Public employees' retirement: contracting agencies: termination.

The Public Employees' Retirement Law creates the Public Employees' Retirement System (PERS) , which provides a defined benefit to its members based on age at retirement, service credit, and final compensation. That law authorizes any public agency to make its employees members of PERS by contracting with the Board of Administration of PERS. Existing law provides for the termination of a contract, including requiring the board to enter, upon request, into a prescribed agreement with the terminating agency relating to the calculation of final compensation for employees and related necessary adjustments in the employer's contribution. This bill would require the Board of Administration of PERS to allow a contracting agency to terminate its contract with the system in a manner that does not result in excessive costs or penalties to the contracting agency, allows the contracting agency to withdraw its net assets paid into the system less payments made to its members and their beneficiaries, and ensures that the contracting agency remains responsible for its unfunded liabilities so that those liabilities are not shifted onto other PERS members or employers. Before a contracting agency would be eligible to terminate its contract, the bill would require a contract to have been in effect for at least 5 years and meet other notice and approval requirements. The bill also would require the agreement between the contracting agency and the board to contain provisions to protect the interests of the system, and would require a contracting agency, before terminating its contract, to determine how termination would affect the health care benefits of its members and also to determine the federal tax ramifications associated with its decision. The bill would contain related legislative findings.