BILL NUMBER: AB 340	AMENDED
	BILL TEXT

	AMENDED IN SENATE  SEPTEMBER 2, 2011
	AMENDED IN SENATE  JUNE 22, 2011
	AMENDED IN ASSEMBLY  APRIL 25, 2011
	AMENDED IN ASSEMBLY  APRIL 14, 2011
	AMENDED IN ASSEMBLY  APRIL 11, 2011
	AMENDED IN ASSEMBLY  FEBRUARY 24, 2011

INTRODUCED BY   Assembly Member Furutani
   (  Coauthor:   Assembly Member 
 Ma   Coauthors:   Assembly Members
  Huber   and Ma  )

                        FEBRUARY 10, 2011

   An act to amend Section 31461 of, and to add Sections 31540,
31540.2, 31541, 31569, and 31680.9 to, the Government Code, relating
to county employees' retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 340, as amended, Furutani. County employees' retirement.
   (1) The County Employees Retirement Law of 1937 (CERL) authorizes
counties and districts, as defined, to provide a system of retirement
benefits to their employees. CERL defines compensation earnable for
the purpose of calculating benefits as the average compensation for
the period under consideration with respect to the average number of
days ordinarily worked by persons in the same grade or class of
positions during the period, and at the same rate of pay, as
determined by the retirement board.
   This bill would prohibit a variety of payments, including 
unscheduled overtime,  payments for unused vacation, sick
leave, or compensatory time off, exceeding what may be earned and
payable in each 12-month period during the final average salary
period, and specified payments made at the termination of employment
from being included in compensation earnable. The bill would
additionally prohibit employer-provided housing allowances and
employer-provided vehicle allowances from being included in
compensation earnable for members first hired on or after January 1,
2012. The bill would require the board to establish a procedure for
assessing and determining whether an element of compensation was paid
for the principal purpose of enhancing a member's retirement benefit
and would prohibit that compensation from being included in
compensation earnable. The bill would except from this prohibition
compensation that a member was entitled to receive pursuant to a
collective bargaining agreement that was subsequently deferred or
otherwise modified as a result of a negotiated amendment of that
agreement.
   The bill would require the board to provide notice to the member
and employer upon a final determination that compensation was paid
for the principal purpose of enhancing a member's retirement benefit.
The bill would authorize the member or employer to obtain judicial
review of the board's action by filing a petition for writ of
mandate, as specified. The bill would permit a member or employer to
present evidence that compensation was not paid for the principal
purpose of enhancing a member's benefit and would permit the board to
revise its determination upon receipt of sufficient evidence to that
effect.
   The bill would also require a county or district, when reporting
compensation to a retirement board, to identify the pay period in
which the compensation was earned regardless of when it was reported
or paid. The bill would authorize the board to assess a county or
district a reasonable amount to cover the cost of audit, adjustment,
or correction, if it determines that a county or district knowingly
failed to comply with these requirements, as specified. The bill
would authorize a retirement board to audit a county or district and
to require a county or district to provide information, or make
information available for examination or copying at a specified time
and place, to determine the correctness of retirement benefits,
reportable compensation, and enrollment in, and reinstatement to, the
system.
   (2) CERL generally provides that each person entering employment
becomes a member of a retirement system on the first day of the
calendar month after his or her entrance into service, unless
otherwise provided by regulations adopted by the board. CERL permits
people in certain employment classifications to elect membership in
the retirement system, including elective officers, and prohibits
membership for persons providing temporary technical or professional
services under contract.
   This bill would require a county or district that fails to enroll
an employee into membership within 90 days of when he or she becomes
eligible, when the employer knows or should have known that the
person was eligible, to pay all costs in arrears for member
contributions and administrative costs of $500 per member.
   (3) CERL permits members of a county retirement system who have
retired to be reemployed without reinstatement into the system in
certain circumstances including in a position requiring special
skills or knowledge.
   This bill, on and after January 1, 2012, would prohibit a person
who has been retired for service from a CERL retirement system from
being reemployed in any capacity without reinstatement into the
system by a district or county operating a county retirement system
established under CERL unless at least 180 days have elapsed since
the person's date of retirement, except as specified. The bill would
prohibit a person whose employment without reinstatement is
authorized under CERL from receiving service credit for that
employment. The bill would require that a retired member employed in
violation of provisions regarding employment without reinstatement to
reimburse the retirement system for any retirement allowance
received during that period. The bill would also require the county
or district to reimburse the retirement system for administrative
expenses incurred in this regard in specified circumstances.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares that the amendments
made to the County Employees Retirement Law of 1937 by this act are
intended to achieve the following reforms:
   (a) To give the retirement boards the authority and the
responsibility to audit and deny compensation items that are
identified as being paid for the principal purpose of enhancing a
member's retirement benefit.
   (b) To require each retirement system to establish accountability
provisions for participating employers that include an ongoing audit
process and to allow the retirement system to assess penalties on
employers for noncompliance.
   (c) To prohibit final settlement pay and the cash-out of multiple
year accruals of vacation time, annual leave, personal leave, or sick
leave from being included in retirement calculations.
   (d) To eliminate the practice of working for a participating
employer while collecting a retirement benefit, also known as
double-dipping, by prohibiting a retiree from returning to work as a
retired annuitant or as a contract employee until at least 180 days
have elapsed since that person's retirement.
  SEC. 2.  Section 31461 of the Government Code is amended to read:
   31461.  (a) "Compensation earnable" by a member means the average
compensation as determined by the board, for the period under
consideration upon the basis of the average number of days ordinarily
worked by persons in the same grade or class of positions during the
period, and at the same rate of pay. The computation for any absence
shall be based on the compensation of the position held by the
member at the beginning of the absence. Compensation, as defined in
Section 31460, that has been deferred shall be deemed "compensation
earnable" when earned, rather than when paid.
   (b) "Compensation earnable" does not include, in any case, the
following:
   (1) Any compensation determined by the board to have been paid for
the principal purpose of enhancing a member's retirement benefit
under that system. That compensation may include:
   (A) Compensation that had previously been provided in-kind to the
member by the employer or paid directly by the employer to a third
party other than the retirement system for the benefit of the member,
and which was converted to and received by the member in the form of
a cash payment in the final average salary period.
   (B) Any one-time or ad hoc payment made to a member, but not to
all similarly situated members in the member's grade or class.
   (C) Any payment that is made solely due to the termination of the
member's employment, but is received by the member while employed,
except those payments that do not exceed what is earned and payable
in each 12-month period during the final average salary regardless of
when reported or paid.
   (2) Payments for unused vacation, annual leave, personal leave,
sick leave, or compensatory time off, however denominated, whether
paid in a lump sum or otherwise, in an amount that exceeds that which
may be earned and payable in each 12-month period during the final
average salary period, regardless of when reported or paid.
   (3) Payments for additional services rendered outside of normal
working hours, whether paid in a lump sum or otherwise. 
   (4) Unscheduled overtime.  
   (5) 
    (4)  Payments made at the termination of employment,
except those payments that do not exceed what is earned and payable
in each 12-month period during the final average salary period,
regardless of when reported or paid.
   (c) In addition to the provisions of subdivision (b), for members
first hired on or after January 1, 2012, compensation earnable also
does not include:
   (1) Any employer-provided housing allowance.
   (2) Any employer-provided vehicle allowance.
  SEC. 3.  Section 31540 is added to the Government Code, to read:
   31540.  (a) The board shall establish a procedure for assessing
and determining whether an element of compensation was paid for the
principal purpose of enhancing a member's retirement benefit. If the
board determines that compensation was paid for the principal purpose
of enhancing a member's benefit, the member or the employer may
present evidence that the compensation was not paid for that purpose.
Upon receipt of sufficient evidence to the contrary, a board may
reverse its determination that compensation was paid for the
principal purpose of enhancing a member's retirement benefits.
   (b) Upon a final determination by the board that compensation was
paid for the principal purpose of enhancing a member's retirement
benefit, the board shall provide notice of that determination to the
member and employer. The member or employer may obtain judicial
review of the board's action by filing a petition for writ of mandate
within 30 days of the mailing of that notice.
   (c) Compensation that a member was entitled to receive pursuant to
a collective bargaining agreement that was subsequently deferred or
otherwise modified as a result of a negotiated amendment of that
agreement shall be considered compensation earnable and shall not be
deemed to have been paid for the principal purpose of enhancing a
member's retirement benefit.
  SEC. 4.  Section 31540.2 is added to the Government Code, to read:
   31540.2.  (a) When a county or district reports compensation to
the board, it shall identify the pay period in which the compensation
was earned regardless of when it was reported or paid. Compensation
shall be reported in accordance with Section 31461 and shall not
exceed compensation earnable, as defined in Section 31461.
   (b) The board may assess a county or district a reasonable amount
to cover the cost of audit, adjustment, or correction, if it
determines that a county or district knowingly failed to comply with
subdivision (a). A county or district shall be found to have
knowingly failed to comply with subdivision (a) if the board
determines that either of the following applies:
   (1) The county or district knew or should have known that the
compensation reported was not compensation earnable, as defined in
Section 31461.
   (2) The county or district failed to identify the pay period in
which compensation earnable was earned, as required by this section.
   (c) A county or district shall not pass on to an employee any
costs assessed pursuant to subdivision (b).
  SEC. 5.  Section 31541 is added to the Government Code, to read:
   31541.  The board may audit a county or district to determine the
correctness of retirement benefits, reportable compensation, and
enrollment in, and reinstatement to, the system. During an audit, the
board may require a county or district to provide information, or
make available for examination or copying at a specified time and
place, books, papers, data, or records, including, but not limited
to, personnel and payroll records, as deemed necessary by the board.
  SEC. 6.  Section 31569 is added to the Government Code, to read:
   31569.  A county or district that fails to enroll an employee into
membership within 90 days of when he or she becomes eligible, when
the employer knows or would reasonably be expected to have known that
the person was eligible, shall pay all costs in arrears for member
contributions and administrative costs of five hundred dollars ($500)
per member as a reimbursement to the system's current year budget.
  SEC. 7.  Section 31680.9 is added to the Government Code, to read:
   31680.9.  (a) Except as provided in Section 31680.1, any person
who has been retired for service on or after January 1, 2012, as a
member of a county retirement system established under this chapter
shall not be reemployed in any capacity either as an employee, an
independent contractor, or an employee of a third party without
reinstatement by a district or county operating a county retirement
system established under this chapter unless at least 180 days have
elapsed since the person's date of retirement.
   (b) A retired person whose employment, without reinstatement, is
authorized by this article shall not acquire service credit or
retirement rights under this part with respect to that employment.
   (c) Any retired member employed in violation of this article shall
reimburse the retirement system for any retirement allowance
received during the period or periods of employment that are in
violation of law.
   (d) Any county or district that employs a retired member in
violation of this article shall contribute toward the reimbursement
of the retirement system for administrative expenses incurred in
responding to a violation of this article, to the extent the county
or district is determined by the executive officer of this system to
be at fault.
  SEC. 8.  The provisions of this act shall not be interpreted or
applied to reduce the pension of any person who has retired prior to
January 1, 2012.