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.
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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
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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:
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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 PEMHCA.
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 :
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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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