BILL NUMBER: AB 3252	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   MAY 28, 1996
	AMENDED IN ASSEMBLY   APRIL 22, 1996

INTRODUCED BY  Assembly Member Kaloogian

                        FEBRUARY 23, 1996

   An act to add Chapter 21.6 (commencing with Section 7522) to
Division 7 of Title 1 of the Government Code, relating to public
employees, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 3252, as amended, Kaloogian.  Public employees:  retirement.
   Existing law establishes various public retirement systems for
state and local public agency employees.
   This bill would  establish the Public Employees' Defined
Contribution Retirement Plan   authorize state and local
agency employers to provide defined contribution retirement plans
 for state and other local public agency employees 
whose employees   who  elect to participate in the
system.  The  system   plans  would be
administered by the  Public Employees' Defined Contribution
Retirement Board   state and local employers  and
on and after January 1, 1997, bargaining units representing state
employees would be authorized to reach agreement with the employer to
have their members participate in the defined contribution
retirement plan in lieu of continued membership in their existing
system and the existing retirement system would be required to
transfer the actuarial present value, as defined, to the plan
administrator.  The bill would establish the Public Employees'
Defined Contribution Retirement Fund in the State Treasury  for
the state defined contribution plan  and provide that all moneys
would be continuously appropriated for payments of the
system   plan  .
   Vote:  majority.  Appropriation:  yes.  Fiscal committee:  yes.
State-mandated local program:  no.


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


  SECTION 1.  Chapter 21.6 (commencing with Section 7522) is added to
Division 7 of Title 1 of the Government Code, to read:

      CHAPTER 21.6.  PUBLIC EMPLOYEES' DEFINED CONTRIBUTION
RETIREMENT  Plan   Plans 

   7522.  This chapter shall be known and may be cited as the Public
Employees' Defined Contribution Retirement Plan Law.
   7522.1.  As used in this chapter, unless the context clearly
requires a different meaning:
   (a) "Accrued service benefit" means the amount, determined
 actuarially   by the actuary of the existing
retirement system  , that represents the present value of an
employee's  projected   accrued  retirement
benefit earned through the date on which a payment is made to a
defined contribution retirement plan by an existing retirement system
for the benefit of an individual account.  In order to determine the
present value of the  projected   accrued 
benefit, the discount rate for investment earnings and the
assumptions for  projected salary increases  
current final average compensation  shall be approved by the
 board   employer  .  At the employer's
written election, the accrued services benefit shall also include an
employee's pro rata share of any actuarially determined excess of
plan assets compared to accrued liabilities in the existing
retirement system on the reporting date prior to the employer's
election to make a defined contribution retirement plan available to
a specific group of employees.  
   (b) "Defined contribution plan" or "plan" means the defined
contribution retirement plan created and established by this chapter.
 
   (b) "Defined contribution plan" or "plan" means the defined
contribution plans authorized by this chapter as those plans may be
established by the state or individual local public agencies. 
   (c) "Existing retirement system" means any state or local public
retirement system.
   (d) "Existing employer" means any public employer of a member of
the existing retirement system.  
   (e) "Board" means the Public Employees' Defined Contribution
Retirement Plan Board created and established to administer the
provisions of this chapter.  
   (f)  
   (e)  "Member" or "employee" means any person  , other
than a safety employee,  employed by the state or any local
public agency that elects to be included in  the 
 a  plan.  
   (g)  
   (f)  "Employer" means the state or local public agency  ,
including, but not limited to, school districts,  that employs
a member.   "Employer" does not include the California State
University.  
   (h) "Compensation" means the full compensation actually received
by members for service provided by the state or local public agency.
 
   (g) "Compensation" means the remuneration paid by the employer in
payment for the employee's services during normal working hours, but
does not include the monetary value of any other advantages furnished
to the employee.  
   (i)  
   (h)  "Member contribution" means an amount reduced from the
employee's regular pay periods, and deposited into the member's
individual account within  the   a  defined
contribution plan.  
   (j)  
   (i)  "Employer contribution" means an amount deposited into
the member's individual account on a periodic basis coinciding with
the employee's regular pay period by an employer from its own funds.

   (k)  
   (j) "Individual account" or "account" means an account in
 the   a  defined contribution plan
established for each member to record the deposit of member and
employer contributions and earnings there on on behalf of the member.
  
   (l)  
   (k)  "Retirement" means a member's withdrawal from the active
employment of a participating employer and completion of all
conditions precedent to retirement.  
   (m) "Permanent, total disability"  means a mental or physical
incapacity requiring the absence from employment service for at least
six months.
   (n)  
   (l)  "Fund" means the Public Employees' Defined Contribution
Retirement Plan Fund.  
   7522.2.  The Public Employees' Defined Contribution Retirement
Plan is hereby created and established to provide state and other
public agency employees with the opportunity for retirement savings
and for the orderly administration of the defined contribution
retirement plan.
   7522.3.  The provisions of this chapter shall be liberally
construed to provide an alternative retirement plan for state and
local public agency employees.  The purpose of this chapter is to
provide a defined contribution retirement program that is fully
funded on a current basis from employer and employee contributions.
 
   7522.2.  Public employees' defined contribution plans may provide
a framework under which the state and each local public agency are
authorized to create defined contribution plans for their respective
employees that are tailored to each employer's individual needs and
that provide the opportunity for retirement savings and for the
orderly administration of the plans.
   7522.3.  (a) This chapter shall be liberally construed to
authorize alternative retirement plans for state and local public
agency employees.  The purpose of this chapter is to authorize the
state and local public agencies to provide defined contribution
retirement plans that are fully funded on a current basis from
employer or employee contributions, or both.
   (b) In no event may the state or any local public agency fail to
continue to offer membership in any retirement system in existence on
January 1, 1997, to current employees, new employees, or retirees.
   (c) Defined contribution plans shall be established and
administered in accordance with the requirements for qualified
retirement or eligible deferred compensation plans respectively under
the Internal Revenue Code of 1986, as amended. 
   7522.4.  (a) The Public Employees' Defined Contribution Retirement
Plan Board is hereby established to administer the plan.
   (b) It consists of:
   (1) Two local government officials appointed by the Governor.
   (2) The Director of the Department of Personnel Administration.
   (3) The Controller.
   (4) The Treasurer.
   (5) One person from the active or retired membership of the
defined contribution retirement plan appointed by the Speaker of the
Assembly.
   (6) One person from the active or retired membership of the
defined contribution retirement plan appointed by the Senate
Committee On Rules.
   (c) The board may sue and be sued, contract and be contracted
with, and conduct all the business of the plan.
   7522.5.  (a) The  board   employer  has
all powers necessary to effectuate the purposes of this chapter.  The
board   employer  shall determine and
charge reasonable costs of administering the system.  The 
board shall   employer may contract with existing public
retirement systems or may  contract with a private pension,
insurance, annuity, mutual fund, or other qualified company or
companies to administer the day-to-day operations of the plan.
   (b) The Public Employees' Defined Contribution Retirement Plan
Fund is hereby created  for the state defined contribution plan
 and is a trust fund in the State Treasury administered by the
board in accordance with this chapter and Section 17 of Article XVI
of the California Constitution.  Notwithstanding Section 13340, all
moneys in the fund are continuously appropriated, without regard to
fiscal years, for administrative costs and payments which shall be
made upon warrants drawn by the Controller upon demands made by the
board.
   7522.6.  Any state or other public agency employee who is a member
of any existing retirement system on the effective date specified in
an agreement between the employees' bargaining unit and the employer
may, in lieu of continued or exclusive participation in an existing
retirement system and upon written election, voluntarily  and
irrevocably  elect membership in a defined contribution
retirement plan offered by the employer.  The administrator of the
defined contribution retirement plan shall notify the existing
retirement system of the employee's election and of the employee's
service record and compensation history within 45 days of that
election, and the existing retirement system, within 45 days, shall
transfer to the plan administrator a payment equal to the actuarial
present value of the employee's accrued service benefit on the date
of the transfer.  The amount so transferred shall be credited to the
employee's individual account.
   7522.7.  (a) On or after January 1, 1997, any bargaining unit
representing new state employees upon reaching an agreement with the
employer may elect to  have those employees participate in
the defined contribution retirement plan.   offer
participation in the defined contribution plan to those employees.

   (b) The governing body of any local public agency and the Regents
of the University of California may elect at any time to permit some
or all of their employees to participate in  the 
 a  defined contribution retirement plan either as an
alternative or as a supplement to an existing retirement system.
Those employers may contract with an existing retirement system for
elective partial defined benefit options in order to facilitate
retirement or benefit plans through which employees may elect to
receive a reduced defined benefit option and a supplemental
complementary defined contribution retirement plan.   Those
employers may require new employees to participate in the defined
contribution retirement plan, provided that no employee covered by a
bargaining agreement shall be required to participate if the
participation would be in contravention of the terms of that
agreement.   Any plan provided by a local agency shall
include more than one employee-directed investment fund appropriate
for investment by public employees, and an educational program,
approved by the  board   employer  or the
employer, that explains to employees considering their elections the
probable and possible benefits and risks of defined benefit and
defined contribution retirement plans, and alternative investment
strategies suitable for public employees.  
   (c) Any bargaining unit representing state members of the Public
Employees' Retirement System who are not state miscellaneous members
upon reaching an agreement with the employer may elect to participate
in the defined contribution retirement plan rather than the Public
Employees' Retirement System.
   (d)  
   (c)  The Department of Personnel Administration shall provide
for the participation in the defined contribution retirement plan by
state employees who are excluded from, or otherwise not subject to,
collective bargaining.   Those employees shall be given the right
to voluntarily elect membership in a defined contribution plan.
 
   (e) Notwithstanding any other provision of law, any employee whose
employment terminates after January 1, 1997, and is later reemployed
by an employer shall be eligible for membership only in this plan
unless that participation would be in contravention of a bargaining
agreement.
   (f)  
   (d) Any employee whose employment terminates after January 1,
1997, and is later reemployed by an employer shall be eligible for
membership in either the existing retirement system or the defined
contribution plan, unless the latter participation would be in
contravention of a bargaining agreement.
   (e)  An employee whose employment with a former employer or
an existing employer is suspended as a result of an approved leave of
absence, approved maternity or paternity break in service, or any
other approved break in service authorized by the board, is eligible
for  readmission to the existing retirement system in which
he or she was a member.
   (g)   readmission to the plan in which he or she was
a member at the time the break in service began.
   (f)  In all cases where a question exists as to 
readmission to membership in the existing retirement system, the
board shall decide the question.   the readmission to
membership in a plan, the employer shall decide the question. 
   7522.8.  The  board or the local agency  employer
or its agent in conjunction with this plan, may purchase group
annuity contracts, individual retirement annuities, disability
insurance investment contracts, securities, interest in trusts and
other financial instruments, health care benefit plans, and group
insurance as necessary or appropriate for the plan to provide
retirement and related benefits comparable to those provided under an
existing retirement system.  Selections of plan administrators,
annuities, and insurance products shall be conducted through a
competitive selection process. If requested by a participating
employer, an existing retirement system shall provide an actuarially
determined optional disability benefit option and employer
contribution rate for employees who elect to participate in a defined
contribution retirement plan.
   7522.9.  The  board or the  plan administrator
shall prepare, or cause to be prepared, at least quarterly a
statement for each member's individual account.  The statement shall
include the current market value of the account, including
self-directed investment options, an itemization of changes in the
account, the amount vested, and other information as may be required
by the board or the participating employer.  The board or the
employer shall arrange for an independent audit of the plan's assets
unless the audit is provided for by a third party organization.