BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 220
          Author:   Beall (D)
          Amended:  8/26/13
          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

           SENATE FLOOR  :  34-0, 5/9/13 (Consent)  
          AYES:  Anderson, Beall, Block, Calderon, Cannella, Corbett,  
            Correa, De León, DeSaulnier, Emmerson, Evans, Fuller, Gaines,  
            Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Jackson,  
            Knight, Leno, Lieu, Liu, Monning, Nielsen, Padilla, Roth,  
            Steinberg, Walters, Wolk, Wright, Wyland, Yee
          NO VOTE RECORDED:  Berryhill, Lara, Pavley, Price, Vacancy,  
            Vacancy

           ASSEMBLY FLOOR  :  76-0, 9/3/13 - See last page for vote


           SUBJECT  :    California Public Employees Pension Reform Act of  
          2013

           SOURCE  :     California Public Employees Retirement System Board  
          of 
                      Administration 


           DIGEST  :    This bill makes various technical corrections and  
          conforming changes that align the Public Employees' Retirement  
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          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.

           Assembly Amendments  repeal, recast, and conform the  
          post-retirement employment restrictions in the PERL, in order to  
          conform to the restrictions imposed by PEPRA; clarify 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; add language to prevent chaptering out issues with AB  
          410 (Jones-Sawyer) of the current legislative session; and make  
          other clarifying and technical changes. 

           ANALYSIS  :    

          Existing law:

           1. Establishes CalPERS, the Legislators' Retirement System, and  
             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:

           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  

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             (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. 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 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  
             other members' contributions. 

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

           7. Clarifies that additional retirement service credit  
             purchases are not permitted for applications received after  
             January 1, 2013. 

           8. 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. 

           9. 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. 

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

           11.Adds language to prevent chaptering out issues with AB 410  
             (Jones-Sawyer) of the current legislative session. 

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

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          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  :   (per Assembly Public Employees, Retirement and Social  
          Security Cmte. 6/17/13 - unable to reverify at time of writing)

          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.

           ASSEMBLY FLOOR  : 76-0, 09/03/13
          AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chávez, Chesbro, Conway, Cooley, Dahle,  
            Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth  
            Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,  
            Grove, Hagman, 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
          NO VOTE RECORDED: Chau, Hall, Vacancy, Vacancy


          JL:RM:d:n  9/3/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE


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