BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 987
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                SB 987 (Negrete McLeod) - As Amended:  June 11, 2012 

          Policy Committee:                             PERSS Vote:4-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill, as proposed to be amended, would make various 
          technical and non-controversial changes to various sections of 
          the Government Code administered by the California Public 
          Employees' Retirement Board, including code sections governing 
          the California Public Employees' Retirement System (CalPERS), 
          the Judges' Retirement Systems I and II (JRS I and JRS II) and 
          the Legislators' Retirement System (LRS).

           FISCAL EFFECT  

          Negligible fiscal impact.

           COMMENTS  

           1)Background.   Annually, CalPERS sponsors a housekeeping bill to 
            make technical and non-controversial changes to the area of 
            law it administers.  This bill includes the following 
            provisions:

             a)   Standardizes service credit purchase eligibility for 
               temporary disability leaves.  Existing law allows members 
               on an employer-approved leave for medical reasons, to 
               purchase retirement service credit for their time away from 
               active service, but contains confusing references.  SB 987 
               clarifies that members are able to purchase service credit 
               at their own expense for time away from work caused by a 
               non-work related injury in the same manner as purchasing 
               service credit for leave a non-work related illness.

             b)   Clarifies that references to "spouse," "surviving 
               spouse," and "marriage" in the laws governing CalPERS, JRS 








                                                                  SB 987
                                                                  Page  2

               I and II, and LRS apply equally to a registered domestic 
               partner, or partnership, to the extent provided by the 
               domestic partnership provisions in the Family Code.

             c)   Align CalPERS Investment Reporting to Financial Industry 
               Standards.  Existing law requires CalPERS to provide the 
               Legislature a review of the system's assets on a quarterly 
               basis that includes, among other things, both time-weighted 
               and dollar-weighted investment rates of return on a 
               five-year, three-year, two-year, and one-year basis. 

               According to the bill's sponsor, CalPERS, reporting 
               investment returns on a two-year basis: 1) deviates from 
               financial industry standards, which specifies calculations 
               on a five-year, three-year, and one-year basis; 2) requires 
               additional time and expense for CalPERS to furnish such 
               information, which is not used for any other purpose; and 
               3) is not required by statute for other public retirement 
               systems in California.  This bill removes the two year 
               reporting requirement.  CalPERS argues this aligns CalPERS 
               financial reporting to financial industry standards and 
               existing requirements for other public retirement systems.

              2)   Proposed amendments.   The proposed amendments would 
               clarify in statute that CalPERS can pay the cafeteria, 
               parking and other building vendor contracts through the 
               CalPERS building fund and correct drafting errors in budget 
               trailer bills.

              3)   There is no registered opposition to this bill  .



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081