Existing law, the Public Employees Retirement Law (PERL), establishes the Public Employees Retirement System (PERS), which provides a defined benefit to members of the system, based on final compensation, credited service, and age at retirement, subject to certain variations, and is administered by its board of administration. PERL authorizes a public agency to contract to make its employees members of PERS and prescribes a process for this. PERL prohibits participating employers from failing or refusing to pay their contributions on time. PERL authorizes the board to charge interest on agency contributions due and unpaid.

This bill would require a contracting agency that fails to make its required employer contributions on time time, and that fails to cure the delinquency within 7 days, to notify members and retired members who are current or past employees of that agency, or their beneficiaries, of the agencys delinquency by mail within 30 days of the payment having become delinquent. The bill would require the board to provide contact information in a specified format to contracting agencies for the purpose of providing notice to members and retired members who are current or past employees of that agency, or to their beneficiaries, and would prescribe a process in this regard. The bill would immunize contracting agencies for failure to provide notice if the contact information is incomplete or incorrect.

Existing law, the Public Employees Retirement Law (PERL), establishes the Public Employees Retirement System (PERS), which provides a defined benefit to members of the system, based on final compensation, credited service, and age at retirement, subject to certain variations, and is administered by its board of administration. PERL authorizes a public agency to contract to make its employees members of PERS and prescribes a process for this. PERL prohibits participating employers from failing or refusing to pay their contributions on time. PERL authorizes the board to charge interest on agency contributions due and unpaid.

This bill would require a contracting agency that fails to make its required employer contributions on time to notify members and retired members who are current or past employees of that agency, or their beneficiaries, of the agencys delinquency by mail within 30 days of the payment having become delinquent. The bill would require the board to provide contact information in a specified format to contracting agencies for the purpose of providing notice to members and retired members who are current or past employees of that agency, or to their beneficiaries, and would prescribe a process in this regard. The bill would immunize contracting agencies for failure to provide notice if the contact information is incomplete or incorrect.

Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administered by the Teachers Retirement Board. Existing law defines a quorum of the board and requires concurrence of the majority of the board members present for a board action to be valid.

This bill would make a nonsubstantive change in provisions relating to the validity of Teachers Retirement Board actions, as described above.

SENATE THIRD READING

STR Bill Id:SB 1166

Author:(Pan)

As Amended Ver:June 18, 2018

Majority vote

SENATE VOTE: 27-10

SUMMARY: Requires a California Public Employees' Retirement System (CalPERS) contracting agency that fails to make the required employer's contribution within the applicable time limitations to notify members and retired members of the agency, or their beneficiaries, of the agency's delinquency, as specified, and among other provisions. Specifically, this bill:

1. Requires a CalPERS contracting agency that fails to make the required employer's contribution within the applicable time limitations to notify a member or retired member of the agency's delinquency by mail, to the member's latest address, within 30 days of the payment having become delinquent.
2. Provides that if a contracting agency of CalPERS fails to bring its account current on or before seven days of becoming delinquent, CalPERS is required to provide the contracting agency with contact information data within seven days of the contracting agency becoming delinquent for the purpose of providing members, retired members, and beneficiaries the required notice.
3. Requires the contracting agency to provide written notice to members and retired members, or to their beneficiaries, of the delinquency within 14 days of receipt of the contact information data from CalPERS and to describe the delinquency's cause, and how and when the delinquency is proposed to be satisfied.
4. Provides that the contracting agency is not liable for failure to provide the required notice if the contact information received for the respective member, retired member, or beneficiary is incomplete or incorrect.

EXISTING LAW:

1. Requires a CalPERS contracting agency to make the contribution for its employees in this system, as recommended by the actuary and approved by the board and certified by it to the contracting agency. The contribution may consist of fixed sums, percentages of compensation of contract members, or both, and shall be paid to this system as provided in the contract.
2. Prohibits any contracting agency from failing or refusing to pay the employers' contribution as required by the Public Employees Retirement Law (PERL) within applicable time limitations.
3. Requires, pursuant to regulations issued by CalPERS, member and employer contributions to be received in the CalPERS' Sacramento office on or before 15 calendar days following the last day of the pay period to which they refer.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill would result in "[m]inor costs for CalPERS to provide contact information data to contracting agencies as needed."

COMMENT: According to the author, "[This bill] allows active and retired CalPERS members to know more quickly when their contracting agency may be having financial difficulties that could affect the members' pension."

Under provisions of the PERL, local public agencies can contract for retirement benefits for their employees with CalPERS. These contracting agencies transmit to CalPERS required employer and employee contributions which are invested by CalPERS. The required contributions and returns on investment are used to fund the employees' pensions.

An agency may terminate its contract under specified terms designed to ensure that CalPERS has sufficient funds to continue to pay all accrued pension benefits to the employer's current and future retirees. However, if the agency fails to pay CalPERS required terminating agency payments, current and future retiree benefits could be cut or eliminated.

A late contribution may presage financial difficulties or pending decisions to terminate the agency's contract with CalPERS. This bill would provide active and retired members an early notice of any possible change in their employer's financial ability or intention to make their CalPERS contributions.

Analysis Prepared by: Michael Bolden / P.E.,R., & S.S. / (916) 319-3957 FN: 0003865

Date of Hearing: August 8, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 1166

Author:(Pan) – As Amended Ver:June 18, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires a California Public Employees’ Retirement System (CalPERS) contracting agency to notify members and retired members of the agency, or their beneficiaries, when the agency fails to make the required employer’s contributions within the applicable time limitations. CalPERS must provide a contracting agency that fails to bring its account current specified contact information data so the contracting agency can provide the required notice.

FISCAL EFFECT:

Minor costs for CalPERS to provide contact information data to contracting agencies as needed.

COMMENTS:

1. Background. Existing law requires a CalPERS contracting agency to make a contribution for its employees into the system, as recommended by the actuary and approved by the CalPERS board. The contribution may consist of fixed dollar amounts, percentages of compensation of contract members, or both, and the contract generally determines the payment process.
2. LA Works. Recent news articles have highlighted instances when agencies have failed to keep up with their contribution obligations. For example, a joint powers authority (JPA) titled “LA Works” was created by four cities in Los Angeles County to provide job training for jail inmates and other unemployed or underemployed persons. After Los Angeles County terminated its contract with LA Works in 2014, LA Works ceased submitting pension contributions. Because CalPERS was not able to collect money from either the JPA or the member agencies, CalPERS reduced the benefits of nearly 200 employees by 63%.
3. Purpose. According to the author, SB 1166 will help ensure that CalPERS members know more quickly when their contracting agency may be having financial difficulties that could affect their pensions.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: June 20, 2018

ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL SECURITY

Freddie Rodriguez, Chair

SBPCA Bill Id:SB 1166

Author:(Pan) – As Amended Ver:June 18, 2018

SENATE VOTE: 27-10

SUBJECT: Public Employees’ Retirement System: contracting agency: contributions

SUMMARY: Requires a California Public Employees’ Retirement System (CalPERS) contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify members and retired members of the agency, or their beneficiaries, of the agency’s delinquency, as specified, and among other provisions. Specifically, this bill:

1. Requires a CalPERS contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.
2. Provides that if a contracting agency of CalPERS fails to bring its account current on or before seven days of becoming delinquent, CalPERS is required to provide the contracting agency with contact information data, as specified, within seven days of the contracting agency becoming delinquent for the purpose of providing members, retired members, and beneficiaries the required notice, but
3. Requires the contracting agency to provide written notice to members and retired members, or to their beneficiaries, of the delinquency within 14 days of receipt of the contact information data from CalPERS and to describe the delinquency’s cause and how and when the delinquency is proposed to be satisfied.
4. Provides that the contracting agency is not be liable for failure to provide the required notice if the contact information received for the respective member, retired member, or beneficiary is incomplete or incorrect.

EXISTING LAW:

1. Requires a CalPERS contracting agency to make the contribution for its employees in this system, as recommended by the actuary and approved by the board and certified by it to the contracting agency. The contribution may consist of fixed sums, percentages of compensation of contract members, or both, and shall be paid to this system as provided in the contract.
2. Prohibits any contracting agency from failing or refusing to pay the employers’ contribution as required by the Public Employees Retirement Law (PERL) within applicable time limitations.
3. Requires, pursuant to regulations issued by CalPERS, member and employer contributions to be received in the CalPERS’ Sacramento office on or before 15 calendar days following the last day of the pay period to which they refer.

FISCAL EFFECT: Unknown. This bill was passed by the Senate Appropriations Committee pursuant to Senate Rule 28.8.

COMMENTS: According to the author, “Assembly Bill 1166 allows active and retired CalPERS members to know more quickly when their contracting agency may be having financial difficulties that could affect the members’ pension.”

1) Employer Termination, Financial Ability to Pay, and Possible Impact on Employee Pensions: Notification To Employees

Under provisions of the PERL, local public agencies can contract for retirement benefits for their employees with CalPERS. These contracting agencies transmit to CalPERS required employer and employee contributions which are invested by CalPERS. The required contributions and returns on investment are used to fund the employees’ pensions.

An agency may terminate its contract under specified terms designed to ensure that CalPERS has sufficient funds to continue to pay all accrued pension benefits to the employer’s current and future retirees. However, if the agency fails to pay CalPERS required terminating agency payments, current and future retiree benefits could be cut or eliminated.

A late contribution may presage financial difficulties or pending decisions to terminate the agency’s contract with CalPERS. This bill would provide active and retired members an early notice of any possible change in their employer’s financial ability or intention to make their CalPERS contributions.

2) Prior/Related Legislation

Senate Bill 1022 (Pan) would require contracting agencies to provide notification to their active and retired employees when they adopt a resolution to notify CalPERS that they intend to terminate their contract with the system, among other provisions.

REGISTERED SUPPORT / OPPOSITION:

Support

Association of California State Supervisors

California State Retirees

Peace Officers Research Association of California

Opposition

None on file.

Analysis Prepared by: Michael Bolden / P.E.,R., & S.S. / (916) 319-3957

 THIRD READING  

Bill No: SB 1166

Author:

:

Vote:

SENATE PUBLIC EMP. & RET. COMMITTEE: 3-1, 4/23/18

AYES: Pan, Leyva, Portantino

NOES: Moorlach

NO VOTE RECORDED: Morrell

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires a California Public Employees’ Retirement System (CalPERS) contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.

Senate Floor Amendments of 5/24/18 require CalPERS to send the delingquent agency the contact information for the agencies former employees who are CalPERS members and retirees so that the delinquent agency can proved the required notification.

ANALYSIS:

Existing law:

1. Requires a CalPERS contracting agency to make the contribution for its employees in this system, as recommended by the actuary and approved by the board and certified by it to the contracting agency. The contribution may consist of fixed sums, percentages of compensation of contract members, or both, and shall be paid to this system as provided in the contract.
2. Prohibits any contracting agency from failing or refusing to pay the employers’ contribution as required by the Public Employees Retirement Law (PERL) within applicable time limitations.
3. Requires, pursuant to regulations issued by CalPERS, member and employer contributions to be received in the CalPERS’ Sacramento office on or before 15 calendar days following the last day of the pay period to which they refer.

This bill:

1. Requires a CalPERS contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.
2. Requires CalPERS to provide the contracting agency with contact information data, as specified, for the purpose of providing members, retired members, and beneficiaries the required notice required.
3. Requires the contracting agency to provide written notice to members and retired members, or to their beneficiaries, of the delinquency within 14 days of receipt of the contact information data from CalPERS and to describe the delinquency’s cause and how and when the delinquency is proposed to be satisfied.
4. Provides that the contracting agency shall not be liable for failure to provide the required notice pursuant if the contact information received for the respective member, retired member, or beneficiary is incomplete or incorrect.

Background

Under provisions of the PERL, local public agencies can contract for retirement benefits for their employees with CalPERS. These contracting agencies transmit to CalPERS required employer and employee contributions which are invested by CalPERS. The required contributions and returns on investment are used to fund the employees’ pensions.

An agency may terminate its contract under specified terms designed to ensure that CalPERS has sufficient funds to continue to pay all accrued pension benefits to the employer’s current and future retirees. However, if the agency fails to pay CalPERS required terminating agency payments, current and future retiree benefits could be cut or eliminated.

A late contribution may presage financial difficulties or pending decisions to terminate the agency’s contract with CalPERS. This bill would provide active and retired members an early notice of any possible change in their employer’s financial ability or intention to make their CalPERS contributions.

Related/Prior Legislation

SB 1022 (Pan, 2018), among other things, requires contracting agencies to provide notification to their active and retired employees when they adopt a resolution to notify CalPERS that they intend to terminate their contract with CalPERS.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/24/18)

Association of California State Supervisors

California State Retirees

OPPOSITION: (Verified 5/24/18)

California Special Districts Association

California State Association of Counties

League of California Cities

ARGUMENTS IN SUPPORT: According to the author, “The bill allows active and retired CalPERS members to know more quickly when their contracting agency may be having financial difficulties that could affect the members’ pension.”

According to the California State Retirees, “SB 1166 will ensure that retirees and employees of the agency are aware of their employer’s failure to make a payment, and that their pensions may be at risk.”

ARGUMENTS IN OPPOSITION: According to California Special Districts Association, California State Association of Counties, and the League of California Cities “It simply makes more sense for CalPERS, as the administrators of the fund, to provide the notification since they will have the precise date of the delinquent payment as well as all of the necessary contact information.”

Prepared by:

5/25/18 13:32:26

**** END ****

 THIRD READING  

Bill No: SB 1166

Author:

: in Senate

Vote:

SENATE PUBLIC EMP. & RET. COMMITTEE: 3-1, 4/23/18

AYES: Pan, Leyva, Portantino

NOES: Moorlach

NO VOTE RECORDED: Morrell

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires a California Public Employees’ Retirement System (CalPERS) contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.

ANALYSIS:

Existing law:

1. Requires a CalPERS contracting agency to make the contribution for its employees in this system, as recommended by the actuary and approved by the board and certified by it to the contracting agency. The contribution may consist of fixed sums, percentages of compensation of contract members, or both, and shall be paid to this system as provided in the contract.
2. Prohibits any contracting agency from failing or refusing to pay the employers’ contribution as required by the Public Employees Retirement Law (PERL) within applicable time limitations.
3. Requires, pursuant to regulations issued by CalPERS, member and employer contributions to be received in the CalPERS’ Sacramento office on or before 15 calendar days following the last day of the pay period to which they refer.

This bill requires a CalPERS contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.

Background

Under provisions of the PERL, local public agencies can contract for retirement benefits for their employees with CalPERS. These contracting agencies transmit to CalPERS required employer and employee contributions which are invested by CalPERS. The required contributions and returns on investment are used to fund the employees’ pensions.

An agency may terminate its contract under specified terms designed to ensure that CalPERS has sufficient funds to continue to pay all accrued pension benefits to the employer’s current and future retirees. However, if the agency fails to pay CalPERS required terminating agency payments, current and future retiree benefits could be cut or eliminated.

A late contribution may presage financial difficulties or pending decisions to terminate the agency’s contract with CalPERS. This bill would provide active and retired members an early notice of any possible change in their employer’s financial ability or intention to make their CalPERS contributions.

Related/Prior Legislation

SB 1022 (Pan, 2018), among other things, requires contracting agencies to provide notification to their active and retired employees when they adopt a resolution to notify CalPERS that they intend to terminate their contract with CalPERS.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/9/18)

Association of California State Supervisors

California State Retirees

OPPOSITION: (Verified 5/9/18)

California Special Districts Association

California State Association of Counties

League of California Cities

ARGUMENTS IN SUPPORT: According to the author, “The bill allows active and retired CalPERS members to know more quickly when their contracting agency may be having financial difficulties that could affect the members’ pension.”

According to the California State Retirees, “SB 1166 will ensure that retirees and employees of the agency are aware of their employer’s failure to make a payment, and that their pensions may be at risk.”

ARGUMENTS IN OPPOSITION: According to California Special Districts Association, California State Association of Counties, and the League of California Cities “It simply makes more sense for CalPERS, as the administrators of the fund, to provide the notification since they will have the precise date of the delinquent payment as well as all of the necessary contact information.”

Prepared by:

5/9/18 16:24:47

**** END ****

SENATE COMMITTEE ON

PUBLIC EMPLOYMENT AND RETIREMENT

Dr. Richard Pan, Chair

2017 - 2018 Regular

Bill No: SB 1166 Hearing Date: 4/23/18

Subject: Public Employees’ Retirement System: contracting agency: contributions.

SOURCE: Author

DIGEST: This bill requires a California Public Employees’ Retirement System (CalPERS) contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.

ANALYSIS:

Existing law:

1. Requires a CalPERS contracting agency to make the contribution for its employees in this system, as recommended by the actuary and approved by the board and certified by it to the contracting agency. The contribution may consist of fixed sums, percentages of compensation of contract members, or both, and shall be paid to this system as provided in the contract.
2. Prohibits any contracting agency from failing or refusing to pay the employers’ contribution as required by the Public Employees Retirement Law (PERL) within applicable time limitations.
3. Pursuant to regulations issued by CalPERS, requires member and employer contributions to be received in the CalPERS’ Sacramento office on or before 15 calendar days following the last day of the pay period to which they refer.

This bill:

Requires a CalPERS contracting agency that fails to make the required employer’s contribution within the applicable time limitations to notify a member or retired member of the agency’s delinquency by mail, to the member’s latest address, within 30 days of the payment having become delinquent.

Background

Under provisions of the Public Employees’ Retirement Law (PERL), local public agencies can contract for retirement benefits for their employees with the California Public Employees’ Retirement System (CalPERS). These contracting agencies transmit to CalPERS required employer and employee contributions which are invested by CalPERS. The required contributions and returns on investment are used to fund the employees’ pensions.

An agency may terminate its contract under specified terms designed to ensure that CalPERS has sufficient funds to continue to pay all accrued pension benefits to the employer’s current and future retirees. However, if the agency fails to pay CalPERS required terminating agency payments, current and future retiree benefits could be cut or eliminated.

A late contribution may presage financial difficulties or pending decisions to terminate the agency’s contract with CalPERS. This bill would provide active and retired members an early notice of any possible change in their employer’s financial ability or intention to make their CalPERS contributions.

Related/Prior Legislation

SB 1022 (Pan, 2018), Currently in Senate Public Employment and Retirement Committee, would among other things require contracting agencies to provide notification to their active and retired employees when they adopt a resolution to notify CalPERS that they intend to terminate their contract with CalPERS.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California State Retirees

OPPOSITION:

None received.

ARGUMENTS IN SUPPORT: According to the author, “The bill allows active and retired CalPERS members to know more quickly when their contracting agency may be having financial difficulties that could affect the members’ pension.”

According to the California State Retirees, “SB 1166 will ensure that retirees and employees of the agency are aware of their employer’s failure to make a payment, and that their pensions may be at risk.”