Public employees' retirement: Deferred Retirement Option Program.

(1) Existing law authorizes the Department of Personnel Administration to provide for annual leave benefits with respect to each officer and employee excluded from the definition of state employee for the purposes of the Ralph C. Dills Act, which regulates state employer-employee relations. Existing law permits an employee who is excluded from the definition of state employee for the purposes of that act to make an irrevocable election, in lieu of earning sick leave and vacation benefits, to participate in the annual leave program. This bill would provide that an excluded or exempt state employee of State Bargaining Unit 5, 6, 7, or 8 who participates in the Deferred Retirement Option Program shall also participate in the annual leave program and accumulate 12 hours of annual leave credits per month. (2) The Public Employees' Retirement Law provides a comprehensive set of rights and benefits for various employees of the state and local agencies. That law also establishes the Public Employees' Retirement System and sets forth the provisions for its administration and the delivery of benefits to its members. Under that law, the retirement benefits of a retirement system member are based, in part, on the completed service credit and compensation received by that member. This bill would establish the Deferred Retirement Option Program as a voluntary program in the Public Employees' Retirement System for the excluded or exempt state employees of State Bargaining Unit 5, 6, 7, or 8, as specified. The program would provide eligible members, upon retirement, access to a lump sum in addition to a monthly retirement allowance, as specified. The program would also permit a specified beneficiary to receive any remaining balance upon the death of the member. The bill would require that the program result in a cost savings or be cost neutral to the state, direct the Board of Administration of the Public Employees' Retirement System to prepare a cost analysis of the program, as specified, and direct the board to implement the program on July 1, 2010, except as specified. The bill would also require the actuary to conduct a biennial valuation of the program, as specified, and authorize the Department of Personnel Administration to terminate the program if it is not cost neutral, subject to specified conditions. (3) The Public Employees' Retirement Law provides that the state's employer contribution from the General Fund to the Public Employees' Retirement Fund shall be made quarterly. That law defines the term "compensation" for purposes of determining required contributions and benefits. That law generally requires a miscellaneous member to pay 5%, and a specified patrol and state peace officer and firefighter member to pay 8% of compensation as his or her normal retirement contribution to the Public Employees' Retirement System, subject to specified exceptions. This bill would provide that an excluded or exempt state employee of State Bargaining Unit 5, 6, 7, or 8 who participates in the Deferred Retirement Option Program, shall not pay contributions to or receive service credit in the Public Employees' Retirement System. The bill would also provide that the state shall not pay employer contributions from the General Fund to the Public Employees' Retirement Fund relating to these excluded or exempt state employees.