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SB-1033 Public employees’ retirement: reciprocal benefits: actuarial liability.(2017-2018)

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Date Published: 02/08/2018 09:00 PM
SB1033:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1033


Introduced by Senator Moorlach

February 08, 2018


An act to add Section 20792 to the Government Code, relating to public employees’s retirement.


LEGISLATIVE COUNSEL'S DIGEST


SB 1033, as introduced, Moorlach. Public employees’ retirement: reciprocal benefits: actuarial liability.
Existing law, the Public Employees’ Retirement Law (PERL), creates the Public Employees’ Retirement System (PERS) and authorizes local entities to join PERS as contracting agencies for the provision of benefits to their employees. Existing law authorizes retirement systems to enter into agreements to provide certain reciprocal benefits to employees that are employed by other agencies that are parties to the agreement if the employees meet specified requirements, a practice commonly referred to as reciprocity. Reciprocity provides for the application of the final compensation paid by a subsequent employer to service provided to a prior employer. PERL provides that a public agency that has agreed to reciprocity with PERS also has reciprocity with all other agencies that have entered into those agreements with PERS, among others. PERL requires the Board of Administration of PERS to ensure that a contracting agency that creates a significant increase in actuarial liability as a result of increased compensation paid to a nonrepresented employee bears the associated liability, except as specified, including a portion that would otherwise be bourne by another contracting agency. PERL requires the system actuary to assess an increase in liability, in this regard, to the employer that created it at the time the increase is determined and to make adjustments to that employer’s contribution rates to account for the increased liability.
This bill would require that an agency participating in PERS that increases the compensation of a member who was previously employed by a different agency to bear all actuarial liability for the action, if it results in an increased actuarial liability beyond what would have been reasonably expected for the member. The bill would require, in this context, that the increased actuarial liability be in addition to reasonable compensation growth that is anticipated for a member who works for an employer or multiple employers over an extended time. The bill would require, if multiple employers cause increased liability, that the liability be apportioned equitably among them. The bill would apply to an increase in actuarial liability, as specified, due to increased compensation paid to an employee on and after January 1, 2019.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 20792 is added to the Government Code, to read:

20792.
 (a) For purposes of this section:
(1) “Agency” means the state, the university, a school employer, or a contracting agency.
(2) “Causative agency” means an agency that employs or has employed a member who was previously employed by an agency and for which the condition described in subdivision (b) is met.
(3) “Impacted agency” means an agency that experiences an increase in actuarial liability, as described in subdivision (b), as a result of actions by a causative agency or agencies.
(b) If an agency increases the compensation of a member who was previously employed by a different agency, and that results in an increased actuarial liability for the previous employer agency beyond what would have been reasonably expected for the member, the agency increasing the member’s compensation shall be subject to subdivision (c). The increased liability shall be in addition to reasonable compensation growth that is anticipated for a member who works for an employer or multiple employers over an extended time. Reasonable compensation growth shall take into account both the increase in, and value of, compensation.
(c) A causative agency shall bear all actuarial liability for an action described in subdivision (b) that otherwise would otherwise be borne by an impacted agency. If there are multiple causative agencies, the liability shall be apportioned equitably among them.
(d) This section shall apply to an increase in actuarial liability, as described in subdivision (b), due to increased compensation paid to an employee on and after January 1, 2019.