Amended in Senate April 1, 2013

Senate BillNo. 215


Introduced by Senator Beall

February 11, 2013


An act to amend Section 22508 of the Education Code, and to amend Sectionsbegin insert 7504,end insert 20092, 20309, 21269, 22850, 22920, and 22922 of, and to repeal Section 20204 of, the Government Code, relating to public employees’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

SB 215, as amended, Beall. Public employees’ retirement.

(1) Existing law permits a member of the Public Employees’ Retirement System (PERS) who is employed by a school district, community college district, a county superintendent of schools, or the State Department of Education to elect to have specified service excluded from coverage by the Defined Benefit Program of the State Teachers’ Retirement Plan and instead be subject to coverage by PERS, as specified.

This bill would provide that the option to elect the exclusion applies when the member of PERS was employed by a school district, community college district, a county superintendent of schools, or the State Department of Education within 120 days prior to the member’s date of hire to perform service that requires membership in the Defined Benefit Program of the State Teachers’ Retirement Plan.

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(2) Existing law requires all state and local public retirement systems to secure the services of an enrolled actuary on a triennial basis to perform a valuation of the system utilizing actuarial assumptions and techniques established by the agency that are, in the aggregate, reasonably related to the experience and the actuary’s best estimate of anticipated experience under the system, as specified.

end insert
begin insert

This bill would instead require an enrolled actuary to be retained on a biennial basis to perform these functions.

end insert
begin delete

(2)

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begin insert(3)end insert Existing law provides that PERS is governed by itsbegin delete Board of Administrationend deletebegin insert board of administrationend insert (board) and prescribes the composition of the board. Existing law requires the retirement fund of PERS to reimburse an employing agency that employs an elected member of the board and that employs a person to replace the member during attendance at meetings of the board, among other times, for the direct and reasonable costs incurred by employing a replacement.

This bill would recast these provisions to provide that the employing agency be reimbursed, as specified, without regard to whether it replaces the elected member.

begin delete

(3)

end delete

begin insert(4)end insert  Existing law authorizes the board to sell exchange-traded call options only through an exchange, and only with respect to stock owned by the system, as specified.

This bill would repeal these provisions.

begin delete

(4)

end delete

begin insert(5)end insert Existing law permits a person entitled to a benefit from PERS to request that payment be madebegin insert byend insert an electronic fund transfer, as specified. Existing law prohibits the board from sending a copy of benefit payment information to any person who has had payment made by electronic fund transfer or by mail, as specified, if the board has received a written request from that person that it not be sent.

This bill would authorize the board to make available, in a manner it determines appropriate, copies of the monthly benefit payment information electronically and by mail. The bill would require the board, if it does not elect to mail copies of this payment information, as specified, to all or some of the people receiving monthly benefit payments, to notify people of their right to request that a copy of the benefit payment information be mailed. The bill would require the board to mail the information upon receiving a written request to do so.

begin delete

(5)

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begin insert(6)end insert Existing law, the Public Employees’ Medical and Hospital Care Act (PEMHCA), authorizes the board to enter into contracts with carriers offering health benefit plans or with entities offering services relating to the administration of health benefit plans. Existing law specifically authorizes the board to contract for, or approve, health benefit plans exclusively for the employees and annuitants of contracting agencies. Existing law authorizes a contracting agency and its employees and annuitants to elect to be subject to PEMHCA upon filing with the board a resolution of its governing body, as specified. Existing law authorizes the board, by regulation, to establish requirements for a contracting agency that elects to become subject to PEMHCA.

This bill would provide that a contracting agency and its employees and annuitants may obtain a health benefit plan, as defined, subject to board approval of a resolution submitted by the governing body. The bill would authorize the board to refuse to contract with, or to agree to an amendment proposed by, any contracting agency for benefit provisions that are not specifically authorized by PEMHCA and that the board determines would adversely affect the administration of this system. Among other things, the bill would permit the board to require the contracting agency to enter into a contract with the board in this regardbegin delete and that the contract would constitute an election by the contracting agency to include the agency and its employees PEMHCA-authorized health benefit plansend delete. The bill would require that the approval of the contract be bybegin delete ordinance adopted by theend delete affirmative vote of a majority of the members of the relevant governing bodybegin delete, at least 20 days after the adoption of the resolution of intention, or by ordinance adopted by a majority vote of the electorate of the contracting agencyend delete.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 22508 of the Education Code is amended
2to read:

3

22508.  

(a) A member who becomes employed by the same or
4a different school district or community college district, or a county
5superintendent, or who becomes employed by the state in a position
6described in subdivision (b), to perform service that requires
7membership in a different public retirement system, and who is
8not excluded from membership in that public retirement system,
9may elect to have that service subject to coverage by the Defined
10Benefit Program of this plan and excluded from coverage by the
11other public retirement system. The election shall be made in
P4    1writing on a form prescribed by this system within 60 days from
2the date of hire in the position requiring membership in the other
3public retirement system. If that election is made, the service
4performed for the employer after the date of hire shall be
5considered creditable service for purposes of this part.

6(b) Subdivision (a) shall apply to a member who becomes
7employed by the state only if the member is also one of the
8following:

9(1) Represented by a state bargaining unit that represents
10educational consultants, professional educators, or librarians
11employed by the state.

12(2) Excluded from the definition of “state employee” in
13subdivision (c) of Section 3513 of the Government Code, but
14performing, supervising, or managing work similar to work
15performed by employees described in paragraph (1).

16(3) In a position not covered by civil service and in the executive
17branch of government, but performing, supervising, or managing
18work similar to work performed by employees described in
19paragraph (1).

20(c) (1) A member of the Public Employees’ Retirement System
21described in paragraph (2) who is subsequently employed to
22perform creditable service requiring coverage by the Defined
23Benefit Program of this plan may elect to have that subsequent
24service subject to coverage by the Public Employees’ Retirement
25System and excluded from coverage by the Defined Benefit
26Program pursuant to Section 20309 of the Government Code. If
27the election is made, creditable service performed for the employer
28after the date of hire shall be subject to coverage by the Public
29Employees’ Retirement System.

30(2) This subdivision shall apply to a member of the Public
31Employees’ Retirement System who either (A) was employed by
32a school district, community college district, a county
33superintendent, or the State Department of Education within 120
34days prior to the member’s date of hire to perform service that
35requires membership in the Defined Benefit Program of the State
36Teachers’ Retirement Plan or (B) has at least five years of credited
37service under the system.

38(d) An election made by a member pursuant to this section shall
39be irrevocable.

P5    1begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 7504 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
2read:end insert

3

7504.  

(a) All state and local public retirement systems shall,
4not less thanbegin delete triennially,end deletebegin insert biennially,end insert secure the services of an
5enrolled actuary. An enrolled actuary, for the purposes of this
6section, means an actuary enrolled under subtitle C of Title III of
7the federal Employee Retirement Income Security Act of 1974
8(Public Law 93-406) and who has demonstrated experience in
9public retirement systems. The actuary shall perform a valuation
10of the system utilizing actuarial assumptions and techniques
11established by the agency that are, in the aggregate, reasonably
12related to the experience and the actuary’s best estimate of
13anticipated experience under the system. Any differences between
14the actuarial assumptions and techniques used by the actuary that
15differ significantly from those established by the agency shall be
16disclosed in the actuary’s report and the effect of the differences
17on the actuary’s statement of costs and obligations shall be shown.

18(b) All state and local public retirement systems shall secure
19the services of a qualified person to perform an attest audit of the
20system’s financial statements. A qualified person means any of
21the following:

22(1) A person who is licensed to practice as a certified public
23accountant in this state by the California Board of Accountancy.

24(2) A person who is registered and entitled to practice as a public
25accountant in this state by the California Board of Accountancy.

26(3) A county auditor in any county subject to the County
27Employees Retirement Law of 1937 (Chapter 3 (commencing with
28Section 31450) of Part 3 of Division 4 of Title 3).

29(4) A county auditor in any county having a pension trust and
30retirement plan established pursuant to Section 53216.

31(c) All state and local public retirement systems shall submit
32audited financial statements to the State Controller at the earliest
33practicable opportunity within six months of the close of each
34fiscal year. However, the State Controller may delay the filing date
35for reports due in the first year until the time as report forms have
36been developed that, in his or her judgment, will satisfy the
37requirements of this section. The financial statements shall be
38prepared in accordance with generally accepted accounting
39principles in the form and manner prescribed by the State
40Controller. The penalty prescribed in Section 53895 shall be
P6    1invoked for failure to comply with this section. Upon a satisfactory
2showing of good cause, the State Controller may waive the penalty
3for late filing provided by this subdivision.

4(d) The State Controller shall compile and publish a report
5annually on the financial condition of all state and local public
6retirement systems containing, but not limited to, the data required
7in Section 7502. The report shall be published within 12 months
8of the receipt of the information, and in no case later than 18
9months after the end of the fiscal year upon which the information
10in the report is based.

11

begin deleteSEC. 2.end delete
12begin insert SEC. 3.end insert  

Section 20092 of the Government Code is amended
13to read:

14

20092.  

Each employing agency that employs an elected
15member of the board shall be reimbursed by the retirement fund
16in an amount equal to the salary and benefits paid to the elected
17board member by the employing agency for the percentage of the
18elected board member’s regular work schedule during which the
19elected board member is on leave from the employing agency to
20attend meetings or activities of the board, or meetings of
21committees or subcommittees of the board, or when serving as
22president or vice president of the board or chair or vice chair of a
23committee or subcommittee of the board, or when carrying out
24other powers or duties as may be approved by the board, or to
25otherwise fulfill his or her responsibilities to the system.

26

begin deleteSEC. 3.end delete
27begin insert SEC. 4.end insert  

Section 20204 of the Government Code is repealed.

28

begin deleteSEC. 4.end delete
29begin insert SEC. 5.end insert  

Section 20309 of the Government Code is amended
30to read:

31

20309.  

(a) A member of the system described in subdivision
32(b) who subsequently is employed to perform service subject to
33coverage by the Defined Benefit Program of the State Teachers’
34Retirement Plan, may elect to retain coverage by this system for
35that subsequent service. An election to retain coverage under this
36system shall be submitted in writing by the member to the system
37on a form prescribed by the system, and a copy of the election
38shall be submitted to the State Teachers’ Retirement System, within
3960 days after the member’s date of hire to perform service that
40requires membership in the Defined Benefit Program of the State
P7    1Teachers’ Retirement Plan. A member who elects to retain
2coverage under this system pursuant to this section shall be deemed
3to be a school member while employed by a school employer.

4(b) This section shall apply to a member of the system who
5either (1) was employed by a school employer, the Board of
6Governors of the California Community Colleges, or the State
7Department of Education within 120 days prior to the member’s
8date of hire to perform service that requires membership in the
9Defined Benefit Program of the State Teachers’ Retirement Plan
10or (2) has at least five years of credited service under this system.

11(c) Any election made pursuant to this section shall become
12effective as of the first day of employment in the position that
13qualified the member to make an election.

14

begin deleteSEC. 5.end delete
15begin insert SEC. 6.end insert  

Section 21269 of the Government Code is amended
16to read:

17

21269.  

(a) Any person entitled to a benefit from this system
18may request that payment be made by deposit by electronic fund
19transfer in the person’s bank, savings and loan association, or credit
20union account.

21(b) If deposit pursuant to subdivision (a) is not available, deposit
22may be made by mail in the person’s bank, savings and loan
23associationbegin insert,end insert or credit union account.

24(c) Mailing of the warrant or electronic fund transfer is a full
25discharge of the board and this system.

26(d) The board shall make available, in a manner it determines
27appropriate, copies of the monthly benefit payment information
28electronically or by mail.

29(1) If the board elects to mail copies of this payment information
30to all or a portion of persons receiving monthly benefit payments,
31it shall not send a copy of the benefit payment information to any
32person who has had payment made by electronic fund transfer or
33by mail pursuant to subdivision (a) or (b), if the board has received
34a written request from that person that it not be sent.

35(2) The board shall notify persons subject to this section, in the
36monthly benefit payment notice, of their right to request that no
37copy of the benefit payment information be mailed, pursuant to
38paragraph (1).

39(3) If the board does not elect to mail copies of this payment
40information to all or a portion of persons receiving monthly benefit
P8    1payments, it shall notify a person subject to this section of his or
2her right to request that a copy of the benefit payment information
3be mailed. The board shall mail a copy of the benefit payment
4information if the system has received a written request to do so
5from that person.

6

begin deleteSEC. 6.end delete
7begin insert SEC. 7.end insert  

Section 22850 of the Government Code is amended
8to read:

9

22850.  

(a) The board may, without compliance with any
10provision of law relating to competitive bidding, enter into
11contracts with carriers offering health benefit plans or with entities
12offering services relating to the administration of health benefit
13plans.

14(b) The board may contract with carriers for health benefit plans
15or approve health benefit plans offered by employee organizations,
16provided that the carriers have operated successfully in the hospital
17and medical care fields prior to the contracting for or approval
18thereof. The plans may include hospital benefits, surgical benefits,
19inpatient medical benefits, outpatient benefits, obstetrical benefits,
20and benefits offered by a bona fide church, sect, denomination, or
21organization whose principles include healing entirely by prayer
22or spiritual means.

23(c) Notwithstanding any other provision of this part, the board
24may contract with health benefit plans offering unique or
25specialized health services.

26(d) The board may administer self-funded or minimum premium
27health benefit plans.

28(e) The board may contract for or implement employee cost
29containment and cost reduction incentive programs that involve
30the employee, the annuitant, and family members as active
31participants, along with the carrier and the provider, in a joint effort
32toward containing and reducing the cost of providing medical and
33hospital health care services to public employees. In developing
34these plans, the board, in cooperation with the Department of
35Human Resources, may request proposals from carriers and
36certified public employee representatives.

37(f) Notwithstanding any other provision of this part, the board
38may do any of the following:

P9    1(1) Contract for, or approve, health benefit plans that charge a
2contracting agency and its employees and annuitants rates based
3on regional variations in the costs of health care services.

4(2) Contract for, or approve, health benefit plans exclusively
5for the employees and annuitants of contracting agencies. State
6employees and annuitants may not enroll in these plans. The board
7may provide health benefit plans exclusively for employees and
8annuitants of contracting agencies in addition to or in lieu of other
9health benefit plans offered under this part pursuant to Section
1022922.

11(3) Implement and administer risk adjustment procedures
12consistent with Section 22864 that require health benefit plans to
13adjust premiums and authorize the system to redistribute premiums
14based on rules and regulations established by the board for this
15purpose.

16(g) The board shall approve any employee association health
17benefit plan that was approved by the board in the 1987-88 contract
18year or prior, provided the plan continues to meet the minimum
19standards prescribed by the board. The trustees of an employee
20association health benefit plan are responsible for providing health
21benefit plan administration and services to its enrollees.
22Notwithstanding any other provision of this part, the California
23Correctional Peace Officer Association Health Benefits Trust may
24offer different health benefit plan designs with varying premiums
25in different areas of the state.

26(h) Irrespective of any other provision of law, the sponsors of
27a health benefit plan approved under this section may reinsure the
28operation of the plan with an admitted insurer authorized to write
29disability insurance, if the premium includes the entire prepayment
30fee.

31

begin deleteSEC. 7.end delete
32begin insert SEC. 8.end insert  

Section 22920 of the Government Code is amended
33to read:

34

22920.  

The following entities are eligible to obtain a health
35benefit plan, as defined in Section 22777, subject to board approval:

36(a) A contracting agency, as defined in Section 20022, a county
37or special district subject to the County Employees Retirement
38Law of 1937 (Chapter 3 (commencing with Section 31450) of Part
393 of Division 4 of Title 3), and a school employer.

P10   1(b) A public body or agency of or within the state that is not
2subject to Part 3 (commencing with Section 20000) of the
3Government Code or the County Employees Retirement Law of
41937 (Chapter 3 (commencing with Section 31450) of Part 3 of
5Division 4 of Title 3), and that provides a retirement system for
6its employees funded wholly or in part by public funds.

7(c) The protection and advocacy agency described in subdivision
8(h) of Section 4900 of the Welfare and Institutions Code, if the
9agency obtains a written advisory opinion from the United States
10Department of Labor stating that the organization is an agency or
11instrumentality of the state or a political subdivision thereof within
12the meaning of Chapter 18 (commencing with Section 1001) of
13Title 29 of the United States Code.

14

begin deleteSEC. 8.end delete
15begin insert SEC. 9.end insert  

Section 22922 of the Government Code is amended
16to read:

17

22922.  

(a) A contracting agency and its employees and
18annuitants may obtain a health benefit plan, as defined in Section
1922777, subject to board approval of a resolution submitted by the
20governing body electing to be so subject. The resolution shall be
21adopted by a majority vote and shall be effective at the time
22provided in board regulations.

23(b) In addition to, or in lieu of, submitting a resolution as
24prescribed in subdivision (a), the board may require the contracting
25agency to enter into a contract with the board to obtain a health
26benefit plan, as defined in Section 22777, for all or part of its
27employees, pursuant to rules and regulations developed by the
28board for this purpose.begin delete The contract entered into between a
29contracting agency and the board pursuant to this part constitutes
30an election by the contracting agency to include the agency and
31its employees in this system’s health benefit plans.end delete

32(c) The board may refuse to contract with, or to agree to an
33 amendment proposed by, a contracting agency for any benefit
34provisions that are not specifically authorized by this part and that
35the board determines would adversely affect the administration of
36this system.

37(d) A contracting agency may become subject to this part with
38respect to a recognized employee organization with which it has
39reached mutual agreement. The resolution and any contracts, or
40the resolution and contract required by subdivisions (a) and (b),
P11   1shall specify the recognized employee organizations participating
2in this system.

3(e) Pursuant to Section 22796 and subdivision (g) of Section
422934, the board may by regulation require any contracting agency
5that becomes subject to this part to meet certain board-determined
6criteria, including, but not limited to, additional requirements for
7any contracting agency that elects to become subject to this part
8that previously terminated coverage pursuant to Section 22938.

9(f) Approval of the contract to obtain a health benefit plan
10pursuant to subdivision (b) shall be bybegin delete ordinance adopted byend delete the
11affirmative vote of a majority of the members of the governing
12body of the contracting agencybegin delete, not less than 20 days after the
13adoption of the resolution of intention, or by ordinance adopted
14by a majority vote of the electorate of the contracting agency voting
15upon itend delete
.



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