BILL ANALYSIS �
AB 782
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 782 (Brownley)
As Amended June 7, 2011
Majority vote
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|ASSEMBLY: |73-0 |(May 2, 2011) |SENATE: |33-0 |(July 1, 2011) |
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Original Committee Reference: P.E.,R.& S.S.
SUMMARY : Allows the California Public Employees' Retirement
System (CalPERS) to assess a reasonable charge on employers to
recover additional costs incurred when an audit of the employer
takes an excessive amount of hours to complete. Specifically,
this bill :
1)Requires CalPERS to notify an employer of the estimated time
to complete an audit prior to initiating the audit.
2)Requires CalPERS to identify the factors on which the estimate
is based.
3)Authorizes CalPERS to assess a reasonable charge on an
employer to recover its additional costs when the time
required to complete an audit exceed the estimate.
4)Specifies that an employer will not be assessed a charge for
delays during the course of the audit that are outside of the
agency's control.
The Senate amendments specify that an employer will not be
assessed a charge for delays during the course of the audit that
are outside of the agency's control.
EXISTING LAW :
1)Requires employers who contract with CalPERS to provide
necessary information, documents, and records for an audit to
determine the correctness of retirement benefits.
2)Authorizes CalPERS to recover the costs of administering the
system including its audit and other expenses through the
administrative fee included in the annual retirement
contribution rates. According to CalPERS, this method
AB 782
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distributes the cost associated with excessive audit time
among all employers, rather than charging those employers who
are directly responsible.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : The CalPERS Office of Audit Services (OFAS) initiated
audits of contracting employers in 1990 in response to reports
of alleged pension spiking. CalPERS audits contracting agencies
for retirement benefit compliance and health benefit coverage
for employers who contract with CalPERS for health benefits.
The audits take from three days to two weeks, depending on the
size of the agency.
According to CalPERS, OFAS has performed approximately 900
employer audits since 1990 and is expected to complete 54 audits
in fiscal year (FY) 2010-11 and 89 audits in FY 2011-12.
CalPERS states they occasionally experience difficulty with
employers who are uncooperative or have poor internal controls
and recordkeeping, resulting in excessive time and cost to
CalPERS staff. Some of these audits have required OFAS staff
time in excess of the hours that OFAS would have estimated for
completion of an audit of a comparable employer and resulted in
large unanticipated administrative costs to CalPERS.
This bill would provide a means for CalPERS to recover costs
from employers whose actions were the cause of the additional
administrative costs associated with an audit.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0001400