Amended  IN  Senate  June 30, 2022
Amended  IN  Assembly  April 05, 2022
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 toadd to add Section 31541.2 to the Government Code, relating to county employees’ retirement.


LEGISLATIVE COUNSEL'S DIGEST


AB 2493, as amended, Chen. County employees’ retirement: disallowed compensation: benefit adjustments.
(1) Existing law, 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 generally vests management of each retirement system in a board of retirement. CERL authorizes a board of retirement to correct errors in the calculation of a retired member’s monthly allowances or other benefits under CERL in certain circumstances, including if the member caused their final compensation to be improperly increased or otherwise overstated at the time of retirement retirement, and the system applied that overstated amount as the basis for calculating the member’s monthly retirement allowance or benefits under CERL, subject to certain limitations.
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 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. require a retirement system established under CERL, upon determining that the compensation reported for a sworn peace officer or firefighter is disallowed compensation, to require the employer, as defined, to discontinue reporting the disallowed compensation. The bill would require, for an active sworn peace officer or firefighter, that all contribution the retirement system to credit all 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 return any contribution paid by, or on behalf of, that member, be returned to the member by the employer or agency, as specified. that reported the disallowed compensation, except in certain circumstances in which a system has already initiated recalculating compensation. The bill would require, require the system, 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. to credit the contributions made on the disallowed compensation against future contributions, to the benefit of the employer that reported the disallowed compensation, and 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 establish other conditions required to be satisfied with respect to a retired sworn peace officer or firefighter, survivor, or beneficiary whose when final compensation was predicated upon disallowed compensation, including, among others, requiring a specified payment of a penalty to be made by the employer or agency that reported contributions on the disallowed compensation. compensation to the retired member, survivor, or beneficiary, as appropriate. The bill would authorize a retirement system that has initiated a process prior to July 1, 2022, to permanently adjust the benefit of the affected retired member, survivor, or beneficiary to reflect the exclusion of the disallowed compensation to use that system in lieu of specified provisions that the bill would enact. 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.
The bill would authorize an employer to submit to a retirement system for review a compensation item proposed to be included in an agreement, as specified, on and after January 1, 2022, that is intended to form the basis of a pension benefit calculation and would require the system to provide guidance on the matter. The bill would prescribe a process in this regard. The bill would specify that it does not affect or otherwise alter a party’s right to appeal any determination regarding disallowed compensation made by the system after July 30, 2022.
(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.
(3) The bill would specify that its provisions are not to be interpreted to alter certain existing laws, including PEPRA and the holding in Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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


SECTION 1.

 Section 31541.2 is added to the Government Code, to read:

31541.2.
 (a) The board of retirement or board of supervisors, as authorized pursuant to this chapter, 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” the following definitions apply:
(1) “Agreement” means a memorandum of understanding or collective bargaining agreement.
(2) “Alameda” means the Supreme Court case of Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032 or its holding.
(3) “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), PEPRA, Alameda, Section 31461, or the system’s administrative regulations of the retirement system, regulations, through no fault of the sworn peace officer or firefighter.
(4) “Employer” means the appropriate applicable county, agency, or district standing in relationship between the employee and the system.
(5) “PEPRA” means the California Public Employees’ Pension Reform Act of 2013 (Article 4 (commencing with Section 7522) of Chapter 21 of Division 7 of Title 1).
(6) “System” means a retirement association or system established by this act.
(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 it 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) (A) In the case of an active sworn peace officer or firefighter, the system shall credit 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 shall return 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. compensation, except as provided by subparagraph (B).
(B) A system that has initiated a process prior to July 1, 2022, to recalculate an active sworn peace officer or firefighter’s reportable compensation to exclude disallowed compensation and return contributions, either directly to the member, indirectly through the employer, or by some other reasonable manner, may continue to use that process provided that it is consistent with PEPRA as it read on July 1, 2022, and with Alameda.
(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. system shall credit the contributions made on the disallowed compensation against future contributions, to the benefit of the employer 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.

(i) The employer reported the compensation to the system and made contributions on that compensation while the sworn peace officer or firefighter was actively employed for at least three years prior to the member’s final compensation.
(ii) The system determined after the date of retirement that the compensation was disallowed.

(iv)

(iii) The sworn peace officer or firefighter was not aware that the compensation was disallowed at the time it was reported. the employer reported it.

(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:

(B) If the disallowed compensation meets the conditions of subparagraph (A), the employer that reported contributions on it 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.

(ii) Pay to the affected retired member, survivor, or beneficiary, as appropriate, 20 percent of the amount calculated by the system representing the actuarial equivalent present value of the difference between the monthly allowance that was predicated on the disallowed compensation and the adjusted monthly allowance calculated pursuant to paragraph (2) for the duration the system projects to pay that allowance to the retired member, survivor, or beneficiary. The employer shall begin payment within six months of notice from the system as prescribed in paragraph (4) and may have up to three years to complete the payment.
(4) The system shall provide a written 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 overpayment amount that the employer shall pay to the system as described in subparagraph (B) of paragraph (3).
(B) The actuarial equivalent present value owed that the employer owes 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 employer’s obligations to the retired member, survivor, or beneficiary pursuant to this section.
(5) In lieu of the process described in paragraphs (3) and (4), a system that has initiated a process prior to July 1, 2022, to permanently adjust the benefit of the affected retired member, survivor, or beneficiary to reflect the exclusion of the disallowed compensation pursuant to paragraph (2) may continue to use that process provided that it is consistent with PEPRA as it read on July 1, 2022, and with Alameda.

(5)The

(6) Upon the employer’s request, the system shall, upon request, shall 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.

(d) (1) An employer may submit to the system for review an additional compensation item that a party to a proposed agreement requests be included, contained, adopted, or a entered into that agreement, 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 PEPRA, Alameda, Section 31461, and the system’s administrative regulations.
(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 all 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 may 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. it provided.
(f) This section does not alter or abrogate any responsibility of the retirement system, an employer, or an agency an employer’s responsibility 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. system after July 30, 2020.

SEC. 2.

 The Legislature finds and declares that Section 1 of this act, which adds Section 31541.2 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 a county retirement system 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 31541.2 of the Government Code.

SEC. 3.

 This act shall not be interpreted to alter the Legislature’s intent in enacting the California Public Employees’ Pension Reform Act of 2013 (Article 4 (commencing with Section 7522) of Chapter 21 of Division 7 of Title 1) of, and Section 31461 of, the Government Code, to alter a retirement system’s corresponding implementing administrative regulations, or to alter the holding in Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032. Rather, the Legislature intends this act to be consistent, not in conflict, with those laws, regulations, and the Alameda holding.