BILL ANALYSIS                                                                                                                                                                                                    



                                                                            



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                                    THIRD READING


          Bill No:  SB 215
          Author:   Beall (D)
          Amended:  4/1/13
          Vote:     21

           
           SENATE PUBLIC EMPL. & RETIREMENT COMMITTEE  :  5-0, 4/8/13
          AYES:  Beall, Walters, Block, Gaines, Yee

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Public employees retirement

           SOURCE  :     California Public Employees Retirement System Board  
          of 
                      Administration


           DIGEST  :    This bill makes 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.

          ANALYSIS  :    

          I.  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  
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             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 Statement 25.

          II.  CalPERS/CalSTRS Right of Election  

             Existing law:

             1.    Permits a CalPERS or California State Teachers'  
                Retirement System (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.

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

             3.    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.

          III.  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  

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             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.

          IV.  Obsolete Options Trading Statute  

             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.

          V.  Electronic Benefit Statements  

             Existing law:

             1.    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.

             2.    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.

             3.    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:

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             1.    Requires CalPERS to notify retirees of their right to  
                receive statements by mail; and

             2.    Requires CalPERS to send a statement by mail to a  
                retiree who has provided CalPERS a written request to  
                receive statements by mail.

          VI.  Contract Requirement Authority for PEMHCA Coverage  

             Existing law authorizes local public agencies to provide  
             employee health care coverage through 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:

             1.    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.

             2.    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.

             3.    Requires an affirmative vote of a majority of the  
                governing board to approve the contract for PEHMCA.

           Background  

          This bill makes technical and non-controversial changes to  
          various sections of the Government Code including code sections  
          governing the CalPERS, PEMHCA, as well as some conforming  
          changes to the Education Code with respect to CalPERS members.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Public Employment & Retirement Committee  
          analyses, 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% of  

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          retirees who receive their retirement allowance through EFT.  By  
          authorizing CalPERS to provide benefit statements  
          electronically, this bill reduces that cost proportionately.

           SUPPORT  :   (Verified  4/19/13)

          CalPERS Board of Administration (source)


           ARGUMENTS IN SUPPORT  :    According to CalPERS, this bill "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."


          JL:d  4/24/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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