CA Legislative Update – Wrapping up the 2014 Session

Categories: California Developments,Legislative Updates
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September 30th was the last day for the Governor to sign or veto bills passed by the Legislature. He had 1,074 to review, signed 930 and vetoed 143.The following list shows the key retirement-related bills that were signed into law and chaptered. The good news is that it has been a fairly slow year bill-wise, although, we continue to see a number of clean-up provisions for issues that were left outstanding in the PEPRA.

SB 1220 – (Torres) STRS Housekeeping

This is the STRS housekeeping bill that contained a number of different provisions. The bill:

  • Clarifies that months not included in the normal school year will not be considered a break-in service
  • Specifies that when a member is performing outgrowth activities, the compensation for those activities is earned at the lowest pay rate for other creditable service activities that the member performs for the same employer during the same year.
  • Clarifies the calculation for the annual adjustment to the compensation cap for members subject to PEPRA.
  • Defines “credited service” for 2% at 62 members so that even though no contributions are made on compensation earned above the limit, the member still earns appropriate service credit for the amount of time worked.
  • Clarifies that a member cannot currently be receiving a retirement benefit when he/she subsequently applies for a disability benefit.
  • Opens a window period in which a member who was married to a same-sex spouse and who elected a beneficiary option prior to June 26, 2013, can change his/her option or annuity election if the member was prevented from selecting the option of his/her choice due to the federal age restrictions previously  in place
  • Clarifies resulting changes to the member’s benefit and when and how a member may elect a new option beneficiary with regard to the option beneficiary pre-deceasing the member.
  • Specifies the requirements for naming a new beneficiary upon re-retirement, and the situations in which anew beneficiary election may become invalid for retired members who reinstate into active service.
  • Clarifies that with regard to dissolution of marriage, CalSTRS will remove or change the option election in accordance with the court order. Any additional changes cannot be made until one year from the termination effective date.

 AB 1163 – (Levine) PERS Board of Administration/Education

This bill requires the CalPERS Board to adopt a policy for providing education to its Board members, and creates a system of follow-up to ensure its members are adhering to the ever changing nature of PERS’ processes. It also requires that all Board members receive 24 hours of education within two years of assuming office, and for every subsequent two-year period of service thereafter.  

AB 1824 (Rendon) County Employees’ Retirement: Optional Settlements Revision

This bill allows retired employees with optional settlement plans to revise their designated beneficiary if they meet certain criteria:

  1. At retirement, the retiree was unmarried or had been married less than one year.
  2. The retiree had retired before the county adopted other specified optional retirement settlements.
  3. The retiree’s spouse is at least 55 years of age and is older than the originally designated beneficiary.
  4. The beneficiary has no community property interest in the benefit.

The key feature of this bill is that it is a county level mandate so it cannot take effect until it is approved and ratified at the individual county level.

AB 2472 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement Law of 1937: Federal Law Compliance

AB 2472 is a “housekeeping bill.” It stipulates a multitude of small changes (many which affect only a very small pool of employees) such as the following:

  • Provides that an individual is no longer a PERS member if he or she has less than 10 years of service credit and no accumulated contributions in the retirement fund at the time of retirement. (Current law has that number at 5 years)
  • States that if a correction to the amount of compensation received by a member needs to be made, the allowance shall be computed using the employer contribution rate that was effective at the time the compensation needing adjustment was earned.
  • Allow an election, revocation, or change of election to be made within 30 days after making the first payment. (Existing law states that these actions must be taken prior to the first payment).

 AB 2473 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement Law of 1937: Federal Law Compliance

AB 2473 is the housekeeping bill for the 37 Act system. It primarily deals with pensions, vested benefits, pension funds being allocated for medical benefits, and alterations to the County Employees Retirement Law of 1937 (CERL). This bill looks to alter portions of CERL to conform to federal law. It:

  • Ensures that a member’s accrued retirement benefits are nonforfeitable.
  • Prohibits a refund, distribution, transfer of contributions, or other funds to an employee or district upon the withdrawal of a district from a retirement system (unless in compliance with federal law).
  • Allows the board of retirement of a county to authorize payment of health benefits with county advance reserves.
  • Specifies that if a county creates a Post-Employment Benefits Trust Account as part of a retirement fund, that account will be used solely to provide health benefits for retirees, their spouses and dependents.
  • Alters county procedures for providing service credit to a retiree member for all or part of his or her military service, as outlined in federal law.

AB 2474 (Committee on Public Employees, Retirement and Social Security) County Employees Retirement: Benefits

This bill deals with provisions in the County 1937 system and aligning that body of law with the new PEPRA. The bill:

  • Clarifies the process for calculating final compensation for members who are on a leave of absence during the three year final compensation period or in the event there is not three years of earned pensionable compensation.
  • Conforms provisions of the 37 Act governing the loss of member benefits in the retirement system to the PEPRA requirements for benefit forfeiture in the event of a felony conviction.
  • Clarifies references to employee classifications by designating the position as “safety” or “nonsafety,” as contained in PEPRA, rather than referring to multiple safety employee classifications.
  • Adds the term “pensionable compensation,” as defined in PEPRA, to the 37 Act’s definition of final compensation and various death benefit provisions so that benefits may be calculated appropriately.
  • Clarifies that provisions allowing a governing board of a county or district to elect to pay members’ contributions during a period of military service are inapplicable to PEPRA.

AB 1783 – (Jones-Sawyer) Public employees’ retirement.

This bill continues to exempt certain public transit workers from the requirements of the Public Employees’ Pension Reform Act of 2013 (PEPRA) until January 1, 2016, or until a federal district court rules that the United States (U.S.) Secretary of Labor (or  his or her designee) erred in determining that application of PEPRA  precludes certification of federal transit funding, whichever is  sooner.

AB 2040 – (Garcia) Public Officials Compensation

This bill requires a local agency to compile, publish, and make publicly available on the Controller’s website, the annual compensation of its public officials. The information must be in a format that may be printed and downloaded, and it must include the annual compensation of a local agency’s elected officials, officers, and employees

AB 2295 – (Ridley-Thomas) Community Colleges –Academic employees.

Extends the length of time, from one year to three  years, for which California Community College (CCC) faculty are entitled to transfer a leave of absence for illness or injury upon his or her acceptance of election of employment to another    school district or CCC district.

AB 1522 (Gonzalez) – Healthy Workplaces, Healthy Families Act of 2014

AB 1522, a bill providing paid sick days to any employee that works for 30 or more days within a year was signed into law and is effective beginning July 1, 2015. The bill provides for a sick leave accrual at a minimum of one hour for every 30 hours worked, which can be used beginning on the 90th day of employment.  For education employers, the concern is that employees, such as substitute teachers that have not previously been covered, will earn paid sick time and increase costs on districts without any additional funding from the state to provide the leave.

ACR 95 – (Gomez) California Community Colleges, Part-time Faculty

This resolution, which does not have the force of law, expresses the intent of the Legislature that California Community College (CCC) districts not reduce the hours of part-time faculty or part-time classified employees for the purpose of avoiding implementation  of the federal Patient Protection and Affordable Care Act (Act).


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