Public employees' and judges' retirement: administration.

The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) , which provides defined benefits to members of the system based on final compensation, credited service, and age at retirement, subject to certain variations. PERL vests management and control of PERS in its board of administration. Existing law also creates the Judges' Retirement System (JRS) and the Judges' Retirement System II (JRS II) for the provision of benefits to judges, both of which the Board of Administration of the Public Employees' Retirement System administers. (1) Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies to agree to jointly exercise a common power. Existing law requires member agencies of an agency established pursuant to a joint powers agreement that participates in a public retirement system, prior to filing a notice of termination, or upon notice of potential termination by the Board of Administration of the Public Employees' Retirement System (board) , to account for the apportionment of the agency's retirement obligations and prescribes a process in this regard. Existing law applies these provisions to a member agency, or current and former member agency, that has an agreement in existence with the board on or before January 1, 2019. This bill would make technical changes to these provisions to specify that they apply to current and former member agencies of an agency that has an agreement with the board of administration in existence as of January 1, 2019. (2) PERL authorizes specified agencies, including school districts and community college districts, to contract for the provisions of benefits to their employees and defines "public agency" and related member classifications in this context. This bill would correct obsolete cross-references regarding the definition of school districts and community college districts that have established police departments and associated member classifications. (3) PERL authorizes the board to refrain from collecting specified underpayments if the amount to be collected is $250 or less. PERL authorizes the board to dispense with returning specified excess balances or payments of $50 or less. PERL also permits the system to dispense with specified recalculations and adjustments of benefit payments in connection with certain small amounts. PERL requires that these dollar amounts be adjusted in accordance with provisions that authorize state agencies generally to forego collection of taxes, licenses, fees, or money owed to the state for any reason if the amount to be collected is $500 or less. JRS and JRS II contain analogous provisions. This bill would correct an obsolete cross-reference to the above-described provisions relating to the general authorization granted to state agencies to forego collection, as described above. (4) PERL prescribes requirements for the computation of service credit in connection with the sick leave that are applicable to a state, school, and school safety member, if the effective date of retirement is within 4 months of separation from employment with the employer that granted the sick leave credit. This bill would remove school and school safety members from the application of the provisions described above. The bill would prescribe separate, similar requirements for school members, school safety members, and local members employed by a contracting agency that is a school district, county office of education, or community college district, to be effective on and after January 1, 2020. These provisions would require that employer certifications report only those days of unused sick leave that were accrued by the member during the normal course of the member's employment and would prohibit the inclusion of additional sick leave reported for the purpose of increasing the member's retirement benefit. The bill would provide that reports of unused days of sick leave are subject to audit and retirement benefits may be adjusted if improper reporting is found. The bill would specify the types of sick leave to which these provisions apply. The bill would provide that a contracting agency that is a school district, county office of education, or community college district, which elects to contract for unused sick leave conversion, as specified, or that participates in a risk pool, as specified, is subject to the provisions. (5) Existing law defines compensation for the purpose of calculating pension benefits. Existing law requires participating employers to report compensation in accordance with specified provisions and prohibits compensation from exceeding compensation earnable, which is defined separately for members and for school members of PERS. This bill would specify that compensation is prohibited from exceeding compensation earnable, as defined for a school member, when applicable, and that payrate, in connection with compensation earnable, is calculated with reference to publicly available pay schedules. (6) Existing law defines compensation earnable for members and for school members to be the payrate and special compensation of the member, as specified. Existing law limits increases in the compensation earnable granted to an employee who is not in a group or class during the final compensation period, and the 2 years prior, to the average increase in compensation earnable during the same period reported by the employer for all employees who are in the same membership classification. Existing law authorizes a contracting agency or school employer to pay all or a portion of the normal contributions required to be paid by a member or a school member. These payments are special compensation for purposes of calculating compensation earnable, subject to certain limitations, including the limitation described above on increases in compensation earnable during the final compensation period. This bill would require the limitation on increases in compensation earnable during the final compensation period to also apply to payments made by a school employer who pays all or a portion of a school member's normal contributions. (7) PERL permits a member of PERS to elect from among various optional settlements for the purpose of structuring the member's retirement allowance, which may result in a reduction of the allowance paid to the member in relation to the payments to the member's beneficiary after the member's death. Existing law permits a member who chose no optional settlement, or who chose other certain optional settlements, at retirement to elect to have the settlement modified to provide for payment of a lesser payment during the member's lifetime and a subsequent payment to the member's spouse beneficiary. This bill would revise the requirements for modification of optional settlements, as described above, to also require that the member marries after retirement. (8) Existing law establishes the California Employers' Pension Prefunding Trust Fund as a special trust fund for the purpose of allowing state and local public agency employers that provide a defined benefit pension plan to their employees to prefund their required pension contributions. Existing law prescribes certain definitions in this regard, including "required pension contributions," which means future required contributions to a defined benefit pension as defined in a specified Governmental Accounting Standards Board statement. This bill would define "required pension contributions," for purposes of the provisions described above, to instead refer to contributions required to fund the present value of plan benefits, calculated in compliance with Actuarial Standards of Practice of the American Academy of Actuaries. (9) Existing law creates the Public Employees' Medical and Hospital Care Act, which is administered by the Board of Administration of the Public Employees' Retirement System. Existing law authorizes the board to contract for health benefit plans for employees and annuitants, as defined. Existing law authorizes specified public entities to contract with the board for the provision of benefits. Existing law authorizes the board to administer self-funded or minimum funded premium plan and provides that every contract for administrative services with respect to a self-funded health benefit plan administered by the board be on the terms the board deems necessary. Existing law requires the board to report to the Legislature regarding the health benefits program, including a description of risk assessment and risk mitigation in connection with flex-funded plan offerings. Existing law creates the Public Employees' Health Care Fund to fund health benefit plans administered or approved by the board and continuously appropriates the fund to pay benefits and claims costs for self-funded or minimum premium health benefit plans and refunds to those who made direct premium payments. Existing law provides a statement of legislative purpose in connection with this fund. Existing law requires the Controller to suitably identify and remit the state's contribution for each employee or annuitant monthly to the Public Employees' Contingency Reserve Fund, together with amounts authorized by the employees and annuitants, as specified. Existing law requires contributions of employees and annuitants of contracting agencies, and those of contracting agency employers, to be suitably identified and remitted monthly to the Public Employees' Contingency Reserve Fund by warrant of the Controller upon claims filed by the board. Existing law defines specified peace officer health benefit trusts for the purpose of establishing their rights to recover medical costs paid to a participant for injuries, as specified. This bill would specifically authorize the Board of Administration of the Public Employees' Retirement System to administer partially self-funded health benefit plans and would generally extend the duties and authorizations described above to apply to partially self-funded plans. The bill would replace the term "flex-funded" with "partially self-funded" for purposes of the above-described reporting requirement. Because the bill would specifically provide for the deposit of additional premiums from partially self-funded health benefit plans into the Public Employees' Health Care Fund, the bill would make an appropriation. The bill would revise the statement of legislative purpose in connection with this fund. This bill would replace the term "rate" with the term "premium" in various provisions. The bill would recast provisions regarding the Controller's duties to suitably identify and remit contributions to the Public Employees' Contingency Reserve Fund to provide that the contributions at issue are monthly. The bill would revise the definition of a health benefits trust, as described above, to include partially self-funded and minimum premium plans.