BILL NUMBER: AB 1247 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 16, 2011
AMENDED IN SENATE JUNE 22, 2011
AMENDED IN ASSEMBLY MAY 9, 2011
AMENDED IN ASSEMBLY APRIL 25, 2011
AMENDED IN ASSEMBLY MARCH 31, 2011
INTRODUCED BY Assembly Member Fletcher
FEBRUARY 18, 2011
An act to amend Section 20229 of the Government Code, relating to
public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1247, as amended, Fletcher. Public retirement systems:
reporting.
The Public Employees' Retirement Law provides a defined benefit to
members of the Public Employees' Retirement System (PERS) based on
age at retirement, service credit, and final compensation, as those
terms are defined. The management and control of PERS is vested in
the Board of Administration of PERS, including the calculation of the
contribution rates for specified state employees and state
employers. Existing law requires the board to submit a report to the
Legislature, the Governor, and the Treasurer describing the
investment return assumptions, discount rates, and amortization
periods utilized by the board in the calculations of the contribution
rates and to include recalculations of those rates based on
specified adjustments of the investment return assumptions,
amortization periods, and discount rates utilized by the board any
time it calculates the contribution rates. Existing law requires the
Treasurer, within 30 days following receipt of the report, to provide
each house of the Legislature, at a publicly noticed floor session,
with an explanation of the role played by the investment return
assumption and amortization period in the calculation of the
contribution rates and the consequences for future state budgets if
the investment return assumptions are not realized, to report whether
the board's amortization period exceeds the estimated average
remaining service periods of employees covered by the contributions,
and to express his or her opinion of the reasonableness of the board'
s calculation of the contribution rates.
This bill would require the Board of Administration of PERS to
submit that report annually to the Legislature, the Governor, and the
Chair of the California Actuarial Advisory Panel, would limit the
scope of the report to state employee retirement plans, and would
revise the adjustments of the investment return assumptions and
discount rates utilized by the board any time it calculates the
contribution rates. The bill would delete the requirement that the
Treasurer express his or her opinion of the reasonableness of the
board's calculation of the contribution rates. The bill would require
the Chair of the California Actuarial Advisory Panel, or his or
her designee, instead of the Treasurer, within 30 days
following receipt of the report, to provide the Senate Committee on
Public Employment and Retirement and the Assembly Committee on Public
Employees, Retirement and Social Security, at a publicly noticed
joint hearing, with an explanation of the role played by the
investment return assumption and amortization period in the
calculation of the contribution rates, a description of the
consequences for future state budgets if the investment return
assumptions are not realized, and a report on whether the board's
amortization period exceeds the estimated average remaining service
periods of employees covered by the contributions.
Existing law also requires the board, at any time it forecasts
contribution rates, to submit a report to the Legislature with a
revised calculation of the forecasted contribution rates utilizing a
specified investment rate assumption.
This bill would delete this reporting requirement of the board.
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. Section 20229 of the Government Code is amended to
read:
20229. (a) The board, notwithstanding Section 10231.5, shall
provide the Legislature, the Governor, and the Chair of the
California Actuarial Advisory Panel, established pursuant to Section
7507.2 of the Government Code, with an annual report that includes
all of the following, as these items apply to state employee
retirement plans:
(1) (A) A description of the investment return assumption utilized
by the board when determining the contribution rates.
(B) A calculation of the contribution rates utilizing an
investment return assumption 2 percentage points above and 2
percentage points below the investment return assumption utilized by
the board.
(2) (A) A description of the amortization period for any unfunded
liabilities utilized by the board when determining the contribution
rates.
(B) A calculation of the contribution rates based on an
amortization period equal to the estimated average remaining service
periods of employees covered by the contributions.
(3) (A) A description of the discount rate utilized by the board
for reporting liabilities.
(B) A calculation of those liabilities based upon a discount rate
that is 2 percent below the long-term rate of return actually assumed
by the board.
(4) The market value of the assets controlled by the board and an
explanation of how the actuarial value assigned to those assets
differs from the market value of those assets.
(b) The Chair of the California Actuarial Advisory Panel, or
his or her designee, within 30 days of receipt of the report
required by subdivision (a) shall, during a publicly noticed joint
hearing of the Senate Committee on Public Employment and Retirement
and the Assembly Committee on Public Employees, Retirement and Social
Security, do all of the following:
(1) Explain the role played by the investment return assumption
and amortization period in the calculation of the contribution rates.
(2) Describe the consequences for future state budgets should the
investment return assumption not be realized.
(3) Report whether the board's amortization period exceeds the
estimated average remaining service periods of employees covered by
the contributions.
(c) The report required by subdivision (a) shall be submitted in
compliance with Section 9795.