BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 987| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 SB 987 Page 2 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 SB 987 Page 3 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 SB 987 Page 4 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 **** END ****