SB 671: County employees’ retirement: retirement funds: transfers.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2017-07-17
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of the countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. Existing law also authorizes a district that is a member of the retirement system in the County of San Bernardino to make advance payments, as described above.
This bill would specify that the authority to make advance payments, described above, does not prevent the board of supervisors or governing body of a district from making advance payments for the estimated annual county or district contributions for an additional year or partial year if certain requirements are satisfied. The bill would revise the provisions currently applicable to a district that is a member of the retirement system in the County of San Bernardino to make them applicable to districts that are members of county retirement systems generally. The bill would make a variety of technical and conforming changes.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of the countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. Existing law also authorizes a district that is a member of the retirement system in the County of San Bernardino to make advance payments, as described above.
This bill would specify that the authority to make advance payments, described above, does not prevent the board of supervisors or governing body of a district from making advance payments for the estimated annual county or district contributions for an additional year or partial year if certain requirements are satisfied. The bill would revise the provisions currently applicable to a district that is a member of the retirement system in the County of San Bernardino to make them applicable to districts that are members of county retirement systems generally. The bill would make a variety of technical and conforming changes.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of the countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. Existing law also authorizes a district that is a member of the retirement system in the County of San Bernardino to make advance payments, as described above.
This bill would specify that the authority to make advance payments, described above, does not prevent the board of supervisors or governing body of a district from making advance payments for the estimated annual county or district contributions for an additional year or years partial year if certain requirements are satisfied. The bill would revise the provisions currently applicable to a district that is a member of the retirement system in the County of San Bernardino to make them applicable to districts that are members of county retirement systems generally. The bill would make a variety of technical and conforming changes.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. Existing law also authorizes a district that is a member of the retirement system in the County of San Bernardino to make advance payments, as described above.
This bill would specify that the authority to make advance payments, described above, does not prevent the board of supervisors or governing body of a district from making advance payments for the estimated annual county or district contributions for an additional year or years, for a county or a district, years if certain requirements are satisfied. The bill would revise the provisions currently applicable to a district that is a member of the retirement system in the County of San Bernardino to make them applicable to districts that are members of county retirement systems generally. The bill would make a variety of technical and conforming changes.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. If the advance is a partial payment, CERL requires remaining contributions to be transferred at the end of each month or pay period and that the overall amount be adjusted at the end of the fiscal year, as specified. Existing law also authorizes a district that is a member of the retirement system in the County of San Bernardino to make advance payments, as described above.
This bill would apply the transfer timing and amount adjustment requirement, currently applicable to transfers for contributions remaining after partial advance payments, to all transfers to the retirement fund. The bill would remove the requirement that advance payments of a countys estimated annual contribution be made within 30 days after the countys fiscal year begins. specify that the authority to make advance payments, described above, does not prevent the board of supervisors or governing body of a district from making advance payments for the estimated annual county contributions for an additional year or years, for a county or a district, if certain requirements are satisfied. The bill would revise the provisions currently applicable to a district that is a member of the retirement system in the County of San Bernardino to make them applicable to districts that are members of county retirement systems generally. The bill would make a variety of technical and conforming changes.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county and district employees. CERL requires a county auditor to certify to the retirement board, at the end of each month or pay period, the compensation earnable paid to members of the retirement association and to transfer the applicable percentage of countys annual contribution to the retirement fund, as specified. CERL authorizes the board of supervisors to authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution if the payment is made within 30 days after the countys fiscal year begins. If the advance is a partial payment, CERL requires remaining contributions to be transferred at the end of each month or pay period and that the overall amount be adjusted at the end of the fiscal year, as specified.
This bill would apply the transfer timing and amount adjustment requirement, currently applicable to transfers for contributions remaining after partial advance payments, to all transfers to the retirement fund. The bill would remove the requirement that advance payments of a countys estimated annual contribution be made within 30 days after the countys fiscal year begins.
(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all members of the retirement association and the auditor shall thereupon transfer from the appropriation to the retirement fund the applicable percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members and 8.85 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the countys fiscal year. This subdivision does not prevent the board of supervisors from authorizing the county auditor to make an advance payment for the estimated annual county contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the county fiscal year for which the advance payment is made. If the advance is only a partial payment of the countys estimated annual contribution, remaining transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. Transfers shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the districts fiscal year. This subdivision does not prevent the governing body of a district from authorizing the district to make an advance payment for the estimated annual district contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the district fiscal year for which the advance payment is made. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all members of the retirement association and the auditor shall thereupon transfer from the appropriation to the retirement fund the applicable percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members and 8.85 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the countys fiscal year. This subdivision does not prevent the board of supervisors from authorizing the county auditor to make an advance payment for the estimated annual county contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the county fiscal year for which the advance payment is made. If the advance is only a partial payment of the countys estimated annual contribution, remaining transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. Transfers shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the districts fiscal year. This subdivision does not prevent the governing body of a district from authorizing the district to make an advance payment for the estimated annual district contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the district fiscal year for which the advance payment is made. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all members of the retirement association and the auditor shall thereupon transfer from the appropriation to the retirement fund the applicable percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members and 8.85 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the countys fiscal year. This subdivision does not prevent the board of supervisors from authorizing the county auditor to make an advance payment for the estimated annual county contributions for an additional year or years partial year if the advance payment is made no later than 30 days after the commencement of the county fiscal year for which the advance payment is made. If the advance is only a partial payment of the countys estimated annual contribution, remaining transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. Transfers shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the districts fiscal year. This subdivision does not prevent the governing body of a district from authorizing the district to make an advance payment for the estimated annual district contributions for an additional year or years partial year if the advance payment is made no later than 30 days after the commencement of the district fiscal year for which the advance payment is made. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all members of the retirement association and the auditor shall thereupon transfer from the appropriation to the retirement fund the applicable percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members and 8.85 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the countys fiscal year. This subdivision does not prevent the board of supervisors from authorizing the county auditor to make an advance payment for the estimated annual county contributions for an additional year or years if the advance payment is made no later than 30 days after the commencement of the county fiscal year for which the advance payment is made. If the advance is only a partial payment of the countys estimated annual contribution, remaining transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. Transfers shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made no later than 30 days after the commencement of the districts fiscal year. This subdivision does not prevent the governing body of a district from authorizing the district to make an advance payment for the estimated annual county district contributions for an additional year or years if the advance payment is made no later than 30 days after the commencement of the district fiscal year for which the advance payment is made. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount required for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members of the retirement association covered by Article 7.5 (commencing with Section 31662) and the compensation earnable, as defined in Section 31461, paid to all other members of the retirement association, and the auditor shall thereupon transfer from the appropriation to the retirement fund the applicable percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all safety members covered by Article 7.5 (commencing with Section 31662) and 8.85 percent of the compensation earnable, as defined in Section 31461, and the pensionable compensation, as defined in Section 7522.34, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made within no later than 30 days after the commencement of the countys fiscal year. This subdivision does not prevent the board of supervisors from authorizing the county auditor to make an advance payment for the estimated annual county contributions for an additional year or years if the advance payment is made no later than 30 days after the commencement of the county fiscal year for which the advance payment is made. If the advance is only a partial payment of the countys estimated annual contribution, remaining transfers from the appropriation to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated required for the year is contributed. This amount Transfers shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)(1)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made within no later than 30 days after the commencement of the districts fiscal year. This subdivision does not prevent the governing body of a district from authorizing the district to make an advance payment for the estimated annual county contributions for an additional year or years if the advance payment is made no later than 30 days after the commencement of the district fiscal year for which the advance payment is made. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated required for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(2)This subdivision shall only apply to a district that is part of a retirement system in a county of the seventh class, as described in Section 28020.SECTION 1.Section 31582 of the Government Code is amended to read:31582.(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, paid to all safety members of the retirement association covered by Article 7.5 (commencing with Section 31662) and the compensation earnable, as defined in Section 31461, paid to all other members of the retirement association, and the auditor shall thereupon transfer from the appropriation to the retirement fund the percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, paid to all safety members covered by Article 7.5 (commencing with Section 31662) and 8.85 percent of the compensation earnable, as defined in Section 31461, paid to all other members.(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirementfund.(c)Transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.(d)(1)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made within 30 days after the commencement of the districts fiscal year. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.(2)This subdivision shall only apply to a district that is part of a retirement system in a county of the seventh class, as described in Section 28020.(a)The county auditor shall certify to the board at the end of each month or at the end of each pay period the compensation earnable, as defined in Section 31461, paid to all safety members of the retirement association covered by Article 7.5 (commencing with Section 31662) and the compensation earnable, as defined in Section 31461, paid to all other members of the retirement association, and the auditor shall thereupon transfer from the appropriation to the retirement fund the percentage of this amount determined pursuant to Sections 31453, 31453.5, and 31454. Until that determination, the amount of the transfer shall be 23.77 percent of the compensation earnable, as defined in Section 31461, paid to all safety members covered by Article 7.5 (commencing with Section 31662) and 8.85 percent of the compensation earnable, as defined in Section 31461, paid to all other members.
(b)The board of supervisors may authorize the county auditor to make an advance payment of all or part of the countys estimated annual contribution to the retirement fund, provided that the payment is made within 30 days after the commencement of the countys fiscal year. If the advance is only a partial payment of the countys estimated annual contribution, transfers from the appropriation fund.
(c)Transfers to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(c)(d)(1)A district subject to Section 31585 may also authorize an advance payment of all or part of the districts estimated annual contribution to the retirement fund, provided that the payment is made within 30 days after the commencement of the districts fiscal year. If the advance is only a partial payment of the districts estimated annual contribution, payments to the retirement fund shall be made at the end of each month or at the end of each pay period until the total amount estimated for the year is contributed. This amount shall be adjusted at the end of the fiscal year to reflect the actual contribution required for that year.
(2)This subdivision shall only apply to a district that is part of a retirement system in a county of the seventh class, as described in Section 28020.
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Date
|
Status
|
|---|---|
| Jul 17, 2017 | Chaptered by Secretary of State. Chapter 76, Statutes of 2017. |
| Jul 17, 2017 | Approved by the Governor. |
| Jul 5, 2017 | Enrolled and presented to the Governor at 12:30 p.m. |
| Jun 29, 2017 | In Senate. Ordered to engrossing and enrolling. |
| Jun 29, 2017 | Read third time. Passed. Ordered to the Senate. |
| Jun 22, 2017 | Read second time. Ordered to consent calendar. |
| Jun 21, 2017 | From committee: Do pass. Ordered to consent calendar. (Ayes 6. Noes 0.) (June 21). |
| Jun 1, 2017 | Referred to Com. on P.E., R., & S.S. |
| May 23, 2017 | In Assembly. Read first time. Held at Desk. |
| May 22, 2017 | Read third time. Passed. (Ayes 37. Noes 0. Page 1144.) Ordered to the Assembly. |
| May 10, 2017 | Read second time. Ordered to third reading. |
| May 9, 2017 | From committee: Do pass. (Ayes 5. Noes 0. Page 1006.) (May 8). |
| May 4, 2017 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on P.E. & R. |
| Apr 24, 2017 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on P.E. & R. |
| Mar 28, 2017 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on P.E. & R. |
| Mar 17, 2017 | Set for hearing May 8. |
| Mar 9, 2017 | Referred to Com. on P.E. & R. |
| Feb 21, 2017 | From printer. May be acted upon on or after March 23. |
| Feb 17, 2017 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
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Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 29, 2017 | SB 671 Moorlach Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Jun 21, 2017 | Do pass. To Consent Calendar. | Assembly Standing Committee on Public Employees, Retirement, and Social Security |
Passed |
|
| May 22, 2017 | Senate 3rd Reading SB671 Moorlach | Senate Floor |
Passed |
|
| May 8, 2017 | Do pass | Senate Standing Committee on Public Employment and Retirement |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
|
Position
|
Date
|
|---|---|---|
| LACERA | * Support | May 8, 2017 |
| Los Angeles County Employees Retirement Association | ** Support | Jun 20, 2017 |
| Sonoma County Board of Supervisors | ** Support | Jun 20, 2017 |
| sonoma county employees' retirement association | ** Support | Jun 20, 2017 |
| State Association Of County Retirement Systems | ** Support | Jun 20, 2017 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
THIRD READING
Bill No: SB 671
:
SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 5/8/17
AYES: Pan, Morrell, Leyva, Moorlach, Portantino
DIGEST:
This bill clarifies that 37 Act County retirement system employers that make their contribution payments to the county retirement system one year in advance may make an additional year or partial year prepayment of contributions in advance.
ANALYSIS:
Existing law:
- Establishes the County Employees Retirement Law of 1937 (37 Act) which governs 20 independent county retirement associations.
- Defines specified districts located wholly or partially within a county and provides that these districts are public employers whose employees are eligible to participate in their respective 37 Act county retirement associations.
- Requires the county board of supervisors to appropriate annually from the proper county funds the amount necessary to defray the entire expense of administration of the retirement system based upon budget estimates prepared by the treasurer and to appropriate an amount determined, as specified, for the county’s employer contributions to be made to the retirement system.
- Requires the county auditor to calculate the required employer contribution and to make monthly transfers to the retirement system, as specified.
- Permits the board of supervisors to authorize the county auditor to make an advance payment of all or part of the county’s estimated annual contribution to the retirement fund, provided that the payment is made within 30 days after the commencement of the county’s fiscal year.
- Allows districts within the County of San Bernardino to also to make an advance payment of all or part of the county’s estimated annual contribution to the retirement fund.
This bill:
- Clarifies that the board of supervisors or the governing body of a district is not prevented from authorizing the county auditor or the district, respectively, from making an advance payment for the estimated annual county contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the county or district fiscal year, respectively, for which the advance payment is made.
- Clarifies that districts in all 37 Act counties, not just San Bernardino County, may make advanced payments of their estimated annual 37 Act contributions.
- Includes technical, conforming clean up language to add references to “pensionable compensation” as defined by PEPRA to the requirement that the county auditor determine and transfer the estimated annual employer contribution based on the employees’ “compensation earnable” as defined under the classic formula.
Background
According to the author, “under current law, counties and districts in San Bernardino County are allowed to prepay up to a year of employer contributions to the retirement system. This allows the retirement system to deploy a larger sum of money into the pension system’s investments earlier than they would if those contributions were paid periodically over the year. The current law provides an opportunity for those funds to earn the plan’s assumed rate of return. It also allows the County to avoid interest charges on the contributions that are added on throughout the year.
However, there is some confusion over the deadline to pay those contributions, and counties are limited to only prepaying one year of employer contributions. Additionally, although many California districts currently prepay their contributions, the Government Code only specifically gives districts in San Bernardino County ability.”
This bill intends to clarify that where a county employer in the 37 Act system wishes to pre-pay retirement contributions it is not prevented by the statute from paying up to two years in advance and may do so in less than full year increments. Additionally, it may pay the second year or partial year payments up to 30 days after the start of the fiscal year for which they are earmarked. For example, an employer that wished to pay 18 months of employer contributions in advance for fiscal years 2018 and 2019, assuming the fiscal year starts on July 1, would need to submit 12 months of contributions for 2018 by July 31, 2018, to prepay but could submit the 6 months earmarked for 2019 contributions on August 1, 2018, or any day thereafter until July 31, 1019.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
Los Angeles County Employees Retirement Association
Sonoma County Board of Supervisors
Sonoma County Employees’ Retirement Association
State Association of County Retirement Systems
None received
ARGUMENTS IN SUPPORT: According to the State Association of County Retirement Systems (SACRS), SB 671 “would provide flexibility to employer agencies participating in (37 Act) retirement systems when considering advance payment of the required employer contributions, and if they do participate, to avoid interest charges that would be included in the contribution rates if paid over time.”
The Sonoma County Employees’ Retirement Association indicates that “prepaying employer contributions provides a benefit to the retirement system by providing a lump sum payment that can be deployed into the retirement system’s investment program.” Allowing the prepayment of employer contributions also provides flexibility to mature retirement systems to better manage cash flow necessary to pay benefits and administrative costs without having to liquidate invested assets. “This reduction in the need to liquidate assets also reduces investment costs resulting from the liquidation transactions.”
5/10/17 9:44:53
**** END ****
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2017 - 2018 Regular
Bill No: SB 671 Hearing Date: 5/8/17
Author: | Moorlach | ||
Version: | 5/4/17 As amended | ||
Urgency: | No | Fiscal: | No |
Consultant: | Glenn Miles | ||
Subject: County employees’ retirement: retirement funds: transfers
SOURCE: Author
DIGEST: This bill clarifies that 37 Act County retirement system employers that make their contribution payments to the county retirement system one year in advance may make an additional year or partial year prepayment of contributions in advance.
ANALYSIS:
Existing law:
- Establishes the County Employees Retirement Law of 1937 (37 Act) which governs 20 independent county retirement associations.
- Defines specified districts located wholly or partially within a county and provides that these districts are public employers whose employees are eligible to participate in their respective 37 Act county retirement associations.
- Requires the county board of supervisors to appropriate annually from the proper county funds the amount necessary to defray the entire expense of administration of the retirement system based upon budget estimates prepared by the treasurer and to appropriate an amount determined, as specified, for the county’s employer contributions to be made to the retirement system.
- Requires the county auditor to calculate the required employer contribution and to make monthly transfers to the retirement system, as specified.
- Permits the board of supervisors to authorize the county auditor to make an advance payment of all or part of the county’s estimated annual contribution to the retirement fund, provided that the payment is made within 30 days after the commencement of the county’s fiscal year.
- Allows districts within the County of San Bernardino to also to make an advance payment of all or part of the county’s estimated annual contribution to the retirement fund.
This bill:
- Clarifies that the board of supervisors or the governing body of a district is not prevented from authorizing the county auditor or the district, respectively, from making an advance payment for the estimated annual county contributions for an additional year or partial year if the advance payment is made no later than 30 days after the commencement of the county or district fiscal year, respectively, for which the advance payment is made.
- Clarifies that districts in all 37 Act counties, not just San Bernardino County, may make advanced payments of their estimated annual 37 Act contributions.
- Includes technical, conforming clean up language to add references to “pensionable compensation” as defined by PEPRA to the requirement that the county auditor determine and transfer the estimated annual employer contribution based on the employees’ “compensation earnable” as defined under the classic formula.
Background
According to the author, “under current law, counties and districts in San Bernardino County are allowed to prepay up to a year of employer contributions to the retirement system. This allows the retirement system to deploy a larger sum of money into the pension system’s investments earlier than they would if those contributions were paid periodically over the year. The current law provides an opportunity for those funds to earn the plan’s assumed rate of return. It also allows the County to avoid interest charges on the contributions that are added on throughout the year.
However, there is some confusion over the deadline to pay those contributions, and counties are limited to only prepaying one year of employer contributions. Additionally, although many California districts currently prepay their contributions, the Government Code only specifically gives districts in San Bernardino County ability.”
This bill intends to clarify that where a county employer in the 37 Act system wishes to pre-pay retirement contributions it is not prevented by the statute from paying up to two years in advance and may do so in less than full year increments. Additionally, it may pay the second year or partial year payments up to 30 days after the start of the fiscal year for which they are earmarked. For example, an employer that wished to pay 18 months of employer contributions in advance for fiscal years 2018 and 2019, assuming the fiscal year starts on July 1, would need to submit 12 months of contributions for 2018 by July 31, 2018, to prepay but could submit the 6 months earmarked for 2019 contributions on August 1, 2018, or any day thereafter until July 31, 1019.
Related/Prior Legislation
None known.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT:
Los Angeles County Employees Retirement Association
Sonoma County Employees’ Retirement Association
State Association of County Retirement Systems
OPPOSITION:
None received.
ARGUMENTS IN SUPPORT: According to the State Association of County Retirement Systems (SACRS), SB 671 “would provide flexibility to employer agencies participating in (37 Act) retirement systems when considering advance payment of the required employer contributions, and if they do participate, to avoid interest charges that would be included in the contribution rates if paid over time.”
The Sonoma County Employees’ Retirement Association indicates that “prepaying employer contributions provides a benefit to the retirement system by providing a lump sum payment that can be deployed into the retirement system’s investment program.” Allowing the prepayment of employer contributions also provides flexibility to mature retirement systems to better manage cash flow necessary to pay benefits and administrative costs without having to liquidate invested assets. “This reduction in the need to liquidate assets also reduces investment costs resulting from the liquidation transactions.”
Discussed in Hearing
2MIN
Senate Floor
9MIN
Senate Standing Committee on Public Employment and Retirement
Bill Author
Bill Co-Author(s):