BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 2472
Norma Torres, Chair HEARING DATE: June 23, 2014
AB 2472 (Asm. PER&SS Comm) as amended 6/16/14
FISCAL: YES
CALIFORNIA PUBLIC EMPLOYEE'S RETIREMENT SYSTEM: ANNUAL
HOUSEKEEPING BILL
HISTORY :
Sponsor: California Public Employees' Retirement System
(CalPERS)
Other legislation: CalPERS Annual Housekeeping Bill
ASSEMBLY VOTES :
PER & SS 6-0 4/02/14
Appropriations 17-0 4/09/14
Assembly Floor 75-0 4/24/14
SUMMARY :
This bill would make changes to various sections of the
Government Code governing the California Public Employees'
Retirement System (CalPERS), including sections related to
the Judges' Retirement System (JRS), and the Judges'
Retirement System II (JRS II), to increase administrative
efficiency.
BACKGROUND AND ANALYSIS :
1) Elimination of Obsolete Reports Including: All Matters
Report, Pre/Post Retirement Late Interest Paid Report; and
School Health Pool Feasibility Report : (GC 20237, 21499,
22849)
Existing law :
a) requires that, in addition to any other reports that
it may be required to make by law, the Board shall
annually file a separate report with the Governor and
each house of the Legislature on all matters under the
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jurisdiction of the board.
b) requires CalPERS to annually provide a report to the
Legislature and to the Governor summarizing its
experience of paying interest, as specified, resulting
from making late payments of initial or of lump sum
payments of a preretirement or postretirement death
allowance or lump sum benefit of $10 or more.
c) directs CalPERS to produce a report on the
feasibility of developing a statewide pool to provide
health insurance to all school employees, as specified.
This bill eliminates the statutory language requiring the
above reports.
Comments : According to the sponsor, AB 1518 (Chapter 7,
Statutes of 2010), "eliminated hundreds of underutilized
and unnecessary annual reports to the Legislature produced
by state agencies, including the following two CalPERS
reports: Annual Report on All Matters Under Board
Jurisdiction and Pre/Post Retirement Death Allowance
Payments."
Also, "AB 256 (Chapter 708, Statutes of 2005) required
CalPERS to examine the feasibility and cost-effectiveness
of creating a single statewide health care pool for all
school employees. CalPERS submitted the study titled
Feasibility of Offering Healthcare Coverage to School
Employees as Outlined in AB 256 to the Legislature In March
2008."
2) CalPERS Membership Termination : (GC 20340, 21075)
Existing law
a) provides criteria for when membership in the
retirement system terminates, including upon retirement,
refund of contributions as specified, or termination of
service with a CalPERS employer if the member has less
than 5 years of service.
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b) provides that if a member is subject to Tier 2, his
or her membership terminates upon termination of service
with a CalPERS employer if the member has less than 10
years of service, as specified.
This bill clarifies that termination of membership for a
Tier 2 member occurs upon termination of service with a
CalPERS employer if the member has less than 10 years of
service and has no accumulated contributions in the
retirement fund at the time.
3) Applicable Employer Contribution Rate for Corrections to
Reported Compensation : (GC 20533)
Existing law provides that if a correction of the amount of
compensation reported by a contracting agency requires
additional employer contributions, the contributions must
be computed using the employer contribution rate in effect
at the time of the adjustment.
This bill : would require CalPERS to use the employer
contribution rate in effect for the period in which the
compensation was earned to more accurately reflect the
correct contributions owed and minimize inequity among
employers.
4) Retirement Age Eligibility for Members with Tier 1 and Tier
2 Service : (GC 21074)
Existing law provides that a state member with service
under both the Tier 1 and Tier 2 benefit formulas shall be
eligible to receive a retirement allowance at age 50.
This bill clarifies that state member eligibility for
retirement at age 50 for service under both Tier 1 and Tier
2 benefit formulas only applies to members who are not
subject to the Public Employees' Pension Reform Act of 2013
(PEPRA) benefit formulas.
5) Member Adjustments to Optional Beneficiary Allowance
Elections : (GC 21453, 75070, 75079)
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Existing law authorizes CalPERS, JRS, and JRSII members to
make an election to receive an actuarial reduced monthly
pension allowance in order to provide either a lump sum
amount equal to the member's remaining contributions or an
ongoing monthly allowance to the member's designated
beneficiary upon the member's death. Members may change
their option election, as specified, prior to receiving
their first pension allowance benefit payment.
This bill would allow members to make a change to their
option beneficiary election even if the member has already
received their first benefit provided that CalPERS receives
their request within 30 days of the issuance of their first
retirement benefit payment.
Comments : According to the sponsor, technological database
upgrades have increased CalPERS' capacity "to release
several types of member payments on a weekly basis, and
provides CalPERS additional flexibility to accept members'
changes to their option elections even after the first
payment is made. This will allow members who may not
realize the extent to which the option they elected,
combined with tax and other benefit deductions, has reduced
their monthly retirement allowance, to make a different
choice."
6) Applicable Interest on JRS II Redeposit After Community
Property Split : (GC 75552)
Existing law permits a JRS II member to redeposit funds to
the member's account in an amount equal to the amount that
was paid out by the retirement system to a non-member
divorced spouse as part of a community property settlement
order and specifies the interest to be paid by the member
upon the redeposit.
This bill updates the statutory reference specifying the
interest rate to be paid by the member along with the
redeposit.
7) JRS II Reinstatement Requirement for Retired Judges Serving
in Judicial Positions : (GC 75580.5)
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Existing law provides that if a person who is retired under
JRS is appointed or elected to serve as a judge, he or she
shall reinstate from retirement and again become a member
of JRS.
This bill clarifies that a retired judge under JRS II who
is subsequently elected or appointed to judicial office
must also reinstate from retirement and again become a
member of JRS II.
FISCAL :
The Assembly Appropriations Committee's analysis of the May
23, 2014, version of this bill states that there would be the
following:
1) No costs to CalPERS for implementation of the
changes; possible minor administrative savings to
CalPERS resulting from efficiency gains.
2) Unknown, but likely offsetting, costs and savings
to employers as a result of modifications to the
employer contribution adjustment rate.
COMMENTS :
1)Arguments in Support :
According to the sponsor, "AB 2472 supports CalPERS'
strategic goal to improve long-term pension and health
benefit sustainability, and also ensures the statutes
administered by CalPERS are as clear and unambiguous as
possible."
According to AFSCME, the bill "will maintain the security and
soundness of our public retirement systems."
2)SUPPORT :
California Public Employees' Retirement System (CalPERS),
Sponsor
American Federation of State, County and Municipal
Employees (AFSCME)
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3)OPPOSITION :
None.
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