BILL ANALYSIS �
SB 503
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Date of Hearing: June 8, 2011
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Warren T. Furutani, Chair
SB 503 (Vargas) - As Introduced: February 17, 2011
SENATE VOTE : 40-0
SUBJECT : Judges' retirement.
SUMMARY : Allows a judge to make a one-time written election,
prior to retirement, to purchase service credit in the Judge's
Retirement System II (JRS II) for any number of whole years a
judge served as a full-time subordinate judicial officer (SJO).
EXISTING LAW :
1)Establishes the Judge's Retirement System I (JRS I) which
provides a set of rights and benefits to members of JRS I and
is administered by the California Public Employees' Retirement
System (CalPERS) Board of Administration (this system was
closed to new members as of November 1994).
2)Establishes the JRS II, administered by the CalPERS Board of
Administration, which provides a set of rights and benefits to
members of JRS II.
3)Permits a judge at any time prior to retirement to purchase
service credit in JRS II for all of the time served as a
full-time "subordinate judicial officer" if a written election
is filed with the CalPERS board.
4)Establishes specified reciprocity between JRS I and JRS II,
CalPERS, and counties operating retirement systems under the
County Employees' Retirement Law of 1937 ('37 Act).
5)Defines a "subordinate judicial officer" as an officer
appointed to perform subordinate judicial duties as authorized
by the State Constitution, including, but not limited to,
duties as a court commissioner, probate commissioner, child
support commissioner, referee, traffic referee, juvenile court
referee, and juvenile hearing officer.
FISCAL EFFECT : According to the Senate Appropriations
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Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to information provided to the Committee
by CalPERS, SJO's are not members of JRS I or JRS II, but are
either members of CalPERS, a 1937 Act County Retirement System,
or another county retirement system. There are currently 360
subordinate judicial officers. However, 98 of those positions,
upon vacancy, will be converted to judgeships and will no longer
be eligible to be filled by SJOs. Since January 1, 2002, only
one JRS II member has elected to purchase SJO time.
Currently, members of JRSII are allowed to purchase service
credit for their time as an SJO if all of the prior SJO service
is purchased and the member pays the actuarial present value of
the increase in benefits due to the additional service. In
addition, to meet the requirements of the federal Internal
Revenue Code, members cannot receive a benefit for their SJO
service from any other retirement system. This requires JRS II
members to seek a refund of contributions from the public
retirement system that provided the benefits associated with
their former SJO service to complete their service credit
purchase under JRS II. These systems include CalPERS and
various county retirement systems.
This bill would provide the less costly option of purchasing
partial service credit to increase their JRS II benefits,
however, because the Public Employees' Retirement Law prohibits
its members from receiving a partial refund, the JRS II member
would be required to refund all of their CalPERS-covered
service.
Under this proposal, as with existing law, the judge would be
required to pay the full employee and employer cost of any SJO
service purchased.
According to the author, "Judges choosing to purchase their
subordinate judicial officer (SJO) service time under JRS II are
required to pay for the JRS II service credit, at the actuarial
present value as determined by CalPERS. Current law requires
the former subordinate judicial officer to purchase all of the
time he or she served as an SJO, which can be prohibitively
expensive and more time than necessary to qualify for full
retirement under JRS II."
According to the sponsor, "SB 503 makes a technical change
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applicable to the circumstance where an SJO is appointed or
elected as a judge. Present law permits former judges with
prior SJO experience to purchase service credit in the judges'
retirement system for their SJO time. Unfortunately, the law
requires the purchase of the entire SJO time, rather than a
portion of that time. Not only is it likely that a judge would
not need to purchase the entirety of the SJO time, but the cost
could be prohibitively expensive. This bill provides judges
with an additional bit of flexibility in retirement planning,
without imposing any costs on the retirement systems or the
state."
The Department of Finance is opposed to the bill stating it is
inconsistent with the Administration's recent pension reform
proposals which seek to eliminate the purchase of additional
service credit, it provides enhanced flexibility to JRSII
members to enrich their retirement benefits, and, since the
actuarial present value may not cover the actual cost of the
additional years of service, it could result in a fiscal impact
to the state.
REGISTERED SUPPORT / OPPOSITION :
Support
California Judges Association (Sponsor)
Judicial Council of California (Co-sponsor)
Opposition
Department of Finance
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957