BILL ANALYSIS Ó
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 782
Gloria Negrete McLeod, Chair Hearing date: June 13, 2011
AB 782 (Brownley) as amended 6/07/11 FISCAL: YES
CALPERS: REQUIREMENTS FOR EMPLOYER AUDITS
HISTORY :
Sponsor: California Public Employees' Retirement System
(CalPERS)
Prior legislation: SB 898 (Soto)
Chapter 898, Statutes of 2002
AB 1799 (Speier)
Chapter 636, Statutes of 1994
ASSEMBLY VOTES :
PER & SS 6-0 3/30/11
Appropriations 15-0 4/13/11
Assembly Floor 73-0 5/02/11
SUMMARY :
AB 782 requires California Public Employees' Retirement
System (CalPERS) to inform employers of the estimated time
required to perform an audit based on specified factors, and
allows CalPERS to charge employers reasonable fees when
audits require more time than originally estimated.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) creates CalPERS, the State's largest public employee
retirement system, which administers retirement and other
benefits for over 1.6 million members and retirees and
their beneficiaries and survivors.
b) requires CalPERS to administer retirement plans for the
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State and over 1,500 public agencies and almost 1,500
school districts.
c) allows CalPERS to perfume audits of employer records to
determine the correctness of retirement benefits,
reportable compensation, and employee enrollment and
reinstatement into the system.
2) This bill :
a) requires CalPERS to inform the subject of an audit of
the estimated time required to perform the audit, based
on the following factors:
i) the number of employees
ii) employment classifications
iii) benefits
iv) contract provisions
v) geographical location
vi) time required for audits of comparable entities
vii) additional time factors raised by the subject of
the audit
b) allows CalPERS to assess reasonable charges to the
employer being audited, when the audit requires more time
than originally estimated, in order to recoup additional
costs incurred for the excess time.
c) specifies that an employer may not be assessed for
delays during the course of the audit that are outside of
the agency's control.
COMMENTS :
1) Argument in Support
According to CalPERS,
The Office of Audit Services (OFAS) began to audit
contracting employers in 1990 in response to reports of
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alleged pension spiking. Although audits originally
focused on contracting agencies, CalPERS later extended
the audit program to the State, California State
University, and school districts. CalPERS also audits
employers who contract with CalPERS for health benefits
for program compliance. The audits take from three days
to two weeks, depending on the size of the agency.
OFAS has performed approximately 900 employer audits
since 1990 and is expected to complete 54 audits in FY
2010-11 and 89 audits in FY 2011-12.
CalPERS states that they occasionally experience
difficulty with employers who are uncooperative or have
poor internal controls and recordkeeping, resulting in
excessive time and cost to CalPERS staff. Some of these
audits have required OFAS staff time in excess of the
hours that OFAS would have estimated for completion of
an audit of a comparable employer and resulted in large
unanticipated administrative costs to CalPERS.
This bill would provide a means for CalPERS to recover
costs from employers whose actions were the cause of the
additional administrative costs associated with an
audit.
2) SUPPORT :
California Public Employees' Retirement System (CalPERS)
Sponsor
3) OPPOSITION :
None to date
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