Amended in Assembly May 4, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2375

Introduced by Committee on Public Employees, Retirement, and Social Security (Assembly Members Cooper (Chair), Bonta, Cooley, Gonzalez, and O'Donnell)

February 18, 2016

An act to amend begin insert Section 87483 of the Education Code, and to amend end insert Sections begin insert 7502, 7504, 7507, 7507.2, end insert 20034, 20035, 20035.5, 20037, 20037.6, 20037.7, 20037.8, 20037.9, 20037.10, 20037.11, 20037.12, 20037.13, 20037.15, begin insert 20229, end insert 20537, 20572, 20577.5, 20578, 20638, begin insert 20900, end insert 20963, 20963.1, 20965, begin insert 21337, end insert 21499, begin delete and 21626.5 end delete begin insert 21626.5, and 22820 end insert of, and to repeal and amend Sections 20037.5 and 20037.14 of, the Government Code, relating to the Public Employees’ Retirement System.

LEGISLATIVE COUNSEL’S DIGEST

AB 2375, as amended, Committee on Public Employees, Retirement, and Social Security. Public Employees’ Retirement System: omnibus bill.

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(1) Existing law requires all state and local retirement systems to secure, not less than triennially, the services of an enrolled actuary, who is required to perform a valuation of the system. Existing law requires all state and local public retirement systems to submit audited financial statements to the Controller at the earliest practicable opportunity within 6 months of the close of each fiscal year. Existing law requires the Controller to review these reports and to publish an annual report on the financial condition of all state and local public retirement systems, as specified. Existing law requires the Controller to establish an advisory committee, including enrolled actuaries, to assist state and local systems with their reporting duties. Existing law requires the Legislature and local legislative bodies, when considering changes in retirement benefits or other postemployment benefits, to secure the services of an actuary to provide a statement of the actuarial impact upon future annual costs, except as specified. Existing law establishes the California Actuarial Advisory Panel, which consists of a specified membership that includes enrolled actuaries. Existing law requires the panel to provide impartial and independent information on pensions, other postemployment benefits, and best practices to public agencies.

end insert begin insert

This bill would delete references to enrolled actuaries for purposes of the provisions described above. The bill would substitute for this designation, for purposes of establishing the advisory committee and the actuarial advisory panel, as described above, actuaries who have attained the designation of Associate or Fellow of the Society of Actuaries. The bill would substitute for the enrolled actuaries designation, for purposes of the triennial valuation and the reporting requirements described above, actuaries who satisfy the qualification standards for actuaries issuing statements of actuarial opinion in the United States with regard to pensions or other postemployment benefits.

end insert begin delete

Existing

end delete

begin insert (2) end insert begin insert   end insert begin insert Existing end insert law, the Public Employees’ Retirement Law, creates the Public Employees’ Retirement System (PERS) for the purpose of providing pension benefits to state employees and employees of contracting agencies and prescribes the rights and duties of members of the system and their beneficiaries. Existing law vests management and control of PERS in its board of administration. PERS provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations.

begin delete

(1) Existing

end delete

begin insert Existing end insert law prescribes various definitions of final compensation based on employment classification, bargaining unit, date of hire, and date of retirement, among other things.

This bill would revise these definitions to remove redundant language and make technical and style changes.

begin insert

(3) Existing law requires the board to provide the Legislature, the Governor, and the Chair of the California Actuarial Advisory Panel a specified report in connection with state employee retirement plans. Existing law requires the Chair of the California Actuarial Advisory Panel, within 30 days of receipt of the report, at a specified, publicly noticed hearing, to make a presentation on certain issues relating to investment returns and amortization.

end insert begin insert

This bill would require that the presentation described above to be made each legislative session and that the presentation be based on the report made by the board.

end insert begin delete

(2)

end delete

begin insert (4) end insert  Existing law authorizes the board to charge interest, at the actuarial interest rate, on the amount of any payment due and unpaid by a contracting agency until payment is received.

This bill would instead permit the board to change interest on payments due and unpaid at the greater of the annual return on the system’s investments for the year prior to the year in which payments are not timely made or a simple annual rate of 10%.

begin delete

(3)

end delete

begin insert (5) end insert  In addition to the above, existing law authorizes the board to assess a contracting agency that fails to make contributions when due interest at an annual rate of 10% and the costs of collection, including reasonable legal fees. In the case of repeated delinquencies, the board may assess the contracting agency a penalty of 10% of the delinquent amount.

This bill would recast these provision to authorize the board, if a contracting agency fails to fully pay any installment of contributions when due, to assess a penalty of 10% of the total amount due and unpaid, including accrued and unpaid interest. The bill would permit the penalty to be assessed once during each 30-day period that the outstanding amount remains unpaid. The bill would also specify that the contracting agency may be assessed the costs of collection, including reasonable legal fees and litigation costs, including, without limitation, legal fees and legal costs incurred in bankruptcy, when necessary to collect any amounts due.

begin delete

(4)

end delete

begin insert (6) end insert  Existing law authorizes the board to terminate a local agency contract if the contracting agency fails for 30 days after demand by the board to pay any installment of required contributions or fails for three months after demand to file any information required for administration of the agency’s employees. Existing law permits the board to reduce benefits in certain instances when contributions are inadequate to fund them. Existing law authorizes the board to merge a plan that has been terminated into the terminated agency pool without benefit reduction or with a lesser reduction if certain conditions are met.

This bill would delete references to merging a plan and instead specify that the board may elect to not impose a reduction on a plan, or to impose a lesser reduction on a plan, that has been terminated if those acts will not impact the actuarial soundness of the terminated agency pool. The bill would make related changes by deleting administrative provisions relating to the sequence for transferring assets in relation to the reduction of benefits.

begin insert

(7) Existing law authorizes certain members who are either academic employees of the California State University or certificated employees of school districts employed on a part-time basis to receive full-time service credit and the benefits related to that status if both the member and employer elect to make the appropriate additional contributions and other requirements are met. Existing law limits the application of these provisions to 5 years of part-time status.

end insert begin insert

This bill would extend the authorization described above to academic employees of community college districts. The bill would also make a correctional change in this regard.

end insert begin delete

(5)

end delete

begin insert (8) end insert  Existing law grants members in specified member classifications whose retirements are within 4 months of separation from employment specified percentages of service credit for each unused day of sick leave or educational leave.

This bill would specify that a day of unused sick leave or unused educational leave is the equivalent of an 8-hour day.

begin insert

(9) Existing law requires the board to transfer funds to separate state and school accounts to fund the purchasing power protection allowance of retirees, survivors, and beneficiaries of state or school employers. Existing law prescribes a method for calculating the amount to be transferred, which is to be the lesser of two amounts, one of which is calculated at one and 1/10th percent of the net earnings on state or school member contributions, as specified.

end insert begin insert

This bill would revise the calculation described above to be one and 1/10th percent of state or school member contributions.

end insert begin delete

(6)

end delete

begin insert (10) end insert  Existing law requires payment of interest on a preretirement or postretirement death allowance or a preretirement or postretirement lump-sum benefit if not paid within a specified time after the date of death of an annuitant. Existing law prescribes the method of calculating interest for this purpose.

This bill would instead require that interest begin delete by end delete begin insert be end insert calculated at 7%, pursuant to the California Constitution.

begin delete

(7)

end delete

begin insert (11) end insert  Existing law requires a surviving domestic partner be treated in the same manner as a surviving spouse for purposes of postretirement survivor’s allowances if certain conditions are met.

This bill would require that an individual who is the same gender as a member be treated in the same manner as a surviving spouse for purposes of postretirement survivor’s allowances if certain conditions are met.

begin insert

(12) Existing law, the Public Employees’ Medical and Hospital Care Act (PEMHCA), which is administered by the Board of Administration of the Public Employees’ Retirement System, authorizes the board to contract for health benefit plans for employees and annuitants, as defined, which may include employees and annuitants of contracting agencies. Existing law grants eligible, uninsured family members of specified firefighters or peace officers whose deaths are the result of injury or disease arising out of their duties the status of annuitants for purposes of receiving benefits under PEMHCA. Existing law requires employers to notify the board within 10 business days of the death of the employee in this context if a spouse of family member may be eligible for enrollment in a health benefit plan in this regard.

end insert begin insert

This bill would revise the duty of employers to notify the board to also require that they provide updated contact information of the surviving spouse or family member if that person may be eligible for enrollment.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 87483 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

87483.  

Notwithstanding any other provision, the governing
board of a community college district may establish regulations
that allow academic employees to reduce their workload from
full-time to part-time duties. The regulations shall include, but
shall not be limited to, the following if the employees wish to
reduce their workload and maintain retirement benefits pursuant
to Section 22713 of this code or Section begin delete 20815 end delete begin insert 20900 end insert of the
Government Code:

(a) The employee shall have reached the age of 55 prior to
reduction in workload.

(b) The employee shall have been employed full time in an
academic position or a position requiring certification
qualifications, or both, for at least 10 years of which the
immediately preceding five years were full-time employment.

(c) During the period immediately preceding a request for a
reduction in workload, the employee shall have been employed
full time in an academic position or a position requiring
certification qualifications, or both, for a total of at least five years
without a break in service. For purposes of this subdivision,
sabbaticals and other approved leaves of absence shall not
constitute a break in service. Time spent on a sabbatical or other
approved leave of absence shall not be used in computing the
five-year full-time service requirement prescribed by this
subdivision.

(d) The option of part-time employment shall be exercised at
the request of the employee and can be revoked only with the
mutual consent of the employer and the employee.

(e) The employee shall be paid a salary which is the pro rata
share of the salary he or she would be earning had he or she not
elected to exercise the option of part-time employment but shall
retain all other rights and benefits for which he or she makes the
payments that would be required if he or she remained in full-time
employment.

The employee shall receive health benefits as provided in Section
53201 of the Government Code in the same manner as a full-time
employee.

(f) The minimum part-time employment shall be the equivalent
of one-half of the number of days of service required by the
employee’s contract of employment during his or her final year
of service in a full-time position.

(g) The period of this part-time employment shall not exceed
five years for employees subject to Section begin delete 20815 end delete begin insert 20900 end insert of the
Government Code or 10 years for employees subject to Section
22713 of this code.

(h) The period of part-time employment of employees subject
to Section 20815 of the Government Code shall not extend beyond
the end of the college year during which the employee reaches his
or her 70th birthday. This subdivision shall not apply to any
employee subject to Section 22713 of this code.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 7502 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

7502.  

The State Controller shall review the annual financial
report of each state and local public retirement system submitted
pursuant to Section 7504 giving particular consideration to the
adequacy of funding of each system. The State Controller shall
also review the triennial valuation of each public retirement system
submitted pursuant to Section 7504 and shall give particular
consideration to the assumption concerning the inflation element
in salary and wage increases, mortality, service retirement rates,
withdrawal rates, disability retirement rates, and rate of return on
total assets.

The State Controller shall establish an advisory committee begin delete which end delete
begin insert that end insert shall include begin delete enrolled actuaries, as defined in Section 7504, end delete
begin insert actuaries who have attained the designation of Associate or Fellow
of the Society of Actuaries end insert and state and local public retirement
system begin delete administrators, end delete begin insert administrators end insert to assist in carrying out the
duties imposed by this section.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 7504 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

7504.  

(a) All state and local public retirement systems shall,
not less than triennially, secure the services of an begin delete enrolled end delete actuary.
begin delete An enrolled actuary, for end delete begin insert For end insert the purposes of this section, begin insert “actuary” end insert
means an actuary begin delete enrolled under subtitle C of Title III of the federal
Employee Retirement Income Security Act of 1974 (Public Law
93-406) end delete begin insert who satisfies the qualification standards for actuaries
issuing statements of actuarial opinion in the United States with
regard to pensions or other postemployment benefits end insert and who has
demonstrated experience in public retirement systems. The actuary
shall perform a valuation of the system utilizing actuarial
assumptions and techniques established by the agency that are, in
the aggregate, reasonably related to the experience and the
actuary’s best estimate of anticipated experience under the system.
Any differences between the actuarial assumptions and techniques
used by the actuary that differ significantly from those established
by the agency shall be disclosed in the actuary’s report and the
effect of the differences on the actuary’s statement of costs and
obligations shall be shown.

(b) All state and local public retirement systems shall secure
the services of a qualified person to perform an attest audit of the
system’s financial statements. A qualified person means any of
the following:

(1) A person who is licensed to practice as a certified public
accountant in this state by the California Board of Accountancy.

(2) A person who is registered and entitled to practice as a public
accountant in this state by the California Board of Accountancy.

(3) A county auditor in any county subject to the County
Employees Retirement Law of 1937 (Chapter 3 (commencing with
Section 31450) of Part 3 of Division 4 of Title 3).

(4) A county auditor in any county having a pension trust and
retirement plan established pursuant to Section 53216.

(c) All state and local public retirement systems shall submit
audited financial statements to the State Controller at the earliest
practicable opportunity within six months of the close of each
fiscal year. However, the State Controller may delay the filing date
for reports due in the first year until the time as report forms have
been developed that, in his or her judgment, will satisfy the
requirements of this section. The financial statements shall be
prepared in accordance with generally accepted accounting
principles in the form and manner prescribed by the State
Controller. The penalty prescribed in Section 53895 shall be
invoked for failure to comply with this section. Upon a satisfactory
showing of good cause, the State Controller may waive the penalty
for late filing provided by this subdivision.

(d) The State Controller shall compile and publish a report
annually on the financial condition of all state and local public
retirement systems containing, but not limited to, the data required
in Section 7502. The report shall be published within 12 months
of the receipt of the information, and in no case later than 18
months after the end of the fiscal year upon which the information
in the report is based.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 7507 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

7507.  

(a) For the purpose of this section:

(1)  “Actuary” means an actuary begin delete who is an associate or fellow
of the Society of Actuaries. end delete begin insert as defined in Section 7504. end insert

(2) “Future annual costs” includes, but is not limited to, annual
dollar changes, or the total dollar changes involved when available,
as well as normal cost and any change in accrued liability.

(b) (1) Except as provided in paragraph (2), the Legislature and
local legislative bodies, including community college district
governing boards, when considering changes in retirement benefits
or other postemployment benefits, shall secure the services of an
actuary to provide a statement of the actuarial impact upon future
annual costs, including normal cost and any additional accrued
liability, before authorizing changes in public retirement plan
benefits or other postemployment benefits.

(2) The requirements of this subdivision do not apply to:

(A)  An annual increase in a premium that does not exceed 3
percent under a contract of insurance.

(B) A change in postemployment benefits, other than pension
benefits, mandated by the state or federal government or made by
an insurance carrier in connection with the renewal of a contract
of insurance.

(c) (1) (A) With regard to local legislative bodies, including
community college district governing boards, the future costs of
changes in retirement benefits or other postemployment benefits,
as determined by the actuary, shall be made public at a public
meeting at least two weeks prior to the adoption of any changes
in public retirement plan benefits or other postemployment benefits.
If the future costs of the changes exceed one-half of 1 percent of
the future annual costs, as defined in paragraph (2) of subdivision
(a), of the existing benefits for the legislative body, an actuary
shall be present to provide information as needed at the public
meeting at which the adoption of a benefit change shall be
considered. The adoption of any benefit to which this section
applies shall not be placed on a consent calendar.

(B) The requirements of this paragraph do not apply to:

(i) An annual increase in a premium that does not exceed 3
percent under a contract of insurance.

(ii) A change in postemployment benefits, other than pension
benefits, mandated by the state or federal government or made by
an insurance carrier in connection with the renewal of a contract
of insurance.

(2) With regard to the Legislature, the future costs as determined
by the actuary shall be made public at the policy and fiscal
committee hearings to consider the adoption of any changes in
public retirement plan benefits or other postemployment benefits.
The adoption of any benefit to which this section applies shall not
be placed on a consent calendar.

(d) Upon the adoption of any benefit change to which this
section applies, the person with the responsibilities of a chief
executive officer in an entity providing the benefit, however that
person is denominated, shall acknowledge in writing that he or
she understands the current and future cost of the benefit as
determined by the actuary. For the adoption of benefit changes by
the state, this person shall be the Director of Human Resources.

(e) The requirements of this section do not apply to a school
district or a county office of education, which shall instead comply
with requirements regarding public notice of, and future cost
determination for, benefit changes that have been enacted to
regulate these entities. These requirements include, but are not
limited to, those enacted by Chapter 1213 of the Statutes of 1991
and by Chapter 52 of the Statutes of 2004.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 7507.2 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

7507.2.  

(a) There is hereby enacted the California Actuarial
Advisory Panel. The panel shall provide impartial and independent
information on pensions, other postemployment benefits, and best
practices to public agencies and shall meet quarterly.

(b) The responsibilities of the California Actuarial Advisory
Panel shall include, but are not limited to:

(1) Defining the range of actuarial model policies and best
practices for public retirement plan benefits, including pensions
and other postemployment benefits.

(2) Developing pricing and disclosure standards for California
public sector benefit improvements.

(3) Developing quality control standards for California public
sector actuaries.

(4) Gathering model funding policies and practices.

(5) Replying to policy questions from public retirement systems
in California.

(6) Providing comment upon request by public agencies.

(c) The California Actuarial Advisory Panel shall consist of
eight members. Each member shall be an begin delete actuary, as defined in
Section 7507, end delete begin insert actuary who has attained the designation of
Associate or Fellow of the Society of Actuaries and who has
demonstrated experience end insert with public sector clients. Members shall
be appointed by the entities listed below, and each member shall
serve a three-year term, provided that, in the initial appointments
only, the panelists named by the University of California, the
Senate, and one of the panelists named by the Governor shall serve
two-year terms. The Governor shall appoint two panelists, and one
panelist shall be appointed by each of the following:

(1) The Teachers’ Retirement Board.

(2) The Board of Administration of the Public Employees’
Retirement System.

(3) The State Association of County Retirement Systems.

(4) The Board of Regents of the University of California.

(5) The Speaker of the Assembly.

(6) The Senate Committee on Rules.

(d) The California Actuarial Advisory Panel shall be located in
the Controller’s office, which shall provide support staff to the
panel.

(e) The opinions of the California Actuarial Advisory Panel are
nonbinding and advisory only. The opinions of the panel shall not,
in any case, be used as the basis for litigation.

(f) A member of the California Actuarial Advisory Panel shall
receive reimbursement for expenses that shall be paid by the
authority that appointed the member.

(g) The California Actuarial Advisory Panel shall report to the
Legislature on or before February 1 of each year.

begin delete SECTION 1. end delete

begin insert SEC. 6. end insert   

Section 20034 of the Government Code is amended
to read:

20034.  

The highest annual average compensation during any
consecutive 12- or 36-month period of employment as a member
of any retirement system maintained by the university shall be
considered compensation earnable by a member of this system for
purposes of computing final compensation for the member
providing he or she retires concurrently under both systems.

begin delete SEC. 2. end delete

begin insert SEC. 7. end insert   

Section 20035 of the Government Code is amended
to read:

20035.  

(a) Notwithstanding Section 20037, “final
compensation” for the purposes of determining any pension or
benefit with respect to a state member who retires or dies on or
after July 1, 1991, and with respect to benefits based on service
with the state, means the highest annual compensation which was
earnable by the state member during any consecutive 12-month
period of employment preceding the effective date of his or her
retirement or the date of his or her last separation from state service
if earlier.

(b) With respect to a state member who retires or dies on or
after July 1, 1991, and who was a managerial employee, as defined
by subdivision (e) of Section 3513, or a supervisory employee, as
defined by subdivision (g) of Section 3513, whose monthly salary
range was administratively reduced by 5 percent because of the
salary range reductions administratively imposed upon managers
and supervisors during the 1991-92 fiscal year, “final
compensation” means the highest annual compensation the state
member would have earned had his or her salary range not been
reduced by the 5-percent reduction. This subdivision shall only
apply if the period during which the state member’s salary was
reduced would have otherwise been included in determining his
or her final compensation. The costs, if any, that may result from
the use of the higher final compensation shall be paid for by the
employer in the same manner as other retirement benefits are
funded.

begin delete SEC. 3. end delete

begin insert SEC. 8. end insert   

Section 20035.5 of the Government Code is amended
to read:

20035.5.  

Notwithstanding Section 20037, “final compensation”
for the purposes of determining any pension or benefit with respect
to a school member who retires or dies on or after January 1, 2000,
and with respect to benefits based on service with a school
employer, means the highest annual compensation that was
earnable by the school member during any consecutive 12-month
period of employment preceding the effective date of his or her
retirement or the date of his or her last separation from service if
earlier.

begin delete SEC. 4. end delete

begin insert SEC. 9. end insert   

Section 20037 of the Government Code is amended
to read:

20037.  

For a state member, or for a local member who is an
employee of a contracting agency that is subject to this section,
“final compensation” means the highest annual average
compensation earnable by a member during any consecutive
36-month period of employment preceding the effective date of
his or her retirement or the date of his or her last separation from
state service if earlier, including any or all of the period or periods
of (a) service required for qualification for membership, or (b)
prior service which qualifies for credit under this system, if any,
immediately preceding membership, or (c) time prior to entering
state service at the compensation earnable by him or her in the
position first held by him or her in that service, as may be necessary
to complete three consecutive years. For the purposes of this
section, periods of service separated by a period of retirement or
breaks in service may be aggregated to constitute a period of three
consecutive years, if the periods of service are consecutive except
for such a period of retirement or breaks. If a break in service did
not exceed six months in duration, time included in the break and
compensation earnable during that time shall be included in
computation of final compensation. If a break in service exceeded
six months in duration, the first six months thereof and the
compensation earnable during those six months shall be included
in computation of final compensation, but time included in the
break which is in excess of six months and the compensation
earnable during that excess time shall be excluded in computation
of final compensation. On and after November 13, 1968, this
section shall apply to all contracting agencies and to the employees
of those agencies whether or not those agencies have previously
elected to be subject to this section, except that this section shall
not apply to an employee of a contracting agency which has not
elected to be subject to this section whose death occurred or whose
retirement was effective prior to November 13, 1968.

begin delete SEC. 5. end delete

begin insert SEC. 10. end insert   

Section 20037.5 of the Government Code, as added
by Section 56 of Chapter 88 of the Statutes of 1998, is repealed.

begin delete SEC. 6. end delete

begin insert SEC. 11. end insert   

Section 20037.5 of the Government Code, as added
by Section 56 of Chapter 91 of the Statutes of 1998, is amended
to read:

20037.5.  

Notwithstanding Section 20035, “final compensation”
for a state member who has elected to be subject to Section
21353.5, for the purposes of determining any pension or benefit
based on service credited under that section, means the highest
average annual compensation earnable by the member during any
consecutive 36-month period preceding the effective date of his
or her retirement or the date of his or her last separation from state
service if earlier.

begin delete SEC. 7. end delete

begin insert SEC. 12. end insert   

Section 20037.6 of the Government Code is amended
to read:

20037.6.  

(a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the
first time and becomes a state member of the system on or after
July 1, 2006, and is represented by State Bargaining Unit 2, means
the highest average annual compensation earnable by the member
during any consecutive 36-month period preceding the effective
date of his or her retirement or the date of his or her last separation
from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 2.

(c) This section does not apply to:

(1)  Former state employees who return to state employment
on or after July 1, 2006.

(2) State employees hired prior to July 1, 2006, who were subject
to Section 20281.5 during the first 24 months of state employment.

(3) State employees hired prior to July 1, 2006, who become
subject to representation by State Bargaining Unit 2 on or after
July 1, 2006.

(4)  State employees on an approved leave of absence who return
to active employment on or after July 1, 2006.

begin delete SEC. 8. end delete

begin insert SEC. 13. end insert   

Section 20037.7 of the Government Code is amended
to read:

20037.7.  

(a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the
first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 1, 3,
4, 11, 14, 15, 17, 20, or 21, means the highest average annual
compensation earnable by the member during any consecutive
36-month period preceding the effective date of his or her
retirement or the date of his or her last separation from state service
if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21.

(c) This section does not apply to:

(1) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 1, 3, 4, 11, 14,
15, 17, 20, or 21 on or after January 1, 2007.

(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 9. end delete

begin insert SEC. 14. end insert   

Section 20037.8 of the Government Code is amended
to read:

20037.8.  

(a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the
first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 12
or 13, means the highest average annual compensation earnable
by the member during any consecutive 36-month period preceding
the effective date of his or her retirement or the date of his or her
last separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 12 or 13.

(c) This section does not apply to:

(1) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 12 or 13 on or
after January 1, 2007.

(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 10. end delete

begin insert SEC. 15. end insert   

Section 20037.9 of the Government Code is amended
to read:

20037.9.  

(a) Notwithstanding Sections 20035 and 20037, final
compensation for a person who is employed by the state for the
first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 16
or 19, means the highest average annual compensation earnable
by the member during any consecutive 36-month period preceding
the effective date of his or her retirement or the date of his or her
last separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 16 or 19.

(c) This section does not apply to:

(1) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 16 or 19 on or
after January 1, 2007.

(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 11. end delete

begin insert SEC. 16. end insert   

Section 20037.10 of the Government Code is amended
to read:

20037.10.  

(a) Notwithstanding Sections 20035 and 20037,
final compensation for a person who is employed by the state for
the first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 7,
means the highest average annual compensation earnable by the
member during any consecutive 36-month period immediately
preceding the effective date of his or her retirement or the date of
his or her last separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 7.

(c) This section does not apply to:

(1) Service credit accrued while classified as a state peace
officer/firefighter while a member of begin insert State end insert Bargaining Unit 7.

(2) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(3) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(4) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 7 on or after
January 1, 2007.

(5) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 12. end delete

begin insert SEC. 17. end insert   

Section 20037.11 of the Government Code is amended
to read:

20037.11.  

(a) Notwithstanding Sections 20035 and 20037,
final compensation for a person who is employed by the state for
the first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 10,
means the highest average annual compensation earnable by the
member during any consecutive 36-month period preceding the
effective date of his or her retirement or the date of his or her last
separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 10.

(c) This section does not apply to:

(1) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 10 on or after
January 1, 2007.

(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 13. end delete

begin insert SEC. 18. end insert   

Section 20037.12 of the Government Code is amended
to read:

20037.12.  

(a) Notwithstanding Sections 20035 and 20037,
final compensation for a person who is employed by the state for
the first time and becomes a state member of the system on or after
January 1, 2007, and is represented by State Bargaining Unit 18,
means the highest average annual compensation earnable by the
member during any consecutive 36-month period preceding the
effective date of his or her retirement or the date of his or her last
separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 18.

(c) This section does not apply to:

(1) Former state employees previously employed before January
1, 2007, who return to state employment on or after January 1,
2007.

(2) State employees hired prior to January 1, 2007, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to January 1, 2007, who become
subject to representation by State Bargaining Unit 18 on or after
January 1, 2007.

(4) State employees on an approved leave of absence employed
before January 1, 2007, who return to active employment on or
after January 1, 2007.

begin delete SEC. 14. end delete

begin insert SEC. 19. end insert   

Section 20037.13 of the Government Code is amended
to read:

20037.13.  

(a) Notwithstanding Sections 20035 and 20037, for
the purposes of determining any pension or benefit with respect
to benefits based on service with the state, “final compensation”
means the highest annual compensation that was earnable by the
state member during any consecutive 36-month period of
employment preceding the effective date of his or her retirement
or the date of his or her last separation from state service if earlier.

(b) This section shall only apply to a member appointed to a
career executive assignment, as defined in Section 18546, who at
the time of appointment meets one or more of the following
criteria:

(1) He or she previously had, but does not currently have,
permanent status in the civil service.

(2) He or she is a person described in Section 18990 who was
not, within the past 12 months, employed by the Legislature for
two or more consecutive years.

(3) He or she is a person described in begin delete Sections end delete begin insert Section end insert 18992
who was not, within the past 12 months, holding a nonelected
exempt position in the executive branch.

(c) A state entity that employs a person described in subdivision
(b) in a career executive assignment shall notify the Controller of
this person’s employment status and the Controller shall forward
this information to the system.

begin delete SEC. 15. end delete

begin insert SEC. 20. end insert   

Section 20037.14 of the Government Code, as
amended by Section 127 of Chapter 296 of the Statutes of 2011,
is repealed.

begin delete SEC. 16. end delete

begin insert SEC. 21. end insert   

Section 20037.14 of the Government Code, as added
by Section 11 of Chapter 163 of the Statutes of 2010, is amended
to read:

20037.14.  

(a) Notwithstanding Sections 20035 and 20037,
final compensation for a person who is employed by the state for
the first time and becomes a state member of the system on or after
October 31, 2010, and is represented by State Bargaining Unit 5
or 8, means the highest average annual compensation earnable by
the member during any consecutive 36-month period preceding
the effective date of his or her retirement or the date of his or her
last separation from state service if earlier.

(b) This section applies to service credit accrued while a member
of State Bargaining Unit 5 or 8 or in a class related to State
Bargaining Unit 5 or 8 as an employee who is excepted from the
definition of “state employee” in subdivision (c) of Section 3513,
or an officer or employee of the executive branch of state
government who is not a member of the civil service.

(c) This section does not apply to:

(1) Former state employees previously employed before October
31, 2010, who return to state employment on or after October 31,
2010.

(2) State employees hired prior to October 31, 2010, who were
subject to Section 20281.5 during the first 24 months of state
employment.

(3) State employees hired prior to October 31, 2010, who
become subject to representation by State Bargaining Unit 5 or 8
on or after October 31, 2010.

(4) State employees on an approved leave of absence employed
before October 31, 2010, who return to active employment on or
after October 31, 2010.

begin delete SEC. 17. end delete

begin insert SEC. 22. end insert   

Section 20037.15 of the Government Code is amended
to read:

20037.15.  

(a)  Notwithstanding Sections 3517.8, 20035, and
20037, final compensation for a person who is employed for the
first time and becomes a member of the system on or after January
15, 2011, means the highest average annual compensation earnable
by the member during any consecutive 36-month period preceding
the effective date of his or her retirement or the date of his or her
last separation from state service if earlier.

(b) This section applies to the following:

(1) Service credit accrued while a member of State Bargaining
Unit 6 or 9 or in a class related to State Bargaining Unit 6 or 9 as
an employee who is excepted from the definition of “state
employee” in subdivision (c) of Section 3513, or an officer or
employee of the executive branch of state government who is not
a member of the civil service.

(2) Service credit accrued while a peace officer/firefighter
member represented by State Bargaining Unit 7 or in a class related
to peace officer/firefighter members in State Bargaining Unit 7 as
an employee who is excepted from the definition of “state
employee” in subdivision (c) of Section 3513, or an officer or
employee of the executive branch of state government who is not
a member of the civil service.

(3) Service credit accrued as an employee who is excepted from
the definition of “state employee” in subdivision (c) of Section
3513, or an officer or employee of the executive branch of state
government who is not a member of the civil service.

(4) Service credit accrued as an employee of the Legislature,
the judicial branch, or the California State University.

(c) This section does not apply to:

(1) Former employees previously employed before January 15,
2011, who return to employment on or after January 15, 2011, and
who were previously subject to a 12-month average.

(2) State employees hired prior to January 15, 2011, who were
subject to Section 20281.5 during the first 24 months of state
employment, and who were previously subject to a 12-month
average.

(3) State employees hired prior to January 15, 2011, who become
subject to representation by State Bargaining Unit 6, 7, or 9 on or
after January 15, 2011, and who were previously subject to a
12-month average.

(4) Employees on an approved leave of absence employed before
January 15, 2011, who return to active employment on or after
January 15, 2011, and who were previously subject to a 12-month
average.

(d) If this section is in conflict with a memorandum of
understanding that is current and in effect on January 15, 2011,
the memorandum of understanding shall be controlling while it
remains in effect. Upon expiration of the memorandum of
understanding that is in effect and current on January 15, 2011,
this section shall be controlling and may not be superseded by a
subsequent memorandum of understanding.

begin insert

begin insert SEC. 23. end insert   

end insert

begin insert Section 20229 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

20229.  

(a) The board, notwithstanding Section 10231.5, shall
provide the Legislature, the Governor, and the Chair of the
California Actuarial Advisory Panel, established pursuant to
Section 7507.2 of the Government Code, with an annual report
that includes all of the following, as these items apply to state
employee retirement plans:

(1) (A) A description of the investment return assumption
utilized by the board when determining the contribution rates.

(B) A calculation of the contribution rates utilizing an
investment return assumption 2 percentage points above and 2
percentage points below the investment return assumption utilized
by the board.

(2) (A) A description of the amortization period for any
unfunded liabilities utilized by the board when determining the
contribution rates.

(B) A calculation of the contribution rates based on an
amortization period equal to the estimated average remaining
service periods of employees covered by the contributions.

(3) (A) A description of the discount rate utilized by the board
for reporting liabilities.

(B) A calculation of those liabilities based upon a discount rate
that is 2 percent below the long-term rate of return actually
assumed by the board.

(4) The market value of the assets controlled by the board and
an explanation of how the actuarial value assigned to those assets
differs from the market value of those assets.

(b)  begin delete The end delete begin insert Each legislative session, the end insert Chair of the California
Actuarial Advisory Panel, or his or her designee, begin delete within 30 days
of receipt of the report required by subdivision (a) end delete shall, during a
publicly noticed joint hearing of the Senate Committee on Public
Employment and Retirement and the Assembly Committee on
Public Employees, Retirement and Social Security, do all of the

begin delete following: end delete begin insert following based on information received in the report
required by subdivision (a): end insert

(1) Explain the role played by the investment return assumption
and amortization period in the calculation of the contribution rates.

(2) Describe the consequences for future state budgets should
the investment return assumption not be realized.

(3) Report whether the board’s amortization period exceeds the
estimated average remaining service periods of employees covered
by the contributions.

(c) The report required by subdivision (a) shall be submitted in
compliance with Section 9795.

begin delete SEC. 18. end delete

begin insert SEC. 24. end insert   

Section 20537 of the Government Code is amended
to read:

20537.  

The board may charge interest on the amount of any
payment due and unpaid by a contracting agency until payment is
received. Interest shall be charged at the greater of the annual
return on the system’s investments for the year prior to the year
in which payments are not timely made or a simple annual rate of
10 percent. The interest shall be deemed interest earnings for the
year in which the late payment is received.

begin delete SEC. 19. end delete

begin insert SEC. 25. end insert   

Section 20572 of the Government Code is amended
to read:

20572.  

(a) If a contracting agency fails for 30 days after
demand by the board to pay in full any installment of contributions
required by its contract, or fails for three months after demand
therefor by the board to file any information required in the
administration of this system with respect to that contracting
agency’s employees, or if the board determines that the contracting
agency is no longer in existence, the board may terminate that
contract by resolution adopted by a majority vote of its members
effective 60 days after notice of its adoption has been mailed by
registered mail to the governing body of the contracting agency.

(b) In addition to the interest obligations set forth in Section
20537, if a contracting agency fails to pay in full any installment
of the contributions when due and the failure continues for a period
of three months, the contracting agency may be assessed a penalty
of 10 percent of the total amount due and unpaid, including any
accrued and unpaid interest. The penalty may be assessed once
during each 30-day period that the outstanding amount remains
unpaid. In addition, the contracting agency may be assessed the
costs of collection, including reasonable legal fees and litigation
costs, including, without limitation, legal fees and legal costs
incurred in bankruptcy, when necessary to collect any amounts
due.

begin delete SEC. 20. end delete

begin insert SEC. 26. end insert   

Section 20577.5 of the Government Code is amended
to read:

20577.5.  

Notwithstanding Section 20577, the board may elect
not to impose a reduction, or to impose a lesser reduction, on a
plan that has been terminated pursuant to Section 20572 if (a) the
board has made all reasonable efforts to collect the amount
necessary to fully fund the liabilities of the plan and (b) the board
finds that not reducing the benefits, or imposing a lesser reduction,
will not impact the actuarial soundness of the terminated agency
pool.

begin delete SEC. 21. end delete

begin insert SEC. 27. end insert   

Section 20578 of the Government Code is amended
to read:

20578.  

(a) Except as provided in subdivision (b), on and after
January 1, 1991, the rights and benefits of a former employee of
a contracting agency which terminated on or before January 1,
1991, or of his or her beneficiary, shall be the same as if the agency
had continued as a contracting agency. Any monthly allowance
of that individual, or of his or her beneficiary, that was reduced
pursuant to Section 20577 because the contracting agency failed
to pay the board the amount of the difference shall not be subject
to continued reduction on or after January 1, 1991. As of January
1, 1991, benefits shall be paid at the level provided in the contract
prior to that reduction. However, if a former employee of a
contracting agency that terminated on or before January 1, 1991,
becomes employed by another covered employer after the date of
termination, including an employer subject to reciprocity, the
benefits shall be calculated by using the highest compensation
earned by the individual.

In accordance with Section 20580, an individual who has
withdrawn his or her accumulated contributions from the
terminated agency shall not be permitted to redeposit any
withdrawn contributions upon again becoming a member of this
system.

(b) If a contracting agency has not paid the system for any deficit
in funding for earned benefits, as determined pursuant to Section
20577, members shall be entitled to the benefits to which members
of the plan were entitled 36 months prior to the date the agency
notified the board of its intention to terminate its contract or 36
months prior to the date the board notified the agency of its intent
to terminate the contract, whichever is earlier. Entitlement to earned
benefits under this subdivision shall be subject to Section 20577.5.

begin delete SEC. 22. end delete

begin insert SEC. 28. end insert   

Section 20638 of the Government Code is amended
to read:

20638.  

The highest annual average compensation during any
consecutive 12- or 36-month period of employment as a member
of a county retirement system shall be considered compensation
earnable by a member of this system for purposes of computing
final compensation for the member provided:

(a) (1) Entry into employment in which he or she became a
member in one system occurred on or after October 1, 1957, and
within 90 days of discontinuance of employment as a member of
the other system.

(2) This subdivision shall not deny the benefit of this section to
any person retiring after October 1, 1963, who entered membership
prior to October 1, 1957, if he or she entered the employment in
which he or she became a member within 90 days of termination
of employment in which he or she was a member of the other
system, and he or she became a member within seven months of
entry into employment, or, if an employee of a district as defined
in Section 31468, became a member at the time the district was
included in a county retirement system.

(b) He or she retires concurrently under both systems and is
credited with the period of service under the county system at the
time of retirement.

begin insert

begin insert SEC. 29. end insert   

end insert

begin insert Section 20900 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

20900.  

begin insert (a) end insert begin insert   end insert Notwithstanding any other provision of this part,
a member employed on a part-time basis on and after January 1,
1976, shall, for the period of part-time employment, receive the
credit the member would receive if he or she was employed on a
full-time basis and have his or her retirement allowance, as well
as any other benefits the member is entitled to under this part,
based upon the salary that he or she would have received if
employed on a full-time basis, if the member and his or her
employer both elect to contribute to the retirement fund the amount
that would have been contributed if the member was employed on
a full-time basis. Prior to the reduction of an employee’s workload
under this section, the district personnel responsible for the
administration of this program, in conjunction with the
administrative staff of the State Teachers’ Retirement System and
this system, shall verify the eligibility of the applicant for the
reduced workload program. This section shall be applicable only
to begin delete members who are academic employees end delete begin insert a member who meets
the following criteria: end insert

begin insert

(1) The member is one of the following:

end insert

begin insert (A) end insert begin insert   end insert begin insert An academic employee end insert of the California State begin delete University
or who are end delete begin insert University. end insert

begin insert (B) end insert begin insert   end insert begin insert A end insert certificated begin delete employees of school districts and who have
met end delete begin insert employee of a school district. end insert

begin insert

(C) An academic employee of a community college district.

end insert

begin insert (2) end insert begin insert   end insert begin insert The member meets end insert the criteria provided in Sections 44922
and 87483 of the Education Code or Section 89516 of the
Education begin delete Code and are end delete begin insert Code. end insert

begin insert (3) end insert begin insert   end insert begin insert The member is end insert not older than 70 years begin insert of age end insert and is limited
to a period of five years of part-time status. begin delete The end delete

begin insert (b) end insert begin insert   end insert begin insert The end insert employer shall maintain the necessary records to
separately identify each employee receiving credit pursuant to this
section.

begin delete SEC. 23. end delete

begin insert SEC. 30. end insert   

Section 20963 of the Government Code is amended
to read:

20963.  

(a) A state, school, or school safety member, whose
effective date of retirement is within four months of separation
from employment with the employer subject to this section that
granted the sick leave credit, shall be credited at his or her
retirement with 0.004 year of service credit for each unused day
of sick leave certified to the board by the employer. A day of
unused sick leave is the equivalent of an eight-hour day. The
certification shall report only those days of unused sick leave that
were accrued by the member during the normal course of his or
her employment and shall not include any additional days of sick
leave reported for the purpose of increasing the member’s
retirement benefit. Reports of unused days of sick leave shall be
subject to audit and retirement benefits may be adjusted where
improper reporting is found. For purposes of this subdivision, sick
leave shall not include sick leave earned as a National Guard
member as described in Section 20380.5.

(b) Until receipt of certification from an employer concerning
unused sick leave, the board may pay an estimated allowance
pursuant to this section. At the time of receipt of the certification,
the allowance shall be adjusted to reflect any necessary changes.

(c) Notwithstanding any other provisions of this part, this section
shall not apply to local members other than local miscellaneous
members employed before July 1, 1980, by a school district that
is a contracting agency or those school safety members employed
before July 1, 1980, by a contracting agency that is a school district
or community college district, as defined in subdivision (i) of
Section 20057.

(d) This section shall not apply to any of the following:

(1) A person who becomes a school member on and after July
1, 1980, and any person who becomes a local member employed,
on and after July 1, 1980, by a school district that is a contracting
agency whether or not the person was ever a school member or
local member prior to that date.

(2) A state employee, with respect to sick leave credits earned
as a state member under Section 21353.5, except that the member
shall be entitled to receive credit under this section for the sick
leave he or she has earned as a state member subject to any other
retirement formula, provided the member has a sick leave credit
balance remaining at the time of retirement.

(e) For the purposes of this section, sick leave benefits provided
to state employees pursuant to the state sick leave system shall be
construed to mean compensation paid to employees on approved
leaves of absence because of sickness.

begin delete SEC. 24. end delete

begin insert SEC. 31. end insert   

Section 20963.1 of the Government Code is amended
to read:

20963.1.  

(a) A state member whose effective date of retirement
is within four months of separation from employment of the state,
shall be credited at his or her retirement with 0.004 year of service
for each unused day of educational leave credit, as certified to the
board by the employer. A day of unused educational leave is the
equivalent of an eight-hour day. The provisions of this section
shall be effective for eligible state members who retire directly
from state employment on and after January 1, 2000.

(b) This section shall apply to eligible state members in state
bargaining units that have agreed to this section in a memorandum
of begin delete understanding, end delete begin insert understanding end insert or as authorized by the Director
of Human Resources for classifications of state employees that
are excluded from the definition of “state employee” by begin delete paragraph end delete
begin insert subdivision end insert (c) of Section 3513 of the Government Code.

begin delete SEC. 25. end delete

begin insert SEC. 32. end insert   

Section 20965 of the Government Code is amended
to read:

20965.  

A local miscellaneous member and a local safety
member, whose effective date of retirement is within four months
of separation from employment with the employer which granted
the sick leave credit, shall be credited at his or her retirement with
0.004 year of service credit for each unused day of sick leave
certified to the board by his or her employer. A day of unused sick
leave is the equivalent of an eight-hour day. The certification shall
report only those days of unused sick leave that were accrued by
the member during the normal course of his or her employment
and shall not include any additional days of sick leave reported
for the purpose of increasing the member’s retirement benefit.
Reports of unused days of sick leave shall be subject to audit and
retirement benefits may be adjusted where improper reporting is
found.

This section shall not apply to any contracting agency nor to the
employees of a contracting agency until the agency elects to be
subject to this section by contract or by amendment to its contract
made in the manner prescribed for approval of contracts, except
that an election among the employees is not required, or, in the
case of contracts made after September 26, 1974, by express
provision in the contract making the contracting agency subject
to this section.

This section shall only apply to members who retire after the
effective date of the contract amendments.

begin insert

begin insert SEC. 33. end insert   

end insert

begin insert Section 21337 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

21337.  

(a) On an annual basis, the board shall transfer funds
to separate supplemental state and school accounts, to fund the
purchasing power protection allowance of retirees, survivors, and
beneficiaries of state or school employers, respectively. The
amounts transferred shall be the lesser of the following:

(1) The amount necessary to increase all monthly allowances
paid by this system to retirees, survivors, and beneficiaries of state
or school employers to 75 percent of the purchasing power of the
initial monthly allowances.

(2) One and one-tenth percent of begin delete the net earnings on end delete state or
school member begin delete contributions, as determined by Section 20178. end delete

begin insert contributions. end insert

(b) The funds transferred to the two separate supplemental
accounts shall be utilized to increase all monthly allowances paid
by this system to retirees, survivors, and beneficiaries of state and
school employers, up to a maximum of 75 percent of the purchasing
power, as determined by the board, of the initial monthly
allowances, notwithstanding the benefit provided by Section 21328,
that were received by every retired state or school member or
survivor or beneficiary of a state or school member or retiree who
was eligible to receive any allowance at the end of each fiscal year.
Funds remaining in the state or school account after the payment
of benefits under this section shall be transferred to the respective
state or school employer accounts.

(c) Annual adjustments in the purchasing power protection
allowance shall be effective with the monthly allowance regularly
payable on the first day of May, provided that in the first year after
enactment of the act adding this subdivision, the purchasing power
protection allowance adjustment to the monthly allowance payable
on the first day of May shall also reflect an adjustment for the
period from January 1 through April 30. The board shall implement
the provisions of this subdivision on or before January 1, 2012,
unless the board determines that the implementation tasks cannot
be completed until a later date, in which case, the board shall be
prepared to implement the provisions of this section no later than
July 1, 2013.

begin delete SEC. 26. end delete

begin insert SEC. 34. end insert   

Section 21499 of the Government Code is amended
to read:

21499.  

(a) Notwithstanding Section 21498, when either an
initial payment of a preretirement or postretirement death allowance
or a preretirement or postretirement lump-sum benefit is payable
in an amount of ten dollars ($10) or more, it shall be authorized
to the Controller within 45 days of receipt by this system of all the
necessary information, including the return of warrants issued or
any overpayment outstanding after the date of the death of the
annuitant.

(b) If any payment is not made within that time limitation, the
payment shall also include interest at the default interest rate
established in Section 1 of Article XV of the California
Constitution for time following the expiration of that time
limitation.

begin delete SEC. 27. end delete

begin insert SEC. 35. end insert   

Section 21626.5 of the Government Code is amended
to read:

21626.5.  

(a) For purposes of Section 21624, 21626, 21627,
21629, or 21630, a surviving domestic partner shall be treated in
the same manner as a surviving spouse if either:

(1) The domestic partnership was registered for one year prior
to the member’s service retirement date or at the disability
retirement date and continuously until the date of the member’s
death.

(2) The member retired prior to January 1, 2006, and both the
member and his or her domestic partner, who currently are in a
state-registered domestic partnership, sign an affidavit stating that,
at the time prescribed by the retirement system for married spouses
to qualify for survivor continuance, the member and the domestic
partner would have qualified to be registered as domestic partners
pursuant to Section 297 of the Family Code.

(b) For purposes of Section 21624, 21626, 21627, 21629, or
21630, an individual who is the same gender as the member shall
be treated in the same manner as a surviving spouse if the following
conditions are satisfied:

(1) The individual entered into marriage with the member on
or after the date when individuals of the same gender were legally
allowed to enter into marriage and was married continuously until
the date of the member’s death.

(2) Either of the following applies:

(A) The member retired prior to the date when individuals of
the same gender were legally allowed to enter into marriage, and
both the member and his or her spouse, who are currently married,
sign an affidavit stating that, at the time prescribed by the
retirement system for spouses to qualify for a survivor continuance,
the member and the individual would have qualified to be legally
married had it been legally possible for people of the same gender
to marry.

(B) The individual originally qualified to become a surviving
spouse under subdivision (a).

begin insert

begin insert SEC. 36. end insert   

end insert

begin insert Section 22820 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

22820.  

(a) Upon the death, on or after January 1, 2002, of a
firefighter employed by a county, city, city and county, district,
or other political subdivision of the state, a firefighter employed
by the Department of Forestry and Fire Protection, a firefighter
employed by the federal government who was a resident of this
state and whose regular duty assignment was to perform
firefighting services within this state, or a peace officer as defined
in Section 830.1, 830.2, 830.3, 830.31, 830.32, 830.33, 830.34,
830.35, 830.36, 830.37, 830.38, 830.39, 830.4, 830.5, 830.55, or
830.6 of the Penal Code, if the death occurred as a result of injury
or disease arising out of and in the course of his or her official
duties, the surviving spouse or other eligible family member of
the deceased firefighter or peace officer, if uninsured, is deemed
to be an annuitant under Section 22760 for purposes of enrollment.
All eligible family members of the deceased firefighter or peace
officer who are uninsured may enroll in a health benefit plan of
the surviving spouse’s choice. However, an unmarried child of the
surviving spouse is not eligible to enroll in a health benefit plan
under this section if the child was not a family member under
Section 22775 and regulations pertinent thereto prior to the
firefighter’s or peace officer’s date of death. The employer of the
deceased firefighter or peace officer shall notify the board within
10 business days of the death of the employee begin delete if a end delete begin insert and any updated
contact information of the surviving spouse or family member if
that end insert spouse or family member may be eligible for enrollment in a
health benefit plan under this section.

(b) Upon notification, the board shall promptly determine
eligibility and shall forward to the eligible spouse or family
member the materials necessary for enrollment. In the event of a
dispute regarding whether a firefighter’s or peace officer’s death
occurred as a result of injury or disease arising out of and in the
course of his or her official duties as required under subdivision
(a), that dispute shall be determined by the Workers’ Compensation
Appeals Board, subject to the same procedures and standards
applicable to hearings relating to claims for workers’ compensation
benefits. The jurisdiction of the Workers’ Compensation Appeals
Board under this section is limited to the sole issue of industrial
causation and this section does not authorize the Workers’
Compensation Appeals Board to award costs against the system.

(c) (1) Notwithstanding any other provision of law, and except
as otherwise provided in subdivision (d), the state shall pay the
employer contribution required for enrollment under this part for
the uninsured surviving spouse of a deceased firefighter or peace
officer for life, and the other uninsured eligible family members
of a deceased firefighter or peace officer, provided the family
member meets the eligibility requirements of Section 22775 and
regulations pertinent thereto.

(2) The contribution payable by the state for each uninsured
surviving spouse and other uninsured eligible family members
shall be adjusted annually and be equal to the amount specified in
Section 22871.

(3) The state’s contribution under this section shall commence
on the effective date of enrollment of the uninsured surviving
spouse or other uninsured eligible family members. The
contribution of each surviving spouse and eligible family member
shall be the total cost per month of the benefit coverage afforded
him or her under the plan less the portion contributed by the state
pursuant to this section.

(d) The cancellation of coverage by an annuitant, as defined in
this section, shall be final without option to reenroll, unless
coverage is canceled because of enrollment in an insurance plan
from another source.

(e) For purposes of this section, “surviving spouse” means a
spouse who was married to the deceased firefighter or peace officer
on the deceased’s date of death and either was married for a
continuous period of at least one year prior to the date of death or
was married to the deceased prior to the date the deceased
firefighter or peace officer sustained the injury or disease resulting
in death.

(f) For purposes of this section, “uninsured” means that the
surviving spouse is not enrolled in an employer-sponsored health
plan under which the employer contribution covers 100 percent
of the cost of health care premiums.

(g) The board has no duty to identify, locate, or notify any
surviving spouse or eligible family member who may be or may
become eligible for benefits under this section.