SB 820

Bill Subjects

Abstract

The Public Employees' Retirement Law (PERL) provides a defined benefit to members of the Public Employees' Retirement System based on age at retirement, service credit, and final compensation, as those terms are defined. The management and control of PERL is vested in the board of administration of PERL, including the calculation of the contribution rates for public employers. Existing law requires the board, any time it adopts or forecasts the contribution rates, to submit a report to the Legislature, the Governor, and the Treasurer describing the investment return assumptions, discount rates, and amortization periods utilized by the board in the calculation of the contribution rates for all public employees and employers. Existing law also requires that this report include recalculations of those rates based on specified adjustments of the investment return assumptions, amortization periods, and discount rates utilized by the board, and specifically requires the board to calculate the liabilities of the fund using a discount rate equal to the rate of the 10-year United States Treasury Bond. Existing law requires the Treasurer, within 30 days following receipt of the report, to provide each house of the Legislature, at a publicly noticed floor session, with an explanation of the role played by the investment return assumption and amortization period in the calculation of the contribution rates and the consequences for future state budgets if the investment return assumptions are not realized, to report whether the board's amortization period exceeds the estimated average remaining service periods of employees covered by the contributions, and to express his or her opinion of the reasonableness of the board's calculation of the contribution rates. This bill would instead require an annual report and would limit the scope of this report to include only contribution rates for the state employer. The bill would delete the reference to the 10-year United States Treasury Bond, and would instead require the board to include a calculation of the liabilities of the fund using discount rates equal to (1) the average rate of investment return since the establishment of the fund, and (2) the average rate of investment return since January 1, 1984. The bill would require the Treasurer, within 30 days of receipt of the report, to present the above-described information to a publicly noticed, joint meeting of the budget and retirement committees of both houses of the Legislature.