BILL ANALYSIS                                                                                                                                                                                                    






          SENATE PUBLIC EMPLOYMENT & RETIREMENT    BILL NO:  SB 215
          Jim Beall, Chair             HEARING DATE:  April 8, 2013
          SB 215 (Beall)    as amended   4/01/13       FISCAL:  YES

           CALIFORNIA PUBLIC EMPLOYEE'S RETIREMENT SYSTEM:  ANNUAL  
          HOUSEKEEPING BILL
           
           HISTORY  :

           Sponsor:  California Public Employees' Retirement System  
                 (CalPERS),
                   Board of Administration

            Other legislation:  CalPERS Annual Housekeeping Bill
           

          SUMMARY  :

          This bill would make technical and non-controversial changes  
          to various sections of the Government Code including code  
          sections governing the California Public Employees'  
          Retirement System (CalPERS), the Public Employees Medical and  
          Hospital Care Act (PEMHCA), as well as some conforming  
          changes to the Education Code with respect to CalPERS  
          members.


          BACKGROUND AND ANALYSIS  :
          
          1)   Actuarial Valuation Reports  

             Existing law  requires all state and local retirement  
            systems to engage an enrolled actuary to produce an  
            actuarial valuation at least triennially.  The State  
            Controller reviews and compiles the actuarial information  
            submitted by state and local public retirement agencies and  
            publishes the data in the Public Retirement Systems Annual  
            Report.

             This bill  changes the period for public retirement systems  
            to produce actuarial valuations from triennial to biennial  
            to conform to standards of best practice promulgated by the  
            Government Accounting Standards Board (GASB) Statement 25.
          Glenn A. Miles
          Date:  4/01/13                                          Page  
          1










          2)  CalPERS/CalSTRS Right of Election  

             Existing law  :

             a)   permits a CalPERS or CalSTRS member respectively who  
               takes a job covered by the other retirement system to  
               elect to remain in the first system and have their  
               eligible service credited as service in the first  
               system.

             b)   requires CalPERS members with less than five years of  
               service to avoid any break in service in order to  
               exercise their right of election.

             c)   allows CalPERS members with more than five years of  
               service and CalSTRS members to exercise their right of  
               election within a specified time period even though they  
               may have a break in service between their old position  
               and new position.

             This bill  clarifies that CalPERS members with less than  
            five years of service may have a break in service of up to  
            120 days and still retain the right to elect to remain in  
            CalPERS upon taking a job covered under CalSTRS.

          3)  Agency Reimbursement for CalPERS Board Member Service  

             Existing law  authorizes CalPERS to reimburse an employing  
            agency of an elected CalPERS Board member for time the  
            Board member was on leave from the agency for official  
            CalPERS business, as specified, if the agency employs  
            another person to replace the employee serving on the  
            CalPERS Board.

             This bill  clarifies that an agency is not required to hire  
            a replacement employee in order to receive reimbursement  
            for time the agency's employee spent on duties as a  
            CalPERS' Board Member and provides a reimbursement  
            equivalent to the pro rata salary and benefits paid to the  
            elected CalPERS Board member by the agency.

          4)  Obsolete Options Trading Statute  
          Glenn A. Miles
          Date:  4/01/13                                          Page  
          2










             Existing law  authorizes CalPERS to invest in accordance  
            with modern portfolio theory pursuant to Proposition 21 and  
            provides CalPERS plenary authority under Proposition 162  
            over investment decisions (Prior to Proposition 21 and  
            Proposition 162's passage, CalPERS required specific  
            statutory authority to invest in certain investment  
            vehicles).

             This bill  repeals obsolete statutory language that  
            authorized CalPERS to invest in exchange traded options, as  
            specified, bringing code into conformity with Propositions  
            21 and 162 and deleting potential misinformation regarding  
            the manner in which CalPERS can invest in options trading.

          5)  Electronic Benefit Statements  

              Existing law  :

              a)  allows retirees to select to receive their retirement  
                check either by mail or by Electronic Funds Transfer  
                (EFT).  In either case, CalPERS also sends a retirement  
                payment benefit statement.

              b)  prohibits CalPERS from mailing a statement to a  
                retiree if the retiree has notified the system in  
                writing that such a statement not be sent.

              c)  requires CalPERS to notify retirees of their right to  
               request not to receive a mailed copy of their statement  
               if they are receiving their retirement check by EFT.

              This bill  gives CalPERS flexibility to decide whether to  
             send statements by mail or electronically.

             If CalPERS elects to send statements  by mail  , this bill  
             prohibits CalPERS from sending a statement to a retiree  
             who has provided CalPERS a written request not to receive  
             statements.

             If CalPERS elects to  not  send statements by mail, this  
             bill:

          Glenn A. Miles
          Date:  4/01/13                                          Page  
          3









              a)     requires CalPERS to notify retirees of their right  
                to receive statements by mail; and

              b)  requires CalPERS to send a statement by mail to a  
               retiree who has provided CalPERS a written request to  
               receive statements by mail.

          6) Contract Requirement Authority for PEMHCA Coverage
           
              Existing law  authorizes local public agencies to provide  
             employee health care coverage through the Public Employee  
             Medical and Hospital Care Act (PEMHCA) by submitting a  
             resolution from their governing board to CalPERS.  The  
             resolution serves to subject the local agency to the  
             provisions of PEMHCA.

              This bill  :

              a)  permits CalPERS, at its discretion, to require local  
               agencies to enter a contract for PEMHCA coverage in  
               addition to, or in lieu of, simply filing a resolution.

              b)  clarifies that CalPERS can refuse to contract with a  
                local agency or decide not to permit amendments to  
                existing contracts for benefits that are not  
                specifically authorized in PEMHCA.

              c)  requires an affirmative vote of a majority of the  
               governing board to approve the contract for PEHMCA.

           FISCAL  :

          CalPERS reports that it incurs an annual cost of $2.8 million  
          to reimburse the State Controller for printing and mailing  
          benefit statements each month to approximately 92 percent of  
          retirees who receive their retirement allowance through  
          Electronic Funds Transfer.  By authorizing CalPERS to provide  
          benefit statements electronically, this bill would reduce  
          that cost proportionately.

           COMMENTS  :

          1)   Arguments in Support  
          Glenn A. Miles
          Date:  4/01/13                                          Page  
          4










          According to the sponsor, SB 215 "would make several minor  
          policy and technical amendments to various sections of the  
          Government Code administered by CalPERS" and "?ensures the  
          statutes administered by CalPERS are as clear and unambiguous  
          as possible."


          2)   SUPPORT  :

            California Public Employees' Retirement System (CalPERS)

          3)   OPPOSITION  :

            None to date




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          Glenn A. Miles
          Date:  4/01/13                                          Page  
          5