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AB-875 Public employees’ retirement.(2011-2012)

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Amended  IN  Assembly  March 31, 2011


Assembly Bill
No. 875

Introduced  by  Assembly Member Donnelly

February 17, 2011

An act to amend Section 31461 of add Section 7514.6 to the Government Code, relating to county public employees’ retirement.


AB 875, as amended, Donnelly. County retirement. Public employees’ retirement.
The Public Employees’ Retirement Law (PERL) creates the Public Employees’ Retirement System, which provides a defined benefit to its members based on age at retirement, service credit, and final compensation. PERL defines “final compensation” for purposes of calculating a member’s retirement allowance. The State Teachers’ Retirement Law, the Judges’ Retirement System II Law, and the County Employees Retirement Law of 1937 also provide for a defined benefit based on age at retirement, service credit, and final compensation.
This bill, for persons first hired on and after January 1, 2012, for the purpose of determining any pension or benefit with respect to a public entity defined benefit retirement system, would prohibit the inclusion of credit for accrued leave of any form or credit for overtime work in the calculation of final compensation, as specified.

The County Employees Retirement Law of 1937 sets forth a comprehensive system of retirement benefits for county and district employees. Existing law defines the term “compensation earnable” for purposes of determining required contributions and benefits.

This bill would make a technical, nonsubstantive change to that provision.

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

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


 Section 7514.6 is added to the Government Code, to read:

(a) Notwithstanding any other provision of law, for the purpose of determining any pension or benefit with respect to service with a public entity that has a retirement system that provides a defined benefit for which final compensation is an element, “final compensation” shall not include any compensation for accrued leave of any form or compensation for overtime work. On and after January 1, 2012, the creation of a contractual right to a calculation of final compensation that includes credit for accrued leave or credit for overtime work is prohibited.

 (b) This section shall apply to a person employed by the public entity for the first time on and after January 1, 2012. If a memorandum of understanding, entered into prior to January 1, 2012, would preclude application of this section with regard to particular employment classifications, this section shall not apply to a person to be employed in those classifications governed by the memorandum of understanding, provided that upon expiration of the memorandum of understanding this section shall apply. A renewal or continuation of an existing memorandum of understanding shall be considered a new agreement for purposes of this section and shall not supersede the requirements of subdivision (a).

SECTION 1.Section 31461 of the Government Code is amended to read:

“Compensation earnable” by a member means the average compensation as determined by the board, for the period under consideration upon the basis of the average number of days ordinarily worked by persons in the same grade or class of positions during the period and at the same rate of pay. The computation for any absence shall be based on the compensation of the position held by the member at the beginning of the absence. Compensation, as defined in Section 31460, that has been deferred shall be deemed “compensation earnable” when earned, rather than when paid.