BILL NUMBER: AB 637	ENROLLED
	BILL TEXT

	PASSED THE SENATE  JULY 9, 2009
	PASSED THE ASSEMBLY  MAY 14, 2009
	AMENDED IN ASSEMBLY  APRIL 2, 2009

INTRODUCED BY   Assembly Member Hill

                        FEBRUARY 25, 2009

   An act to amend Sections 20537, 21677, and 22899 of, and to add
Sections 20027.5 and 20538 to, the Government Code, relating to
retirement.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 637, Hill. Public Employees' Retirement System: contracting
agencies.
   The Public Employees' Retirement Law permits any public agency, as
defined, to enter into a contract to participate in the Public
Employees' Retirement System, as specified. That law also authorizes
the Board of Administration of the Public Employees' Retirement
System to establish a deferred compensation program for California
public employees. The Public Employees' Medical and Hospital Care Act
authorizes the Board of Administration of the Public Employees'
Retirement System to contract with carriers for health benefit plans
and major medical plans for employees and annuitants, as defined.
Participation in the system and these benefit programs is funded by
employer and employee contributions.
   This bill would require contributions made by a contracting agency
under the provisions described above to be paid through an
electronic funds transfer, as defined, that is prescribed by the
Board of Administration of the Public Employees' Retirement System,
as specified. The bill would authorize a contracting agency that is
unable, for good cause, to comply with that requirement to apply to
the board for a waiver.
   The Public Employees' Retirement Law authorizes the Board of
Administration of the Public Employees' Retirement System to charge
interest, at a rate approximating the average rate received on moneys
then being invested, on the amount of any payment due and unpaid by
a contracting agency until payment is received.
   This bill would instead authorize the board to charge interest at
the actuarial interest rate on those amounts due and unpaid by a
contracting agency.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 20027.5 is added to the Government Code, to
read:
   20027.5.  (a) "Electronic funds transfer" means any transfer of
funds, other than a transaction originated by check, draft, or
similar paper instrument, that is initiated through an electronic
terminal, telephonic instrument, or computer or magnetic tape, so as
to order, instruct, or authorize a financial institution to debit or
credit an account. Electronic funds transfers shall be executed by
one of the following methods:
   (1) An automated clearinghouse debit in which the state, through
its designated depository bank, originates an automated clearinghouse
transaction debiting the person's bank account and crediting the
state's bank account for the amount of the debit. Banking costs
incurred for the automated clearinghouse debit transaction shall be
paid by the state.
   (2) An automated clearinghouse credit in which the person, through
his or her own bank, originates an entry crediting the state's bank
account and debiting his or her own bank account. Banking costs
incurred for the automated clearinghouse credit transaction charged
to the state shall be paid by the person originating the credit.
   (3) A Federal Reserve Wire Network transfer (Fedwire) originated
by a person utilizing the national electronic payment system to
transfer funds through the federal reserve banks, when that person
debits his or her own bank account and credits the state's bank
account. Electronic funds transfers may be made by Fedwire only if
payment cannot, for good cause, be made according to paragraph (1) or
(2), and the use of Fedwire is preapproved by the board. Banking
costs incurred for the Fedwire transaction charged to the person and
to the state shall be paid by the person originating the transaction.

   (b) For purposes of this section, "automated clearinghouse" means
any federal reserve bank, or an organization established in agreement
with the National Automated Clearing House Association, that
operates as a clearinghouse for transmitting or receiving entries
between banks or bank accounts and which authorizes an electronic
transfer of funds between these banks or bank accounts.
  SEC. 2.  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 actuarial interest rate. The
interest shall be deemed interest earnings for the year in which the
late payment is received.
  SEC. 3.  Section 20538 is added to the Government Code, to read:
   20538.  (a) All amounts due to the retirement system by a
contracting agency under this part shall be paid through an
electronic funds transfer method prescribed by the board. This
payment requirement is effective upon declaration by the board.
   (b) A contracting agency that is unable, for good cause, to comply
with subdivision (a), may apply to the board for a waiver that
allows the agency to pay in an alternate manner as prescribed by the
board, but not by credit card payment.
  SEC. 4.  Section 21677 of the Government Code is amended to read:
   21677.  The Public Employees' Deferred Compensation Fund shall
consist of the following sources and receipts and disbursements shall
be accounted for as set forth below:
   (a) Premiums determined by the board and paid by employers and
plan participants for the cost of administering the deferred
compensation program.
   (b) Asset management fees as determined by the board assessed
against investment earnings of investment options or other
investments funds provided by the board to either the state or other
public employers. Asset management fees shall be disclosed to plan
participants.
   (c) Deferrals or contributions to be paid monthly by participating
employers or plan participants for investment by the board pursuant
to this article. The moneys shall be deposited in the investment
corpus account within the Public Employees' Deferred Compensation
Fund, and invested in accordance with the fund option or fund
selected by the plan participants.
   (1) Deferrals or contributions paid by a contracting agency shall
be paid through an electronic funds transfer method prescribed by the
board. This payment requirement is effective upon declaration by the
board.
   (2) A contracting agency that is unable, for good cause, to comply
with paragraph (1), may apply to the board for a waiver that allows
the agency to pay in an alternate manner as prescribed by the board,
but not by credit card payment.
   (d) Disbursements to plan participants shall be paid from a
disbursement account within the Public Employees' Deferred
Compensation Fund, in accordance with current federal law pertaining
to tax-deferred savings plans.
   (e) The board shall offer a savings account equivalent plan among
those deferred compensation accounts made payable to plan
participants.
   (f) Income, of whatever nature, earned on the Public Employees'
Deferred Compensation Fund shall be credited to the appropriate
account. Participant accounts shall be individually posted to reflect
net asset value for each fund in which the participant invests.
   (g) The board has the exclusive control of the administration and
investment of the Public Employees' Deferred Compensation Fund.
  SEC. 5.  Section 22899 of the Government Code is amended to read:
   22899.  (a) The contributions required of a contracting agency,
along with contributions withheld from salaries of its employees,
shall be forwarded monthly, no later than the 10th day of the month
for which the contribution is due. The contributions shall be
credited to the Public Employees' Contingency Reserve Fund as
specified by Section 22910.
   (1) Deferrals or contributions paid by a contracting agency shall
be paid through an electronic funds transfer method prescribed by the
board. This payment requirement is effective upon declaration by the
board.
   (2) A contracting agency that is unable, for good cause, to comply
with paragraph (1), may apply to the board for a waiver that allows
the agency to pay in an alternate manner as prescribed by the board,
but not by credit card payment.
   (3) For the purpose of this subdivision, "electronic funds
transfer" has the same meaning as that set forth in Section 20027.5.
   (b) A county superintendent of schools shall draw requisitions
against the county school service fund and the funds of the
respective school districts for the amount equal to the total of the
employer contributions and the employee contributions deducted from
compensation paid from those funds. The amounts shall be deposited in
the county treasury to the credit of the contract retirement fund
established pursuant to Section 20617. The county superintendent
thereafter shall draw his or her requisitions against the fund in
favor of the board which, when allowed by the county auditor, shall
constitute warrants against the fund and shall forward the warrants
to the board in accordance with this section.
   (c) If a contracting agency fails to remit the contributions when
due, the agency may be assessed interest at an annual rate of 10
percent and the costs of collection, including reasonable legal fees,
when necessary to collect the amounts due. In the case of repeated
delinquencies, the contracting agency may be assessed a penalty of 10
percent of the delinquent amount. That penalty may be assessed once
during each 30-day period that the amount remains unpaid.
Additionally, the contracting agency may be required to deposit
one-month's premium as a condition of continued participation in the
program.