed necessary by the board to
determine the correctness of retirement benefits, reportable
compensation, and enrollment in and reinstatement to this system.
   SEC. 12.   SEC. 15.   Section 31569 is
added to the Government Code, to read:
   31569.  Any county or district that fails to enroll an employee
into membership when he or she becomes eligible, or within 90 days
thereof, when the employer knows or can reasonably be expected to
have known of that eligibility shall be required to pay all arrears
costs for member contributions and administrative costs of five
hundred dollars ($500) per member as a reimbursement to the system's
current year budget.
   SEC. 13.   SEC. 16.   Section 31680.10
is added to the Government Code, to read:
   31680.10.  (a) Except as provided in Section 31680.1, any person,
who has been retired for service on or after January 1, 2011, as a
member of a county retirement system established under this chapter,
may not be reemployed in any capacity either as an employee, an
independent contractor, or an employee of a third party without
reinstatement by a district or county operating a county retirement
system established under this chapter unless at least 180 days have
elapsed since the person's date of retirement.
   (b) A retired person whose employment, without reinstatement, is
authorized by this article shall not acquire service credit or
retirement rights under this part with respect to that employment.
   (c) Any retired member employed in violation of this article
shall:
   (1) Reimburse the retirement system for any retirement allowance
received during the period or periods of employment that are in
violation of law. 
   (2) Pay to the retirement 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) 
    (2)  Contribute toward the reimbursement of the
retirement system for administrative expenses incurred in responding
to a violation of this article, to the extent the member is
determined by the executive officer to be at fault.
   (d) Any county or district that employs a retired member in
 violation of this article shall:  
   (1) Pay to the retirement 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
  violation of this article shall contribute 
toward the reimbursement of the retirement system for administrative
expenses incurred in responding to a violation of this article, to
the extent the county or district is determined by the executive
officer of this system to be at fault.
   SEC. 14.   SEC. 17.   Section 45309.6 is
added to the Government Code, to read:
   45309.6.  (a) A city retirement board established pursuant to this
chapter shall be in full compliance with the provisions of Section
7500.5 by July 1, 2011.
   (b) A city retirement system established pursuant to this chapter
shall adopt any regulations necessary to implement the requirements
of Section 7500.5.
   SEC. 15.   SEC. 18.   Section 45309.7 is
added to the Government Code, to read:
   45309.7.  (a) A city retirement board established pursuant to this
chapter may adopt regulations regarding the employment of retirees
who were members of a retirement system established pursuant to this
chapter.
   (b) Notwithstanding subdivision (a), on or after January 1, 2011,
a person who has been retired under a retirement system established
pursuant to this chapter may not be employed in any capacity by the
city establishing that retirement system unless one of the following
events has occurred:
   (1) He or she has been reinstated from retirement.
   (2) At least 180 days have elapsed since his or her retirement
date.
   SEC. 16.   SEC. 19.   Section 50871.6 is
added to the Government Code, to read:
   50871.6.  (a) A retirement board established pursuant to this
chapter shall be in full compliance with the provisions of Section
7500.5 by July 1, 2011.
   (b) A retirement system established pursuant to this chapter shall
adopt any regulations necessary to implement the requirements of
Section 7500.5.
   SEC. 17.   SEC. 20.   Section 50871.7 is
added to the Government Code, to read:
   50871.7.  (a) A retirement board established pursuant to this
chapter may adopt regulations regarding the employment of retirees
who were members of a retirement system established pursuant to this
chapter.
   (b) Notwithstanding subdivision (a), on or after January 1, 2011,
a person who has been retired under a retirement system established
pursuant to this chapter may not be employed in any capacity by the
city establishing that retirement system unless one of the following
events has occurred:
   (1) He or she has been reinstated from retirement.
   (2) At least 180 days have elapsed since his or her retirement
date. 
  SEC. 18.     
  SEC. 21.    (a)    Except as otherwise
specifically provided, the provisions of this act  regarding the
determination of a person's final compensation  shall become
operative on July 1, 2011. 
   (b) It is the intent of the Legislature that the provisions of
this act shall not be interpreted or applied to reduce the pension of
any person who has retired prior to July 1, 2011. 
   SEC. 19.   SEC. 22.   This bill shall
become operative only if Senate Bill 1425 of the 2009-10 Regular
Session is enacted and takes effect on or before January 1, 2011.