BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 215
          Author:   Beall (D)
          Amended:  8/22/13
          Vote:     21

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

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  33-2, 4/25/13
          AYES:  Beall, Berryhill, Block, Calderon, Cannella, Corbett,  
            Correa, De León, DeSaulnier, Emmerson, Evans, Gaines,  
            Galgiani, Hancock, Hernandez, Hill, Huff, Jackson, Knight,  
            Lara, Leno, Lieu, Liu, Monning, Nielsen, Pavley, Price, Roth,  
            Steinberg, Walters, Wright, Wyland, Yee
          NOES:  Anderson, Fuller
          NO VOTE RECORDED:  Hueso, Padilla, Wolk, Vacancy, Vacancy

           ASSEMBLY FLOOR  :  77-1, 8/26/13 - See last page for vote


           SUBJECT  :    Public employee benefits

           SOURCE  :     California Public Employees Retirement System Board  
          of 
                      Administration


           DIGEST  :    This bill makes various technical and conforming  
          changes to the Public Employees' Retirement Law (PERL) necessary  
          for continued effective administration of the California Public  
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          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.

           Assembly Amendments  (1) allow employers that contract for health  
          care with CalPERS to add part-time employees, as required by the  
          Affordable Care Act; (2) allow the current Highway Patrol  
          Commissioner to continue to serve in his/her position beyond the  
          age of 60, but no longer than to the end of 2018; (3) allow the  
          1937 Act retirement systems to use recorded telephone  
          conversations for the processing of authorized transactions  
          affecting member accounts; (4) fixed an oversight in the law to  
          allow an individual who divorces and remarries a former spouse  
          to again name that spouse as a beneficiary, consistent with what  
          a member can currently do who divorces and marries a new spouse;  
          and (5) remove several sections that were opposed by the  
          Department of Finance.

           ANALYSIS  :    

          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/her spouse as the  
             beneficiary of an optional settlement 2, 3 or 4, and is later  
             awarded the total interest in his/her benefit through an  
             annulment, legal separation, or dissolution judgment, to have  

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             his /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/she  
             remarries a former spouse.

          5. Defines "employee" for purposes of determining eligibility to  
             participate in the Public Employees' Medical and Hospital  
             Care Act (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.

          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.

          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  

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             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 sunsets in 2018.

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


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          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 retention of the recorded communication.

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

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

           SUPPORT :   (Verified  8/27/13)

          CalPERS Board of Administration (source)
          California Federation of Teachers
          California State Association of Counties

           ARGUMENTS IN SUPPORT  :    According to the sponsor, 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."

          The California State Association of Counties (CSAC) states in  
          support that this bill expands the definition of "employee,"  
          thus providing counties with the option of offering health  
          coverage to employees previously not eligible for PEMHCA  
          benefits.  CSAC asserts this broadening of benefits eligibility  
          will grant counties with an affordable option when complying  

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          with the ACA.

           ASSEMBLY FLOOR  :  77-1, 8/26/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Frazier, Beth  
            Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,  
            Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,  
            Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,  
            V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NOES: Fox
          NO VOTE RECORDED: Vacancy, Vacancy


          JL:d  8/29/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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