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AB-192 Public retirement benefits: excess salaries.(2009-2010)

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AB192:v98#DOCUMENT

Amended  IN  Senate  August 20, 2010

CALIFORNIA LEGISLATURE— 2009–2010 REGULAR SESSION

Assembly Bill
No. 192

Introduced  by Committee on Budget Assembly Member Gatto
 (Coauthor(s): Assembly Member De La Torre, Bonnie Lowenthal, Nava, Smyth, Audra Strickland, Torrico)

February 02, 2009

An act relating to the Budget Act of 2009 to add Section 20808.5 to the Government Code, relating to public employee retirement benefits.


LEGISLATIVE COUNSEL'S DIGEST


AB 192, as amended, Committee on Budget Gatto. Budget Act of 2009. Public retirement benefits: excess salaries.
The Public Employees’ Retirement Law (PERL) creates the Public Employees’ Retirement System (PERS), which provides a defined benefit to its employees based on age at retirement, service credit, and final or highest compensation paid to the employee. In the case of an employee who has been employed by one or more contracting public agencies, retirement benefits distributed to that employee is the obligation of all of contracting public agency employers and is prorated to each of the contracting public agencies based upon the number of years that the employee worked for each of those agencies.
This bill would provide that the obligations for retirement benefits that are attributable to excess compensation earned by a nonrepresented employee who was employed by one or more public agencies shall be the sole obligation of the subsequent contracting agency that paid the excess compensation. This bill would define “excess compensation” as the final compensation of an employee of a contracting agency who previously worked for another contracting agency to the extent the final compensation received from the current contracting agency is in excess of 15% of the salary paid by the prior contracting agency, as adjusted for actuarial increases in that salary.

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2009.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 20808.5 is added to the Government Code, to read:

20808.5.
 (a) (1) Notwithstanding any other law, the contributions and disbursements of benefits for that portion of the compensation of an employee of a contracting agency that constitutes excessive compensation shall be the sole obligation of the current contracting agency that paid the excessive compensation to that employee.
(2) The liability of any prior contracting agency for the contributions and disbursements of benefits of that employee shall be limited to contributions and other assets sufficient to fund a retirement allowance calculated using the amount of the employee’s final compensation at the time he or she terminated his or her service with the prior contracting agency and any amount that is not excess compensation.
(b) For purposes of this section, “excessive compensation” is the final compensation of an employee of a contracting agency who previously worked for another contracting agency to the extent the final compensation received from the current contracting agency is in excess of 15 percent of the salary paid by the prior contracting agency, as adjusted for actuarial increases in that salary.
(c) This section shall not apply to any employee who is covered by a memorandum of understanding or to any employee who is a member of a recognized employee organization as that term is defined in Section 3501.
(d) The actuary, in determining contributions required of contracting agencies, subject to this section, shall establish a contribution with respect to excessive compensation separate from and independent of the contribution required for other benefits under their contracts. The total contribution, in that case, for the agencies as a group shall be established and from time to time adjusted by actuarial valuation performed by the actuary of the liability for the benefit or benefits on account of the employees of all those agencies. Adjustments shall affect only future contributions and shall take into account the difference between contributions on hand and the amount required to fund the allowances or benefits for which entitlement has already been established as well as liability for future entitlements to benefits. The contribution as so established and adjusted from time to time shall be allocated between the agencies on a basis that, in the opinion of the board, after recommendation of the actuary, provides an equitable distribution between the agencies as required by this section. However, the allocation shall not be based on differences in the incidence of death or disability in the respective agencies.
(e) (1) Whenever the board, pursuant to subdivision (d), establishes a separate contribution, it shall maintain the contribution and any contributions required to be made by employees towards the cost of the benefit or benefits as a separate account, which shall be available only for payment of the benefit or benefits and shall not be a part of the accumulated contributions under this system of any of the employers or members included.
(2) All contributions in that account, irrespective of the agency from which they were received, shall be available for payment of the benefit or benefits with respect to the employees of any agency included. In the event of termination of any agency’s participation in this system, the liability with respect to all those benefits to which the agency’s employees have become entitled, after establishment of the rate and prior to the termination, shall be its contributions, as established under subdivision (d), that have become due and payable as of the date of termination.
(f) The board and each contracting agency shall modify each contract to reflect the requirements of this section on or before July 1, 2011.

SECTION 1.

It is the intent of the Legislature to enact statutory changes relating to the Budget Act of 2009.