BILL ANALYSIS Ó
AB 2472
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Date of Hearing: April 2, 2014
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Rob Bonta, Chair
AB 2472 (P.E.,R.& S.S. Com.) - As Amended: March 27, 2014
SUBJECT : Public employees: retirement and health benefits.
SUMMARY : Makes various minor policy and technical changes to
the Public Employees' Retirement Law (PERL) necessary for the
maintenance and continued effective administration of the
California Public Employees' Retirement System (CalPERS).
Specifically, this bill :
1)Allows the use of the employer contribution rate in effect at
the time the compensation is earned when making prior period
adjustments.
2)Allows a member to make a change to their election of a
survivor benefit option if CalPERS receives their request
within 30 days of the issuance of their first retirement
payment.
3)Corrects an incorrect cross-reference and clarifies that a
retired judge who is subsequently elected or appointed to
judicial office must forfeit his or her retirement allowance
and reinstate to active membership.
4)Eliminates obsolete reporting requirements from the PERL.
FISCAL EFFECT : Unknown.
COMMENTS : According to the sponsor, CalPERS, AB 2472 "would
make several changes in the PERL necessary for the maintenance
and good governance of CalPERS, and to ensure its statutes are
clear." The following information was provided to the Committee
by CalPERS:
1)Under existing law, if a correction of the amount of
compensation reported by a contracting agency requires
additional employer contributions, the contributions must be
computed using the employer contribution rate in effect at the
time of the adjustment. However, when the current employer
contribution rate is used to adjust previous period
AB 2472
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compensation reporting errors, the difference between the two
rates may be so great in some cases that such adjustments
result in the employer paying more, and in some cases the
employer paying less, than is necessary to cover the cost of
the benefit.
Currently, payroll corrections and employer contribution
adjustments are completed by CalPERS employers on an ongoing
basis utilizing the my|CalPERS system, which is designed to
use the current employer rates when employers submit payroll
adjustments for prior periods. There are thousands of these
employer initiated adjustments completed each month that
automatically apply the current employer contribution rates
for both current year and prior period adjustments.
To more accurately reflect the correct contributions owed and
minimize inequity, this bill will allow the use of the
employer contribution rate in effect at the time the
compensation is earned when making prior period adjustments.
2)As an alternative to receiving an unmodified allowance, a
CalPERS member may elect to receive a reduced monthly benefit
so that upon his or her death, either a lump sum of remaining
member contributions will be paid, or an ongoing monthly
allowance will be paid, to one or more named beneficiaries.
These alternative choices are called Options or Optional
Settlements.
Existing law allows members to change their option election
prior to their first benefit payment on account of any
retirement allowance or, in the event of a change of
retirement status after retirement, prior to the benefit
payment immediately following the change in retirement status.
However, the recently implemented my|CalPERS member database
is now able to release several types of member payments on a
weekly basis, and provides CalPERS additional flexibility to
accept members' changes to their option elections even after
the first payment is made. This bill will allow members to
make a change to their option election if CalPERS receives
their request within 30 days of the issuance of their first
retirement payment. This will allow members who may not
realize the extent to which the option they elected, combined
with tax and other benefit deductions, has reduced their
monthly retirement allowance, to make a different choice.
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3)Under existing law, a retired judge that participates in the
Judges' Retirement System I (JRS I) cannot be elected or
appointed to serve as a judge while continuing to receive
retirement benefits through the JRS I, except for a retired
judge while serving under assignment by the Chair of the
Judicial Council. In such instances, the benefit of the
retired judge is reduced by the amount of that salary or
compensation earned during the time he or she is on
assignment, and he or she does not earn service credit or
become entitled to additional retirement benefits on account
of that assignment. The Judges' Retirement Law II (JRL II)
does not contain a similar prohibition, which may cause
unnecessary confusion and misunderstanding for members and
employers.
This bill will add a similar provision to the JRL II to make
clear that a retired judge that participates in the Judges'
Retirement System II (JRS II) cannot be elected or appointed
to serve as a judge while continuing to receive retirement
benefits through the JRS II, except for a retired judge while
serving under assignment by the Chair of the Judicial Council.
4)AB 256 (De La Torre), Chapter 708, Statutes of 2005, required
CalPERS to examine the feasibility and cost-effectiveness of
creating a single statewide health care pool for all school
employees. CalPERS submitted the study titled Feasibility of
Offering Health care Coverage to School Employees as Outlined
in AB 256 to the Legislature In March 2008.
In addition, AB 1585 (Assembly Accountability and Administrative
Review Committee), Chapter 7, Statutes of 2010, eliminated
hundreds of underutilized and unnecessary annual reports to
the Legislature produced by state agencies, including the
following two CalPERS reports: Annual Report on All Matters
Under Board Jurisdiction and Pre/Post Retirement Death
Allowance Payments.
This bill will delete these obsolete reporting requirements.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 2472
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California Public Employees' Retirement System (Sponsor)
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957