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Chaptered Legislation

This is a brief summary of the legislation that will become law in January 2004 passed during the 2003 legislative session, effecting '37 Act counties:

 

AB 55, Chapter 261

 

Authorizes a county board of supervisors to allow active members of the retirement system to purchase up to 5 years of service credit for additional retirement credit.  Existing law does not authorize '37 Act retirement systems to allow their members to purchase additional service credit that is not linked with any actual service performed.

 

This statute states that: 

 

1.      "Additional retirement credit" is time that does not qualify as county service, public service, military service, medical leave of absence or any other time the system recognizes for service credit.

 

2.      Service credit for additional retirement credit may not be used to meet the minimum qualifications for service or disability retirement or for establishing eligibility for certain benefits and any service credit based benefits.

 

3.      A member electing to purchase service credit under this law will be required to pay an amount, determined by the retirement board and the actuary, that will not place any additional financial burden upon the retirement system.  Payment may be made either in a lump sum or in installments over a period of no more than 10 years.

 

4.      This benefit will not become operative in a county until adopted by the county's board of supervisors.

 

AB 85, Chapter 830

 

Provides that service credit accrued in a '37 Act system which is based on temporary, seasonal, intermittent, or part time service by a member would be credited as continuous service by the member.  For example, such service would be credited toward the 30 years of service necessary to stop employee contributions to the plan.  (ICERS excludes service credit for the above as well as extra help, except for permanent part time workers.)

 

AB 205, Chapter 421

 

Applies to all public retirement systems in California.  It extends most of the rights and responsibilities available to spouses solely available under state law to registered domestic partners.

 

1.      Provides that registered domestic partners shall have the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law as are granted to and imposed upon spouses.

 

2.      Provides that former domestic partners shall have the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law as are granted to and imposed upon former spouses.

 

3.      Provides that a surviving domestic partner, following the death of the other partner, shall have the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law as are granted to and imposed upon a widow or a widower.

 

4.      Provides that the rights and obligations of domestic partners with respect to a child of either of them shall be the same as those of spouses and the rights and obligations of former or surviving domestic partners with respect to a child of either of them shall be the same as those of former or surviving spouses.

 

5.      This is not effective until 1/1/05.

 

AB 374, Chapter 95, sunsets in 1/1/07

 

Existing law requires certain counties to adopt an annual budget covering the entire expense of administration of the retirement system, which expense may not exceed 0.18% of the total assets of the retirement system.  This allows a board of retirement to set an administrative expenditures cap based on an asset level reached during positive market returns.  The expense may not exceed 0.23% of the total assets of the retirement system.  The authority to set the spending cap expires in three years.

 

AB 933, Chapter 840

 

Allows stepchildren of law enforcement officers or firefighters who are slain in the line of duty to be eligible for benefits that all other surviving children - natural or adopted - are currently eligible to receive.  Also allows them to be exempt from payment of systemwide fees or tuition at the University of California and the California State University systems, as long as the stepchild had a regular parent-child relationship with the deceased person at the time of death. This applies retroactively to those killed on or after January 1, 2001.

 

AB 1585, Chapter 520

 

The new law has several unrelated parts:

 

1.      Authorizes the board of retirement (or the board of investments) to obtain a loan, secured by a portion of the assets of the retirement system, if the board finds that an emergency exists affecting the national banking system or financial markets that makes the loan necessary to pay benefits when due. The costs of the loan would be a charge against investment earnings of the retirement fund. (This was prompted by the emergency following 9-11.)

 

2.      Revises the requirement that the county treasurer must file a sworn statement of the financial condition and financial transactions of the county's retirement system with the county auditor and board of supervisors from "within four months" to "within six months" after the end of the calendar or fiscal year. 

 

3.      Requires each county and district subject to the '37 Act to establish and administer a replacement benefits program in connection with Internal Revenue Code Section 415.  (This is a county responsibility, not an ICERS responsibility.) 

 

4.      Authorizes districts to contract with counties to administer the district's program and authorizes the retirement board to assist in the administration of the program to the extent permitted by federal law.

 

5.      Allows all >37 Act systems to hire or contract for legal services rather than use county counsel without having to go to the state legislature.  The retirement board must pass a resolution to do so.

                   

AB 1587, Chapter 852 

 

This law:

 

1.      Prohibits the adoption of retirement benefits for some, but not all, general members or for any subgroup.  Authorizes a county or district to adopt a single contribution rate for all persons subject to the same benefit formula after that formula is adopted.

 

2.      Where a situation exists that there is no firefighter or law enforcement member to elect as alternate safety board member, the alternate safety board member may be chosen from safety groups other than firefighters or law enforcement, such as probations officers. 

 

3.      Clarifies that an organization shall be deemed to be a "qualified retiree organization" if a majority of the members of the organization are retired members of the system. (Before, all members had to be retirees to qualify.)

 

SB 85, Chapter 780

 

This law relates to domestic partnership benefits:

 

1.      Provides that same sex domestic partners of the 16 >37 Act counties that have not adopted domestic partner provisions (the 4 that have are San Mateo, Los Angeles, Santa Barbara and Marin) will be eligible for the same survivor benefits received by spouses of county employees.

 

2.      Only domestic partners of county employees with an Affidavit of Domestic Partnership on file with the county for at least a year prior to the member's death are eligible to receive the survivor benefits.

 

3.      If there is a surviving dependent child, he or she will retain the death and survivor benefits until the child reaches 18, marries, or turns 22 and is enrolled in college, at which time the benefits may be accorded the domestic partner.

 

4.      If the dependent child elects to receive a lump sum payment, the payment will be shared proportionally among all surviving dependent children and the domestic partner.

 

5.      Must be adopted by the Board of Supervisors to be effective.

 

SB 270, Chapter 191

 

Requires that retirees be provided with advance notice of the proposed changes or use of excess funds by a '37 Act Retirement System.

 

1.      Requires any '37 Act county, district, or retirement system to provide any organization that is recognized by the retirement system of the county or district as representing retirees with reasonable advance notice of proposed retirement benefit changes or use of excess funds of the retirement system.

 

2.      The retiree organization must have an opportunity to comment on the proposed changes prior to the county, district, or retirement system taking any formal action on matters relating to retirement benefit changes and the use of excess funds in the retirement system.

 

SB 274, Chapter 897

 

Establishes the Deferred Retirement Option Program (DROP) as an optional benefit for safety members only of '37 Act counties that choose to offer the program.

 

Under a DROP, a person can receive a reduced retirement allowance so that they may also receive a lump sum payment when they cease working.  There are 3 types of DROPs:

 

1.                  Forward DROP.  A forward DROP allows an employee to continue to work for the employer but his or her retirement benefit is calculated as though the employee had retired on an agreed upon date. The employee continues to work and the money they would have received as a retirement allowance accumulates in the DROP account. When the employee finally decides to quit working, they begin receiving their retirement allowance plus the money they have accumulated in the DROP account.

 

2.         Backward DROP.  A backward DROP allows the employee to terminate employment and retire at the same time. However, the employee directs the retirement system to calculate their retirement allowance as though they retired earlier. The period from the earlier retirement date to the actual date of ceasing employment is considered the DROP. The members' retirement allowance is calculated based on the member's age, years of service and compensation at the beginning of the DROP period.  The retirement benefits that would have been payable to the member during the DROP period are paid to the member as a lump sum when the member stops working.

 

3.         Actuarial Equivalent DROP.  An actuarial equivalent DROP allows the employee at the time of retirement to request the retirement system calculate the actuarial present value of his or her pension and then select some fraction of that retirement benefit to be received in a lump sum. The remainder of the pension is then used to pay monthly benefits.

 

Only becomes effective if a county board of supervisors adopts an ordinance stating that it adopts the DROP.  The ordinance may not be adopted or become effective until an actuarial analysis determines that the proposed program is cost neutral and the program has been agreed to in a collective bargaining agreement.