BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 987|
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                              UNFINISHED BUSINESS


          Bill No:  SB 987
          Author:   Negrete McLeod (D)
          Amended:  8/13/12
          Vote:     21

           
           SENATE PUBLIC EMPLOY. & RETIREMENT COMM. :  3-0, 4/9/12
          AYES:  Negrete McLeod, Gaines, Vargas
          NO VOTE RECORDED:  Walters, Padilla
          
           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  31-0, 5/3/12
          AYES:  Alquist, Berryhill, Blakeslee, Calderon, Cannella, 
            Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, 
            Fuller, Gaines, Hancock, Harman, Hernandez, Kehoe, Leno, 
            Lieu, Liu, Lowenthal, Negrete McLeod, Price, Rubio, 
            Steinberg, Strickland, Vargas, Wolk, Wright, Wyland, Yee
          NO VOTE RECORDED:  Anderson, Dutton, Huff, La Malfa, 
            Padilla, Pavley, Runner, Simitian, Walters

           ASSEMBLY FLOOR  :  Not available


           SUBJECT  :    Public employees retirement:  annual 
          housekeeping 
                      legislation

           SOURCE :     California Public Employees Retirement System, 
          Board of 
                      Administration


                                                           CONTINUED





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           DIGEST  :    This bill makes 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).

           Assembly Amendments  clarify 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. 

           ANALYSIS  :    

          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. 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. 

          3. 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. 

          4. 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 







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             employee contributions) of the service credit. 

          5. 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. 

          This bill includes the following provisions: 

          1. 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.  This bill 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. 

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

          3. Aligns 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 







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             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. 

             This bill also clarifies 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. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

           SUPPORT  :   (Verified  8/15/12)

          California Public Employees' Retirement System, Board of 
            Administration (source)

           ARGUMENTS IN SUPPORT  :    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."


          DLW:m  8/22/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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