BILL AMENDS LAWS REGULATING CalPERS

October 2011
Number 59 

On October 3, 2011, Governor Brown signed into law Assembly Bill (AB) 1028, which updates and clarifies a number of laws governing the administration and management of the California Public Employees’ Retirement System (CalPERS). The bill touches on a range of issues, the most significant of which include the employment of retired CalPERS members by public agencies, as well as the payment of death benefits with respect to decedents lacking named beneficiaries. All changes will take effect January 1, 2012.

Employment of Retirees

One of the more significant changes to current law tightens the rules governing the employment of retired CalPERS members. State law generally prohibits a CalPERS retiree from being employed by a contracting agency in any capacity unless he or she is first reinstated from retirement. The exceptions to this general rule are that a retiree may serve without reinstatement if he or she is appointed to a position of limited duration that requires specialized skills, or is appointed during an emergency to prevent stoppage of public business. AB 1028 amends Government Code section 21221 to further narrow these exceptions by permitting a retiree to be appointed to a vacant position only on an interim basis. During the appointment, the employer must recruit to permanently fill the position. The compensation for the interim appointment may not exceed the maximum published pay schedule for the vacant position.  Finally, AB 1028 prohibits the appointment of a retiree more than once.

AB 1028 also modifies Government Code section 21228, which addresses persons who have retired due to a disability, but who do not meet the mandatory age for retirement applicable to persons in that position. The statute authorizes such a retiree to be re-employed without reinstatement from retirement so long as the agency’s governing board finds that the retiree’s disability does not prevent the employment, and that the retiree is being reinstated to a position other than the one from which he or she retired. The amended statute now also prohibits such a retiree from being concurrently employed under other specified provisions that allow for employment after retirement.

Payment of Death Benefits

Many CalPERS retirees do not keep their beneficiary designations up to date. If the retiree does not have a designated beneficiary at the time of death, or if the beneficiary has died, CalPERS pays out the death benefits in the order provided by statute (spouse, children, parents, siblings, etc.). Often, the amount to be paid is small and may be disbursed by a public administrator without going through probate. AB 1028 modifies Government Code 21493 to authorize the payment of death benefits that do not exceed $30,000 to a public administrator once the public administrator presents to CalPERS the required certification.

In addition, in order to make Government Code section 21533.5 consistent with federal law, AB 028 mandates that survivors of a member who dies while performing qualified military service are entitled to any benefits they would have received had the member remained an active employee.

Administrative Changes

AB 1028 amends the definition of “payrate” in Government Code section 20636.1, the statute that sets out the requirements for the reporting of compensation and service for school employees. The existing definition does not include amounts deducted for participation in a tax-deferred retirement plan, in a deferred compensation plan, or in a flexible benefits program. However, it has been common practice to include these deducted amounts in the reporting of compensation. AB 1028 clarifies that these amounts should be included.

If you have any questions about these amendments or how they relate to your operations, please contact one of our eight offices located statewide or visit our website.

Written by:

Thomas Manniello
Shareholder
Monterey Office
tmanniello@lozanosmith.com

Jonathan Dale
Associate
Monterey Office
jdale@lozanosmith.com

© 2011 Lozano Smith

Advertisements

Comments are closed.