BILL ANALYSIS Ó
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 220
Jim Beall, Chair HEARING DATE: April 22, 2013
SB 220 (Beall) as amended 4/11/13 FISCAL: YES
CALPERS: CONFORMITY WITH PUBLIC EMPLOYEES PENSION REFORM ACT
OF 2013
HISTORY :
Sponsor: California Public Employees Retirement System
(CalPERS)
Other legislation: SB 13 (Beall), 2013
Currently in Assembly Rules Committee
AB 340 (Furutani)
Chapter 296, Statutes of 2012
SUMMARY :
SB 220 is CalPERS' technical clean-up bill to implement the
provisions of AB 340 (Furutani, Chapter 296, Statutes of
2012), also known as the Public Employees' Pension Reform Act
of 2013 (PEPRA). This bill is intended to bring the statutes
administered by CalPERS into conformity with the requirements
of PEPRA. SB 220 is intended to be primarily technical and
non-controversial.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) establishes the California Public Employees'
Retirement System (CalPERS), the Legislators' Retirement
System (LRS) and the Judges Retirement Systems I and II
(JRSI and JRSII), all of which are administered by the
CalPERS Board of Administration under the provisions of
the Public Employees' Retirement Law and other
provisions of the Government Code.
b) establishes PEPRA, which requires, as of January 1,
2013, comprehensive and statewide reform for the State's
public pension systems and plans and public employers
and employees, including the retirement systems
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administered by the CalPERS Board of Administration.
c) specifies who is considered to be a new member of a
public retirement system and defines which provisions of
PEPRA are applicable to new members and which provisions
apply to new and/or legacy members.
2) This bill , sponsored by the CalPERS Board of
Administration, clarifies CalPERS' authority to administer
the changes required by PEPRA in the various systems it
administers, and makes technical and clarifying changes to
the statutes administered by CalPERS in order to conform
those statutes with PEPRA, including the following:
a) PEPRA requires new members to pay at least one-half
of the actuarial annual normal cost of their benefit
plans as member contributions and prohibits employers
from making those contributions on behalf of employees.
This bill clarifies that members subject to PEPRA cannot
receive Employer Paid Member Contributions from their
employers.
b) PEPRA prohibits certain items of pay from being
included in "pensionable compensation" for new members
subject to PEPRA.
This bill clarifies that new members subject to PEPRA
are excluded from the pre-PEPRA statutes defining
"compensation earnable." Those statutes will continue
to apply to "legacy" members (i.e., members prior to
implementation of PEPRA).
c) PEPRA requires a retiree receiving a public pension
who is appointed to a salaried position on a state board
or commission to either reinstate from retirement and
suspend retirement benefits, or to forgo a salary for
the board or commission and be paid per diem only while
receiving retirement benefits.
This bill conforms the definition of "annuitant" to
accommodate the reinstatement provisions of PEPRA with
regard to retired appointees to full-time state boards
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and commissions.
d) PEPRA creates a new, optional Second Tier retirement
formula for new state employee members of CalPERS.
This bill adds code references for the new Second Tier
retirement formula to various sections impacting Second
Tier benefits and participants.
e) PEPRA requires all state employees who participate in
the Second Tier retirement formula (which was originally
created to be a non-contributory formula for members) to
increase member contributions by 1.5% annually starting
July 1, 2013.
This bill clarifies that Second Tier member
contribution rates shall increase by 1.5% annually
until they are in compliance with the requirement to
pay at least one-half of the actuarial normal cost of
their benefit plan, and makes other technical changes
to ensure that Second Tier member contributions are
credited to member accounts and treated consistently
with other members' contributions.
FISCAL :
These changes are part of CalPERS' efforts to conform to the
requirements of PEPRA and are not anticipated to create
additional costs.
COMMENTS :
1) Argument in Support :
According to the sponsor:
This bill makes conforming changes to the PERL,
Legislators Retirement Law, and the Judges' Retirement
Law (JRL I & JRL II) in order to facilitate the
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implementation of newly enacted pension reform
legislation. The proposed changes are technical in
nature and will better align CalPERS' processes and
statutes to the new pension reform laws, and to the
pension reform clean-up legislation presently being
considered by the Legislature. The proposed changes are
not intended to alter the intent or the provisions of
the Public Employees' Pension Reform Act of 2013 and
related pension reform statutes. Without these changes,
CalPERS' pension reform implementation efforts may
become delayed or subject to unnecessary challenge.
2) SUPPORT :
California Public Employees Retirement System (CalPERS),
Sponsor
3) OPPOSITION :
None to date
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