SB 775, as introduced, Walters. State employees: postemployment benefits.
The Public Employees’ Medical and Hospital Care Act authorizes the Board of Administration of the Public Employees’ Retirement System to contract with carriers for health benefit plans and major medical plans for employees and annuitants, as defined, and to approve other specified plans.
This bill would require the Board of Administration of the Public Employees’ Retirement System to develop a comprehensive plan, pursuant to specified criteria, to provide current state employees, with or without vested health care benefits, certain options to receive a buyout or transfer of promised postemployment health care benefits. Specified requirements for the plan to be developed by the board include the creation and administration of retiree health care savings accounts, determination of the potential costs of the program, and development of actuarial methods to determine the present value of postretirement health care benefits.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 7.5 (commencing with Section 22889.1)
2is added to Chapter 1 of Part 5 of Division 5 of Title 2 of the 3Government Code, to read:
4
The Legislature finds and declares:
8(a) The purpose of this article is to reduce the unfunded liability
9of the State of California’s postemployment health care benefits.
10(b) According to the Controller’s most recent valuation report,
11the state’s unfunded liability for postemployment health care
12benefits stands at $62.1 billion.
13(c) The Legislature intends to enact legislation that would enable
14the state to offer current state employees options of a buyout or
15transfer of their future health care benefits, and to enact legislation
16to administer and fund such a program.
17(d) The Legislature intends to enact legislation to create a special
18fund to receive any state taxes generated from state employees
19who elect to accept a buyout of future health care benefits; the
20proceeds of this fund would be used to pay down any remaining
21debt or unfunded liability arising from postemployment health
22care benefits.
(a) The Board of Administration of the Public
24Employees’ Retirement System (board) shall develop a
25comprehensive plan to provide current state employees with an
26option to accept a buyout of their health and other postretirement
27benefits, exclusive of pension benefits, that incorporates the
28following concepts:
29(1) The state shall offer for a limited period, not to exceed four
30consecutive months, a one-time buyout option for current state
31employees.
32(2) The state shall permit a vested, current employee to release
33his or her promised retiree health benefits in exchange for one of
34the following options:
35(A) A lump-sum cash payout of up to 80 percent of the current
36value of the employee’s future health benefits, as determined by
37an actuary, of which amount a minimum of 20 percent would be
P3 1placed into a retiree health savings account that would be available
2to the employee when he or she retires.
3(B) An incremental deferred compensation payout of up to 80
4percent of the current value of the employee’s future health
5benefits, as determined by an actuary, of which amount a minimum
6of 20 percent would be placed into a retiree health savings account
7that would be available to the employee when he or she retires.
8(C) A transfer of 100 percent of the current value of the
9employee’s future health benefits, as determined by an actuary, to
10a retiree health savings account.
11(D) Any combination of the above options
as long as a minimum
12of 20 percent of any payout or transfer is placed into a retiree health
13savings account.
14(3) The state shall permit a nonvested, current employee to
15release his or her promised retiree health benefits in exchange for
16one of the following options:
17(A) A lump-sum cash payout of up to 80 percent of the current
18value of the employee’s future health benefits, as determined by
19an actuary, five years from the date the employee agrees to take
20the buyout option, of which amount a minimum of 20 percent
21would be placed into a retiree health savings account immediately.
22(B) An incremental deferred compensation payout of up to 80
23percent of the current value of the employee’s future health
24benefits, as determined by an actuary, beginning five years from
25the date the employee agreed to take the buyout option,
of which
26amount a minimum of 20 percent would be placed into a retiree
27health savings account immediately.
28(C) A transfer of 100 percent of the current value of the
29employee’s future health benefits, as determined by an actuary, to
30a retiree health savings account.
31(D) Any combination of the above options as long as a minimum
32of 20 percent of any payout or transfer is placed into a retiree health
33savings account.
34(b) The employee shall not be relieved of any tax liability
35resulting from the lump-sum or deferred compensation options.
36(c) The state shall create and the board shall administer retiree
37health savings accounts for current state employees who exercise
38one or more of the options under the plan.
39(d) The board shall determine the potential costs of
40implementing this program.
P4 1(e) The board shall submit to the Legislature, by September 1,
22014, a report containing the comprehensive plan required by this
3section. This report shall not be subject to the requirements of
4Section 9795.
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