SB 292, as amended, Pan. Public employee retirement: contributions.
The California Public Employees’ Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013.
begin delete On and after January 1, 2013,end delete PEPRA requires new employees of begin delete specifiedend delete public employers, begin delete the Legislature, the California State University, and the judicial branchend delete
who participate in a defined benefit plan to have an initial contribution rate of at least 50% of the normal cost rate for that defined benefit plan, rounded to the nearest 1⁄4 of 1%, or the current contribution rate of similarly situated employees, whichever is greater.
The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. The California Constitution exempts from that limit an additional ad valorem property tax rate for, among other things, indebtedness approved by the voters of the local entity prior to July 1, 1978, including pension programs.
This bill would exempt a
city or county that pays its pension costs with revenues from a property tax
begin delete rate,end delete approved by begin delete the voters of a city or countyend delete to make payments in support of pension programs and levied in addition to the general property tax rate, and that city’s or county’s begin delete employeesend delete from the above-described begin delete 50% contribution rate provision under PEPRA.end delete
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 7522.30 of the Government Code is
2amended to read:
(a) This section shall apply to all public employers
4and to all new members. Equal sharing of normal costs between
5public employers and public employees shall be the standard. The
6standard shall be that employees pay at least 50 percent of normal
7costs and that employers not pay any of the required employee
9(b) The “normal cost rate” shall mean the annual actuarially
10determined normal cost for the plan of retirement benefits provided
11to the new member and shall be established based on the actuarial
12assumptions used to determine the liabilities and costs as part of
13the annual actuarial valuation. The plan of retirement benefits shall
14include any elements that would impact the actuarial determination
15of the normal cost, including, but not limited to, the retirement
16formula, eligibility and vesting criteria, ancillary benefit provisions,
17and any automatic cost-of-living adjustments as determined by the
18public retirement system.
19(c) New members employed by those public employers
20defined in paragraphs (2) and (3) of subdivision (i) of Section
217522.04, the Legislature, the California State University, and the
22judicial branch who participate in a defined benefit plan shall have
23an initial contribution rate of at least 50 percent of the normal cost
24rate for that defined benefit plan, rounded to the nearest
begin delete quarterend deleteof
251 percent, unless a greater contribution rate has been agreed to
26pursuant to the requirements in subdivision (e).
begin delete Thisend delete contribution shall not be paid by
2the employer on the employee’s behalf.
11(d) Notwithstanding subdivision (c), once established, the
12employee contribution rate described in subdivision (c) shall not
13be adjusted on account of a change to the normal cost rate unless
14the normal cost rate increases or decreases by more than 1 percent
15of payroll above or below the normal cost rate in effect at the time
16the employee contribution rate is first established or, if later, the
17normal cost rate in effect at the time of the last adjustment to the
18employee contribution rate under this section.
19(e) Notwithstanding subdivision (c), employee contributions
20may be more than one-half of the normal cost rate if the increase
21has been agreed to through the collective bargaining process,
22subject to the following conditions:
23(1) The employer shall not contribute at a greater rate to the
24plan for nonrepresented, managerial, or supervisory employees
25than the employer contributes for other public employees, including
26represented employees, of the same employer who are in related
27retirement membership classifications.
28(2) The employer shall not increase an employee contribution
29rate in the absence of a memorandum of understanding that has
30been collectively bargained in accordance with applicable laws.
31(3) The employer shall not use impasse procedures to increase
32an employee contribution rate above the rate required by this
34(f) If the terms of a contract, including a memorandum of
35understanding, between a public employer and its public
36employees, that is in effect on January 1, 2013, would be impaired
37by any provision of this section, that provision shall not apply to
38the public employer and public employees subject to that contract
39until the expiration of that contract. A renewal, amendment, or
P4 1any other extension of that contract shall be subject to the
2requirements of this section.
3(g) This section does not apply to a public employer and its
4public employees if the public employer is a city or county that
5pays its pension program costs with revenues derived from a
6property tax rate, approved by the voters of a city or county to
7make payments in support of pension programs and levied in
8addition to the property tax rate limited by subdivision (a) of
9Section 1 of Article XIII A of the California Constitution.