BILL NUMBER: AB 340	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 11, 2011
	AMENDED IN ASSEMBLY  FEBRUARY 24, 2011

INTRODUCED BY   Assembly Member Furutani
   (Coauthor: Assembly Member Ma)

                        FEBRUARY 10, 2011

   An act to amend Section 31461 of, and to add Sections 31540,
31540.2, 31541, 31569, and 31680.9 to, the Government Code, relating
to county employees' retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 340, as amended, Furutani. County employees' retirement:
postretirement service.
   (1) The County Employees Retirement Law of 1937 (CERL) authorizes
counties and districts, as defined, to provide a system of retirement
benefits to their employees. CERL defines compensation earnable for
the purpose of calculating benefits as the average compensation for
the period under consideration with respect to the average number of
days ordinarily worked by persons in the same grade or class of
positions during the period, and at the same rate of pay, as
determined by the retirement board.
   This bill would prohibit a variety of payments including bonus
payments, housing allowances, severance pay, vehicle allowances, and
payments for unused vacation, sick leave, or compensatory time off,
exceeding what may be earned and payable in a 12-month period, from
being included in compensation earnable. The bill would prohibit any
compensation determined by the board to have been paid for the
purpose of enhancing a member's retirement benefit from being
included in compensation earnable. The bill would except from this
prohibition compensation that a member was entitled to receive
pursuant to a collective bargaining agreement that was subsequently
deferred or otherwise modified as a result of a negotiated amendment
of that agreement. The bill would permit a member or employer to
present evidence that compensation was not paid for the purpose of
enhancing a member's benefit and would permit the board to revise its
determination upon receipt of sufficient evidence to that effect.
   The bill would also require a county or district, when reporting
compensation to a retirement board, to identify the pay period in
which the compensation was earned regardless of when it was reported
or paid. The bill would authorize the board to assess a county or
district a reasonable amount to cover the cost of audit, adjustment,
or correction, if it determines that a county or district knowingly
failed to comply with these requirements, as specified. The bill
would authorize a retirement board to audit a county or district and
to require a county or district to provide information, or make
information available for examination or copying at a specified time
and place, to determine the correctness of retirement benefits,
reportable compensation, and enrollment in, and reinstatement to, the
system.
   (2) CERL generally provides that each person entering employment
becomes a member of a retirement system on the first day of the
calendar month after his or her entrance into service, unless
otherwise provided by regulations adopted by the board. CERL permits
people in certain employment classifications  the option
 to elect membership in the retirement system, including
elective officers, and prohibits membership for persons providing
temporary technical or professional services under contract.
   This bill would require a county or district that fails to enroll
an employee into membership within 90 days of when he or she becomes
eligible, when the employer knows or should have known that the
person was eligible, to pay all costs in arrears for member
contributions and administrative costs of $500 per member.
   (3) CERL permits members of a county retirement system who have
retired to be reemployed without reinstatement into the system in
certain circumstances including in a position requiring special
skills or knowledge.
   This bill, on and after January 1, 2012, would prohibit a person
who has been retired for service from a CERL retirement system from
being reemployed in any capacity without reinstatement into the
system by a district or county operating a county retirement system
established under  this  CERL unless at least 180
days have elapsed since the person's date of retirement, except as
specified. The bill would prohibit a person whose employment without
reinstatement is authorized under CERL from receiving service credit
for that employment. The bill would require that a retired member
employed in violation of provisions regarding employment without
reinstatement to reimburse the retirement system for any retirement
allowance received during that period and pay for administrative
expenses incurred in responding to the violation. The bill would also
require the county or district to reimburse the retirement system in
this regard in specified circumstances.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  The Legislature finds and declares that the amendments
made to the County  Employees'   Employees 
Retirement Law of 1937 by this act are intended to achieve the
following reforms:
   (a) To give the retirement boards the authority and the
responsibility to audit and deny compensation items that are
identified as being paid for the principal purpose of enhancing a
member's retirement benefit.
   (b) To require each retirement system to establish accountability
provisions for participating employers that include an ongoing audit
process and to allow the retirement system to assess penalties on
employers for noncompliance.
   (c) To prohibit final settlement pay and multiple year accruals of
vacation time, annual leave, personal leave, or sick leave from
being included in retirement calculations.
   (d) To eliminate the practice of working for a participating
employer while collecting a retirement benefit, also known as
double-dipping, by prohibiting a retiree from returning to work as a
retired annuitant or as a contract employee until at least 180 days
have elapsed since that person's retirement.
  SEC. 2.  Section 31461 of the Government Code is amended to read:
   31461.  (a) "Compensation earnable" by a member means the average
compensation as determined by the board, for the period under
consideration upon the basis of the average number of days ordinarily
worked by persons in the same grade or class of positions during the
period, and at the same rate of pay. The computation for any absence
shall be based on the compensation of the position held by the
member at the beginning of the absence. Compensation, as defined in
Section 31460, that has been deferred shall be deemed "compensation
earnable" when earned, rather than when paid.
   (b) "Compensation earnable" does not include, in any case, the
following:
   (1) Payments for unused vacation, annual leave, personal leave,
sick leave, or compensatory time off, however denominated, whether
paid in a lump sum or otherwise, in an amount that exceeds that which
may be earned and payable in a 12-month period.
   (2) Payments for additional services rendered outside of normal
working hours, whether paid in a lump sum or otherwise.
   (3) Bonus payments.
   (4) Housing allowance.
   (5) Severance pay.
   (6) Unscheduled overtime.
   (7) Vehicle allowance.
  SEC. 3.  Section 31540 is added to the Government Code, to read:
   31540.  (a) Any compensation determined by the board to have been
paid for the purpose of enhancing a member's retirement benefit under
that system shall not be included in compensation earnable. If the
board determines that compensation was paid for the purpose of
enhancing a member's benefit, the member or the employer may present
evidence that the compensation was not paid for that purpose. Upon
receipt of sufficient evidence to the contrary, a board may reverse
its determination that compensation was paid for the purpose of
enhancing a member's retirement benefits.
   (b) Compensation that a member was entitled to receive pursuant to
a collective bargaining agreement that was subsequently deferred or
otherwise modified as a result of a negotiated amendment of that
agreement shall be considered compensation earnable and shall not be
deemed to have been paid for the purpose of enhancing a member's
retirement benefit.
  SEC. 4.  Section 31540.2 is added to the Government Code, to read:
   31540.2.  (a) When a county or district reports compensation to
the board, it shall identify the pay period in which the compensation
was earned regardless of when it was reported or paid. Compensation
shall be reported in accordance with Section 31461 and shall not
exceed compensation earnable, as defined in Section 31461.
   (b) The board may assess a county or district a reasonable amount
to cover the cost of audit, adjustment, or correction, if it
determines that a county or district knowingly failed to comply with
subdivision (a). A county or district shall be found to have
knowingly failed to comply with subdivision (a) if the board
determines that either of the following  apply  
applies  :
   (1) The county or district knew or should have known that the
compensation reported was not compensation earnable, as defined in
Section 31461.
   (2) The county or district failed to identify the pay period in
which compensation earnable was earned, as required by this section.
   (c) A county or district shall not pass on to an employee any
costs assessed pursuant to subdivision (b).
  SEC. 5.  Section 31541 is added to the Government Code, to read:
   31541.  The board may audit a county or district to determine the
correctness of retirement benefits, reportable compensation, and
enrollment in, and reinstatement to, the system. During an audit, the
board may require a county or district to provide information, or
make available for examination or copying at a specified time and
place, books, papers, data, or records, including, but not limited
to, personnel and payroll records, as deemed necessary by the board.
  SEC. 6.  Section 31569 is added to the Government Code, to read:
   31569.  A county or district that fails to enroll an employee into
membership within 90 days of when he or she becomes eligible, when
the employer knows or would reasonably be expected to have known that
the person was eligible, shall pay all costs in arrears for member
contributions and administrative costs of five hundred dollars ($500)
per member as a reimbursement to the system's current year budget.
  SEC. 7.  Section 31680.9 is added to the Government Code, to read:
   31680.9.  (a) Except as provided in Section 31680.1, any person
who has been retired for service on or after January 1, 2012, as a
member of a county retirement system established under this chapter
shall 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) 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 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. 8.  The provisions of this act shall not be interpreted or
applied to reduce the pension of any person who has retired prior to
 July   January  1, 2011.