BILL ANALYSIS Ó
SB 987
Page 1
SENATE THIRD READING
SB 987 (Negrete McLeod)
As Amended August 13, 2012
Majority vote
SENATE VOTE :31-0
PUBLIC EMPLOYEES 4-0 APPROPRIATIONS 12-0
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|Ayes:|Furutani, Allen, Ma, |Ayes:|Fuentes, Blumenfield, |
| |Wieckowski | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
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SUMMARY : Makes various technical and non-controversial changes
to various sections of the Government Code administered by the
California Public Employees' Retirement System (CalPERS) that
are necessary for the continued efficient administration of the
system. Specifically, this bill :
1)Clarifies that references to "spouse," "surviving spouse," and
"marriage" in the laws governing CalPERS, the Judges'
Retirement Systems I and II (JRS I and JRS II) and the
Legislators' Retirement System (LRS) apply equally to a
registered domestic partner, or partnership, to the extent
provided by the domestic partnership provisions in the Family
Code.
2)Conforms the Public Employees' Retirement Law to CalPERS' use
of the Building Account to pay expenses associated with
building vendor services such as parking, security and food
service, and other building operating expenses.
3)Revises investment reporting requirements to align them with
financial industry standards and the requirements of other
public retirement systems.
4)Ensures that state employee retirement benefits are not
adversely impacted by mandatory furloughs imposed on two state
bargaining units for fiscal year 2012-13.
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5)Clarifies the definition of an industrial "leave of absence"
to include leave for an industrial illness or injury.
6)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 for a non-work related illness.
7)Clarifies that the 960-hour annual work limit and ban on
additional benefits enacted in recent budget trailer bill
language only apply to retired annuitants working in vacant
positions for a CalPERS contracting agency, and not to other
retired annuitants serving in specified elected and appointed
positions.
8)Clarifies that contracting agency employees must be members of
CalPERS or another public retirement system in order to be
eligible for CalPERS health benefits, and that contracting
agencies have the option to provide CalPERS health benefits to
their elected and appointed officials regardless of whether
they also provide retirement benefits to these officials or
the official has chosen to become a CalPERS member.
EXISTING LAW :
1)Allows individuals to file a Declaration of Domestic
Partnership with the Secretary of State and requires that
registered domestic partners shall have the same rights,
protections, and benefits as are granted to and imposed upon
spouses.
2)Establishes a Building Account for the transfer of money that
is continuously appropriated for the acquisition of real
property and the construction, maintenance, and improvement of
CalPERS facilities.
3)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.
4)Ensures that state employees subject to previous mandatory
furloughs occurring in specific fiscal years will not have
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their eligibility, reportable compensation and service for
pension purposes reduced as a result of those furloughs.
5)Allows a public employee to be absent from service on
employer-approved leave for an industrial illness or injury
and to receive temporary disability payments during the
absence.
6)Allows a CalPERS member who has been on uncompensated,
employer-approved leave for a personal illness or injury to
purchase service credit in the CalPERS system equivalent to
the time spent on leave. In such cases the employee pays the
entire cost (i.e., employer and employee contributions) of the
service credit.
7)Limits the conditions under which a retired annuitant may work
in CalPERS covered employment after retirement. SB 1021
(Budget and Fiscal Review Committee), Chapter 41, Statutes of
2012, specifies that a retired annuitant may not be paid more
than the monthly maximum paid to other staff doing similar
work and restricts the hours a retired annuitant can work
yearly to 960 regardless of the number of employers.
8)Requires employees of CalPERS contracting agencies, in order
to be eligible for CalPERS health benefits, to be CalPERS
members or participate in another public retirement system.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact.
COMMENTS : CalPERS is the state's largest public retirement
system, providing benefits for California's state employees and
local public employees. Annually, CalPERS sponsors a
housekeeping bill to make technical and non-controversial
changes to the area of law it administers.
This bill removes the two-year reporting requirement to align
CalPERS financial reporting to financial industry standards and
existing requirements for other public retirement systems.
Among other things, a fiscal year 2012-13 budget trailer bill,
SB 1006 (Budget and Fiscal Review Committee), Chapter 32,
Statutes of 2012, established the Personal Leave Program 2012
(PLP 2012) effective July 1, 2012 through July 1, 2013, for all
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represented employees of the state whose bargaining units
approved participation in the program, as well as all excluded
and exempt state employees. Under PLP 2012, full-time employees
are subject to a reduction in pay equal to 4.62%, and eight
hours of leave is credited to the employee's leave balance on
the first day of each pay period. Unless otherwise corrected in
the membership reporting process, this may lower the amount of
service credit a CalPERS member earns and the salary on which
his or her benefits are calculated. The Public Employees'
Retirement Law (PERL) currently provides that the pension
benefits of state employees participating in an approved
personal leave program shall not be adversely impacted.
However, state employees represented by two bargaining units
that did not reach agreement to participate in PLP 2012, are
subject to mandatory one-day per month unpaid furloughs.
According to CalPERS, "Employers do not distinguish between
illness or injury when approving employee leaves, which are
granted for medical or disability reasons regardless of cause.
The proposed change would clarify 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
non-work related illness."
Because of a drafting error in SB 1021 (Budget and Fiscal Review
Committee) that imposed the 960-hour limit on all retired
annuitants serving in all the positions listed in Government
Code Section 21221, including, among others, crossing guards,
election officers, jurors, elected and appointed officials
previously exempted in that section, many retired members will
now be subject to reinstatement to active employment and
collection of retirement contributions for any service in excess
of the 960-hour limit. This bill will clarify that the 960 hour
limit and ban on additional benefits enacted by SB 1021 (Budget
and Fiscal Review Committee) apply to retired annuitants working
in a vacant position for a CalPERS contracting agency, and not
to other retired annuitants serving in specified elected and
appointed positions pursuant to Government Code Section 21221.
CalPERS points out that poor drafting in the Public Employees
Medical and Hospital Care Act (PEMHCA) would appear to make
available CalPERS health benefits to non-member employees and
only elected and appointed officials that participate in a
retirement system provided by the contracting agency. This bill
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clarifies in statute that contracting agency employees must be
members of CalPERS or another public retirement system in order
to be eligible for CalPERS health benefits, and that contracting
agencies have the option to provide CalPERS health benefits to
their elected and appointed officials regardless of whether they
also provide retirement benefits to these officials or the
official has chosen to become a CalPERS member. This will align
the PEMHCA with existing practices that enable CalPERS to
monitor eligibility of contracting agency employees, and ensure
equity among officials of local governments that provide health
benefits.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0004838