BILL NUMBER: AB 837	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 4, 2014
	AMENDED IN SENATE  SEPTEMBER 6, 2013
	AMENDED IN ASSEMBLY  MAY 1, 2013

INTRODUCED BY   Assembly Member Wieckowski
    (   Coauthors:  
Assembly Members   Fong   
 and Fox   ) 

                        FEBRUARY 21, 2013

   An act amend Section  7522.30   7522.04 
of the Government Code, relating to public employees' retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 837, as amended, Wieckowski. Public employees' retirement
benefits. 
   The California Public Employees' Pension Reform Act of 2013
(PEPRA) generally requires a public retirement system, as defined, to
modify its pension plan or plans to comply with the act, as
specified. Among other things, PEPRA prohibits a public employer
offering a defined benefit pension plan from exceeding specified
retirement formulas for new members and prohibits an enhancement of a
public employee's retirement formula or benefit adopted after
January 1, 2013, from applying to service performed prior to the
operative date of the enhancement. PEPRA defines terms for those
purposes, including defining "new member" to include an individual
who becomes a member of any public retirement system for the first
time on or after January 1, 2013, and who was not a member of any
other public retirement system prior to that date; an individual who
becomes a member of a public retirement system for the first time on
or after January 1, 2013, and who was a member of another public
retirement system prior to that date, but who was not subject to
reciprocity under specified law; or an individual who was an active
member in a retirement system and who, after a break in service of
more than 6 months, returned to active membership in that system with
a new employer.  
   This bill would specifically exclude from the definition of "new
member" a judge, as defined in specified existing law, elected to
office before January 1, 2013.  
   The California Public Employees' Pension Reform Act of 2013
(PEPRA), on and after January 1, 2013, requires a public retirement
system, as defined, to modify its plan or plans to comply with the
act and, among other provisions, establishes new retirement formulas
that may not be exceeded by a public employer offering a defined
benefit pension plan, setting the maximum benefit allowable for
employees first hired on or after January 1, 2013, as a formula
commonly known as 2.5% at age 67 for nonsafety members, one of 3
formulas for safety members, 2% at age 57, 2.5% at age 57, or 2.7% at
age 57, and 1.25% at age 67 for new state miscellaneous or
industrial members who elect to be in Tier 2.  
   On and after January 1, 2013, PEPRA requires new employees of
specified public employers, the California State University, and the
judicial branch who participate in a defined benefit plan to have an
initial contribution rate of at least 50% of the normal cost rate for
that defined benefit plan, rounded to the nearest 1/4 of 1%, or the
current contribution rate of similarly situated employees, whichever
is greater.  
   This bill would make that provision applicable to new members
employed by those entities and new members employed by the
Legislature. The bill would except from these provisions a judge who
was elected to office prior to January 1, 2013, despite not assuming
that office and becoming a member of the Judges' Retirement System II
for the first time until January 1, 2013, or after that date. The
bill would also specify that this contribution rate for new members
shall be 50% rounded to the nearest 1/4 of 1%, unless a greater
contribution rate has been agreed to through the collective
bargaining process. The bill would require that, for purposes of
calculating the normal cost rate, the actuarial valuation of
retirement benefits includes any elements that impact the actuarial
determination of the normal cost, including, but not limited to, the
retirement formula, eligibility and vesting criteria, ancillary
benefit provisions, and any automatic cost-of-living adjustments.

   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 7522.04 of the  
Government Code   is amended to read: 
   7522.04.  For the purposes of this article:
   (a) "Defined benefit formula" means a formula used by  the
  a  retirement system to determine a retirement
benefit based on age, years of service, and pensionable compensation
earned by an employee up to the limit defined in Section 7522.10.
   (b) "Employee contributions" means the contributions to a public
retirement system required to be paid by a member of the system, as
fixed by law, regulation, administrative action, contract, contract
amendment, or other written agreement recognized by the retirement
system as establishing an employee contribution.
   (c) "Federal system" means the old age, survivors, disability, and
health insurance provisions of the federal Social Security Act (42
U.S.C. Sec. 301 et seq.).
   (d) "Member" means a public employee who is a member  of
any type  of a public retirement system or plan.
   (e) "New employee" means either of the following:
   (1) An employee, including one who is elected or appointed, of a
public employer who is employed for the first time by  any
  a  public employer on or after January 1, 2013,
and who was not employed by  any other   another
 public employer prior to that date.
   (2) An employee, including one who is elected or appointed, of a
public employer who is employed for the first time by  any
  a  public employer on or after January 1, 2013,
and who was employed by another public employer prior to that date,
but who was not subject to reciprocity under subdivision (c) of
Section 7522.02.
   (f)  (1)    "New  member"  
member," except as provided in paragraph (2),  means any of the
following: 
   (1) 
    (A)  An individual who becomes a member of  any
  a  public retirement system for the first time on
or after January 1, 2013, and who was not a member of  any
other   another  public retirement system prior to
that date. 
   (2) 
    (B)  An individual who becomes a member of a public
retirement system for the first time on or after January 1, 2013, and
who was a member of another public retirement system prior to that
date, but who was not subject to reciprocity under subdivision (c) of
Section 7522.02. 
   (3) 
    (C)  An individual who was an active member in a
retirement system and who, after a break in service of more than six
months, returned to active membership in that system with a new
employer. For purposes of this subdivision, a change in employment
between state entities or from one school employer to another shall
not be considered as service with a new employer. 
   (2) Notwithstanding any other provision of this subdivision, a
judge, as defined in subdivision (a) of Section 75502, elected to
office before January 1, 2013, shall not be considered a new member
for the purposes of this article. 
   (g) "Normal cost" means the portion of the present value of
projected benefits under the defined benefit that is attributable to
the current year of service, as determined by the public retirement
system's actuary according to the most recently completed valuation.
For the purpose of determining normal cost, the system's actuary may
use a single rate of contribution or an age-based rate of
contribution as is applicable to that retirement system.
   (h) "Public employee" means an officer, including one who is
elected or appointed, or an employee of a public employer.
   (i) "Public employer" means:
   (1) The state and every state entity, including, but not limited
to, the Legislature, the judicial branch, including judicial
officers, and the California State University.
   (2)  Any   A    political
subdivision of the state, or agency or instrumentality of the state
or subdivision of the state, including, but not limited to, a city,
county, city and county, a charter city, a charter county, school
district, community college district, joint powers authority, joint
powers agency, and any public agency, authority, board, commission,
or district.
   (3) Any charter school that elects or is required to participate
in a public retirement system.
   (j) "Public retirement system" means  any   a
 pension or retirement system of a public employer, including,
but not limited to, an independent retirement plan offered by a
public employer that the public employer participates in or offers to
its employees for the purpose of providing retirement 
benefits,   benefits  or a system of benefits for
public employees that is governed by Section 401(a) of Title 26 of
the United States Code. 
  SECTION 1.    Section 7522.30 of the Government
Code is amended to read:
   7522.30.  (a) This section shall apply to all public employers and
to all new members. Equal sharing of normal costs between public
employers and public employees shall be the standard. The standard
shall be that employees pay at least 50 percent of normal costs and
that employers not pay any of the required employee contribution.
   (b) The "normal cost rate" shall mean the annual actuarially
determined normal cost for the plan of retirement benefits provided
to the new member and shall be established based on the actuarial
assumptions used to determine the liabilities and costs as part of
the annual actuarial valuation. The plan of retirement benefits shall
include any elements that would impact the actuarial determination
of the normal cost, including, but not limited to, the retirement
formula, eligibility and vesting criteria, ancillary benefit
provisions, and any automatic cost-of-living adjustments as
determined by the public retirement system.
   (c) (1) New members employed by those public employers defined in
paragraphs (2) and (3) of subdivision (i) of Section 7522.04, the
Legislature, the California State University, and the judicial branch
who participate in a defined benefit plan shall have an initial
contribution rate of at least 50 percent of the normal cost rate for
that defined benefit plan, rounded to the nearest quarter of 1
percent, unless a greater contribution rate has been agreed to
pursuant to the requirements in subdivision (e). This contribution
shall not be paid by the employer on the employee's behalf.
   (2) For purposes of this subdivision, "new member" does not
include a member who is a judge who was elected to office prior to
January 1, 2013, despite assuming the office of judge, and becoming a
member of the Judges' Retirement System II, for the first time on or
after that date.
   (d) Notwithstanding subdivision (c), once established, the
employee contribution rate described in subdivision (c) shall not be
adjusted on account of a change to the normal cost rate unless the
normal cost rate increases or decreases by more than 1 percent of
payroll above or below the normal cost rate in effect at the time the
employee contribution rate is first established or, if later, the
normal cost rate in effect at the time of the last adjustment to the
employee contribution rate under this section.
   (e) Notwithstanding subdivision (c), employee contributions may be
more than one-half of the normal cost rate if the increase has been
agreed to through the collective bargaining process, subject to the
following conditions:
   (1) The employer shall not contribute at a greater rate to the
plan for nonrepresented, managerial, or supervisory employees than
the employer contributes for other public employees, including
represented employees, of the same employer who are in related
retirement membership classifications.
   (2) The employer shall not increase an employee contribution rate
in the absence of a memorandum of understanding that has been
collectively bargained in accordance with applicable laws.
   (3) The employer shall not use impasse procedures to increase an
employee contribution rate above the rate required by this section.
   (f) If the terms of a contract, including a memorandum of
understanding, between a public employer and its public employees,
that is in effect on January 1, 2013, would be impaired by any
provision of this section, that provision shall not apply to the
public employer and public employees subject to that contract until
the expiration of that contract. A renewal, amendment, or any other
extension of that contract shall be subject to the requirements of
this section.