BILL ANALYSIS                                                                                                                                                                                                    



                                                                 SB 215
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         SENATE THIRD READING
         SB 215 (Beall)
         As Amended  August 15, 2013
         Majority

          SENATE VOTE  :   33-2
           
          PUBLIC EMPLOYEES    6-0         APPROPRIATIONS      17-0        
          
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         |Ayes:|Bonta, Allen,             |Ayes:|Gatto, Harkey, Bigelow,   |
         |     |Jones-Sawyer, Mullin,     |     |Bocanegra, Bradford, Ian  |
         |     |Rendon, Wieckowski        |     |Calderon, Campos,         |
         |     |                          |     |Donnelly, Eggman, Gomez,  |
         |     |                          |     |Hall, Holden, Linder,     |
         |     |                          |     |Pan, Quirk, Wagner, Weber |
         |-----+--------------------------+-----+--------------------------|
         |     |                          |     |                          |
          ----------------------------------------------------------------- 
          SUMMARY  :  Makes various technical and conforming changes to the  
         Public Employees' Retirement Law (PERL) necessary for continued  
         effective administration of the California Public Employees'  
         Retirement System (CalPERS) and allows a county operating a  
         retirement system pursuant to the County Employee's Retirement Law  
         of 1937 ('37 Act) to establish procedures for the secure  
         processing of member requests by telephone, as specified.   
         Specifically,  this bill  :   

         1)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.

         2)Repeals obsolete statutory language that authorized CalPERS to  
           invest in exchange traded options, as specified, bringing code  
           into conformity with Proposition 21 of 1984 and Proposition 162  
           of 1992 and deleting potential misinformation regarding the  
           manner in which CalPERS can invest in options trading.

         3)Allows the current Commissioner of the California Highway Patrol  
           to exceed the mandatory age 60 retirement requirement until  
           2018.  This provision will sunset in 2018.

         4)Allows a CalPERS member who has remarried a former spouse to  








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           again name that person as an optional settlement beneficiary.

         5)Allows the state and local employers who contract with CalPERS  
           for health care under the Public Employees' Medical and Hospital  
           Care Act (PEMHCA) to comply with requirements of the Affordable  
           Care Act by expanding the definition of "employee" in PEMHCA to  
           include fulltime employees as defined by Section 4980(H) of  
           Title 26 of the United States Code, as specified.

         6)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:

            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.

         7)Allows a retiree, on or after January 1, 2014, to name as a new  
           option beneficiary the same person as previously covered under  
           the member's option election if due to divorce the judgment  
           dividing the community property awarded the total interest in  
           the retirement system to the retired member.

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

         9)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.

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

         11)Allows a '37 Act retirement system to voluntarily adopt  
           regulations allowing for the use and acceptance of a member's  
           recorded telephone request to have an authorized transaction  
           processed as long as the procedures adopted provide for adequate  
           validation and authentication of member identity and permanent  








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           retention of the recorded communication.

          EXISTING LAW  : 

         1)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.

         2)Authorizes CalPERS to invest in accordance with modern portfolio  
           theory pursuant to Proposition 21 of 1984 and provides CalPERS  
           plenary authority under Proposition 162 of 1992 over investment  
           decisions.  (Prior to Proposition 21 and Proposition 162's  
           passage, CalPERS required specific statutory authority to invest  
           in certain investment vehicles).

         3)Requires a state patrol member to separate from employment under  
           that classification upon attaining age 60.

         4)Allows a CalPERS member that names his or her spouse as the  
           beneficiary of an optional settlement 2, 3 or 4, and is later  
           awarded the total interest in his or her benefit through an  
           annulment, legal separation, or dissolution judgment, to have  
           his or her allowance recalculated under a new option and name a  
           different person as the beneficiary.  However, current law does  
           not allow the member to name the same person as a beneficiary of  
           an optional settlement 2, 3 or 4 when he or she remarries a  
           former spouse.

         5)Defines "employee" for purposes of determining eligibility to  
           participate in PEMHCA. 

         6)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.

         7)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.

         8)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.









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         9)Allows a retiree to name a different option beneficiary  
           following a divorce if the judgment dividing the community  
           property awards the total interest in the retirement system to  
           the retired member.

         10)Authorizes local public agencies to provide employee health  
           care coverage through the PEMHCA by submitting a resolution from  
           their governing board to CalPERS.  The resolution serves to  
           subject the local agency to the provisions of PEMHCA.

         11)Allows the retirement boards of '37 Act retirement systems to  
           adopt regulations allowing for the use and acceptance of a  
           member's electronic signature with the same force and effect as  
           a signed, valid original document.

          FISCAL EFFECT :  According to the Assembly Appropriations  
         Committee, CalPERS estimates it will save about $2 million because  
         of the provisions of this bill. 

          COMMENTS  :  According to the sponsor, CalPERS, 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."

         Additionally, 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  
         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.

         Beginning in January 2015, the Affordable Care Act (ACA) requires  
         large employers defined as employing 50 or more fulltime or  
         fulltime equivalent employees, to offer affordable health coverage  
         that provides minimum value to at least 95% of their fulltime  
         employees, defined as working an average of 30 or more hours per  
         week, or be subject to penalties. 
          
         Some state and contracting agency employees that are eligible for  
         health coverage under the ACA because they average 30 or more  
         hours of work per week, but are currently not eligible for  
         coverage under PEMHCA because they do not participate in a  
         publicly funded retirement system or do not otherwise satisfy  








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         PEMHCA eligibility requirements.

         To ensure conformity with the ACA, this bill would permit  
         employers to offer health coverage to employees previously not  
         eligible for PEMHCA by including in the definition of "employee"  
         fulltime employees as defined by Section 4980(H) of Title 26 of  
         the United States Code.


          Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
         319-3957 
                                                                 FN: 0001639