VETO  

Bill No: SB 184

Author: Moorlach (R), et al.

Amended: 9/3/19

Vote: 27

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 3/27/19

AYES: Hill, Morrell, Jackson, Mitchell, Pan

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 38-0, 5/21/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

SENATE FLOOR: 40-0, 9/10/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 79-0, 9/9/19 - See last page for vote

SUBJECT: Judges’ Retirement System II: deferred retirement

SOURCE: Alliance of California Judges

DIGEST:

This bill authorizes a “deferred” retirement option under the Judges Retirement System II (JRS II) to permit a judge who has 20 years of judicial service or has attained the age of 60 with at least five years of judicial service to leave judicial office and receive a retirement allowance at a later date upon reaching the prescribed JRS II retirement age.

ANALYSIS:

Existing law:

1. Establishes the Judges’ Retirement System I (JRS I) which provides a set of rights and benefits to members of JRS I and is administered by the California Public Employees’ Retirement System (CalPERS) Board of Administration This system was closed to new members as of November 1994. (Government Code Section 75000 et seq.)
2. Establishes the JRS II which provides that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation. A judge eligible for a DB monthly allowance may also opt to receive an amount under the Monetary Credit Plan in lieu of the monthly allowance. (GC 75500 et seq.)
3. Authorizes the Monetary Credit Plan, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service. Under the plan, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary. (GC 75520, 75521)
4. Provides that a judge who leaves office before accruing at least five years of service shall receive only a lump sum equal to the amount of his or her contributions to JRS II. (GC 75521(a)).

This bill:

1. Permits a judge who is not eligible to retire under existing provisions of JRS II but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire without losing his or her right to receive a monthly allowance, as specified.
2. Requires an eligible judge who wishes to leave judicial office and receive a retirement allowance pursuant to this option to leave his or her monetary credits (including accrued interest) on deposit with CalPERS.
3. Requires the judge to make an election for this option within 30 days of separation. If an eligible judge fails or refuses to make an election within 30 days of separation, the judge shall receive the amount of his or her monetary credits, as specified.
4. Authorizes CalPERS to extend the 30-day election period in cases of illness or other hardship, and establishes that once the judge makes the election, it is final and irrevocable.
5. Authorizes a judge who leaves judicial office, as provided, but who is not yet receiving a monthly allowance, to continue health care benefits (including those for family members) upon assuming payment of all contributions, including employer contributions. The bill also requires the judge to pay an additional two percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources.
6. Treats, upon commencement of the judge's retirement allowance, the judge who elects this deferred allowance option as an "annuitant" and thus, allows the judge to receive applicable post-retirement health benefits in the same manner as any other JRS II annuitant.
7. Provides for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire, as provided, based on the Consumer Price Index for all Urban Consumers; allows for a calculation of the benefit pursuant to a division of community property; and, provides for optional settlements.
8. Provides for surviving spouse benefits if a judge dies before receiving a monthly retirement allowance, or after retirement, and establishes the process for, and payment of, monetary credits (including interest) to a designated beneficiary if the judge dies before receiving payment and there is no surviving spouse eligible to receive a monthly allowance.
9. Clarifies the surviving spouse’s monthly allowance or optional settlement shall begin the date the judge would have been eligible to receive the deferred retirement allowance.
10. Prohibits a judge who elects a deferred retirement provided by this bill from serving on judicial assignment until the judge begins receiving the monthly retirement allowance.
11. Establishes that, pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act of 2013, a judge who elects the option to retire as provided within this bill shall not be considered to have received an enhancement to his or her retirement benefit or retirement formula.
12. Clarifies that a judge who selects the deferred retirement option may move and enroll in another health plan as a qualifying event rather than wait until open enrollment.
13. Clarifies that a judge’s surviving spouse and dependents may continue their CalPERS health coverage as specified if the judge dies after the judge “retires” under the deferred retirement option but before the judge begins receiving the retirement allowance.
14. Makes several changes to neutralize gender pronouns.
15. Makes other technical conforming changes to JRS II provisions.

Related/Prior Legislation

SB 656 (Moorlach, 2018). Vetoed by the Governor.

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

According to the Assembly Appropriations Committee:

1. An increase in JRS II benefits worth $14.3 million in today’s dollars. This estimate reflects the present value of costs aggregated across fiscal years and actual costs will depend on how judges respond to the new program. Some judges who would take an early retirement under current law could now be eligible for a more generous benefit.
2. An increase in annual contributions over the next 20 years to fund the increased accrued liability. CalPERS indicates that annual contributions will increase by approximately $1.7 million in 2019-20 and will continue to increase each year thereafter, a portion of which will be paid by the General Fund.
3. Increased staffing costs for CalPERS of approximately $90,000 to assist with the processing of deferred payments and health benefits.

SUPPORT: (Verified 9/9/19)

Alliance of California Judges (source)

California Judges Association

OPPOSITION: (Verified 9/9/19)

None received

ARGUMENTS IN SUPPORT: According to the Alliance of California Judges, “Senate Bill 184 will not give any judge a dollar more, nor a day sooner, than if the judge had remained on the bench until full retirement age. Judges who defer retirement will be replaced by a more diverse group of younger, more energetic judges, who in most cases, will contribute almost twice as much each month to the plan. The deferred retirement option protects the fiscal integrity of JRS-II, while permitting those judges who face difficult personal circumstances in later years to leave office with a promise that they will receive at a later date the retirement they have worked so hard to achieve.”

According to the California Judges Association (CJA), “JRS II is the only state retirement plan, we believe in the nation, with harsh cliff-vesting rules for judges who do not serve until age 65 with 20 years of service. CJA believes SB 184 is an important step towards improving inequities in the retirement system.”

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 184 without my signature.

This bill would lower the minimum age at which a judge who is a member of the Judges' Retirement System (JRS) II can retire from judicial service and still maintain eligibility for full pension benefits. Specifically, SB 184 would allow a judge to leave the bench at age 60, retire, and defer receiving a monthly defined benefit allowance until the judge reaches age 65 (with at least 20 years of service) or age 70 (with at least five years of service) - as long as all other current requirements for receiving retirement benefits are met.

The costs of modifying the current rules on judicial retirement as proposed in SB 184 are steep and would in some cases result in a judge receiving more generous benefits than what the same judge can currently receive. These concerns are not new and have been raised in previous iterations of this bill. It is also difficult to overlook the possibility that current rules may in some cases incentivize judges who are in poor health to prolong their service rather than retire and care for themselves or others.

I encourage the Legislature to work collaboratively with my Administration as well as the California Public Employees' Retirement System on a more narrow solution to these issues.

ASSEMBLY FLOOR: 79-0, 9/9/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

Prepared by: Glenn Miles / L., P.E. & R. / (916) 651-1556

10/24/19 11:21:20

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 184

Author: Moorlach (R), et al.

Amended: 9/3/19

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 3/27/19

AYES: Hill, Morrell, Jackson, Mitchell, Pan

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 38-0, 5/21/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 79-0, 9/9/19 - See last page for vote

SUBJECT: Judges’ Retirement System II: deferred retirement

SOURCE: Alliance of California Judges

DIGEST:

This bill authorizes a “deferred” retirement option under the Judges Retirement System II (JRS II) to permit a judge who has 20 years of judicial service or has attained the age of 60 with at least five years of judicial service to leave judicial office and receive a retirement allowance at a later date upon reaching the prescribed JRS II retirement age.

Assembly Amendments

make minor changes to clarify the following: (1) a judge who selects the deferred retirement option may move and enroll in another health plan as a qualifying event rather than wait until open enrollment; and (2) a judge’s surviving spouse and dependents may continue their California Public Employees’ Retirement System (CalPERS) health coverage, as specified, if the judge dies after the judge “retires” under the deferred retirement option but before the judge begins receiving the retirement allowance.

ANALYSIS:

Existing law:

1. Establishes the Judges’ Retirement System I (JRS I) which provides a set of rights and benefits to members of JRS I and is administered by the CalPERS Board of Administration This system was closed to new members as of November 1994. (Government Code Section 75000 et seq.)
2. Establishes the JRS II which provides that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation. A judge eligible for a DB monthly allowance may also opt to receive an amount under the Monetary Credit Plan in lieu of the monthly allowance. (GC 75500 et seq.)
3. Authorizes the Monetary Credit Plan, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service. Under the plan, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary. (GC 75520, 75521)
4. Provides that a judge who leaves office before accruing at least five years of service shall receive only a lump sum equal to the amount of his or her contributions to JRS II. (GC 75521(a)).

This bill:

1. Permits a judge who is not eligible to retire under existing provisions of JRS II but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire without losing his or her right to receive a monthly allowance, as specified.
2. Requires an eligible judge who wishes to leave judicial office and receive a retirement allowance pursuant to this option to leave his or her monetary credits (including accrued interest) on deposit with CalPERS.
3. Requires the judge to make an election for this option within 30 days of separation. If an eligible judge fails or refuses to make an election within 30 days of separation, the judge shall receive the amount of his or her monetary credits, as specified.
4. Authorizes CalPERS to extend the 30-day election period in cases of illness or other hardship, and establishes that once the judge makes the election, it is final and irrevocable.
5. Authorizes a judge who leaves judicial office, as provided, but who is not yet receiving a monthly allowance, to continue health care benefits (including those for family members) upon assuming payment of all contributions, including employer contributions. The bill also requires the judge to pay an additional two percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources.
6. Treats, upon commencement of the judge's retirement allowance, the judge who elects this deferred allowance option as an "annuitant" and thus, allows the judge to receive applicable post-retirement health benefits in the same manner as any other JRS II annuitant.
7. Provides for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire, as provided, based on the Consumer Price Index for all Urban Consumers; allows for a calculation of the benefit pursuant to a division of community property; and, provides for optional settlements.
8. Provides for surviving spouse benefits if a judge dies before receiving a monthly retirement allowance, or after retirement, and establishes the process for, and payment of, monetary credits (including interest) to a designated beneficiary if the judge dies before receiving payment and there is no surviving spouse eligible to receive a monthly allowance.
9. Clarifies the surviving spouse’s monthly allowance or optional settlement shall begin the date the judge would have been eligible to receive the deferred retirement allowance.
10. Prohibits a judge who elects a deferred retirement provided by this bill from serving on judicial assignment until the judge begins receiving the monthly retirement allowance.
11. Establishes that, pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act of 2013, a judge who elects the option to retire as provided within this bill shall not be considered to have received an enhancement to his or her retirement benefit or retirement formula.
12. Clarifies that a judge who selects the deferred retirement option may move and enroll in another health plan as a qualifying event rather than wait until open enrollment.
13. Clarifies that a judge’s surviving spouse and dependents may continue their CalPERS health coverage as specified if the judge dies after the judge “retires” under the deferred retirement option but before the judge begins receiving the retirement allowance.
14. Makes several changes to neutralize gender pronouns.
15. Makes other technical conforming changes to JRS II provisions.

Related/Prior Legislation

SB 656 (Moorlach, 2018). Vetoed by the Governor.

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

According to the Assembly Appropriations Committee:

1. An increase in JRS II benefits worth $14.3 million in today’s dollars. This estimate reflects the present value of costs aggregated across fiscal years and actual costs will depend on how judges respond to the new program. Some judges who would take an early retirement under current law could now be eligible for a more generous benefit.
2. An increase in annual contributions over the next 20 years to fund the increased accrued liability. CalPERS indicates that annual contributions will increase by approximately $1.7 million in 2019-20 and will continue to increase each year thereafter, a portion of which will be paid by the General Fund.
3. Increased staffing costs for CalPERS of approximately $90,000 to assist with the processing of deferred payments and health benefits.

SUPPORT: (Verified 9/9/19)

Alliance of California Judges (source)

California Judges Association

OPPOSITION: (Verified 9/9/19)

None received

ARGUMENTS IN SUPPORT: According to the Alliance of California Judges, “Senate Bill 184 will not give any judge a dollar more, nor a day sooner, than if the judge had remained on the bench until full retirement age. Judges who defer retirement will be replaced by a more diverse group of younger, more energetic judges, who in most cases, will contribute almost twice as much each month to the plan. The deferred retirement option protects the fiscal integrity of JRS-II, while permitting those judges who face difficult personal circumstances in later years to leave office with a promise that they will receive at a later date the retirement they have worked so hard to achieve.”

According to the California Judge’s Association, “JRS II is the only state retirement plan, we believe in the nation, with harsh cliff-vesting rules for judges who do not serve until age 65 with 20 years of service. CJA believes SB 184 is an important step towards improving inequities in the retirement system.”

ASSEMBLY FLOOR: 79-0, 9/9/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

Prepared by: Glenn Miles / L., P.E. & R. / (916) 651-1556

9/9/19 22:58:27

**** END ****

SENATE THIRD READING

STR Bill Id:SB 184

Author:(Moorlach)

As Amended Ver:September 3, 2019

Majority vote

SUMMARY:

Establishes the Judicial Fairness Act of 2019 which authorizes a deferred retirement option under the Judges' Retirement System II (JRS II) administered by the California Public Employees' Retirement System (CalPERS), to permit a judge to leave judicial office and receive a retirement allowance at a later date upon reaching the requisite JRS II retirement age, among other provisions.

Major Provisions

1. Authorizes a judge who is not otherwise eligible to retire under existing provisions of the JRS II, but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to leave the judge's monetary credits on deposit in the JRS II, to retire, and after reaching retirement age, receive a monthly Defined Benefit (DB) retirement allowance.
2. Establishes that a judge who elects the deferred retirement allowance option must not be considered to have received an enhancement to their retirement benefit or formula pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act (PEPRA) of 2013.
3. Provides that a judge who elects to retire under these provisions must not be eligible for judicial assignment until commencement of the judge's retirement allowance.
4. Includes a judge who elects the deferred allowance option and the judge's surviving spouse within the definition of "annuitant" for purposes of postretirement health benefits.

COMMENTS:

The JRS II statutes provide that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II DB service retirement. Upon qualification, a judge is eligible to receive a monthly DB retirement allowance equal to 3.75% of final compensation, multiplied by the number of years of service, up to a maximum of 75% of final compensation. A judge with at least five years of service credit, but who does not meet the age requirements may only receive a lump sum under the Monetary Credit Plan (MCP).

The MCP is an alternative JRS II benefit for judges who leave office prior to fully qualifying for a DB retirement allowance, but after accruing five or more years of service. Under the MCP, a judge receives a lump sum equal to the amount of the judge's monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. A judge accrues monetary credits worth 18% of their monthly salary.

According to the Author:

"Currently, if a judge leaves office before reaching the mandatory minimum retirement age, the judge receives a repayment of contributions to the plan, plus interest, but the judge is denied a DB pension, even if the judge held office for more than 20 years.

'Senate Bill 184 would reform the JRS II, giving an option for judges to leave the bench earlier than planned should the need arise due to any number of factors, with the requirement that they defer their public pension until they are eligible to retire."

Arguments in Support:

The Alliance of California Judges expresses sentiments similar to those of the author, and adds that, "… this bill will not give any judge a dollar more, nor a day sooner if the judge had remained on the bench until the full retirement age. Judges who defer retirement will be replaced by a more diverse group of younger, more energetic judges, who, in most cases, will contribute almost twice as much each month to the [JRS II] plan."

According to the California Judges Association, "[this bill] is an important step towards improving inequities in the judicial system."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

The Assembly Appropriations Committee states that this bill would result in: a) an increase in JRS II benefits worth $14.3 million in today's dollars, reflected as the present value of costs aggregated across fiscal years and actual costs will depend on how judges respond to the new program. Some judges who would take an early retirement under current law could now be eligible for a more generous benefit; b) an increase in annual contributions over the next 20 years to fund the increased accrued liability. CalPERS indicates that annual contributions will increase by approximately $1.7 million in 2019-20 and will continue to increase each year thereafter, a portion of which will be paid by the General Fund; and, c) increased staffing costs for CalPERS (approximately $90,000) to assist with the processing of deferred payments and health benefits.

VOTES:

SENATE FLOOR: 38-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASM PUBLIC EMPLOYMENT AND RETIREMENT: 7-0-0

YES: Rodriguez, Voepel, Cervantes, Cooley, Cooper, Fong, O'Donnell

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: September 3, 2019

CONSULTANT: Michael Bolden / P.E. & R. / (916) 319-3957 FN: 0001778

Date of Hearing: August 14, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 184

Author:(Moorlach) – As Amended Ver:May 17, 2019

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

SUMMARY:

This bill establishes the Judicial Fairness Act of 2019 to allow a judge who is 60 years of age or older with at least five years of service, or a judge who has accrued 20 or more years of service (eligible judge), to make an election relating to service retirement. Specifically, this bill:

1. Authorizes an eligible judge to place their monetary credits, including accrued interest, as specified, on deposit with the retirement system and, upon reaching retirement age, to receive a monthly retirement allowance.
2. Authorize the board to charge a fee to a judge who elects a deferred retirement to cover the administrative costs to the system, including costs associated with continued health care coverage, not to exceed the reasonable amount of those costs.

FISCAL EFFECT:

1. An increase in Judges’ Retirement System II (JRS II) benefits worth $14.3 million in today’s dollars. This estimate reflects the present value of costs aggregated across fiscal years and actual costs will depend on how judges respond to the new program. Some judges who would take an early retirement under current law could now be eligible for a more generous benefit.
2. An increase in annual contributions over the next 20 years to fund the increased accrued liability. CalPERS indicates that annual contributions will increase by approximately $1.7 million in 2019-20 and will continue to increase each year thereafter, a portion of which will be paid by the General Fund.
3. Increased staffing costs for CalPERS of approximately $90,000 to assist with the processing of deferred payments and health benefits.

COMMENTS:

1. Background. The JRS II requires a judge be at least 65 years old with at least 20 years of service, or 70 years old with at least 5 years of service, to qualify for the defined benefit (DB) service retirement. When a judge is qualified, they receive a monthly allowance equal to 3.75% of final compensation, multiplied by the number of years of service, up to a maximum of 75% of final compensation.
2. Early retirement and monetary credits. A judge with five or more years of service credit who does not meet the age requirements may receive a lump sum under the Monetary Credit Plan. A judge accrues monetary credits worth 18% of their monthly salary, and under the Monetary Credit a judge receives those credits, plus interest, in one lump-sum payment. A judge who retires before accruing at least five years of service receives a lump-sum payment equal to their contributions into JRS II.
3. Disability. A judge may retire for disability due to a mental or physical disability that is likely to become permanent. A judge who elects a disability retirement receives a monthly retirement allowance worth the lesser of an allowance determined as if that judge had retired when they were retirement eligible or 65% of their final compensation. The chief justice and the Commission on Judicial Performance must approve the election of disability retirement, and a member judge with less than five years of service may retire for disability if the disability is a result of an injury or disease arising out of, and in the course of, judicial service.
4. Purpose. According to the Alliance of California Judges, the bill’s sponsor, SB 184 creates a deferred retirement option that permits judges who face difficult personal circumstances to leave office with a promise that they will receive, at a later date, the retirement they earned.
5. Recent legislation. SB 656 (Moorlach), of the 2017-18 Legislative Session, which was similar to this bill, was vetoed by Governor Brown, whose veto message stated:

This bill would amend and significantly expand--retroactively--the pension benefits of the Judges' Retirement System II, a program that has been in effect since 1994. The costs associated with this bill are large and unbudgeted. In addition, the proposed retroactive benefits are contrary to the explicit provisions of the PEPRA.

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

Date of Hearing: June 26, 2019

ASSEMBLY COMMITTEE ON PUBLIC EMPLOYMENT AND RETIREMENT

Freddie Rodriguez, Chair

SBPCA Bill Id:SB 184

Author:(Moorlach) – As Amended Ver:May 17, 2019

SENATE VOTE: 38-0

SUBJECT: Judges’ Retirement System II: deferred retirement

SUMMARY: Establishes the Judicial Fairness Act of 2019 which authorizes a deferred retirement option under the Judges’ Retirement System II (JRS II) administered by the California Public Employees’ Retirement System (CalPERS), to permit a judge to leave judicial office and receive a retirement allowance at a later date upon reaching the requisite JRS II retirement age, among other provisions. Specifically, this bill:

1. Modifies the definition of “annuitant” by including a judge who elects to retire under the deferred allowance option and is receiving a retirement allowance, and a surviving spouse receiving a monthly allowance in place of a judge who has retired under the deferred allowance option.
2. Authorizes a judge who elects to retire under the deferred allowance option, but who is not yet receiving a monthly allowance, to continue health care coverage (including those for family members) upon assuming payment of all contributions, including employer contributions, and requires the judge to pay an additional two percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources.

Upon commencement of retirement allowance, the judge becomes an “annuitant” and may continue his or her current health plan enrollment, enroll in a health plan within 60 days of the commencement of the retirement allowance or enroll during any future open enrollment period, similarly as provided to other JRS II members.

1. Permits a judge who is not eligible to retire under existing provisions of the JRS II, but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire subject to the following requirements:

1. After attaining 60 years of age and accruing five or more years of service, a judge may leave his or her monetary credits on deposit, including additional amounts credited to the judge’s account, as specified, and upon attaining 70 years of age to receive a retirement allowance, as specified.
2. After accruing 20 or more years of service, a judge may retire and leave his or her monetary credits on deposit, including additional amounts credited to his or her account, and upon attaining 65 years of age, receive a retirement allowance, as specified.
3. A judge who elects to retire under the deferred allowance option must have his or her monetary credits, as specified, on deposit with the JRS II and must accrue interest, as provided, through the last day of the month preceding distribution of either the first monthly allowance payment or monetary credits, as specified.
4. Provides that a judge who elects to retire under the deferral option must elect to do so within 30 days of separation. Once the election is made, it is final; however, failure or refusal to make the elections within that timeframe requires the judge to receive his or her monetary credits, as provided. CalPERS is authorized to extend the 30-day election period in cases of illness or other hardship.
5. Establishes that a monthly allowance or optional settlement payable to a surviving spouse of the judge who elected to retire under the deferred allowance option, and who dies before receiving a retirement allowance, must begin as of the date that the judge would have been eligible to receive the allowance and must continue until the death of the surviving spouse.
6. Authorizes CalPERS to charge a fee to cover its administrative costs, including costs associated with health care coverage that a judge elects, as specified, if a judge elects to retire under the deferred allowance option.
7. Establishes that a judge who elects to retire under the deferred allowance option must not be eligible for other judicial assignment, as specified, until commencement of the judge’s retirement allowance. 75522.5(g)
8. Provides for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire under the deferral allowance option, as provided, allows for a calculation of the benefit pursuant to a division of community property, as specified, and provides for optional settlements, also as specified.
9. Provides that a surviving spouse of a retired judge who was receiving an allowance under the deferral allowance option, must receive a monthly allowance equal to 50 percent of the deceased judge’s unmodified monthly retirement allowance, which must be adjusted for changes in the cost of living.
10. Provides that a surviving spouse of a judge who elected to retire and received an allowance under the deferred allowance option, but who dies before receiving the allowance, must receive a monthly allowance of 50 percent of the unmodified allowance that the deceased judge would have received had the judge been living and receiving the allowance, which must be adjusted for changes in the cost of living.
11. Establishes that a judge who elects the deferral allowance option must not be considered to have received an enhancement to his or her retirement benefit or retirement formula pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act (PEPRA) of 2013.
12. Makes minor and other technical and conforming changes to JRS II provisions for these purposes.

EXISTING LAW:

1. Establishes the Judges’ Retirement System I (JRS I), administered by CalPERS, which provides a set of rights and benefits to members of JRS I. This system was closed to new members as of November 1994.

1. Establishes the JRS II which provides that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation. A judge eligible for a DB monthly allowance may also opt to receive an amount under the Monetary Credit Plan (MCP) in lieu of the monthly allowance.
2. Authorizes the MCP, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service.

Under the MCP, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary.

1. Provides that a judge who leaves office before accruing at least five years of service shall receive only a lump sum equal to the amount of his or her contributions to JRS II.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill would result in the following:

1. Increased annual benefit payouts to retired judges beyond what would occur under current law. CalPERS estimates that the present value of these payments, for all future fiscal years aggregated, is $22 million (JRS II Fund). The cost in present value for any individual year would be considerably less.
2. Increased annual state contributions to JRS II to fund the increase in accrued liability that would occur as a result of the bill. CalPERS estimates this cost to be $2.1 million in 2019-20. Costs in the ensuing years would likely be in the low millions of dollars annually thereafter (General Fund).

COMMENTS: According to the author, “[c]currently, if a judge leaves office before reaching the mandatory minimum retirement age, the judge receives a repayment of contributions to the plan, plus interest, but the judge is denied a defined benefit pension, even if the judge held office for more than 20 years.

‘Senate Bill 184 would reform the JRS II, giving an option for judges to leave the bench earlier than planned, should the need arise due to any number of factors, with the requirement that they defer their public pension until they are eligible [to retire].”

1. Comments by Supporters

According to the Alliance of California Judges, “Senate Bill 184 will not give any judge a dollar more, nor a day sooner if the judge had remained on the bench until the full retirement age. Judges who defer retirement will be replaced by a more diverse group of younger, more energetic judges, who, in most cases, will contribute almost twice as much each month to the plan. The deferred retirement option protects the fiscal integrity of the JRS II, while permitting those judges who face difficult personal circumstances in their later years to leave office with a promise that they will receive at a later date, the retirement they have worked so hard to achieve.”

According to the California Judges Association, “[this bill] is an important step towards improving inequities in the judicial system.”

1. Prior or Related Legislation

Assembly Bill 979 (Reyes, 2019) proposes numerous changes to JRS II retirement including reducing the requisite retirement age and years of service of a JRS II judge to receive a lifetime allowance, and the normal share of cost of PEPRA judges, among other items. This bill is currently held in the Assembly Committee on Public Employment and Retirement.

Senate Bill 430 (Wieckowski, 2019) proposes to except judges from the PEPRA who were elected in 2012, but could not take office and begin employment until after the effective date of the PEPRA, among other provisions. This bill is currently pending in the Assembly Committee on Public Employment and Retirement.

Senate Bill 656 (Moorlach, 2018) was substantially similar to the current measure, but vetoed by Governor Brown who stated that:

“This bill would amend and significantly expand--retroactively--the pension benefits of the Judges' Retirement System II, a program that has been in effect since 1994. The costs associated with this bill are large and unbudgeted. In addition, the proposed retroactive benefits are contrary to the explicit provisions of the PEPRA.”

Chapter 528, Statutes of 2013 (Senate Bill 13, Beall) made technical corrections to the PEPRA to clarify the Legislature’s intent in its enactment and to assist affected employers and retirement systems in implementation of its provisions.

Assembly Bill 837 (Wieckowski, 2013) was substantially similar to Senate Bill 430 (Wieckowski, 2019); however, it was vetoed by Governor Brown who stated that:

“This measure creates an exemption to the (PEPRA). I am unwilling to begin chipping away at these reforms.”

Chapter 879, Statutes of 1994 (Senate Bill 64, McCorquodale) established the JRS II which provides a new, lower tier of benefits for judges first elected or appointed to judicial office on or after November 9, 1994, and repealed the statutory requirement that the actuarial unfunded liability of the JRS I be eliminated by 2002.

REGISTERED SUPPORT / OPPOSITION:

Support

Alliance of California Judges (Sponsor)

California Judges Association

Numerous California Judges and Justices of the Superior Courts and Courts of Appeal

Opposition

None on file

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

 THIRD READING  

Bill No: SB 184

Author: Moorlach (R), et al.

Amended: 5/17/19

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 3/27/19

AYES: Hill, Morrell, Jackson, Mitchell, Pan

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SUBJECT: Judges’ Retirement System II: deferred retirement

SOURCE: Alliance of California Judges

DIGEST:

This bill authorizes a “deferred” retirement option under the Judges Retirement System II (JRS II) to permit a judge who has 20 years of judicial service or has attained the age of 60 with at least five years of judicial service to leave judicial office and receive a retirement allowance at a later date upon reaching the prescribed JRS II retirement age.

ANALYSIS:

Existing law:

1. Establishes the Judges’ Retirement System I (JRS I) which provides a set of rights and benefits to members of JRS I and is administered by the California Public Employees’ Retirement System (CalPERS) Board of Administration This system was closed to new members as of November 1994. (Government Code Section 75000 et seq.)
2. Establishes the JRS II which provides that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation. A judge eligible for a DB monthly allowance may also opt to receive an amount under the Monetary Credit Plan in lieu of the monthly allowance. (GC 75500 et seq.)
3. Authorizes the Monetary Credit Plan, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service. Under the plan, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary. (GC 75520, 75521)
4. Provides that a judge who leaves office before accruing at least five years of service shall receive only a lump sum equal to the amount of his or her contributions to JRS II. (GC 75521(a)).

This bill:

1. Permits a judge who is not eligible to retire under existing provisions of JRS II but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire without losing his or her right to receive a monthly allowance, as specified.
2. Requires an eligible judge who wishes to leave judicial office and receive a retirement allowance pursuant to this option to leave his or her monetary credits (including accrued interest) on deposit with CalPERS.
3. Requires the judge to make an election for this option within 30 days of separation. If an eligible judge fails or refuses to make an election within 30 days of separation, the judge shall receive the amount of his or her monetary credits, as specified.
4. Authorizes CalPERS to extend the 30-day election period in cases of illness or other hardship, and establishes that once the judge makes the election, it is final and irrevocable.
5. Authorizes a judge who leaves judicial office, as provided, but who is not yet receiving a monthly allowance, to continue health care benefits (including those for family members) upon assuming payment of all contributions, including employer contributions. The bill also requires the judge to pay an additional two percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources.
6. Treats, upon commencement of the judge's retirement allowance, the judge who elects this deferred allowance option as an "annuitant" and thus, allows the judge to receive applicable post-retirement health benefits in the same manner as any other JRS II annuitant.
7. Provides for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire, as provided, based on the Consumer Price Index for all Urban Consumers; allows for a calculation of the benefit pursuant to a division of community property; and, provides for optional settlements.
8. Provides for surviving spouse benefits if a judge dies before receiving a monthly retirement allowance, or after retirement, and establishes the process for, and payment of, monetary credits (including interest) to a designated beneficiary if the judge dies before receiving payment and there is no surviving spouse eligible to receive a monthly allowance.
9. Clarifies the surviving spouse’s monthly allowance or optional settlement shall begin the date the judge would have been eligible to receive the deferred retirement allowance.
10. Prohibits a judge who elects a deferred retirement provided by this bill from serving on judicial assignment until the judge begins receiving the monthly retirement allowance.
11. Establishes that, pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act of 2013, a judge who elects the option to retire as provided within this bill shall not be considered to have received an enhancement to his or her retirement benefit or retirement formula.
12. Makes several changes to neutralize gender pronouns.
13. Makes other technical conforming changes to JRS II provisions.

Related/Prior Legislation

SB 656 (Moorlach, 2018). Vetoed by the Governor.

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

According to the Senate Appropriations Committee:

• This bill will result in increased annual benefit payouts to retired judges beyond what would occur under current law. CalPERS estimates that the present value of these payments, for all future fiscal years aggregated, is $22 million (JRS II Fund). The cost in present value for any individual year would be considerably less.
• Additionally, this bill will result in increased annual state contributions to JRS II to fund the increase in accrued liability that would occur as a result of the bill. CalPERS estimates this cost to be $2.1 million in 2019-20. Costs in the ensuing years would likely be in the low millions of dollars annually thereafter (General Fund).

SUPPORT: (Verified 5/17/19)

Alliance of California Judges (source)

California Judges Association

OPPOSITION: (Verified 5/17/19)

None received

ARGUMENTS IN SUPPORT: According to the Alliance of California Judges, “Senate Bill 184 will not give any judge a dollar more, nor a day sooner, than if the judge had remained on the bench until full retirement age. Judges who defer retirement will be replaced by a more diverse group of younger, more energetic judges, who in most cases, will contribute almost twice as much each month to the plan. The deferred retirement option protects the fiscal integrity of JRS-II, while permitting those judges who face difficult personal circumstances in later years to leave office with a promise that they will receive at a later date the retirement they have worked so hard to achieve.”

According to the California Judge’s Association, “JRS II is the only state retirement plan, we believe in the nation, with harsh cliff-vesting rules for judges who do not serve until age 65 with 20 years of service. CJA believes SB 184 is an important step towards improving inequities in the retirement system.”

Prepared by: Glenn Miles / L., P.E. & R. / (916) 651-1556

5/20/19 12:25:12

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 184 (Moorlach) - Judges’ Retirement System II: deferred retirement

Bill Summary:

SB 184 would authorize a “deferred” retirement option under the Judges Retirement System (JRS) II to permit a judge to leave judicial office and receive a retirement allowance at a later date, as specified.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2019

Fiscal Impact:

• This bill would result in increased annual benefit payouts to retired judges beyond what would occur under current law. The California Public Employees Retirement System (CalPERS) estimates that the present value (PV) of these payments, for all future fiscal years aggregated, is $22 million (JRS II Fund). The cost in present value for any individual year would be considerably less.
• Additionally, this bill would result in increased annual state contributions to JRS II to fund the increase in accrued liability that would occur as a result of the bill. CalPERS estimates this cost to be $2.1 million in 2019-20. Costs in the ensuing years would likely be in the low millions of dollars annually thereafter (General Fund).

Author Amendments:

Make technical and clarifying changes.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 184 (Moorlach) - Judges’ Retirement System II: deferred retirement

Bill Summary:

SB 184 would authorize a “deferred” retirement option under the Judges Retirement System (JRS) II to permit a judge to leave judicial office and receive a retirement allowance at a later date, as specified.

Fiscal Impact:

• This bill would result in increased annual benefit payouts to retired judges beyond what would occur under current law. The California Public Employees Retirement System (CalPERS) estimates that the present value (PV) of these payments, for all future fiscal years aggregated, is $22 million (JRS II Fund). The cost in present value for any individual year would be considerably less.
• Additionally, this bill would result in increased annual state contributions to JRS II to fund the increase in accrued liability that would occur as a result of the bill. CalPERS estimates this cost to be $2.1 million in 2019-20. Costs in the ensuing years would likely be in the low millions of dollars annually thereafter (General Fund).

Background:

CalPERS currently administers two retirement plans for Supreme and Appellate Court justices, as well as Superior and Municipal Court judges: (1) Judges' Retirement System (JRS) for those elected or appointed before November 9, 1994, and (2) Judges' Retirement System II (JRS II) for those elected or appointed on or after November 9, 1994.

Under JRS II, a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation.

Additionally, current law authorizes the Monetary Credit Plan, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service. Under the plan, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary. Judges who leave office before accruing five years of service receive only a lump sum equal to the amount of the contributions they made.

Proposed Law:

This bill would, among other things, do the following:

• Permit a judge who is not eligible to retire under existing provisions of JRS II but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire without losing the right to receive a monthly allowance, as specified.
• Require an eligible judge who wishes to leave judicial office and receive a retirement allowance pursuant to this option to leave his or her monetary credits (including accrued interest) on deposit with CalPERS.
• Require the judge to make an election for this option within 30 days of separation. If an eligible judge fails or refuses to make an election within 30 days of separation, the judge shall receive the amount of his or her monetary credits, as specified.
• Authorize CalPERS to extend the 30-day election period in cases of illness or other hardship, and establishes that once the judge makes the election, it is final and irrevocable.
• Authorize a judge who leaves judicial office, as provided, but who is not yet receiving a monthly allowance, to continue health care benefits (including those for family members) upon assuming payment of all contributions, including employer contributions. The bill also would require the judge to pay an additional 2 percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources (CalHR).
• Treat, upon commencement of the judge's retirement allowance, the judge who elects this deferred allowance option as an "annuitant" and thus, allows the judge to receive applicable post-retirement health benefits in the same manner as any other JRS II annuitant.
• Provide for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire, as provided.
• Provide for surviving spouse benefits, as specified.
• Establish that, pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act of 2013 (PEPRA), a judge who elects the option to retire as provided within this bill shall not be considered to have received an enhancement to his or her retirement benefit or retirement formula.

Related Legislation:

SB 656 (Moorlach, 2018) was similar to this bill, and was vetoed by the Governor.

Staff Comments:

JRS II benefits are funded by three sources: (1) contributions from participating members, (2) contributions from the State (an annual General Fund appropriation), and (3) investment returns. JRS II had a funded status of 99 percent at the end of 2016-17, a seven-percentage point increase from the prior year. The increase was due to investment returns and a change in mortality assumptions, among other factors.

CalPERS currently estimates that this bill’s proposed policy change and resulting increase in benefits would have a total present value cost over time of $22 million. Among other things, this estimate assumes that every eligible judge will respond to the bill by electing to defer retirement. To the extent that this does not occur, the CalPERS cost estimate would be overstated. Additionally, the estimate represents the present value of the future stream of additional benefits over several decades; consequently, the impact of the bill on benefits in any given year would be significantly smaller.

-- END --

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Jerry Hill, Chair

2019 - 2020 Regular

Bill No: SB 184 Hearing Date: March 27, 2019

Subject: Judges’ Retirement System II: deferred retirement

KEY ISSUE

Should the Legislature authorize a “deferred” retirement option under the Judges Retirement System (JRS) II to permit a judge to leave judicial office and receive a retirement allowance at a later date upon reaching the prescribed JRS II retirement age in order to provide relief to judges who are ill, who become caretakers of ill relatives, or who otherwise can no longer fulfill their judicial duties?

ANALYSIS

Existing law:

1. Establishes the Judges’ Retirement System I (JRS I) which provides a set of rights and benefits to members of JRS I and is administered by the California Public Employees’ Retirement System (CalPERS) Board of Administration This system was closed to new members as of November 1994. (Government Code Section 75000 et seq.)
2. Establishes the JRS II which provides that a judge must be at least 65 years of age with at least 20 years of service, or 70 years of age with at least five years of service to qualify for a JRS II defined benefit (DB) service retirement. Upon qualification, a judge is eligible to receive a monthly retirement allowance equal to 3.75 percent of final compensation, multiplied by the number of years of service, up to a maximum of 75 percent of final compensation. A judge eligible for a DB monthly allowance may also opt to receive an amount under the Monetary Credit Plan in lieu of the monthly allowance. (GC 75500 et seq.)
3. Authorizes the Monetary Credit Plan, an alternative JRS II benefit for judges who leave office prior to qualifying for a DB retirement allowance but after accruing five or more years of service. Under the plan, a judge receives a lump sum equal to the amount of his or her monetary credits plus an amount credited at the JRS II net earnings rate from the preceding year. Monetary credits are the judge’s accumulation of contributions equal to 18 percent of the judge’s monthly salary. (GC 75520, 75521)
4. Provides that a judge who leaves office before accruing at least five years of service shall receive only a lump sum equal to the amount of his or her contributions to JRS II. (GC 75521(a)).

This bill:

1. Permits a judge who is not eligible to retire under existing provisions of JRS II but who is at least 60 years of age with a minimum of five years of service, or who has accrued 20 or more years of service, to retire without losing his or her right to receive a monthly allowance, as specified.
2. Requires an eligible judge who wishes to leave judicial office and receive a retirement allowance pursuant to this option to leave his or her monetary credits (including accrued interest) on deposit with CalPERS.
3. Requires the judge to make an election for this option within 30 days of separation. If an eligible judge fails or refuses to make an election within 30 days of separation, the judge shall receive the amount of his or her monetary credits, as specified.
4. Authorizes CalPERS to extend the 30-day election period in cases of illness or other hardship, and establishes that once the judge makes the election, it is final and irrevocable.
5. Authorizes a judge who leaves judicial office, as provided, but who is not yet receiving a monthly allowance, to continue health care benefits (including those for family members) upon assuming payment of all contributions, including employer contributions. The bill also requires the judge to pay an additional 2 percent of the premium amount to cover administrative expenses incurred by CalPERS or the Department of Human Resources (CalHR).
6. Treats, upon commencement of the judge's retirement allowance, the judge who elects this deferred allowance option as an "annuitant" and thus, allows the judge to receive applicable post-retirement health benefits in the same manner as any other JRS II annuitant.
7. Provides for a cost-of-living adjustment to the retirement allowance of a retired judge who elects to retire, as provided, based on the Consumer Price Index for all Urban Consumers; allows for a calculation of the benefit pursuant to a division of community property; and, provides for optional settlements.
8. Provides for surviving spouse benefits if a judge dies before receiving a monthly retirement allowance, or after retirement, and establishes the process for, and payment of, monetary credits (including interest) to a designated beneficiary if the judge dies before receiving payment and there is no surviving spouse eligible to receive a monthly allowance.
9. Establishes that, pursuant to prohibitions on retroactive benefit increases contained in the Public Employees' Pension Reform Act of 2013 (PEPRA), a judge who elects the option to retire as provided within this bill shall not be considered to have received an enhancement to his or her retirement benefit or retirement formula.
10. Makes other technical conforming changes to JRS II provisions.

COMMENTS

1. Need for this bill?

The author states the following:

If a judge leaves office before reaching the mandatory minimum retirement age, the judge receives a repayment of contributions to the plan, plus interest, but the judge is denied a defined benefit pension, even if the judge held office for more than 20 years.

1. Proponent Arguments

The (current) plan’s rigid requirement that a judge must remain on the bench until he or she reaches a mandatory minimum age at retirement – age 65 with 20 or more years of service, age 70 with less than 20 years – forces those judges facing a serious family or health crisis in their later years to remain on the bench when not emotionally or physically able to do the work, lest they lose their retirement benefit altogether.

1. Opponent Arguments:

None received.

1. Prior Legislation:

SB 656, Moorlach (2018). Vetoed by the Governor.

I am returning Senate Bill 656 without my signature.

This bill would amend and significantly expand--retroactively--the pension benefits of the Judges' Retirement System II, a program that has been in effect since 1994.

The costs associated with this bill are large and unbudgeted. In addition, the proposed retroactive benefits are contrary to the explicit provisions of the Public Employees Pensions Reform Act of 2013.

Sincerely,

Edmund G. Brown Jr.

SUPPORT

Alliance of California Judges (Sponsor)

OPPOSITION

None received.

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