BILL NUMBER: SB 775	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 15, 2013

INTRODUCED BY   Senator Walters

                        FEBRUARY 22, 2013

   An act  to add Article 7.5 (commencing with Section
22889.1) to Chapter 1 of Part 5 of Division 5 of Title 2 of the
Government Code,  relating to retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 775, as amended, Walters. State employees: postemployment
benefits. 
   Existing law requires all state and local retirement systems to
secure, not less than triennially, the services of an enrolled
actuary, who is to perform a valuation of the system. Existing law
requires all state and local public retirement systems to secure the
services of a qualified person to perform an attest audit of the
system's financial statements and to provide reports in this regard
to the Controller. Existing law requires the Controller to review
these reports and requires the Controller to publish an annual report
on the financial condition of all state and local public retirement
systems, as specified.  
   This bill would require the Controller to include in its 2015
report a section that uses the data collected for that report to
evaluate the actuarial feasibility and associated costs of a
statewide buyout of current state employees' defined postemployment
health care 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:

   SECTION 1.    The Controller shall include in the
2015 report published pursuant to Section 7504 of the Government Code
a section that uses the data collected for that report to evaluate
the actuarial feasibility and associated costs of a statewide buyout
of current state employees' defined postemployment health care
benefits.  
  SECTION 1.    Article 7.5 (commencing with Section
22889.1) is added to Chapter 1 of Part 5 of Division 5 of Title 2 of
the Government Code, to read:

      Article 7.5.  PostEmployment Health Care Benefits


   22889.1.  The Legislature finds and declares:
   (a) The purpose of this article is to reduce the unfunded
liability of the State of California's postemployment health care
benefits.
   (b)  According to the Controller's most recent valuation report,
the state's unfunded liability for postemployment health care
benefits stands at $62.1 billion.
   (c) The Legislature intends to enact legislation that would enable
the state to offer current state employees options of a buyout or
transfer of their future health care benefits, and to enact
legislation to administer and fund such a program.
   (d) The Legislature intends to enact legislation to create a
special fund to receive any state taxes generated from state
employees who elect to accept a buyout of future health care
benefits; the proceeds of this fund would be used to pay down any
remaining debt or unfunded liability arising from postemployment
health care benefits.
   22889.2.  (a)  The Board of Administration of the Public Employees'
Retirement System (board) shall develop a comprehensive plan to
provide current state employees with an option to accept a buyout of
their health and other postretirement benefits, exclusive of pension
benefits, that incorporates the following concepts:
   (1) The state shall offer for a limited period, not to exceed four
consecutive months, a one-time buyout option for current state
employees.
   (2) The state shall permit a vested, current employee to release
his or her promised retiree health benefits in exchange for one of
the following options:
   (A) A lump-sum cash payout of up to 80 percent of the current
value of the employee's future health benefits, as determined by an
actuary, of which amount a minimum of 20 percent would be placed into
a retiree health savings account that would be available to the
employee when he or she retires.
   (B) An incremental deferred compensation payout of up to 80
percent of the current value of the employee's future health
benefits, as determined by an actuary, of which amount a minimum of
20 percent would be placed into a retiree health savings account that
would be available to the employee when he or she retires.
   (C) A transfer of 100 percent of the current value of the employee'
s future health benefits, as determined by an actuary, to a retiree
health savings account.
   (D) Any combination of the above options as long as a minimum of
20 percent of any payout or transfer is placed into a retiree health
savings account.
   (3) The state shall permit a nonvested, current employee to
release his or her promised retiree health benefits in exchange for
one of the following options:
   (A) A lump-sum cash payout of up to 80 percent of the current
value of the employee's future health benefits, as determined by an
actuary, five years from the date the employee agrees to take the
buyout option, of which amount a minimum of 20 percent would be
placed into a retiree health savings account immediately.
   (B) An incremental deferred compensation payout of up to 80
percent of the current value of the employee's future health
benefits, as determined by an actuary, beginning five years from the
date the employee agreed to take the buyout option, of which amount a
minimum of 20 percent would be placed into a retiree health savings
account immediately.
   (C) A transfer of 100 percent of the current value of the employee'
s future health benefits, as determined by an actuary, to a retiree
health savings account.
   (D) Any combination of the above options as long as a minimum of
20 percent of any payout or transfer is placed into a retiree health
savings account.
   (b) The employee shall not be relieved of any tax liability
resulting from the lump-sum or deferred compensation options.
   (c) The state shall create and the board shall administer retiree
health savings accounts for current state employees who exercise one
or more of the options under the plan.
   (d) The board shall determine the potential costs of implementing
this program.
   (e) The board shall submit to the Legislature, by September 1,
2014, a report containing the comprehensive plan required by this
section. This report shall not be subject to the requirements of
Section 9795.