BILL NUMBER: AB 966 ENROLLED
BILL TEXT
PASSED THE SENATE JULY 9, 2009
PASSED THE ASSEMBLY JULY 13, 2009
AMENDED IN SENATE JUNE 2, 2009
AMENDED IN ASSEMBLY MARCH 26, 2009
INTRODUCED BY Committee on Public Employees, Retirement and Social
Security (Hernandez (Chair), Fong (Vice Chair), Beall, and Torrico)
FEBRUARY 26, 2009
An act to amend Section 2610 of the Family Code, and to amend
Sections 20037.6, 20037.7, 20037.8, 20037.9, 20037.10, 20037.11,
20037.12, 20039.5, 20069, 20164, 20195, 20221, 20228, 20281.5, 20283,
20305, 20475, 20479, 20636.1, 20962, 20967, 21117, 21118, 21252,
21264, 21296, 21753, 22839, 22960.15, 75006, 75028.5, and 75507 of,
to add Sections 20831.2, 21310.5, and 75080.5 to, and to repeal
Sections 20041 and 20043 of, the Government Code, relating to public
employee benefits.
LEGISLATIVE COUNSEL'S DIGEST
AB 966, Committee on Public Employees, Retirement and Social
Security. Public employee benefits.
(1) The Public Employees' Retirement Law (PERL) creates the Public
Employees' Retirement System (PERS), which provides a defined
benefit to its members based on age at retirement, service credit,
and final compensation. PERL defines final compensation in this
regard for members of certain state bargaining units who became a
state member of the system on or after January 1, 2006, or January 1,
2007, with specified exceptions.
This bill would specify that the provisions described above apply
to members in state bargaining units 1, 2, 3, 4, 7, 10, 11, 12, 13,
14, 15, 16, 17, 18, 19, 20, and 21 who were employed by the state for
the first time on or after January 1, 2006, or January 1, 2007.
(2) PERL requires that the entire compensation of a local member
of PERS be used for the calculation of service rendered as an
employee of the contracting agency for specified contracts, including
contracts entered prior to July 1, 1952, that contained an election
in this regard. PERL provides a definition of final compensation for
a local member of PERS in connection with this requirement.
This bill would delete these provisions.
(3) PERL permits officers, warrant officers, and enlisted
personnel of the California National Guard to become members of PERS
upon filing a written election and making the necessary contributions
to the retirement fund. Existing law defines final compensation and
state service in this regard. Existing law prohibits a National Guard
member from receiving health care benefits under the Public
Employees' Medical and Hospital Care Act based on his or her service
with the California National Guard.
This bill would revise the definition of final compensation for a
National Guard member to specify that it is the highest annual
compensation that was earned during a consecutive 12-month period
while rendering service with the California National Guard. The bill
would also make technical changes, including revising the definition
of state service with regard to a National Guard member to specify
that it does not apply to qualification for health and dental
benefits.
(4) PERL prescribes the period of limitation within which an
action for adjustment of errors and omissions regarding payments into
or out of the retirement fund must be filed, and generally sets that
period at 3 years. The law provides that the period of limitation
commences with the discovery of the erroneous payment in cases in
which payment is erroneous because of death or remarriage, as
specified.
This bill would provide in cases in which payment is erroneous
because of death or remarriage, as described above, that the period
of limitation is 10 years.
(5) PERL permits the Board of Directors of PERS to select,
purchase, or acquire in the name of the system real property,
improved or unimproved, and to construct or remodel, and equip an
office building, including appropriate satellite structures, as
specified.
This bill would permit the Board of Directors of PERS to select,
purchase, or acquire real property and to construct or remodel, and
equip business recovery centers in California for use by the system
as an alternate facility, emergency operations center, or data center
that the board determines is appropriate for disaster preparedness.
(6) PERL requires every state agency, school employer, and the
chief administrative officer of a contracting agency to provide
immediate written notice to the Board of Directors of PERS of the
change in status of any member resulting from transfer, promotion,
leave of absence, resignation, reinstatement, dismissal, or death.
This bill would revise these provisions to provide that the notice
be filed in the manner prescribed by PERS.
(7) PERL requires the Board of Directors of PERS to annually
employ a certified public accountant, who is not in public
employment, to audit the financial statements of this system.
This bill would specify that these provisions do not affect the
ability of the State Auditor or the Department of Finance to conduct
other types of audits of the system as otherwise authorized.
(8) PERL provides that an employer that fails to enroll an
employee into PERS membership when he or she becomes eligible, or
within 90 days of that date, when the employer knows or should have
known of that eligibility, is required to pay all arrears costs for
member contributions and administrative costs of $500 per member.
PERL provides that a contribution adjustment is not required when a
member paid less than the correct amount of normal contributions, if
the board finds that the error was not known to the member and was
not the result of erroneous information provided by the employee to
the system or to his or her employer.
This bill would prohibit an employer from passing on to an
employee costs associated with the employer's failure to enroll an
employee into membership, as described above. The bill would also
require an employer that fails to withhold and submit an employee's
normal contributions within the applicable time limitations to notify
PERS and to take no action until authorized by PERS.
(9) PERL excludes an employee who serves on a less than full-time
basis from membership in PERS unless that person comes within
specified exceptions. PERL provides an exception for a person whose
employment is on a seasonal, limited-term, on-call, or other
irregular basis, and the person works more than 125 days, or 1,000
hours within the fiscal year, as specified.
This bill would instead provide that an employee whose appointment
or employment contract does not fix a term of full-time, continuous
employment in excess of 6 months is excluded from PERS membership
unless specified exceptions apply. Among those exceptions, the bill
would provide that a position is not excluded if it requires service
equivalent to an average of 20 hours a week for one year or longer.
The bill would also revise the exception described above, regarding
seasonal, limited-term, or on-call employment, to have it apply if
the person completes 125 days or 1,000 hours, as specified.
(10) PERL permits a contracting agency to amend its contract with
PERS without election among its employees, as specified, if the
contracting agency has fully discharged obligations imposed on it
with respect to the amendments, and if the amendment meets certain
requirements, including that the amendments apply uniformly to a
member in specified member classes.
This bill would include local safety officers and school safety
members within the member classes to which the amendments must apply
uniformly.
(11) PERL prohibits making a contract or contract amendment to
provide retirement benefits for some, but not all members of
specified membership classifications.
This bill would include local safety officers and school safety
members within these classifications.
(12) PERL defines compensation earnable with respect to a school
member of PERS, and in this regard, particularly defines payrate for
noncertificated members for whom the normal work schedule is less
than 40 hours a week. For the purpose of calculating retirement
benefits based on part-time service, PERL requires that compensation
earnable be taken as the compensation that would have been earnable
if the employment had been on a full-time basis and the member had
worked full time, except as specified.
This bill would redefine noncertificated members as classified
members for these purposes and make clarifying changes in the
definition of payrate in this context. The bill would specify that
compensation earnable must also conform to other specified standards
for members and school members.
(13) PERL requires that a state miscellaneous member or industrial
member, other than a university member, or a local member of PERS be
retired for service if he or she has elected to participate in
partial service retirement, as specified, has been credited with 20
years of state service, and has attained normal retirement age.
This bill would eliminate the requirement of 20 years service
credit for the purpose of these provisions.
(14) PERL requires that the effective date of a written
application for retirement submitted to the board more than 9 months
after the member's discontinuance of state service be determined by
the Board of Administration of PERS consistent with criteria
established for the correction of errors and omissions.
This bill would require that the effective date of a written
application for retirement submitted to the board more than 9 months
after the member's discontinuance of state service be the first day
of the month in which the member's application is received at an
office of the board or by an employee of PERS designated by the
board.
(15) PERL provides for the preservation of the purchasing power of
benefits through a system of adjustments in benefits based on
changes in living costs. The law also establishes provisions to
ensure the federal tax-exempt status of the system and to preserve
the deferred treatment of federal income tax on public employer
contributions to public employee pensions. Existing federal law
limits the amount a defined benefit plan may pay a participant
annually, and requires that this limitation be adjusted annually by
regulation to account for increases in the cost of living.
This bill would specify that the amount payable to a member,
including any cost-of-living adjustments, is prohibited from
exceeding the limit on annual benefit payments prescribed by federal
law, and would incorporate specified provisions of federal law by
reference. The bill would also make related changes.
(16) The Public Employees Medical and Hospital Care Act requires
that 30 days prior to, or 30 days after, retirement and during the
open enrollment period, a state employee enrolled in a flexible
benefit plan administered by the state be given the option to enroll
in a health benefit plan, as specified.
This bill would change the period described above to provide that
a state employee may be given the option to enroll 30 days prior to,
or 60 days following, retirement and during the open enrollment
period.
(17) The Judges' Retirement Law establishes the Judges' Retirement
System to provide retirement benefits for retired judges. Existing
law also establishes the Judges' Retirement System II Law for judges
elected or appointed on or after November 9, 1994. Both of these laws
provide for the payment of accrued allowances that remain unpaid at
the time of the death of a judge pursuant to a specified order.
This bill would require that a person who is retired under the
Judges' Retirement System who is again appointed or elected to serve
as a judge reinstate from retirement and become a member of the
system, as specified. The bill would also revise provisions governing
the payment of accrued, unpaid allowances in both judges' retirement
systems to provide for their payment to either the estate of the
deceased or the duly authorized representative of the estate when the
court receives a court order appointing an executor, administrator,
or personal representative. If the estate does not require probate,
the bill would also authorize the payment to be made to a successor
trustee, or to a beneficiary of the deceased named in a valid will,
as applicable.
(18) The bill would also make technical changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2610 of the Family Code is amended to read:
2610. (a) Except as provided in subdivision (b), the court shall
make whatever orders are necessary or appropriate to ensure that each
party receives the party's full community property share in any
retirement plan, whether public or private, including all survivor
and death benefits, including, but not limited to, any of the
following:
(1) Order the disposition of any retirement benefits payable upon
or after the death of either party in a manner consistent with
Section 2550.
(2) Order a party to elect a survivor benefit annuity or other
similar election for the benefit of the other party, as specified by
the court, in any case in which a retirement plan provides for such
an election, provided that no court shall order a retirement plan to
provide increased benefits determined on the basis of actuarial
value.
(3) Upon the agreement of the nonemployee spouse, order the
division of accumulated community property contributions and service
credit as provided in the following or similar enactments:
(A) Article 2 (commencing with Section 21290) of Chapter 9 of Part
3 of Division 5 of Title 2 of the Government Code.
(B) Chapter 12 (commencing with Section 22650) of Part 13 of the
Education Code.
(C) Article 8.4 (commencing with Section 31685) of Chapter 3 of
Part 3 of Division 4 of Title 3 of the Government Code.
(D) Article 2.5 (commencing with Section 75050) of Chapter 11 of
Title 8 of the Government Code.
(E) Chapter 15 (commencing with Section 27400) of Part 14 of the
Education Code.
(4) Order a retirement plan to make payments directly to a
nonmember party of his or her community property interest in
retirement benefits.
(b) A court shall not make any order that requires a retirement
plan to do either of the following:
(1) Make payments in any manner that will result in an increase in
the amount of benefits provided by the plan.
(2) Make the payment of benefits to any party at any time before
the member retires, except as provided in paragraph (3) of
subdivision (a), unless the plan so provides.
(c) This section shall not be applied retroactively to payments
made by a retirement plan to any person who retired or died prior to
January 1, 1987, or to payments made to any person who retired or
died prior to June 1, 1988, for plans subject to paragraph (3) of
subdivision (a).
SEC. 2. 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 the
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, or during any other period of 36
consecutive months during his or her state membership that the member
designates on the application for retirement.
(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.
SEC. 3. 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 the 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, or during any other period of 36 consecutive months during
his or her state membership that the member designates on the
application for retirement.
(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.
SEC. 4. 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
the 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, or during any other period
of 36 consecutive months during his or her state membership that the
member designates on the application for retirement.
(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.
SEC. 5. 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
the 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, or during any other period
of 36 consecutive months during his or her state membership that the
member designates on the application for retirement.
(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.
SEC. 6. 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 the
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, or during any other period of 36
consecutive months during his or her state membership that the member
designates on the application for retirement.
(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 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.
SEC. 7. 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 the
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, or during any other period of 36
consecutive months during his or her state membership that the member
designates on the application for retirement.
(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.
SEC. 8. 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 the
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, or during any other period of 36
consecutive months during his or her state membership that the member
designates on the application for retirement.
(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.
SEC. 9. Section 20039.5 of the Government Code is amended to read:
20039.5. Notwithstanding Article 5 (commencing with Section
20350) of Chapter 3, or any other provision of this part, "final
compensation" for the purposes of determining any pension or benefit
for service with the California National Guard with respect to a
National Guard member means the highest average annual compensation
that was earned during a consecutive 12-month period while rendering
service with the California National Guard. The final compensation of
a National Guard member under another retirement or pension system
shall not apply to the calculation of his or her retirement allowance
with respect to service with the California National Guard.
SEC. 10. Section 20041 of the Government Code is repealed.
SEC. 11. Section 20043 of the Government Code is repealed.
SEC. 12. Section 20069 of the Government Code is amended to read:
20069. (a) "State service" means service rendered as an employee
or officer (employed, appointed, or elected) of the state, the
California Institute for Regenerative Medicine and the officers and
employees of its governing body, the university, a school employer,
or a contracting agency, for compensation, and only while he or she
is receiving compensation from that employer therefor, except as
provided in Article 4 (commencing with Section 20990) of Chapter 11.
(b) "State service," solely for purposes of qualification for
benefits and retirement allowances under this system, shall also
include service rendered as an officer or employee of a county if the
salary for the service constitutes compensation earnable by a member
of this system under Section 20638.
(c) "State service," except for purposes of qualification for
health or dental benefits, shall also include compensated service
rendered by an officer, warrant officer, or a person of the enlisted
ranks of the California National Guard who has elected to become a
member pursuant to Section 20326 and who has not canceled his or her
membership pursuant to Section 20327.
SEC. 13. Section 20164 of the Government Code is amended to read:
20164. (a) The obligations of this system to its members continue
throughout their respective memberships, and the obligations of this
system to and in respect to retired members continue throughout the
lives of the respective retired members, and thereafter until all
obligations to their respective beneficiaries under optional
settlements have been discharged. The obligations of the state and
contracting agencies to this system in respect to members employed by
them, respectively, continue throughout the memberships of the
respective members, and the obligations of the state and contracting
agencies to this system in respect to retired members formerly
employed by them, respectively, continue until all of the obligations
of this system in respect to those retired members, respectively,
have been discharged. The obligations of any member to this system
continue throughout his or her membership, and thereafter until all
of the obligations of this system to or in respect to him or her have
been discharged.
(b) For the purposes of payments into or out of the retirement
fund for adjustment of errors or omissions, whether pursuant to
Section 20160, 20163, or 20532, or otherwise, the period of
limitation of actions shall be three years, and shall be applied as
follows:
(1) In cases where this system makes an erroneous payment to a
member or beneficiary, this system's right to collect shall expire
three years from the date of payment.
(2) In cases where this system owes money to a member or
beneficiary, the period of limitations shall not apply.
(c) Notwithstanding subdivision (b), in cases where payment is
erroneous because of the death of the retired member or beneficiary
or because of the remarriage of the beneficiary, the period of
limitation shall be 10 years and shall commence with the discovery of
the erroneous payment.
(d) Notwithstanding subdivision (b), where any payment has been
made as a result of fraudulent reports for compensation made, or
caused to be made, by a member for his or her own benefit, the period
of limitation shall be 10 years and that period shall commence
either from the date of payment or upon discovery of the fraudulent
reporting, whichever date is later.
(e) The board shall determine the applicability of the period of
limitations in any case, and its determination with respect to the
running of any period of limitation shall be conclusive and binding
for purposes of correcting the error or omission.
SEC. 14. Section 20195 of the Government Code is amended to read:
20195. (a) The board may select, purchase, or acquire in the name
of the system, the fee or any lesser interest in real property,
improved or unimproved, and may construct or remodel, and equip, an
office building, including appropriate satellite structures, in the
County of Sacramento, California, for its use and for the use of
other state retirement systems excepting the State Teachers'
Retirement System, other departments, boards, and agencies of the
state, or appropriate private commercial entities as space may be
available from time to time. The office building and satellite
structures shall conform to the Capital Master Plan if located within
an area subject to the plan.
(b) The board may select, purchase, or acquire in the name of the
system, the fee or any lesser interest in real property, improved or
unimproved, and may construct or remodel, and equip, business
recovery centers in California for use by the system as an alternate
facility, emergency operations center, or data center that the board
determines is appropriate for disaster preparedness.
(c) If the board acquires bare land, improvements shall be
constructed according to plans approved by the State Public Works
Board and Department of General Services.
(d) If the board acquires land with improvements thereon, the
improvements shall be remodeled or completed in accordance with plans
approved by the State Public Works Board and Department of General
Services.
(e) If condemnation of the property selected is necessary, the
board may elect to deposit the funds deemed necessary with the
Treasurer. The funds are appropriated for purchase of the selected
property subject to the Property Acquisition Law.
(f) Work on all projects shall be done under contract awarded to
the lowest responsible bidder pursuant to bidding procedures set
forth in Part 2 (commencing with Section 10100) of Division 2 of the
Public Contract Code.
SEC. 15. Section 20221 of the Government Code is amended to read:
20221. Each state agency, school employer, and the chief
administrative officer of a contracting agency or any other person
who its governing body may designate shall furnish all of the
following:
(a) Immediate notice to the board, in the manner prescribed by the
system, of the change in status of any member resulting from
transfer, promotion, leave of absence, resignation, reinstatement,
dismissal, or death.
(b) Any additional information concerning any member that the
board may require in the administration of this system.
(c) The services of its officer and departments that the board may
request in connection with claims by members against this system.
SEC. 16. Section 20228 of the Government Code is amended to read:
20228. The board shall annually employ a certified public
accountant, who is not in public employment, to audit the financial
statements of this system. The term for which the board may contract
to employ a certified public accountant shall not exceed five years.
The board shall not contract to employ the same certified public
accountant for two consecutive five-year terms. The costs of the
audit shall be paid from the income of the retirement fund. The audit
shall be made annually. The board shall file a copy of the audit
report with the Governor, the Secretary of the Senate, and the Chief
Clerk of the Assembly.
The board, for purposes of Section 7504, may file internally
prepared financial statements with the Controller within six months
of the end of the fiscal year, and shall file independently audited
financial statements as soon as they are available.
The annual audits of the financial statements of the system shall
not be duplicated by the Department of Finance or the State Auditor.
This section does not affect the ability of the State Auditor or
the Department of Finance to conduct other types of audits of the
system as otherwise authorized by statute. This system shall be
exempt from a pro rata general administrative charge for auditing.
SEC. 17. Section 20281.5 of the Government Code is amended to
read:
20281.5. (a) Notwithstanding Section 20281, a person who becomes
a state miscellaneous member or state industrial member of the system
on or after the effective date of this section because the person is
first employed by the state and qualifies for membership shall be
subject to the provisions of this section.
(b) Members subject to this section shall not accrue credit for
service in the system and shall not make employee contributions to
the system, including the contributions set forth in Section 20677.4,
for employment with the state until the first day of the first pay
period commencing 24 months after becoming a member of the system.
(c) Notwithstanding subdivision (a), this section shall not apply
to any of the following:
(1) Persons who are already members or annuitants of the system at
the time they are first employed by the state.
(2) Employees of the California State University, or the
legislative or judicial branch of state government.
(3) Members of the Judges' Retirement System, the Judges'
Retirement System II, the Legislators' Retirement System, the State
Teachers' Retirement System, or the University of California
Retirement Plan.
(4) Persons who are members of a reciprocal retirement system and
whose employment was subject to a reciprocal retirement system within
the six months prior to membership in this system.
(5) Persons whose service is not included in the federal system.
(6) Persons who are employed by the Department of the California
Highway Patrol as students at the department's training school
established pursuant to Section 2262 of the Vehicle Code.
(7) Persons who had ceased to be members pursuant to Section 20340
or 21075.
(8) Persons who are National Guard members pursuant to Section
20380.5.
(d) A separation of employment does not alter the 24-month period
described by subdivision (b). A member who separates from state
employment shall remain subject to this section if he or she returns
to state employment as a state miscellaneous or state industrial
member within that 24-month period.
(e) Any regulations adopted by the board to implement the
requirements of this section shall not be subject to the review and
approval of the Office of Administrative Law, pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3. The
regulations shall become effective immediately upon filing with the
Secretary of State.
SEC. 18. Section 20283 of the Government Code is amended to read:
20283. (a) Any employer that fails to enroll an employee into
membership when he or she becomes eligible, or within 90 days
thereof, when the employer knows or can reasonably be expected to
have known of that eligibility shall be required to pay all arrears
costs for member contributions and administrative costs of five
hundred dollars ($500) per member as a reimbursement to this system's
current year budget.
(b) An employer shall not pass on to an employee any costs
assessed pursuant to subdivision (a).
SEC. 19. Section 20305 of the Government Code is amended to read:
20305. (a) An employee whose appointment or employment contract
does not fix a term of full-time, continuous employment in excess of
six months is excluded from this system unless:
(1) He or she is a member at the time he or she renders that
service and is not otherwise excluded pursuant to this article or by
a provision of a contract.
(2) His or her position requires regular, part-time service for
one year or longer for at least an average of 20 hours a week, or
requires service that is equivalent to at least an average of 20
hours a week for one year or longer, unless he or she elects
membership pursuant to Section 20325.
(3) His or her employment is, in the opinion of the board, on a
seasonal, limited-term, on-call, emergency, intermittent, substitute,
or other irregular basis, and is compensated and meets one of the
following conditions:
(A) The appointment or employment contract does not fix a term of
full-time, continuous employment in excess of six months, but
full-time employment continues for longer than six months, in which
case membership shall be effective not later than the first day of
the first pay period of the seventh month of employment.
(B) The person completes 125 days, if employed on a per diem basis
or, if employed on other than a per diem basis, completes 1,000
hours within the fiscal year, in which case, membership shall be
effective not later than the first day of the first pay period of the
month following the month in which 125 days or 1,000 hours of
service were completed. For purposes of this subdivision, "day" means
each eight-hour period of employment worked by an employee paid on a
per diem basis so that membership is effective after he or she has
completed 1,000 hours of compensated service in a fiscal year.
(C) The person is employed by the Department of Forestry and Fire
Protection in one of the positions that provide state safety
membership pursuant to Section 20400 or state peace
officer/firefighter membership pursuant to Section 20392.
(4) He or she is a temporary faculty member of the California
State University and meets one of the following conditions:
(A) He or she works two consecutive semesters or three consecutive
quarters at half-time or more, and is not otherwise excluded
pursuant to this article, in which case, membership
shall be effective with the start of the
next consecutive semester or quarter if the appointment requires
service of half-time or more.
(B) He or she works two consecutive semesters or three consecutive
quarters at a minimum teaching load of six weighted units, and is
not otherwise excluded pursuant to this article, in which case
membership shall be effective at the start of the next consecutive
semester or quarter, but not earlier than July 1, 2004, if the
appointment requires service of six weighted units or more. This
subparagraph does not apply to faculty members unless provided for in
a memorandum of understanding agreed upon, on or after January 1,
2003, pursuant to Chapter 12 (commencing with Section 3560) of
Division 4 of Title 1, or authorized by the Trustees of the
California State University for employees excluded from collective
bargaining.
(5) He or she is a member of the Board of Prison Terms, the State
Personnel Board, or the State Air Resources Board and elects to
become a member pursuant to Section 20320.
(6) He or she is participating in partial service retirement,
pursuant to Article 1.7 (commencing with Section 19996.30) of Chapter
7 of Part 2.6.
(7) He or she is included by specific provision of the board
relating to the exclusion of less than full-time employees.
(b) This section shall supersede any contract provision excluding
persons in any temporary or seasonal employment basis and shall apply
only to persons entering employment on and after January 1, 1975.
Except as provided in Section 20502, no contract or contract
amendment entered into after January 1, 1981, shall contain any
provision excluding persons on an irregular employment basis.
SEC. 20. Section 20475 of the Government Code is amended to read:
20475. Notwithstanding Section 20474, a contracting agency may
amend its contract or previous amendments to its contract, without
election among its employees, to reduce benefits, to terminate
provisions that are available only by election of the agency to
become subject thereto, to provide different benefits or provisions
or to provide a combination of those changes with respect to service
performed after the effective date of the contract amendment made
pursuant to this section, if the contracting agency has fully
discharged all of the obligations imposed by Chapter 10 (commencing
with Section 3500) of Division 4 of Title 1 with respect to the
contract amendments, and if the amendment provides that:
(a) The contract amendments apply uniformly with respect to all
members within each of the following classifications: local
miscellaneous members, local police officers, local firefighters,
county peace officers, local sheriffs, local safety members, school
safety members, or all local safety members other than local police
officers, local firefighters, county peace officers, local sheriffs,
local safety members, or school safety members.
(b) A member shall be subject to the contract as amended only if,
after the effective date of the contract amendment, the member either
(1) receives service credit for the first time within a
classification, or (2) the member returns to service within a
classification following termination of membership as provided for in
subdivision (b) of Section 20340 unless the member has redeposited
or elects prior to 90 days after returning to service to redeposit
contributions pursuant to Section 20750, in which case the member
shall not be subject to the contract amendment.
Amendments to the contract and amendments of previous amendments
to the contract may be effected pursuant to this section only once
during any three-year period with respect to each of the
classifications.
SEC. 21. Section 20479 of the Government Code is amended to read:
20479. Notwithstanding any other provision of law, including, but
not limited to, Chapter 10 (commencing with Section 3500) of
Division 4 of Title 1, no contract or contract amendment shall be
made to provide retirement benefits for some, but not all members of
the following membership classifications: local miscellaneous
members, local police officers, local firefighters, county peace
officers, local sheriffs, local safety officers, or school safety
members.
No contract or contract amendments shall provide different
retirement benefits for a subgroup, including, but not limited to,
bargaining units or unrepresented groups, within those membership
classifications.
This section does not preclude changing membership classification
from one membership classification to another membership
classification or exclusion of groups of members by contract.
For purposes of this section, "benefit" shall not be limited to
the benefits set forth in Section 20020.
SEC. 22. Section 20636.1 of the Government Code is amended to
read:
20636.1. (a) Notwithstanding Section 20636, and Section 45102 of
the Education Code, "compensation earnable" by a school member means
the payrate and special compensation of the member, as defined by
subdivisions (b) and (c), and as limited by Section 21752.5.
(b) (1) "Payrate" means the normal monthly rate of pay or base pay
of the member paid in cash to similarly situated members of the same
group or class of employment for services rendered on a full-time
basis during normal working hours. For purposes of this part, for
classified members, full-time employment is 40 hours per week, and
payments for services rendered, not to exceed 40 hours per week,
shall be reported as compensation earnable for all months of the year
in which work is performed. "Payrate," for a member who is not in a
group or class, means the monthly rate of pay or base pay of the
member, paid in cash and pursuant to publicly available pay
schedules, for services rendered on a full-time basis during normal
working hours, subject to the limitations of paragraph (2) of
subdivision (e).
(A) For the purposes of this section, "classified members" shall
mean members who retain membership under this system while employed
with a school employer in positions not subject to coverage under the
Defined Benefit Program under the State Teacher's Retirement System.
(B) For the purposes of this section, and Sections 20962 and
20966, "certificated members" shall mean members who retain
membership under this system while employed in positions subject to
coverage under the Defined Benefit Program under the State Teacher's
Retirement System.
(2) The computation for any leave without pay of a member shall be
based on the compensation earnable by him or her at the beginning of
the absence.
(3) The computation for time prior to entering state service shall
be based on the compensation earnable by him or her in the position
first held by him or her in state service.
(c) (1) Special compensation of a school member includes any
payment received for special skills, knowledge, abilities, work
assignment, workdays or hours, or other work conditions.
(2) Special compensation shall be limited to that which is
received by a member pursuant to a labor policy or agreement or as
otherwise required by state or federal law, to similarly situated
members of a group or class of employment that is in addition to
payrate. If an individual is not part of a group or class, special
compensation shall be limited to that which the board determines is
received by similarly situated members in the closest related group
or class that is in addition to payrate, subject to the limitations
of paragraph (2) of subdivision (e).
(3) Special compensation shall be for services rendered during
normal working hours and, when reported to the board, the employer
shall identify the pay period in which the special compensation was
earned.
(4) Special compensation may include the full monetary value of
normal contributions paid to the board by the employer, on behalf of
the member and pursuant to Section 20691, provided that the employer'
s labor policy or agreement specifically provides for the inclusion
of the normal contribution payment in compensation earnable.
(5) The monetary value of any service or noncash advantage
furnished by the employer to the member, except as expressly and
specifically provided in this part, shall not be special compensation
unless regulations promulgated by the board specifically determine
that value to be "special compensation."
(6) The board shall promulgate regulations that delineate more
specifically and exclusively what constitutes "special compensation"
as used in this section. A uniform allowance, the monetary value of
employer-provided uniforms, holiday pay, and premium pay for hours
worked within the normally scheduled or regular working hours that
are in excess of the statutory maximum workweek or work period
applicable to the employee under Section 201 et seq. of Title 29 of
the United States Code shall be included as special compensation and
appropriately defined in those regulations.
(7) Special compensation does not include any of the following:
(A) Final settlement pay.
(B) Payments made for additional services rendered outside of
normal working hours, whether paid in lump sum or otherwise.
(C) Any other payments the board has not affirmatively determined
to be special compensation.
(d) Notwithstanding any other provision of law, payrate and
special compensation schedules, ordinances, or similar documents
shall be public records available for public scrutiny.
(e) (1) As used in this part, "group or class of employment" means
a number of employees considered together because they share
similarities in job duties, work location, collective bargaining
unit, or other logical work-related grouping. Under no circumstances
shall one employee be considered a group or class.
(2) Increases in compensation earnable granted to any employee who
is not in a group or class shall be limited during the final
compensation period applicable to the employees, as well as the two
years immediately preceding the final compensation period, to the
average increase in compensation earnable during the same period
reported by the employer for all employees who are in the same
membership classification, except as may otherwise be determined
pursuant to regulations adopted by the board that establish
reasonable standards for granting exceptions.
(f) As used in this part, "final settlement pay" means any pay or
cash conversions of employee benefits that are in excess of
compensation earnable, that are granted or awarded to a member in
connection with or in anticipation of a separation from employment.
The board shall promulgate regulations that delineate more
specifically what constitutes final settlement pay.
SEC. 23. Section 20831.2 is added to the Government Code, to read:
20831.2. Any employer that fails to withhold and submit an
employee's normal contributions required by this chapter within the
applicable time limitations shall notify the system and shall take no
action until authorized by the system.
SEC. 24. Section 20962 of the Government Code is amended to read:
20962. (a) One year of service credit shall be granted for
service rendered and compensated in a fiscal year in full-time
employment for any of the following:
(1) One academic year of service for persons employed on an
academic year basis by the University of California, the California
State University system, or school employees who are certificated
members, under terms and conditions prescribed by the board.
(2) Ten months of service for persons employed on a monthly basis.
(3) Two hundred fifteen days of service after June 30, 1951, and
250 days prior to July 1, 1951, for persons employed on a daily
basis.
(4) One thousand seven hundred twenty hours of service after June
30, 1951, and 2,000 hours prior to July 1, 1951, for persons employed
on an hourly basis.
(5) Nine months of service for state employees represented by
State Bargaining Unit 3 and subject to the 9-12 pay plan or leave
plan, provided a memorandum of understanding has been agreed to by
the state employer and the recognized employee organization to become
subject to this subdivision.
(b) A fractional year of credit shall be given for service
rendered in a fiscal year in full-time employment for less than the
time prescribed in this section.
SEC. 25. Section 20967 of the Government Code is amended to read:
20967. For the purpose of calculating retirement benefits based
on part-time service, except under Section 21381, compensation
earnable shall be taken as the compensation that would have been
earnable if the employment had been on a full-time basis and the
member had worked full time, and shall conform to the definitions
given in Section 20636.1 for school members and Section 20636 for all
other members.
SEC. 26. Section 21117 of the Government Code is amended to read:
21117. A state miscellaneous member or industrial member, other
than a university member, shall be partially retired for service upon
his or her written application to the board if he or she has elected
to participate in partial service retirement pursuant to Article 1.7
(commencing with Section 19996.30) of Chapter 7 of Part 2.6, and has
attained the applicable normal retirement age as prescribed by
regulations of the board.
SEC. 27. Section 21118 of the Government Code is amended to read:
21118. (a) A local member shall be partially retired for service
upon his or her written application to the board if he or she has
elected to participate in partial service retirement pursuant to
Sections 21110 through 21115, provided he or she has attained the
applicable normal retirement age as prescribed by regulations of the
board.
(b) This section shall not apply to a contracting agency or its
employees until the contracting agency elects to be subject to it by
amendment to its contract made in a manner prescribed for approval of
contracts or in the case of a new contract, by express provision of
the contract. The operative date of this section with respect to a
local member shall be the effective date of the amendment to his or
her employer's contract electing to be subject to this section.
SEC. 28. Section 21252 of the Government Code is amended to read:
21252. (a) A member's written application for retirement, if
submitted to the board within nine months after the date the member
discontinued his or her state service, and, in the case of retirement
for disability, if the member was physically or mentally
incapacitated to perform his or her duties from the date the member
discontinued state service to the time the written application for
retirement was submitted to the board, shall be deemed to have been
submitted on the last day for which salary was payable. The effective
date of a written application for retirement submitted to the board
more than nine months after the member's discontinuance of state
service shall be the first day of the month in which the member's
application is received at an office of the board or by an employee
of this system designated by the board.
(b) An application for retirement may only be submitted by or for
a member who is living on the date the application is actually
received by the system. If the member has been deemed incompetent to
act on his or her own behalf continuously from the last day for which
salary was payable, the effective date of retirement may not be
earlier than one year prior to the month in which an application
submitted by the guardian of the member's estate is received by the
system.
(c) Notwithstanding any other provision of law, a member who
separates from a retirement system that has established reciprocity
with this system with the intention of retiring concurrently under
both systems and who submits his or her application for retirement
for service to the board within nine months after that separation,
may have his or her application received and acted upon by this
system as if the application were submitted pursuant to this section.
SEC. 29. Section 21264 of the Government Code is amended to read:
21264. Retired members of this system, and beneficiaries who are
entitled to receive allowances or benefits under this part, may
authorize deductions to be made from their retirement allowance
payments or from the allowances and benefits, respectively, or from
either or both if both are being received, in accordance with
regulations or procedures established by the board for the payment of
group insurance premiums and other premiums for benefits or
protection provided for under Section 1151, including
employer-sponsored voluntary insurance programs, for credit union
payments or shares, or for the payment, with respect to any retired
member of this system, of dues or for any other services pursuant to
Article 6 (commencing with Section 1150) of Chapter 1 of Division 4
of Title 4. The board shall determine the additional cost involved in
making deductions under this section and the state agency, the
public agency, the association, or the unit thereof, or the credit
union shall pay the amount of the additional cost to the board for
deposit in the retirement fund.
SEC. 30. Section 21296 of the Government Code is amended to read:
21296. Retirement shall be effective and the retirement allowance
shall begin to accrue as of the date designated in the nonmember's
application as the effective date of retirement, or the day following
the date of court order dividing the community property of the
member and nonmember, if later. If the retirement application is not
received within nine months of the requested effective date, in no
event shall the retirement become effective or the retirement
allowance begin to accrue earlier than the first day of the month in
which the nonmember's application is received at an office of the
board or by an employee of this system designated by the board, or,
if the nonmember has been incompetent to act on his or her own behalf
continuously from the date of dissolution or legal separation, one
year prior to the month in which an application by the guardian of
his or her estate is so received. An application for retirement may
only be filed by or for a nonmember who is living on the date the
application is actually received by this system. The effective date
of a nonmember application for retirement received more than nine
months after the requested effective date shall be determined in
accordance with Section 20160.
SEC. 31. Section 21310.5 is added to the Government Code, to read:
21310.5. The cost-of-living adjustments under Section 415(d) of
the Internal Revenue Code to the limits described in Section 415(b)
of the Internal Revenue Code, as prescribed by the regulations of the
Department of the Treasury of the United States, are hereby
incorporated by reference and shall continue to apply after a member'
s severance from employment or annuity starting date. The amount
payable to a member in any limitation year, including any
cost-of-living adjustments provided under this article, shall not be
greater than the limit applicable under Section 415(b) of the
Internal Revenue Code at the annuity starting date, as increased in
subsequent years pursuant to Section 415(d) of the Internal Revenue
Code and the associated regulations.
SEC. 32. Section 21753 of the Government Code is amended to read:
21753. Notwithstanding any other provision of law, and except as
provided in Section 21310.5, the retirement allowance of a member
shall be increased to reflect cost-of-living adjustments to the
limits contained in Section 415 of Title 26 of the United States Code
as provided in Section 415(d) of that code, provided that the member'
s allowance determined without regard to Section 415 equals or
exceeds the applicable limit as indexed. Nothing in this section is
intended to, nor shall be construed to, entitle a retired member to a
cost-of-living adjustment to his or her allowance in excess of that
provided pursuant to Part 3 (commencing with Section 20000).
SEC. 33. Section 22839 of the Government Code is amended to read:
22839. Thirty days prior to, or 60 days following, retirement and
during the open enrollment period, a state employee enrolled in a
flexible benefit plan administered by the state shall be given the
option to enroll in a health benefit plan approved or maintained by
the board and receive the applicable employer contribution, if the
state employee would otherwise qualify as an annuitant.
SEC. 34. Section 22960.15 of the Government Code is amended to
read:
22960.15. "Eligible employee" means any person employed by the
state, whose compensation is paid out of funds directly controlled by
the state, and who is subject to coverage by the plan pursuant to
the provisions of Section 22960.
SEC. 35. Section 75006 of the Government Code is amended to read:
75006. (a) Any allowance payable to a retired judge or to a
surviving spouse or to an eligible surviving child which has accrued
and remained unpaid at the time of the judge's or the surviving
spouse's or surviving child's death, or any unclaimed warrant issued
prior to the date of death and returned to the system, shall be paid
pursuant to the following order:
(1) The survivor entitled to an allowance payable by this system.
(2) The beneficiary designated by the surviving spouse, eligible
surviving child, or retired judge if there is no eligible survivor.
(3) The estate of the deceased, if there is no one entitled to
payment under paragraph (1) or (2). The payment to the estate shall
be paid to either the estate of the deceased or the duly authorized
representative or representatives of the estate when this system
receives a court order appointing an executor, administrator, or
personal representative.
(4) If the estate does not require probate and the deceased has a
trust, the payment may, in the judgment of the board, be paid to the
successor trustee named in the trust.
(5) If the estate does not require probate and the deceased does
not have a trust, the payment may, in the judgment of the board, be
paid to the beneficiary or beneficiaries of the deceased named in a
valid will.
(b) If there is no qualifying beneficiary pursuant to paragraphs
(1) to (5), inclusive, of subdivision (a), the payment shall be paid
to the surviving next of kin of the deceased pursuant to the order of
distribution specified in Section 21493.
SEC. 36. Section 75028.5 of the Government Code is amended to
read:
75028.5. After a judge has withdrawn his or her accumulated
contributions upon discontinuance of his or her service, that service
shall not count in the event he or she later becomes a judge again,
until he or she pays into the Judges' Retirement Fund the amount of
accumulated contributions withdrawn by him or her, plus interest
thereon at the rate of interest then being required to be paid by
members of the Public Employees' Retirement System under Section
20750 from the date of withdrawal to the date of his or her payment.
SEC. 37. Section 75080.5 is added to the Government Code, to
read:
75080.5. (a) Except as described in subdivision (b), if a person
who is retired under this system is appointed or elected to serve as
a judge, he or she shall reinstate from retirement and again become a
member of the Judges' Retirement System pursuant to this chapter.
(b) This section shall not apply to a retired judge who is
assigned to serve in a court pursuant to Section 68543.5, and he or
she shall not earn service credit or be entitled to retirement
benefits under this part for that assignment.
SEC. 38. Section 75507 of the Government Code is amended to read:
75507. (a) Any allowance payable to a retired judge or to a
surviving spouse or to an eligible surviving child that has accrued
and remained unpaid at the time of the death of the judge or the
death of a surviving spouse or surviving child, or any unclaimed
warrant issued prior to the date of death and returned to the board,
shall be paid pursuant to the following order:
(1) The survivor entitled to an allowance payable by the board.
(2) The beneficiary designated by the surviving spouse, eligible
surviving child, or retired judge if there is no eligible survivor.
(3) The estate of the deceased, if there is no one entitled to
payment under paragraph (1) or (2). The payment to the estate shall
be paid to either the estate of the deceased or the duly authorized
representative or representatives of the estate when this system
receives a court order appointing an executor, administrator, or
personal representative.
(4) If the estate does not require probate and the deceased has a
trust, the payment may, in the judgment of the board, be paid to the
successor trustee named in the trust.
(5) If the estate does not require probate and the deceased does
not have a trust, the payment may, in the judgment of the board, be
paid to the beneficiary or beneficiaries of the deceased named in a
valid will.
(b) If there is no qualifying beneficiary pursuant to paragraphs
(1) to (5), inclusive, of subdivision (a), the payment shall be paid
to the surviving next of kin of the deceased pursuant to the order of
distribution specified in Section 21493.