BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1878 (Jones-Sawyer) - Public Employees' Retirement System:   
          state or school members:  postretirement death benefit
          
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          |Version: May 31, 2016           |Policy Vote: P.E. & R. 3 - 1    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: AB 1878 would authorize the Board of Administration of  
          the California Public Employees' Retirement System (CalPERS) to  
          annually adjust the $2,000 lump-sum death benefit for state and  
          school members, based on changes in the All Urban California  
          Consumer Price Index, after each actuarial valuation.


          Fiscal  
          Impact:  CalPERS would incur a one-time administrative cost of  
          $50,000 to modify existing information technology systems and  
          benefit publications. Additionally, because the cost of the  
          death benefit is factored into the CalPERS' contribution rate  
          structure, it could potentially lead to higher state department  
          contribution rates in future years 









          AB 1878 (Jones-Sawyer)                                 Page 1 of  
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          Background: The California Public Employees' Retirement Law provides  
          varying levels of death benefits according to membership  
          category and status, each providing a "lump-sum" of money to  
          survivors at the time of the member's death.  The original  
          lump-sum death benefit of $300 for all retired CalPERS members  
          was enacted in 1945.  However, over the years, the Legislature  
          began to provide different benefit levels to different  
          categories of members:  state, school, local, Judges' Retirement  
          Systems (JRS and JRS II), Legislators' Retirement System (LRS),  
          active, and retired.
          Currently, state and school members have a retiree death benefit  
          of $2,000.  School employers also have the ability to amend  
          their individual contracts with CalPERS to provide enhanced  
          retiree death benefits of $3,000, $4,000 or $5,000.  Local  
          members have a minimum benefit of $500, with an option to  
          provide up to $5,000 through contract amendment.  Members of JRS  
          have no retiree death benefit, while members of LRS receive  
          $600.


          The California State Teachers' Retirement System currently  
          provides a lump sum death payment for survivors of retired  
          members of $6,163.  The amount of the death payment may be  
          adjusted by the Teachers' Retirement Board following each  
          actuarial valuation based on changes to the All Urban California  
          Consumer Price Index.




          Proposed Law:  
          This bill would authorize the CalPERS board to adjust the $2,000  
          lump-sum death benefit for state and school member retirees,  
          based on changes in the All Urban California Consumer Price  
          Index, following each annual actuarial valuation.

















          AB 1878 (Jones-Sawyer)                                 Page 2 of  
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          Related Legislation:



                 AB 507 (Garcia, of 2013) would have increased, over a  
               period of four years, the postretirement death benefit paid  
               to the beneficiary of a school member of CalPERS from  
               $2,000 to $6,000. This bill was held under submission on  
               the Suspense File of the Assembly Appropriations Committee.
                 AB 2606 (Mendoza, of 2012) would have increased, over a  
               period of four years, the postretirement death benefit paid  
               to the beneficiary of a school member of CalPERS from  
               $2,000 to $6,000. This bill was held under submission on  
               the Suspense File of the Assembly Appropriations Committee.




          



          Staff  
          Comments: . CalPERS has yet to complete its actuarial analysis  
          of the current version of the bill, but costs to state  
          departments via higher contribution rates could be significant. 
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