BILL ANALYSIS                                                                                                                                                                                                    



                                                                            



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          |SENATE RULES COMMITTEE            |                        SB 220|
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                                       CONSENT


          Bill No:  SB 220
          Author:   Beall (D)
          Amended:  4/11/13
          Vote:     21

           
           SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM.  :  5-0, 4/22/13
          AYES:  Beall, Walters, Block, Gaines, Yee

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    California Public Employees Pension Reform Act of  
          2013

           SOURCE  :     California Public Employees Retirement System Board  
          of 
                      Administration 


           DIGEST  :    This bill makes various technical and  
          non-controversial changes in the Public Employees Retirement Law  
          and the Public Employee Medical and Hospital Care Act to conform  
          with the requirements of the California Public Employees Pension  
          Reform Act of 2013 (PEPRA).  This bill brings the statutes  
          administered by the California Public Employees' Retirement  
          System (CalPERS) into conformity with the requirements of PEPRA.

           ANALYSIS  :    

          Existing law:

           1. Establishes CalPERS, the Legislators' Retirement System, and  
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             the Judges Retirement Systems I and II, 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.

           2. 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 administered by the CalPERS  
             Board of Administration.

           3. 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.

          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:

          1. Clarifies that members subject to PEPRA cannot receive  
             Employer Paid Member Contributions from their employers.

          2. 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).

          3. Conforms the definition of "annuitant" to accommodate the  
             reinstatement provisions of PEPRA, as specified.

          4. Adds code references for the new Second Tier retirement  
             formula to various sections impacting Second Tier benefits  
             and participants.

          5. 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.


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

          According to the Senate Public Employment & Retirement  
          Committee, these changes are part of CalPERS' efforts to conform  
          to the requirements of PEPRA and are not anticipated to create  
          additional costs.

           SUPPORT  :   (Verified  5/7/13)

          California Public Employees Retirement System (source)


           ARGUMENTS IN SUPPORT  :    According to CalPERS, the sponsor, this  
          bill makes conforming changes in order to facilitate the  
          implementation of newly enacted pension reform legislation.   
          CalPERS states that 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  
          sponsor states the proposed changes are not intended to alter  
          the intent or the provisions of PEPRA and related pension reform  
          statutes.  CalPERS claims that without these changes, CalPERS'  
          pension-reform implementation efforts may become delayed or  
          subject to unnecessary challenge.


          JL:d  5/7/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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