BILL ANALYSIS
AB 3094
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 3094 (Public Employees Committee)
As Amended August 11, 2004
Majority vote
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|ASSEMBLY: |79-0 |(May 26, 2004) |SENATE: |34-0 |(August 18, |
| | | | | |2004) |
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Original Committee Reference: P.E., R.&S.S.
SUMMARY : Creates procedures for public retirement systems to
recover benefit overpayments in the event of the death of a
benefit recipient.
The Senate amendment provides chaptering out language with
respect to AB 1776 (Banking and Finance Committee).
EXISTING 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 a state or local
agency or department from requesting or receiving from a
financial institution the financial information of a customer
except under specified conditions.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required retirement benefit payments from the public
retirement system directly deposited by electronic fund
transfer following the date of death of a person entitled to
receive the benefits to be refunded to the retirement system.
2)Added an exemption to the provisions of the California Right
to Financial Privacy Act to require a financial institution to
provide a public retirement system, as specified, with certain
information about accounts of a customer who received direct
deposit transfers from the retirement system after the date of
his or her death.
AB 3094
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FISCAL EFFECT : Savings will result as California Public
Employees' Retirement System (CalPERS) is allowed to use less
extensive legal procedures (e.g., subpoenas) to recover benefit
overpayments.
COMMENTS : According to CalPERS, some retirees receive
retirement allowances via direct deposit to their bank accounts.
If CalPERS is not informed immediately of a retiree's death,
the payments continue until CalPERS is notified. Sometimes
other parties who have access to those accounts withdraw the
funds paid to the deceased retiree. Financial institutions will
not release the names and addresses of these individuals without
subpoenas, which are costly and increase administrative expenses
for the retirement systems. This bill would require financial
institutions to disclose the names and addresses of financial
account owners, or any people having access to the accounts, to
CalPERS and the California State Teachers' Retirement System
(CalSTRS) 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 CalPERS' legal office if the overpayment amounts exceed
$2,500. Overpayments of less than $2,500 are presently being
submitted for write-off. Over the past four years at CalPERS,
274 cases have been written off, amounting to a total loss of
$528,411. This bill would allow CalPERS and CalSTRS to obtain
necessary information from 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 would be
similarly narrow. It would only allow CalPERS and CalSTRS to
obtain the names and addresses of persons withdrawing funds from
an annuitant's account following the annuitant's death. It
would not allow the systems to obtain any other information in
any other circumstances.
If automatic payments have been paid to a retiree's account and
withdrawn by the survivor or beneficiary who is entitled to an
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ongoing allowance following the retiree's death, CalPERS does
not attempt to collect those payments. The survivor's or
beneficiary's ongoing allowance can be adjusted over a period of
months to reflect any overpayments that may have occurred.
Analysis Prepared by : Clem Meredith / P.E., R. & S.S. / (916)
319-3957
FN: 0007733