BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 220
                                                                  Page  1

          Date of Hearing:   June 26, 2013

                                  Rob Bonta, Chair
                     SB 220 (Beall) - As Amended:  June 17, 2013

           SENATE VOTE  :   34-0
          SUBJECT  :   California Public Employees' Pension Reform Act of  
          2013: administration.

           SUMMARY  :   Makes various technical corrections and conforming  
          changes that align the Public Employees' Retirement Law (PERL)  
          and other laws administered by the California Public Employees'  
          Retirement System (CalPERS) with the provisions of the Public  
          Employees' Pension Reform Act of 2013 (PEPRA), as enacted in AB  
          340 (Furutani), Chapter 296, Statutes of 2012.  Specifically,  
           this bill  :   

          1)Clarifies that CalPERS has the authority to administer the  
            changes required by PEPRA.

          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)Clarifies that members subject to PEPRA cannot receive  
            employer-paid member contributions from their employers.

          4)Conforms the definition of "annuitant" to accommodate the  
            reinstatement provisions of PEPRA with regard to retired  
            appointees to full-time state boards and commissions.

          5)Adds code references for the new Second Tier retirement  
            formula to various sections impacting Second Tier benefits and  

          6)Clarifies that Second Tier member contribution rates will  
            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  


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            other members' contributions.

          7)Clarifies that the contract option for increasing final  
            compensation through a modified employer-paid member  
            contributions mechanism does not apply to members subject to  

          8)Clarifies that additional retirement service credit purchases  
            are not permitted for applications received after January 1,  

          9)Clarifies how CalPERS will determine the retirement benefit  
            for a member retiring prior to age 52 with service credit  
            under an existing CalPERS benefit schedule and a PEPRA  
            non-safety benefit schedule.

          10)Clarifies that the PEPRA requirement for employees to pay 50%  
            of the normal cost applies to new members in the local agency  
            1.5% at age 65 formula.

          11)Repeals, recasts, and conforms the post-retirement employment  
            restrictions in the PERL, in order to conform to the  
            restrictions imposed by PEPRA.

           EXISTING LAW  establishes comprehensive public employee pension  
          reform through enactment of PEPRA (and related statutory  
          changes) that apply to all public employers and public pension  
          plans on and after January 1, 2013, excluding the University of  
          California and charter cities and counties that do not  
          participate in a retirement system governed by state statute.

           FISCAL EFFECT  :   According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :   According to the author, "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  
          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  


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          implementation efforts may become delayed or subject to  
          unnecessary challenge."


          California Public Employees' Retirement System (Sponsor)
          None on file

           Analysis Prepared by  :    Karon Green  / P.E., R. & S.S. / (916)