Amended in Senate June 17, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 611

Introduced by Assembly Member Bonta

February 20, 2013

An act to amend Section begin delete 22950 of the Education Code, relating to state teachers’ retirement. end delete begin insert 22960.4 of, and to add Sections 22960.05 and 22960.51 to, the Government Code, relating to public employees’ retirement, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 611, as amended, Bonta. begin delete State teachers’ retirement. end delete begin insert State Peace Officers’ and Firefighters’ Defined Contribution Plan. end insert

begin insert

Existing law requires that contributions to the State Peace Officers’ and Firefighters’ Defined Contribution Plan cease, prohibits new members from participating in the plan, and requires that the plan be terminated, as prescribed. Existing law requires that moneys in the State Peace Officers’ and Firefighters’ Defined Contribution Plan Fund be distributed, as specified and in accordance with federal law, including requiring that amounts payable from the fund be rolled over to the Supplemental Contributions Program, if not elected otherwise.

end insert begin insert

This bill would require that the plan be terminated effective June 1, 2014, subject to obtaining appropriate approvals from the Internal Revenue Service. The bill would state that the bill is intended to constitute a governmental plan under federal tax law, as specified. Consistent with specified federal law, the bill would prohibit the corpus or income of the plan’s trust from being diverted to purposes other than the exclusive benefit of the members or their beneficiaries or there being a reversion of trust funds, except as federal law permits.

end insert begin insert

This bill would declare that it is to take effect immediately as an urgency statute.

end insert begin delete

The State Teachers’ Retirement System provides pension benefits based in part upon credited service. Existing law states that by accepting employment to perform creditable service, a member consents to make contributions for service and compensation. The Teachers’ Retirement Law requires the employer to contribute monthly to the system 8% of the creditable compensation upon which members’ contributions are based. The Teachers’ Retirement Law requires portions of the employer contributions to be deposited in the Teachers’ Retirement Fund and the Teachers’ Health Benefits Fund. Existing law authorizes a limited amount from the employer contributions to also be deposited into the Teachers’ Retirement Program Development Fund.

end delete begin delete

This bill would make that deposit into the Teachers’ Retirement Program Development Fund a required deposit.

end delete

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 22960.4 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

22960.4.  

(a) The Legislature finds and declares that an
agreement between the exclusive representative of state peace
officer and firefighter members in State Bargaining Unit 6 and the
employer has eliminated the employer contributions to the plan
provided in Section 22960.60.

(b) The following shall occur:

(1) All contributions to the plan shall cease.

(2) New participants shall be prohibited from participating in
the plan.

(3) The plan shall be terminated begin delete on the later of January end delete begin insert effective
June end insert 1, 2014, begin delete or upon end delete begin insert subject to end insert obtaining appropriate approvals
from the Internal Revenue Service, including a favorable
determination letter on plan termination from the Internal Revenue
Service.

(4) Subject to paragraph (3), all moneys in the fund shall be
distributed in accordance with this part and federal law. If not
elected otherwise, amounts that become payable from the fund
under this section shall be rolled over under Section 401(a)(31) of
Title 26 of the United States Code to the Supplemental
Contributions Program established in accordance with Section
22970.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 22960.05 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 22960.05. end insert   

The plan is intended to constitute a governmental
plan as defined by Section 414(d) of the Internal Revenue Code
(26 U.S.C. Sec. 414(d)) and, as such, the plan and all benefits
payable thereunder are intended to satisfy all requirements of
Section 401(a) of the Internal Revenue Code (26 U.S.C. Sec.
401(a)) that apply to the plan.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 22960.51 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 22960.51. end insert   

Consistent with the requirements of Section 401(a)(2)
of the Internal Revenue Code (26 U.S.C. Sec. 401(a)(2)), the corpus
or income of the plan’s trust shall not be diverted to, or used for,
purposes other than the exclusive benefit of the members or their
beneficiaries nor shall there be a reversion of trust funds except
as permitted by Revenue Ruling 91-4, 1991-1 C.B. 57, by the
Internal Revenue Service.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert

begin insert In order that the members of the State Peace Officers’ and
Firefighters’ Defined Contribution Plan may receive the
distributions that are due to them at the earliest possible time, it
is necessary that this act take effect immediately. end insert

begin delete

SECTION 1.  

Section 22950 of the Education Code is amended
to read:

22950.  

(a) Employers shall contribute monthly to the system
8 percent of the creditable compensation upon which members’
contributions under this part are based.

(b) From the contributions required under subdivision (a), there
shall be deposited in the Teachers’ Retirement Fund an amount,
determined by the board, that is not less than the amount,
determined in an actuarial valuation of the Defined Benefit
Program pursuant to Section 22311.5, necessary to finance the
liabilities associated with the benefits of the Defined Benefit
Program over the funding period adopted by the board, after taking
into account the contributions made pursuant to Sections 22901,
22951, and 22955.

(c) The amount of contributions required under subdivision (a)
that is not deposited in the Teachers’ Retirement Fund pursuant
to subdivision (b) shall be deposited directly into the Teachers’
Health Benefits Fund, as established in Section 25930, and shall
not be deposited into or transferred from the Teachers’ Retirement
Fund.

(d) (1) Notwithstanding subdivisions (b) and (c), there shall be
deposited into the Teachers’ Retirement Program Development
Fund, as established in Section 22307.5, from the contributions
required under subdivision (a), an amount determined by the board,
not to exceed the limit specified in paragraph (2).

(2) The balance of deposits into the Teachers’ Retirement
Program Development Fund, minus the subsequent transfer of
funds, with interest, into the Teachers’ Retirement Fund pursuant
to subdivision (e) of Section 22307.5, shall not exceed 0.01 percent
of the total of the creditable compensation of the fiscal year ending
in the immediately preceding calendar year upon which member’s
contributions to the Defined Benefit Program are based.

(3) The deposits described in this subdivision shall not be
deposited into, or transferred from, the Teachers’ Retirement Fund.

end delete