BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 3094|
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THIRD READING
Bill No: AB 3094
Author: Assm. Public Emp., Ret. & and S.S. Committee
Amended: 8/11/04 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 5-0, 6/21/04
AYES: Soto, Ashburn, Escutia, Karnette, Oller
SENATE APPROPRIATIONS COMMITTEE : 8-0, 8/4/04
AYES: Alpert, Battin, Aanestad, Ashburn, Bowen, Escutia,
Karnette, Speier
NO VOTE RECORDED: Burton, Johnson, Machado, Murray,
Poochigian
ASSEMBLY FLOOR : 79-0, 5/26/04 - See last page for vote
SUBJECT : Retirement systems
SOURCE : State Public Employees Retirement System
State Teachers Retirement System
DIGEST : This bill creates procedures for the State
Public Employees' Retirement System, the State Teachers'
Retirement System and the 20 county retirement systems
under the County Employees Retirement Act of 1937 to
recover benefit overpayments in the event of the death of a
benefit recipient.
Senate Floor Amendments of 8/11/04 provide double-jointing
language for this bill and AB 1776 (Assembling Banking and
Finance Committee), which relates to out-of-state banking
CONTINUED
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records.
ANALYSIS :
Existing Retirement Law
1.Provides that any person entitled to receive benefits
from any state, county, or district retirement system may
authorize the payment of the benefits to be directly
deposited by electronic fund transfer into the person's
account at a financial institution of his or her choice.
2.Prohibits an officer, employee, or agent of the state or
local agency or department from requesting or receiving
from a financial institution the financial information of
a customer except under specified conditions.
This bill:
1.Requires retirement benefit payments from the State
Public Employees' Retirement System (PERS), the State
Teachers' Retirement System (STRS), or county retirement
systems under the County Employees Retirement Act of 1937
('37 Act) directly deposited by electronic transfer
following the date of death of a person entitled to
receive the benefits to be refunded to the retirement
system.
2.Adds an exemption to the provisions of the California
Right to Financial Privacy Act to require a financial
institution to provide these public retirement systems
with certain information about accounts of a customer who
received direct deposit transfers form the retirement
system after the date of his or her death.
Comments
Arguments in Support . According to PERS, some retirees
receive retirement allowances via direct deposit to their
bank accounts. If, however, PERS is not informed
immediately of a retiree's death, the payments continue
until PERS is notified. Sometimes other parties who have
access to those accounts withdraw the funds paid to the
deceased retiree. Financial institutions will not release
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the names and addresses of these individuals without
subpoenas, which are costly and increase administrative
expenses for the retirement systems.
This bill requires financial institutions to disclose the
names and addressees of financial account owners, or any
people having access to the accounts, to PERS, STRS, and
'37 Act county retirement systems for all overpayment
cases, without the need for individual subpoenas to be
issued.
Because of the legal and procedural complexities associated
with promulgating interrogatories and the issuing and
serving of subpoenas, and based upon cost-effectiveness
issues, it was determined that referrals of overpayment
cases would only be made to PERS' legal office if the
overpayment amount exceeds $$2,500. Overpayments of less
than $2,500 are presently being written off. Over the past
four years at PERS, 274 cases have been written off,
amounting to a total loss of $528,411.
This bill allows these public retirement systems to obtain
necessary information from the financial institutions
without subpoenas.
The law protects individuals' rights to privacy with regard
to their financial and personal records. Entities such as
police and sheriff's departments and other state agencies
have narrowly defined exemptions allowing only specific
types of information to be obtained under specific
situations.
This bill will be similarly narrow. It only allows PERS,
STRS and '37 Act county retirement systems to obtain the
names and addresses of persons withdrawing funds from an
annuitant's account following the annuitant's death. It
will not allow the systems to obtain any other information
in any other circumstance.
If automatic payments have been paid to a retiree's account
and withdrawn by the survivor or beneficiary who is
entitled to an ongoing monthly allowance following the
retiree's death, these retirement systems do not attempt to
collect those payments. The survivor's or beneficiary's
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ongoing allowance can be adjusted over a period of months
to reflect any overpayments that may have occurred.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/11/04)
State Public Employees' Retirement System (co-source)
State Teachers' Retirement System (co-source)
American Federation of State, County and Municipal
Employees
State Association of County Retirement Systems
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,
Calderon, Campbell, Canciamilla, Chan, Chavez, Chu,
Cogdill, Cohn, Corbett, Correa, Cox, Daucher, Diaz,
Dutra, Dutton, Dymally, Firebaugh, Frommer, Garcia,
Goldberg, Harman, Haynes, Jerome Horton, Shirley Horton,
Houston, Jackson, Keene, Kehoe, Koretz, La Malfa, La
Suer, Laird, Leno, Leslie, Levine, Lieber, Liu,
Longville, Lowenthal, Maddox, Maldonado, Matthews, Maze,
McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nakano,
Nation, Negrete McLeod, Oropeza, Pacheco, Parra, Pavley,
Plescia, Reyes, Richman, Ridley-Thomas, Runner, Salinas,
Samuelian, Simitian, Spitzer, Steinberg, Strickland,
Vargas, Wesson, Wiggins, Wolk, Wyland, Yee, Nunez
NO VOTE RECORDED: Hancock
TSM:cm 8/11/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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