BILL NUMBER: SB 1139	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 9, 2010
	AMENDED IN ASSEMBLY  AUGUST 3, 2010
	AMENDED IN ASSEMBLY  JULY 1, 2010

INTRODUCED BY   Senator Correa

                        FEBRUARY 18, 2010

   An act to amend Sections 20197, 20199, 20228,  20969, 
21337, 21337.1, 21670, 21671, 21672, 21674, 21675, 21676, 21677,
21679, 21680, 21681, 21682, 21683, 21685, 21750, 22775, 22814, 22910,
and 22960.83 of, and to add Sections 21671.5 and 22819.1 to, the
Government Code, relating to state retirement, and making an
appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1139, as amended, Correa. State retirement: benefit programs.
   (1) The Public Employees' Retirement Law (PERL) provides a
comprehensive set of rights and benefits for various employees of the
state and local agencies. That law also establishes the Public
Employees' Retirement System (PERS) and sets forth the provisions for
the delivery of benefits, including retirement benefits, health
benefits, and an optional tax-deferred compensation program, to its
members. Under that law, the retirement benefits of a retirement
system member are based, in part, on the completed service credit and
compensation received by that member.
   This bill would make technical and clarifying changes to those
provisions of law, including amendments that rename the current
"deferred compensation program" as the "tax-preferred retirement
savings program."
   (2) PERL permits the Board of Directors of PERS to select,
purchase, or acquire in the name of the system  ,  real
property, improved or unimproved, and to construct or remodel, and
equip, an office building, including appropriate satellite
structures, as specified. Existing law authorizes the board to lease
any space in its buildings and improvements that is in excess of the
immediate requirements of the board at rates that are equal to fair
market value and sufficient to pay a reasonable rate of return for
the costs of construction and maintenance of the leased portions of
the buildings and improvements.
   This bill would eliminate the requirement that the lease rates are
to be equal to fair market value and sufficient to pay a reasonable
rate of return for the costs of construction and maintenance of the
leased portions of the buildings and improvements.
   (3) PERL requires the Board of Directors of PERS to annually
employ a certified public accountant, who is not in public
employment, to audit the financial statements of this system.
Existing law limits the contract period to 5 years and prohibits the
board from contracting with the same certified public accountant for
2 consecutive 5-year terms.
   This bill would eliminate the provisions that restrict the period
of time for which the board may retain the same certified public
accountant to audit the financial statements of the system.
   (4) Existing law provides health benefits to employees and
annuitants of specified contracting public agencies. Existing law
requires the employer and each employee or annuitant to contribute a
portion of the costs of providing these benefits. These contributions
are deposited into the Public  Employee's  
Employees'  Contingency Reserve Fund, which is a continuously
appropriated trust fund.
   This bill would authorize a contracting public agency to elect to
provide health benefits to a family member of a deceased annuitant
who retired from a contracting agency prior to the effective date of
the agency's contract to provide health coverage, and who was validly
enrolled in the agency's health benefit plan on the day prior to the
effective date of the contract, if that family member does not
receive an allowance in place of the annuitant. This bill would
require the contracting agency to pay the costs of the benefits and
premiums and would authorize the employer to require the family
member to pay all or a portion of the costs of the health premium. By
increasing member contributions into a continuously appropriated
fund, this bill would make an appropriation.
   Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 20197 of the Government Code is amended to
read:
   20197.  All buildings and improvements constructed by the board
under this article may contain space in excess of the immediate
requirements of the board that, until needed, may be leased by the
board upon those terms and conditions as may be approved by the
board.
   The board may contract with the Department of General Services to
handle the rentals of any excess space over and above that required
by the board and to furnish general supervision and maintenance of
buildings and improvements constructed under the provisions of this
article.
  SEC. 2.  Section 20199 of the Government Code is amended to read:
   20199.  The board shall establish a building account for the
transfer of money that is continuously appropriated for that purpose
from the retirement fund for the cost of the acquisition of real
property, the construction or remodeling of buildings and
improvements thereon, and the maintenance, repair, and improvement
thereof.
   For accounting purposes the board shall pay to the building
account an amount sufficient to repay all costs for construction and
maintenance of space used by the board. Other amounts or
contributions received shall be deposited in the building account and
disbursed as provided in this section.
   The board may contract with the Department of General Services for
the purchase of insurance against loss of, or damage to, the
property or the loss of use or occupancy of the building, liability
insurance and other insurance as is customarily carried on state
office buildings. Premiums for the insurance shall be paid from the
building account.
   Money in the building account that is in excess of current needs
shall be paid into the retirement fund monthly. The land, building,
equipment, and improvements thereon, shall constitute an asset in the
retirement fund and shall be carried on the books thereof as such in
accordance with generally accepted accounting practices.
  SEC. 3.  Section 20228 of the Government Code is amended to read:
   20228.  The board shall annually employ a certified public
accountant, who is not in public employment, to audit the financial
statements of this system. The costs of the audit shall be paid from
the income of the retirement fund. The audit shall be made annually.
The board shall file a copy of the audit report with the Governor,
the Secretary of the Senate, and the Chief Clerk of the Assembly.
   The board, for purposes of Section 7504, may file internally
prepared financial statements with the Controller within six months
of the end of the fiscal year, and shall file independently audited
financial statements as soon as they are available.
   The annual audits of the financial statements of the system shall
not be duplicated by the Department of Finance or the State Auditor.
   This section does not affect the ability of the State Auditor or
the Department of Finance to conduct other types of audits of the
system as otherwise authorized by statute. This system shall be
exempt from a pro rata general administrative charge for auditing.
   SEC. 4.    Section 20969 of the   Government
Code   is amended to read: 
   20969.  (a) For all retirement purposes, including benefit
eligibility and calculations of retirement allowances for members
employed by the state that are subject to mandatory furloughs, credit
for service and compensation earnable shall be based on the amount
that would have been credited had the employee not been subject to
mandatory furloughs.
   (b) For the purposes of this section, "mandatory furloughs" means
time during which a member identified below is directed to be absent
from work without pay as a consequence of an Executive order in the
2008-09  and   ,  2009-10  , and 
 2010-11  fiscal years:
   (1) A state employee subject to an Executive order requiring a
mandatory furlough for state employees.
   (2) A person who is excepted from the definition of "state
employee" in subdivision (c) of Section 3513, or who is an officer or
employee of the executive branch of state government who is not a
member of the civil service, and who is subject to an Executive order
requiring a mandatory furlough for state employees.
   (3) A state employee, a person who is excepted from the definition
of "state employee" in subdivision (c) of Section 3513, or a person
who is an officer or employee of the executive branch of state
government who is not a member of the civil service, and whose
employer is not under the direct executive authority of the Governor,
and who is subject to a mandatory furlough imposed by his or her
employer in response to encouragement in an Executive order.
   (c) An employer of an employee identified in subdivision (b) shall
notify the board of the terms and conditions of any mandatory
furlough, including, but not limited to, the amount of mandatory
furlough time imposed on employees during a reporting period and the
date on which the mandatory furlough ends. The employer and the
Controller shall provide any additional information as the board may
require to implement this section.
   SEC. 4.   SEC. 5.  Section 21337 of the
Government Code is amended to read:
   21337.  (a) On an annual basis, the board shall transfer funds to
separate supplemental state and school accounts, to fund the
purchasing power protection allowance of retirees, survivors, and
beneficiaries of state or school employers, respectively. The amounts
transferred shall be the lesser of the following:
   (1) The amount necessary to increase all monthly allowances paid
by this system to retirees, survivors, and beneficiaries of state or
school employers to 75 percent of the purchasing power of the initial
monthly allowances.
   (2) One and one-tenth percent of the net earnings on state or
school member contributions, as determined by Section 20178.
   (b) The funds transferred to the two separate supplemental
accounts shall be utilized to increase all monthly allowances paid by
this system to retirees, survivors, and beneficiaries of state and
school employers, up to a maximum of 75 percent of the purchasing
power, as determined by the board, of the initial monthly allowances,
notwithstanding the benefit provided by Section 21328, that were
received by every retired state or school member or survivor or
beneficiary of a state or school member or retiree who was eligible
to receive any allowance at the end of each fiscal year. Funds
remaining in the state or school account after the payment of
benefits under this section shall be transferred to the respective
state or school employer accounts.
   (c) Annual adjustments in the purchasing power protection
allowance shall be effective with the monthly allowance regularly
payable on the first day of May, provided that in the first year
after enactment of the act adding this subdivision, the purchasing
power protection allowance adjustment to the monthly allowance
payable on the first day of May shall also reflect an adjustment for
the period from January 1 through April 30. The board shall implement
the provisions of this subdivision on or before January 1, 2012,
unless the board determines that the implementation tasks cannot be
completed until a later date, in which case, the board shall be
prepared to implement the provisions of this section no later than
July 1, 2013.
   SEC. 5.   SEC. 6.   Section 21337.1 of
the Government Code is amended to read:
   21337.1.  (a) All monthly allowances paid by the system to
retirees of contracting public agencies, and to survivors and
beneficiaries of members and retirees of those agencies, shall
annually be increased to 80 percent of the purchasing power of the
initial monthly allowance as determined by the board. Adjustments in
the purchasing power protection allowance shall be effective with the
monthly allowance regularly payable on the first day of May,
provided that, in the first year after enactment of the act amending
this subdivision, the purchasing power protection allowance
adjustment to the monthly allowance payable on the first day of May
shall also reflect an adjustment for the period from January 1
through April 30.
   (b) Notwithstanding subdivision (a), retirees of contracting
public agencies, and survivors and beneficiaries of members and
retirees of those agencies, who receive a monthly allowance payable
by this system shall also receive, on or after January 1, 2001, a
one-time lump-sum payment in an amount equal to the difference, if
any, between the purchasing power protection allowance paid between
January 1, 2000, and December 31, 2000, and the purchasing power
protection allowance that would have been payable if this section had
been operative during that period.
   (c) The cost of the increase in allowances paid pursuant to
subdivisions (a) and (b) shall be paid from the same assets of the
employer used in the determination of each employer contribution rate
for each membership classification under which service was credited
that affects the allowance calculation of the retirees, survivors, or
beneficiaries.
   SEC. 6.   SEC. 7.   Section 21670 of the
Government Code is amended to read:
   21670.  The board may establish one or more tax-preferred
retirement savings programs for California public employees. These
programs shall be made available to all employees of a participating
employer under procedures established by the board unless
participation is subject to the terms of any memorandums of
understanding between the employer and the employees.
   SEC. 7.   SEC. 8.   Section 21671 of the
Government Code is amended to read:
   21671.  A tax-preferred retirement savings program established
pursuant to Section 21670 may grant the maximum tax-preferred
retirement savings opportunities available under current federal law,
and may provide for employer as well as employee contributions. The
program may include, but is not limited to, one or more of the
following plans:
   (a) A deferred compensation plan described under Section 457 of
Title 26 of the United States Code.
   (b) A program described under Section 403(b) of Title 26 of the
United States Code. Section 770.3 of the Insurance Code shall not
apply to the board for the purposes of contracting for those
annuities.
   (c) Any other form of a tax-preferred retirement savings
arrangement authorized by the provisions of Title 26 of the United
States Code and approved by the board.
   SEC. 8.   SEC. 9.   Section 21671.5 is
added to the Government Code, to read:
   21671.5.  The design and administration of a tax-preferred
retirement savings program established pursuant to Section 21670
shall conform with the applicable provisions of Title 26 of the
United States Code.
   SEC. 9.   SEC. 10.   Section 21672 of
the Government Code is amended to read:
   21672.  A tax-preferred retirement savings program may include one
or more of the following components:
   (a) Investment fund options for participants, as part of the
deferred compensation program administered for state employees by the
Department of Personnel Administration.
   (b) Investment fund options for other participants.
   (c) Annuity contracts on behalf of all participants.
   (d) Asset management, administrative, or related services.
   SEC. 10.   SEC. 11.   Section 21674 of
the Government Code is amended to read:
   21674.  (a) Investment fund options under subdivision (a) of
Section 21672 shall be provided through a written interagency
agreement between the board and the Department of Personnel
Administration.
   (b) Except for investments made pursuant to subdivision (a),
participating employers shall enter into a written contractual
agreement with the board.
   (c) Participants shall enter into contractual agreements that are
required to effectuate participation in a tax-preferred retirement
savings program, including employees participating under a program
described in subdivision (a) or (b) of Section 21671, or any other
program that provides for the deferral of compensation program or
written salary reduction agreements with their employers, for the
purpose of making deferrals or for annuity contracts.
   SEC. 11.   SEC. 12.   Section 21675 of
the Government Code is amended to read:
   21675.  All development and administration costs of tax-preferred
retirement savings programs shall be paid by employers and plan
participants.
   SEC. 12.   SEC. 13.   Section 21676 of
the Government Code is amended to read:
   21676.  The Public Employees' Deferred Compensation Fund is hereby
established. Notwithstanding any other provision of law, the board
may:
   (a)  Establish one or more accounts, trusts, group trusts, or
similar vehicles within the fund.
   (b) Retain a bank, trust company, or similar entity to serve as
repository of the fund, or of any account, trust, group trust, or
other similar vehicle within the fund.
   The board may also retain a bank or trust company to serve as a
custodian for safekeeping, recordkeeping, delivery, securities
valuation, investment performance reporting, or other services in
connection with investment of the fund or of any account, trust,
group trust, or similar vehicle within the fund.
   Notwithstanding Section 13340, all moneys in the fund are
continuously appropriated, without regard to fiscal years, to the
board to carry out the purposes of this chapter.
   SEC. 13.   SEC. 14.   Section 21677 of
the Government Code is amended to read:
   21677.  The Public Employees' Deferred Compensation Fund shall
consist of the following sources and receipts, for which
disbursements shall be accounted for as set forth below:
   (a) Fees determined by the board and paid by employers and plan
participants for the cost of administering the tax-preferred
retirement savings programs.
   (b) Asset management fees as determined by the board assessed
against investment earnings of investment options or other investment
funds provided by the board to either the state or other public
employers. Asset management fees shall be disclosed to participants.
   (c) (1) Deferrals or contributions to be paid monthly by
participating employers or participants for investment by the board
pursuant to this chapter. The moneys shall be deposited in the
appropriate account, trust, group trust, or similar vehicle within
the Public Employees' Deferred Compensation Fund, and invested in
accordance with the fund option or fund selected by the participants.

   (2) Deferrals or contributions paid by a contracting agency shall
be paid through an electronic funds transfer method prescribed by the
board. This payment requirement is effective upon declaration by the
board.
   (3) A contracting agency that is unable, for good cause, to comply
with paragraph (2), may apply to the board for a waiver that allows
the agency to pay in an alternate manner as prescribed by the board,
but not by credit card payment.
   (d) Disbursements shall be paid from the appropriate account,
trust, group trust, or similar vehicle within the Public Employees'
Deferred Compensation Fund, in accordance with the provisions of this
chapter, the documents and instruments governing the tax-preferred
retirement savings program, and current federal law pertaining to
tax-preferred savings programs.
   (e) The board shall offer a savings account equivalent program
among those deferred compensation accounts made payable to
participants.
   (f) Net earnings on the Public Employees' Deferred Compensation
Fund shall be credited to the appropriate account, trust, group
trust, or similar vehicle. Participant accounts shall be individually
posted to reflect net asset value for each fund in which the
participant invests.
   (g) The board has the exclusive control of the administration and
investment of the Public Employees' Deferred Compensation Fund.
   SEC. 14.   SEC. 15.   Section 21679 of
the Government Code is amended to read:
   21679.  The officers and employees of this system shall discharge
their duties with respect to the tax-preferred retirement savings
program solely in the interest of the participants in the following
manner:
   (a) For the exclusive purpose of providing tax-preferred
retirement savings to participants and defraying reasonable expenses
of administering the program.
   (b) In the selection of investment options with the care, skill,
prudence, and diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and familiar with those
matters would use in the conduct of an enterprise of a like character
and with like aims.
   (c) By diversifying the investment options available to
participants so as to minimize the risk of large losses and by using
reasonable diligence to accurately inform all employees and
participants as to all options.
   (d) In accordance with the documents and instruments governing the
programs insofar as those documents and instruments are consistent
with this chapter.
   SEC. 15.   SEC. 16.   Section 21680 of
the Government Code is amended to read:
   21680.  Except as otherwise provided by law, the officers and
employees of this system shall not engage in a transaction with
regard to a tax-preferred retirement savings program if they know or
should know that the transaction constitutes, directly or indirectly,
any of the following:
   (a) The sale, exchange, or leasing of any property from the
program to a participant for less than adequate consideration, or
from a participant to the program for more than adequate
consideration.
   (b) The lending of money or other extension of credit from the
program to a participant without the receipt of adequate security and
a reasonable rate of interest, or from a participant to the program
with the provision of excessive security or an unreasonably high rate
of interest.
   (c) The furnishing of goods, services, or facilities from the
program to a participant for less than adequate consideration, or
from a participant to the program for more than adequate
consideration.
   (d) The transfer to, or use by or for the benefit of, a
participant of any assets of the program for less than adequate
consideration.
   SEC. 16.  SEC. 17.   Section 21681 of
the Government Code is amended to read:
   21681.  The officers and employees of this system shall not do any
of the following:
   (a) Deal with the assets of the program in their own interest or
for their own account.
   (b) In their individual or in any other capacity, act in any
transaction involving the program on behalf of a party, or represent
a party, whose interests are adverse to the interests of the program
or the interests of the participants.
   (c) Receive any consideration for their personal account, or any
gift, from any party dealing with the program in connection with a
transaction involving the assets of the program.
   SEC. 17.   SEC. 18.   Section 21682 of
the Government Code is amended to read:
   21682.  This chapter shall not be construed to prohibit officers
and employees of this system from participating in a tax-preferred
retirement savings program, on the same terms as other state
employees or participants.
   SEC. 18.   SEC. 19.   Section 21683 of
the Government Code is amended to read:
   21683.  This system may require an investment manager or
recordkeeper under contract with, or appointed by, this system be
subject to the duties set forth in Section 21679.
   SEC. 19.   SEC. 20.   Section 21685 of
the Government Code is amended to read:
   21685.  Notwithstanding any other provision of this part, the
following definitions govern the construction of this chapter:
   (a) "Participating employer" means any California public agency,
including, but not limited to, any office of the county
superintendent of schools, school district, community college
district, or public agency defined by Section 20056 that has elected
to contract for a tax-preferred retirement savings program for any or
all of its employees.
   (b) "Employer" means any city, county, city and county, district,
school district, community college district, county superintendent of
schools, and other public authority or body within this state.
   (c) "Participant" means any person enrolled in a tax-preferred
retirement savings program established by this chapter.
   SEC. 20.   SEC. 21.   Section 21750 of
the Government Code is amended to read:
   21750.  The purpose of this part is to ensure the federal
tax-exempt status of the Public Employees' Retirement System, and any
other retirement system administered by the board, to preserve the
deferred treatment of federal income tax on public employer
contributions to public employee pensions, and to ensure that members
are provided with retirement and other related benefits that are
commensurate, to the extent deemed reasonable, with the actuarial
value of the benefits that would have been received but for the
limitations imposed by Section 415 of Title 26 of the United States
Code.
   To achieve this purpose, this part incorporates certain pension
payment limitations and elects the "grandfather" option in Section
415(b)(10) of Title 26 of the United States Code. Also, this part
contains certain payment provisions and replacement benefits.
   SEC. 21.   SEC. 22.   Section 22775 of
the Government Code is amended to read:
   22775.  "Family member" means an employee's or annuitant's spouse
or domestic partner and any child, including an adopted child, a
stepchild, or recognized natural child. The board shall, by
regulation, prescribe age limits and other conditions and limitations
pertaining to children.
   SEC. 22.   SEC. 23.   Section 22814 of
the Government Code is amended to read:
   22814.  (a) A judge who retires pursuant to Chapter 11 (commencing
with Section 75000) of Title 8, but is not yet receiving a pension,
may continue his or her coverage and the coverage of any family
members for the duration of the leave of absence, upon his or her
application and upon assuming payment of the contributions otherwise
required of the employer.
   (b) (1) A judge who leaves judicial office pursuant to subdivision
(b) of Section 75521 and has not attained 65 years of age may
continue his or her coverage and the coverage of any family members
upon assuming payment of the contributions otherwise required of the
employer. The judge shall also pay an additional 2 percent of the
premium amount to cover administrative expenses incurred by the
system or the Department of Personnel Administration.
   (2) An election to continue coverage under this subdivision shall
be made within 60 days of permanent separation. A retired judge who
cancels that coverage may not reenroll.
   (3) Upon attaining 65 years of age, a retired judge who has
continuous and uninterrupted coverage pursuant to this subdivision
shall be entitled to the applicable employer contribution.
   SEC. 23.   SEC. 24.   Section 22819.1 is
added to the Government Code, to read:
   22819.1.  (a) A family member of a deceased annuitant who retired
from a contracting agency prior to the effective date of the agency's
contract to provide health coverage under this part, and who was
validly enrolled in the agency's health plan on the day prior to the
effective date of the contract under this part, but who does not
receive an allowance in place of the annuitant, is deemed to be an
annuitant for purposes of Section 22760, pursuant to regulations
prescribed by the board.
   (b) A contracting agency shall remit the amounts required under
Section 22901 as well as the total amount of the premium required
from the employer and enrollees in accordance with regulations of the
board. Enrollment of the eligible family members shall be continuous
following the death of the annuitant, or the effective date of
enrollment, as applicable, so long as the surviving family members
meet the eligibility requirements of Section 22775 and any
regulations promulgated with respect to that section. Either a
failure to timely pay the required premiums and associated costs of
the coverage or the cancellation of coverage shall terminate the
coverage without the option to reenroll. The contracting agency may
elect to require the family members to pay all or any part of the
employer premium for enrollment.
   (c) This section shall apply to a contracting agency only upon the
filing with the board of a resolution of its governing board
electing to be subject to this section.
   SEC. 24.   SEC. 25.   Section 22910 of
the Government Code is amended to read:
   22910.  (a) There shall be maintained in the State Treasury the
Public Employees' Contingency Reserve Fund. The board may invest
funds in the Public Employees' Contingency Reserve Fund in accordance
with the provisions of law governing its investment of the
retirement fund.
   (b) (1) An account shall be maintained within the Public Employees'
Contingency Reserve Fund with respect to the health benefit plans
the board has approved or that have entered into a contract with the
board. The account shall be credited, from time to time and in
amounts as determined by the board, with moneys contributed under
Section 22885 or 22901 to provide an adequate contingency reserve.
The income derived from any dividends, rate adjustments, or other
funds received from a health benefit plan shall be credited to the
account. The board may deposit, in the same manner as provided in
paragraph (4), up to one-half of 1 percent of premiums in the account
for purposes of cost containment programs, subject to approval as
provided in paragraph (2) of subdivision (c).
   (2) The account for health benefit plans may be utilized to defray
increases in future rates, to reduce the contributions of employees
and annuitants and employers, to implement cost containment programs,
or to increase the benefits provided by a health benefit plan, as
determined by the board. The board may use penalties and interest
deposited pursuant to subdivision (c) of Section 22899 to pay any
difference between the adjusted rate set by the board pursuant to
Section 22864 and the applicable health benefit plan contract rates.
   (3) The total credited to the account for health benefit plans at
any time shall be limited, in the manner and to the extent the board
may find to be most practical, to a maximum of 10 percent of the
total of the contributions of the employers and employees and
annuitants in any fiscal year. The board may undertake any action to
ensure that the maximum amount prescribed for the fund is
approximately maintained.
   (4) Board rules and regulations adopted pursuant to Section 22831
to minimize the impact of adverse selection or contracts entered into
pursuant to Section 22864 to implement health benefit plan
performance incentives may provide for deposit in and
                                  disbursement to carriers or to
Medicare from the account the portion of the contributions otherwise
payable directly to the carriers by the Controller under Section
22913 as may be required for that purpose. The deposits shall not be
included in applying the limitations, prescribed in paragraph (3), on
total amounts that may be deposited in or credited to the fund.
   (5) Notwithstanding Section 13340, all moneys in the account for
health benefit plans are continuously appropriated without regard to
fiscal year for the purposes provided in this subdivision.
   (c) (1) An account shall also be maintained in the Public
Employees' Contingency Reserve Fund for administrative expenses
consisting of funds deposited for this purpose pursuant to Sections
22885 and 22901.
   (2) The moneys deposited pursuant to Sections 22885 and 22901 in
the Public Employees' Contingency Reserve Fund may be expended by the
board for administrative purposes, provided that the expenditure is
approved by the Department of Finance and the Joint Legislative
Budget Committee in the manner provided in the Budget Act for
obtaining authorization to expend at rates requiring a deficiency
appropriation, regardless of whether the expenses were anticipated.
   (d) An account shall be maintained in the Public Employees'
Contingency Reserve Fund for health plan premiums paid by contracting
agencies, including payments made pursuant to subdivision (f) of
Section 22850. Notwithstanding Section 13340, the funds are
continuously appropriated, without regard to fiscal year, for the
payment of premiums or other charges to carriers or the Public
Employees' Health Care Fund. Penalties and interest paid pursuant to
subdivision (c) of Section 22899 shall be deposited in the account
pursuant to paragraphs (1) and (2) of subdivision (b).
   (e) Accounts shall be maintained in the Public Employees'
Contingency Reserve Fund for complementary annuitant premiums and
related administrative expenses paid by annuitants pursuant to
Section 22802. Notwithstanding Section 13340, the funds are
continuously appropriated, without regard to fiscal year, to
reimburse the Public Employees' Retirement Fund, the Judges'
Retirement Fund, the Judges' Retirement Fund II, and the Legislators'
Retirement Fund, as applicable, for payment of annuitant health
premiums, and for the payment of premiums and other charges to
carriers or to the Public Employees' Health Care Fund. Administrative
expenses deposited in this account shall be credited to the account
provided by subdivision (c).
   (f) Amounts received by the board for retiree drug subsidy
payments that are attributed to contracting agencies and their
annuitants and employees pursuant to subdivision (c) of Section
22910.5 shall be deposited in the Public Employees' Contingency
Reserve Fund. Notwithstanding Section 13340, these amounts are
continuously appropriated, without regard to fiscal year, for the
payment of premiums, costs, contributions, or other benefits related
to contracting agencies and their employees and annuitants, and as
consistent with the Medicare Prescription Drug Improvement and
Modernization Act, as amended.
   (g) The Account for Retiree Drug Subsidy Payments is hereby
established in the Public Employees' Contingency Reserve Fund and
funds in that account shall, upon appropriation by the Legislature,
be used for the purposes described in Section 22910.5.
   (h) Notwithstanding any other law, the Controller may use the
moneys in the Public Employees' Contingency Reserve Fund for loans to
the General Fund as provided in Sections 16310 and 16381. However,
interest shall be paid on all moneys loaned to the General Fund from
the Public Employees' Contingency Reserve Fund. Interest payable
shall be computed at a rate determined by the Pooled Money Investment
Board to be the current earning rate of the fund from which loaned.
This subdivision does not authorize any transfer that will interfere
with the carrying out of the object for which the Public Employees'
Contingency Reserve Fund was created.
   SEC. 25.   SEC. 26.   Section 22960.83
of the Government Code is amended to read:
   22960.83.  In the event the participant dies without a valid
beneficiary designation on file, or if no designated beneficiary
survives the participant, any balance remaining in the participant's
account shall be payable to the participant's survivors in the
following order:
   (a) The participant's spouse.
   (b) The participant's natural or adopted children.
   (c) The participant's parents.
   (d) The participant's brothers and sisters.
   (e) The participant's estate.