BILL NUMBER: AB 1184 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 22, 2011
AMENDED IN SENATE JULY 1, 2011
AMENDED IN ASSEMBLY APRIL 25, 2011
INTRODUCED BY Assembly Member Gatto
(Coauthors: Assembly Members Blumenfield, Gordon, Jeffries, Smyth,
and Williams)
(Coauthor: Senator Liu)
FEBRUARY 18, 2011
An act to amend Section 21757 of, and to add Section 20791 to, the
Government Code, relating to public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1184, as amended, Gatto. Public employees' retirement benefits.
The Public Employees' Retirement Law (PERL) creates the Public
Employees' Retirement System (PERS), which provides a defined benefit
to its employees based on age at retirement, service credit, and
final or highest compensation paid to the employee. Existing law
authorizes any public agency to participate in, and make its
employees members of, PERS by contract. In the case of an employee
who has been employed by one or more contracting public agencies,
retirement benefits distributed to that employee are based on the
highest final compensation under any system, and each system makes a
separate retirement payment to the employee based upon the number of
years that the employee worked for each of those agencies.
This bill would state the intent of the Legislature that a
contracting agency not experience a significant increase in actuarial
liability due to increased compensation paid by another contracting
agency to a nonrepresented employee. The bill would require the Board
of Administration of PERS to develop guidelines in this regard and
to implement program changes to ensure that a contracting agency that
creates a significant increase in actuarial liability due to
increased compensation bears the associated liability. The bill would
require the system actuary to assess an increase in liability in
this regard to the employer that created it at the time the increase
is determined and to make adjustments to that employer's rates as
needed. The bill would apply these requirements to any significant
increase in actuarial liability due to increased compensation paid to
a nonrepresented employee regardless of when the increase in
compensation occurred. The bill would require the board to report to
the Legislature on the implementation of these provisions.
Existing law requires the Board of Administration of PERS to
establish a plan of replacement benefits for members and any
survivors or beneficiaries whose retirement benefits are limited by a
specified provision of federal law and that cannot be fully
maximized pursuant to PERL.
This bill would prohibit a plan of replacement benefits from being
administered by the board for a person who first becomes a member on
or after January 1, 2013.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 20791 is added to the
Government Code, to read:
20791. (a)
SECTION 1. It is the intent of the Legislature ,
by adding Section 20791 to the Government Code pursuant to Section 2
of this act, that a contracting agency shall not experience a
significant increase in actuarial liability due to increased
compensation paid by another contracting agency to a nonrepresented
employee subject to this part the Public
Employees' Retirement Law (Part 3 (commencing with Section 20000) of
Division 5 of Title 2 of the Government Code) .
(b)
SEC. 2. Section 20791 is added to the
Government Code , to read:
20791. (a) The board shall
develop requirements for defining a significant increase in actuarial
liability due to increased compensation paid to a nonrepresented
employee and to implement program changes to ensure that a
contracting agency that creates a significant increase in actuarial
liability due to increased compensation paid to a nonrepresented
employee that would also apply to another contracting agency or
agencies shall instead bear that liability.
(c)
(b) The system actuary, in accordance with the
requirements established pursuant to subdivision (b)
(a) , shall assess the increase in liability to
the employer that created it at the time the increase is determined
and shall make adjustments to that employer's rates as needed to
comply with the requirements.
(d)
(c) This section shall not apply to compensation paid
to an employee for service performed while covered by a memorandum of
understanding or to compensation paid for service performed while a
member of a recognized employee organization as that term is defined
in Section 3501.
(e)
(d) This section shall apply to any significant
increase in actuarial liability, due to increased compensation paid
to a nonrepresented employee, that is determined after January 1,
2012, regardless of when the increase in compensation occurred.
(f)
(e) (1) No later than June 30, 2012, in compliance with
Section 9795, the board shall report to the Legislature on the
implementation of this section. The report shall include an
explanation of the guidelines developed by the board pursuant to this
section and an assessment of the implementation and effectiveness of
the guidelines.
(2) The requirement for submitting a report imposed under this
subdivision is inoperative on June 30, 2016, pursuant to Section
10231.5.
SEC. 2. SEC. 3. Section 21757 of the
Government Code is amended to read:
21757. (a) If the retirement benefits of any member or his or her
survivors or beneficiaries payable pursuant to Part 3 (commencing
with Section 20000) would be limited by Section 415 of Title 26 of
the United States Code, the board shall adjust the payment of those
benefits, including, but not limited to, cost-of-living adjustments,
cost-of-living banks, temporary annuities, survivor continuance
benefits, or any combinations thereof, in order to maximize benefits
within the limits of Section 415.
(b) The board shall establish a plan of replacement benefits for
members and any survivors or beneficiaries whose retirement benefits
are limited by Section 415 and cannot be fully maximized pursuant to
Part 3 (commencing with Section 20000). The benefits provided by that
plan may consist of deferred compensation, cash payments, health
benefits, or supplemental disability benefits, as shall be determined
by the board to give effect to the purpose of this part. The factors
the board may take into consideration in making its determination
shall include, but not be limited to, the following: legal
constraints, administrative feasibility, and cost effectiveness. The
board may periodically modify the replacement benefits plan and may
add or eliminate any type of replacement benefits, as necessary, to
carry out the purpose of this part. The administrative costs of the
replacement benefits plan shall be satisfied out of funds credited to
the accounts of the participant members, and shall not be paid from
the retirement fund or the retirement trust fund of a participating
agency.
(c) The application of Section 415 to benefits provided under Part
3 (commencing with Section 20000) and this part shall not be taken
into account for purposes of determining employers' or employees'
contribution rates, until replacement benefits are implemented
pursuant to Section 21758.
(d) Under no circumstances shall the replacement benefit plan
result in increased benefit costs to an employer, member, or
annuitant.
(e) The board shall not administer a plan of replacement benefits
for a person who first becomes a member on or after January 1, 2013.