Amended  IN  Assembly  March 24, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2493

Introduced by Assembly Member Chen

February 17, 2022

An act to amend Section 50020 of the Government Code, relating to local government. add Section 31639.96 to the Government Code, relating to county employees’ retirement.


LEGISLATIVE COUNSEL'S DIGEST


AB 2493, as amended, Chen. Cities and counties. County employees’ retirement: Orange County: disallowed compensation: benefit adjustments.
(1) The California Public Employees’ Pension Reform Act of 2013 (PEPRA) generally requires a public retirement system, as defined, to modify its plan or plans to comply with the act. PEPRA, among other things, establishes new defined benefit formulas and caps on pensionable compensation.
The County Employees Retirement Law of 1937 (CERL) authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to their employees. CERL authorizes a county retirement system in Los Angeles County to adjust retirement payments due to errors or omissions, as specified.
The Public Employees’ Retirement Law (PERL) also authorizes its board of administration to adjust retirement payments due to errors or omissions, including for cases in which the retirement systems that the benefits of a member or annuitant are, or would be, based on disallowed compensation that conflicts with PEPRA and other specified laws and is thus impermissible.
This bill would similarly authorize a county retirement system in Orange County to adjust retirement payments based on disallowed compensation for sworn peace officers and firefighters of that system. The bill would provide that if the retirement system determines that the compensation reported for a sworn peace officer or firefighter of the system is disallowed compensation, as defined, the system would require the county employer or agency to discontinue reporting the disallowed compensation. The bill would apply this to determinations made on or after July 30, 2020, if an appeal has been filed and the applicable member, retired member, survivor, or beneficiary has not exhausted their administrative or legal remedies. The bill would require, for an active sworn peace officer or firefighter, that all contribution made on the disallowed compensation be credited against future contributions to the benefit of the employer or agency that reported the disallowed compensation, and any contribution paid by, or on behalf of, that member, be returned to the member by the employer or agency, as specified. The bill would require, for a retired sworn peace officer or firefighter, survivor, or beneficiary whose final compensation was predicated upon the disallowed compensation, that contributions made on the disallowed compensation be credited against future contributions to the benefit of the employer or agency that reported the disallowed compensation and would require the system to permanently adjust the benefit of the affected retired member, survivor, or beneficiary to reflect the exclusion of the disallowed compensation. The bill would specify other conditions required to be satisfied with respect to a retired sworn peace officer or firefighter, survivor, or beneficiary whose final compensation was predicated upon disallowed compensation, including, among others, requiring payment of a penalty by the employer or agency that reported contributions on the disallowed compensation. The bill would also require certain information regarding the relevant retired member, survivor, or beneficiary needed for purposes of these provisions to be kept confidential by the recipient.
(2) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.

Existing law prescribes the powers and duties that are common to cities and counties, including the powers and duties of legislative bodies. Under existing law, if a statute requires a local agency to take legislative action by resolution, and the local agency’s charter requires it to take legislative action by ordinance, action by ordinance is compliance with the statute for all purposes.

This bill would make a nonsubstantive change to those provisions.

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

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


SECTION 1.

 Section 31639.96 is added to the Government Code, to read:

31639.96.
 (a) This section shall only apply to Orange County. The board of retirement and board of supervisors may enter into any agreements as may be necessary and appropriate to carry out the provisions of this section.
(b) For purposes of this section, “disallowed compensation” means compensation reported for a sworn peace officer or firefighter of the retirement system that the system subsequently determines is not in compliance with the California Public Employees’ Pension Reform Act of 2013 (Article 4 (commencing with Section 7522) of Chapter 21 of Division 7 of Title 1), Section 31461, or administrative regulations of the retirement system, through no fault of the sworn peace officer or firefighter.
(c) If the retirement system determines that the compensation reported for a sworn peace officer or firefighter of the system is disallowed compensation, the system shall require the county employer or agency to discontinue reporting the disallowed compensation. This section shall also apply to determinations made on or after July 30, 2020, if an appeal has been filed and the sworn peace officer or firefighter, the retired sworn peace officer or firefighter, survivor, or beneficiary has not exhausted their administrative or legal remedies.
(1) In the case of an active sworn peace officer or firefighter, all contributions made on the disallowed compensation shall be credited against future contributions to the benefit of the employer or agency that reported the disallowed compensation, and any contribution paid by, or on behalf of, that member, shall be returned to the member by the employer or agency that reported the disallowed compensation.
(2) In the case of a retired sworn peace officer or firefighter, survivor, or beneficiary whose final compensation at the time of retirement was predicated upon the disallowed compensation, the contributions made on the disallowed compensation shall be credited against future contributions, to the benefit of the employer or agency that reported the disallowed compensation and the system shall permanently adjust the benefit of the affected retired member, survivor, or beneficiary to reflect the exclusion of the disallowed compensation.
(3) (A) In the case of a retired sworn peace officer or firefighter, survivor, or beneficiary whose final compensation at the time of retirement was predicated upon the disallowed compensation as described in paragraph (2), the repayment and notice requirements described in this paragraph and paragraph (4) shall apply only if all of the following conditions are met:
(i) The compensation was reported to the system and contributions were made on that compensation while the sworn peace officer or firefighter was actively employed.
(ii) The compensation was agreed to in a memorandum of understanding or collective bargaining agreement between the employer and the recognized employee organization as compensation for pension purposes and the employer and the recognized employee organization did not knowingly agree to compensation that was disallowed.
(iii) The determination by the system that compensation was disallowed was made after the date of retirement.
(iv) The sworn peace officer or firefighter was not aware that the compensation was disallowed at the time it was reported.
(B) If the conditions of subparagraph (A) are met, the employer or agency that reported contributions on the disallowed compensation shall do all of the following:
(i) Pay to the system, as a direct payment, the full cost of any overpayment of the prior paid benefit made to an affected retired member, survivor, or beneficiary resulting from the disallowed compensation.
(ii) Pay a penalty, as described in clause (iii), equal to 20 percent of the amount calculated as a lump sum of the actuarial equivalent present value representing the difference between the monthly allowance that was based on the disallowed compensation and the adjusted monthly allowance calculated pursuant to paragraph (2) for the duration that allowance is projected to be paid by the system to the retired member, survivor, or beneficiary.
(iii) One hundred percent of the penalty to be paid under clause (ii) shall be paid by the employer or agency as restitution to the affected retired member, survivor, or beneficiary who was impacted by disallowed compensation.
(4) The system shall provide a notice to the employer or agency that reported contributions on the disallowed compensation and to the affected retired member, survivor, or beneficiary, including, at a minimum, all of the following:
(A) The amount of the overpayment to be paid by the employer or agency to the system as described in subparagraph (B) of paragraph (3).
(B) The actuarial equivalent present value owed to the retired member, survivor, or beneficiary as described in clause (ii) of subparagraph (B) of paragraph (3), if applicable.
(C) Written disclosure of the employer or agency’s obligations to the retired member, survivor, or beneficiary pursuant to this section.
(5) The system shall, upon request, provide the employer or agency with contact information data in its possession of a relevant retired member, survivor, or beneficiary in order for the employer or agency to fulfill their obligations to that retired member, survivor, or beneficiary pursuant to this section. The recipient of this contact information data shall keep it confidential.
(d) (1) The employer or agency, as applicable, may submit to the system for review an additional compensation item that is proposed to be included, or is contained, in a memorandum of understanding adopted, or a collective bargaining agreement entered into, on and after January 1, 2022, that is intended to form the basis of a pension benefit calculation, in order for the system to review consistency of the proposal with the California Public Employees’ Pension Reform Act of 2013 (Article 4 (commencing with Section 7522) of Chapter 21 of Division 7 of Title 1), Section 31461, the retirement system, and the administrative regulations of the system.
(2) A submission to the system for review under paragraph (1) shall include only the compensation item language and a description of how it meets the criteria listed in subdivision (a) of Section 571 or subdivision (b) of Section 571.1 of Title 2 of the California Code of Regulations, along with any other supporting documents or requirements the system deems necessary to complete its review.
(3) The system shall provide guidance regarding the submission within 90 days of the receipt of all information required to make a review.
(e) The system shall periodically publish a notice of the proposed compensation language submitted to the system pursuant to this section for review and the guidance provided by the system.
(f) This section does not alter or abrogate any responsibility of the retirement system, an employer, or an agency to meet and confer in good faith with the employee organization regarding the impact of the disallowed compensation or the effect of any disallowed compensation on the rights of the employees and the obligations of the employer to its employees, including any employees who, due to the passage of time and promotion, may have become exempt from inclusion in a bargaining unit, but whose benefit was the product of collective bargaining.
(g) This section does not affect or otherwise alter a party’s right to appeal any determination regarding disallowed compensation made by the system.

SEC. 2.

 The Legislature finds and declares that Section 1 of this act, which adds Section 31639.96 to the Government Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
In order to appropriately maintain the current confidentiality of personal contact information held by the retirement system of Orange County regarding retired members of the system, and their survivors and beneficiaries, it is necessary to limit access to this information if it is provided to other public entities for purposes of Section 31639.96 of the Government Code.
SECTION 1.Section 50020 of the Government Code is amended to read:
50020.

If a statute requires a local agency to take legislative action by resolution and the local agency is required by its charter to take legislative action by ordinance, action by ordinance is compliance with the statute for all purposes.