CalPERS’ Board Votes to Sponsor 2013 Legislation to ‘Clean Up’ Governing Law

In an effort to maintain good governance and clarity of the existing Government Code statute administered by the California Public Employees’ Retirement System (CalPERS), the CalPERS’ Board of Administration this week voted to sponsor legislation to make policy and technical changes to various sections of the Public Employees Retirement Law (PERL). The changes reflect areas that CalPERS staff believes have not been kept current with CalPERS’ duties. The following statutory changes have been proposed:

Retaining PERS/STRS Membership After Service Break

Current law allows CalPERS’ vested members to elect to retain membership in CalPERS, regardless of whether a break in service occurred, upon accepting employment that would normally require membership in the California State Teachers’ Retirement System (CalSTRS). Existing law, however, does not allow this election for non-vested CalPERS’ members if any break in service occurred. Conversely, CalSTRS members are able to retain CalSTRS membership when accepting a position subject to mandatory CalPERS participation and allowed a break in service between the two positions (i.e., a weekend or summer break). 

In order to make CalPERS equitable with CalSTRS on the administration of this law, CalPERS proposes to, as long as the member meets all other eligibility requirements in current law, allow a 120 days or less break in service for non-vested CalPERS members to elect to retain CalPERS membership when taking employment that would normally require participation in CalSTRS.

PEMHCA Contracting Process

Existing law requires public agencies to enter into the CalPERS pension system through a contract between it and the CalPERS Board of Administration (Board). However, the governing body of a public agency that wishes to provide health benefits to its employees through CalPERS under the Public Employees’ Medical and Hospital Care Act (PEMHCA) can do so by merely adopting a majority vote resolution and filing it with the Board. CalPERS proposes to allow the Board to request that a public agency enter into a contract with the Board to participate in PEMHCA, stating that the change in law will help CalPERS clarify the responsibilities of the public agency and CalPERS and standardize the process for the pension and health programs it offers. The proposal would additionally state that the Board has the authority to refuse to enter into any contract with a public agency for retirement benefits or health benefits if the Board determines the contract would have a negative effect on CalPERS (i.e., the agency is facing legal or serious financial issues).

Paperless Benefit Statements

Currently, the CalPERS Board is required to mail a printed copy of a benefit-payment statement to disability and service retired members as well as non-member spouses, and beneficiaries receiving payments through electronic funds transfer unless a written request to no longer receive the information in this manner is received by the Board. CalPERS proposes to amend existing law to allow the Board to only mail the printed copy if such a member requests it as long as members, nonmember spouses and beneficiaries have been notified by the Board that they retain the right to receive a printed statement.

Reimbursing Employers of CalPERS Board Members

Existing law allows the employer of an elected CalPERS Board member to be reimbursed for the reasonable costs of hiring a replacement while the Board Member is fulfilling the responsibilities required by the CalPERS Board. CalPERS has determined that most such employers do not hire a replacement and, instead, absorb the duties within existing resources. As this practice makes it difficult to determine such replacement costs, CalPERS proposes reimbursing employers for the time a Board Member spends fulfilling Board responsibilities; the amount would be based on the cost of their salaries and benefits rather than the cost associated with hiring a replacement employee.

CSAC will keep counties apprised regarding the introduction of legislation that pertains to the CalPERS proposals. Please do not hesitate to contact us if you have associated concerns.