California Assembly Bill AB2375 Introduced / Bill

 BILL NUMBER: AB 2375INTRODUCED BILL TEXT INTRODUCED BY Committee on Public Employees, Retirement, and Social Security (Assembly Members Cooper (Chair), Bonta, Cooley, Gonzalez, and O'Donnell) FEBRUARY 18, 2016 An act to amend Sections 20034, 20035, 20035.5, 20037, 20037.6, 20037.7, 20037.8, 20037.9, 20037.10, 20037.11, 20037.12, 20037.13, 20037.15, 20537, 20572, 20577.5, 20578, 20638, 20963, 20963.1, 20965, 21499, and 21626.5 of, and to repeal and amend Sections 20037.5 and 20037.14 of, the Government Code, relating to the Public Employees' Retirement System. LEGISLATIVE COUNSEL'S DIGEST AB 2375, as introduced, Committee on Public Employees, Retirement, and Social Security. Public Employees' Retirement System: omnibus bill. Existing law, the Public Employees' Retirement Law, creates the Public Employees' Retirement System (PERS) for the purpose of providing pension benefits to state employees and employees of contracting agencies and prescribes the rights and duties of members of the system and their beneficiaries. Existing law vests management and control of PERS in its board of administration. PERS provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. (1) Existing law prescribes various definitions of final compensation based on employment classification, bargaining unit, date of hire, and date of retirement, among other things. This bill would revise these definitions to remove redundant language and make technical and style changes. (2) Existing law authorizes the board to charge interest, at the actuarial interest rate, on the amount of any payment due and unpaid by a contracting agency until payment is received. This bill would instead permit the board to change interest on payments due and unpaid at the greater of the annual return on the system's investments for the year prior to the year in which payments are not timely made or a simple annual rate of 10%. (3) In addition to the above, existing law authorizes the board to assess a contracting agency that fails to make contributions when due interest at an annual rate of 10% and the costs of collection, including reasonable legal fees. In the case of repeated delinquencies, the board may assess the contracting agency a penalty of 10% of the delinquent amount. This bill would recast these provision to authorize the board, if a contracting agency fails to fully pay any installment of contributions when due, to assess a penalty of 10% of the total amount due and unpaid, including accrued and unpaid interest. The bill would permit the penalty to be assessed once during each 30-day period that the outstanding amount remains unpaid. The bill would also specify that the contracting agency may be assessed the costs of collection, including reasonable legal fees and litigation costs, including, without limitation, legal fees and legal costs incurred in bankruptcy, when necessary to collect any amounts due. (4) Existing law authorizes the board to terminate a local agency contract if the contracting agency fails for 30 days after demand by the board to pay any installment of required contributions or fails for three months after demand to file any information required for administration of the agency's employees. Existing law permits the board to reduce benefits in certain instances when contributions are inadequate to fund them. Existing law authorizes the board to merge a plan that has been terminated into the terminated agency pool without benefit reduction or with a lesser reduction if certain conditions are met. This bill would delete references to merging a plan and instead specify that the board may elect to not impose a reduction on a plan, or to impose a lesser reduction on a plan, that has been terminated if those acts will not impact the actuarial soundness of the terminated agency pool. The bill would make related changes by deleting administrative provisions relating to the sequence for transferring assets in relation to the reduction of benefits. (5) Existing law grants members in specified member classifications whose retirements are within 4 months of separation from employment specified percentages of service credit for each unused day of sick leave or educational leave. This bill would specify that a day of unused sick leave or unused educational leave is the equivalent of an 8-hour day. (6) Existing law requires payment of interest on a preretirement or postretirement death allowance or a preretirement or postretirement lump-sum benefit if not paid within a specified time after the date of death of an annuitant. Existing law prescribes the method of calculating interest for this purpose. This bill would instead require that interest by calculated at 7%, pursuant to the California Constitution. (7) Existing law requires a surviving domestic partner be treated in the same manner as a surviving spouse for purposes of postretirement survivor's allowances if certain conditions are met. This bill would require that an individual who is the same gender as a member be treated in the same manner as a surviving spouse for purposes of postretirement survivor's allowances if certain conditions are met. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 20034 of the Government Code is amended to read: 20034. The  average monthly salary   highest annual average compensation  during any  consecutive 12- or 36-month  period of  service   employment  as a member of any retirement system maintained by the university shall be considered compensation earnable by a member of this system for purposes of computing final compensation for the member providing he or she retires concurrently under both systems. SEC. 2. Section 20035 of the Government Code is amended to read: 20035. (a) Notwithstanding Section 20037, "final compensation" for the purposes of determining any pension or benefit with respect to a state member who retires or dies on or after July 1, 1991, and with respect to benefits based on service with the state, means the highest annual compensation which was earnable by the state member during  the   any  consecutive 12-month period of employment  immediately  preceding the effective date of his or her retirement or the date of his or her last separation from state service if  earlier or during any other period of 12 consecutive months during his or her membership in this system that the member designates on the application for retirement.   earlier.  (b) With respect to a state member who retires or dies on or after July 1, 1991, and who was a managerial employee, as defined by subdivision (e) of Section 3513, or a supervisory employee, as defined by subdivision (g) of Section 3513, whose monthly salary range was administratively reduced by 5 percent because of the salary range reductions administratively imposed upon managers and supervisors during the 1991-92 fiscal year, "final compensation" means the highest annual compensation the state member would have earned had his or her salary range not been reduced by the 5-percent reduction. This subdivision shall only apply if the period during which the state member's salary was reduced would have otherwise been included in determining his or her final compensation. The costs, if any, that may result from the use of the higher final compensation shall be paid for by the employer in the same manner as other retirement benefits are funded. SEC. 3. Section 20035.5 of the Government Code is amended to read: 20035.5. Notwithstanding Section 20037, "final compensation" for the purposes of determining any pension or benefit with respect to a school member who retires or dies on or after January 1, 2000, and with respect to benefits based on service with a school employer, means the highest annual compensation that was earnable by the school member during  the   any  consecutive 12-month period of employment  immediately  preceding the effective date of his or her retirement or the date of his or her last separation from service if  earlier or during any other period of 12 consecutive months during his or her membership in this system that the member designates on the application for retirement.   earlier.  SEC. 4. Section 20037 of the Government Code is amended to read: 20037. For a state member, or for a local member who is an employee of a contracting agency that is subject to this section, "final compensation" means the highest  average  annual  average  compensation earnable by a member during  the three consecutive years   any consecutive 36-month period  of employment  immediately  preceding the effective date of his or her retirement or the date of his or her last separation from state service if  earlier or during any other period of three consecutive years during his or her membership in this system which he or she designates in his or her application for retirement,   earlier,  including any or all of the period or periods of (a) service required for qualification for membership, or (b) prior service which qualifies for credit under this system, if any, immediately preceding membership, or (c) time prior to entering state service at the compensation earnable by him or her in the position first held by him or her in that service, as may be necessary to complete three consecutive years. For the purposes of this section, periods of service separated by a period of retirement or breaks in service may be aggregated to constitute a period of three consecutive years, if the periods of service are consecutive except for such a period of retirement or breaks. If a break in service did not exceed six months in duration, time included in the break and compensation earnable during that time shall be included in computation of final compensation. If a break in service exceeded six months in duration, the first six months thereof and the compensation earnable during those six months shall be included in computation of final compensation, but time included in the break which is in excess of six months and the compensation earnable during that excess time shall be excluded in computation of final compensation. On and after November 13, 1968, this section shall apply to all contracting agencies and to the employees of those agencies whether or not those agencies have previously elected to be subject to this section, except that this section shall not apply to an employee of a contracting agency which has not elected to be subject to this section whose death occurred or whose retirement was effective prior to November 13, 1968. SEC. 5. Section 20037.5 of the Government Code, as added by Section 56 of Chapter 88 of the Statutes of 1998, is repealed.  20037.5. Notwithstanding Section 20035, "final compensation" for a state member who has elected to be subject to Section 21353.5, for the purposes of determining any pension or benefit based on service credited under that section, means the highest average annual compensation earnable by the member during the consecutive 36-month period immediately preceding the effective date of his or her retirement, or the date of his or her last separation from state service if earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.  SEC. 6. Section 20037.5 of the Government Code, as added by Section 56 of Chapter 91 of the Statutes of 1998, is amended to read: 20037.5. Notwithstanding Section 20035, "final compensation" for a state member who has elected to be subject to Section 21353.5, for the purposes of determining any pension or benefit based on service credited under that section, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  SEC. 7. Section 20037.6 of the Government Code is amended to read: 20037.6. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after July 1, 2006, and is represented by State Bargaining Unit 2, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 2. (c) This section does not apply to: (1) Former state employees who return to state employment on or after July 1, 2006. (2) State employees hired prior to July 1, 2006, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to July 1, 2006, who become subject to representation by State Bargaining Unit 2 on or after July 1, 2006. (4) State employees on an approved leave of absence who return to active employment on or after July 1, 2006. SEC. 8. Section 20037.7 of the Government Code is amended to read: 20037.7. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21. (c) This section does not apply to: (1) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (2) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 1, 3, 4, 11, 14, 15, 17, 20, or 21 on or after January 1, 2007. (4) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 9. Section 20037.8 of the Government Code is amended to read: 20037.8. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 12 or 13, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 12 or 13. (c) This section does not apply to: (1) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (2) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 12 or 13 on or after January 1, 2007. (4) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 10. Section 20037.9 of the Government Code is amended to read: 20037.9. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 16 or 19, means the highest average annual compensation earnable by the member during  the  any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 16 or 19. (c) This section does not apply to: (1) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (2) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 16 or 19 on or after January 1, 2007. (4) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 11. Section 20037.10 of the Government Code is amended to read: 20037.10. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 7, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period immediately preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 7. (c) This section does not apply to: (1) Service credit accrued while classified as a state peace officer/firefighter while a member of Bargaining Unit 7. (2) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (3) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (4) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 7 on or after January 1, 2007. (5) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 12. Section 20037.11 of the Government Code is amended to read: 20037.11. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 10, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 10. (c) This section does not apply to: (1) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (2) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 10 on or after January 1, 2007. (4) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 13. Section 20037.12 of the Government Code is amended to read: 20037.12. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after January 1, 2007, and is represented by State Bargaining Unit 18, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 18. (c) This section does not apply to: (1) Former state employees previously employed before January 1, 2007, who return to state employment on or after January 1, 2007. (2) State employees hired prior to January 1, 2007, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to January 1, 2007, who become subject to representation by State Bargaining Unit 18 on or after January 1, 2007. (4) State employees on an approved leave of absence employed before January 1, 2007, who return to active employment on or after January 1, 2007. SEC. 14. Section 20037.13 of the Government Code is amended to read: 20037.13. (a) Notwithstanding Sections 20035 and 20037, for the purposes of determining any pension or benefit with respect to benefits based on service with the state, "final compensation" means the highest annual compensation that was earnable by the state member during  the   any  consecutive 36-month period of employment  immediately  preceding the effective date of his or her retirement or the date of his or her last separation from state service  or during any other period of 36 consecutive months during his or her membership in this system that the member designates on the application for retirement.   if earlier.  (b) This section shall only apply to a member appointed to a career executive assignment, as defined in Section 18546, who at the time of appointment meets one or more of the following criteria: (1) He or she previously had, but does not currently have, permanent status in the civil service. (2) He or she is a person described in Section 18990 who was not, within the past 12 months, employed by the Legislature for two or more consecutive years. (3) He or she is a person described in Sections 18992 who was not, within the past 12 months, holding a nonelected exempt position in the executive branch. (c) A state entity that employs a person described in subdivision (b) in a career executive assignment shall notify the Controller of this person's employment status and the Controller shall forward this information to the system. SEC. 15. Section 20037.14 of the Government Code, as amended by Section 127 of Chapter 296 of the Statutes of 2011, is repealed.  20037.14. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after October 31, 2010, and is represented by State Bargaining Unit 5 or 8, means the highest average annual compensation earnable by the member during the consecutive 36-month period immediately preceding the effective date of his or her retirement, or the date of his or her last separation from state service if earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement. (b) This section applies to service credit accrued while a member of State Bargaining Unit 5 or 8 or in a class related to State Bargaining Unit 5 or 8 as an employee who is excepted from the definition of "state employee" in subdivision (c) of Section 3513, or an officer or employee of the executive branch of state government who is not a member of the civil service. (c) This section does not apply to: (1) Former state employees previously employed before October 31, 2010, who return to state employment on or after October 31, 2010. (2) State employees hired prior to October 31, 2010, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to October 31, 2010, who become subject to representation by State Bargaining Unit 5 or 8 on or after October 31, 2010. (4) State employees on an approved leave of absence employed before October 31, 2010, who return to active employment on or after October 31, 2010.  SEC. 16. Section 20037.14 of the Government Code, as added by Section 11 of Chapter 163 of the Statutes of 2010, is amended to read: 20037.14. (a) Notwithstanding Sections 20035 and 20037, final compensation for a person who is employed by the state for the first time and becomes a state member of the system on or after October 31, 2010, and is represented by State Bargaining Unit 5 or 8, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her  retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to service credit accrued while a member of State Bargaining Unit 5 or 8 or in a class related to State Bargaining Unit 5 or 8 as an employee who is excepted from the definition of "state employee" in subdivision (c) of Section 3513, or an officer or employee of the executive branch of state government who is not a member of the civil service. (c) This section does not apply to: (1) Former state employees previously employed before October 31, 2010, who return to state employment on or after October 31, 2010. (2) State employees hired prior to October 31, 2010, who were subject to Section 20281.5 during the first 24 months of state employment. (3) State employees hired prior to October 31, 2010, who become subject to representation by State Bargaining Unit 5 or 8 on or after October 31, 2010. (4) State employees on an approved leave of absence employed before October 31, 2010, who return to active employment on or after October 31, 2010. SEC. 17. Section 20037.15 of the Government Code is amended to read: 20037.15. (a) Notwithstanding Sections 3517.8, 20035, and 20037, final compensation for a person who is employed for the first time and becomes a member of the system on or after January 15, 2011, means the highest average annual compensation earnable by the member during  the   any  consecutive 36-month period  immediately  preceding the effective date of his or her retirement,   retirement  or the date of his or her last separation from state service if  earlier, or during any other period of 36 consecutive months during his or her state membership that the member designates on the application for retirement.   earlier.  (b) This section applies to the following: (1) Service credit accrued while a member of State Bargaining Unit 6 or 9 or in a class related to State Bargaining Unit 6 or 9 as an employee who is excepted from the definition of "state employee" in subdivision (c) of Section 3513, or an officer or employee of the executive branch of state government who is not a member of the civil service. (2) Service credit accrued while a peace officer/firefighter member represented by State Bargaining Unit 7 or in a class related to peace officer/firefighter members in State Bargaining Unit 7 as an employee who is excepted from the definition of "state employee" in subdivision (c) of Section 3513, or an officer or employee of the executive branch of state government who is not a member of the civil service. (3) Service credit accrued as an employee who is excepted from the definition of "state employee" in subdivision (c) of Section 3513, or an officer or employee of the executive branch of state government who is not a member of the civil service. (4) Service credit accrued as an employee of the Legislature, the judicial branch, or the California State University. (c) This section does not apply to: (1) Former employees previously employed before January 15, 2011, who return to employment on or after January 15, 2011, and who were previously subject to a 12-month average. (2) State employees hired prior to January 15, 2011, who were subject to Section 20281.5 during the first 24 months of state employment, and who were previously subject to a 12-month average. (3) State employees hired prior to January 15, 2011, who become subject to representation by State Bargaining Unit 6, 7, or 9 on or after January 15, 2011, and who were previously subject to a 12-month average. (4) Employees on an approved leave of absence employed before January 15, 2011, who return to active employment on or after January 15, 2011, and who were previously subject to a 12-month average. (d) If this section is in conflict with a memorandum of understanding that is current and in effect on January 15, 2011, the memorandum of understanding shall be controlling while it remains in effect. Upon expiration of the memorandum of understanding that is in effect and current on January 15, 2011, this section shall be controlling and may not be superseded by a subsequent memorandum of understanding. SEC. 18. Section 20537 of the Government Code is amended to read: 20537. The board may charge interest on the amount of any payment due and unpaid by a contracting agency until payment is received. Interest shall be charged at the  actuarial interest rate.   greater of the annual return on the system's investments for the year prior to the year in which payments are not timely made or a simple annual rate of 10 percent.  The interest shall be deemed interest earnings for the year in which the late payment is received. SEC. 19. Section 20572 of the Government Code is amended to read: 20572. (a) If a contracting agency fails for 30 days after demand by the board to pay  in full  any installment of contributions required by its contract, or fails for three months after demand  therefor  by the board  therefor  to file any information required in the administration of this system with respect to that  contracting  agency's employees, or if the board determines that the  contracting  agency is no longer in existence, the board may terminate that contract by resolution adopted by a majority vote of its members effective 60 days after notice of its adoption has been mailed by registered mail to the governing body of the contracting agency. (b)  Notwithstanding   In addition to the interest obligations set forth in  Section 20537, if a contracting agency fails to  remit   pay in full any installment of  the contributions when  due, the agency may be assessed interest at an annual rate of 10 percent and the costs of collection, including reasonable legal fees, when necessary to collect the amounts due. In the case of repeated delinquencies,   due and the failure continues for a period of three months,  the contracting agency may be assessed a penalty of 10 percent of the  delinquent amount. That   total amount due and unpaid, including any accrued and unpaid interest. The  penalty may be assessed once during each 30-day period that the  outstanding  amount remains unpaid.  In addition, the contracting agency may be assessed the costs of collection, including reasonable lega   l fees and litigation costs, including, without limitation, legal fees and legal costs incurred in bankruptcy, when necessary to collect any amounts due.  SEC. 20. Section 20577.5 of the Government Code is amended to read: 20577.5. Notwithstanding Section 20577, the board may  merge a plan   elect not to impose a reduction, or to impose a lesser reduction, on a plan  that has been terminated pursuant to Section  20572 into the terminated agency pool without benefit reduction, or with a lesser reduction,  20572  if (a) the board has made all reasonable efforts to collect the amount necessary to fully fund the liabilities of the  plan,   plan  and (b) the board finds that  the merger of the plan into the terminated agency pool without benefit reduction   not reducing the benefits, or imposing a lesser reduction,  will not impact the actuarial soundness of the terminated agency pool. SEC. 21. Section 20578 of the Government Code is amended to read: 20578. (a) Except as provided in subdivision (b), on and after January 1, 1991, the rights and benefits of a former employee of a contracting agency which terminated on or before January 1, 1991, or of his or her beneficiary, shall be the same as if the agency had continued as a contracting agency. Any monthly allowance of that individual, or of his or her beneficiary, that was reduced pursuant to Section 20577 because the contracting agency failed to pay the board the amount of the difference shall not be subject to continued reduction on or after January 1, 1991. As of January 1, 1991, benefits shall be paid at the level provided in the contract prior to that reduction. However, if a former employee of a contracting agency that terminated on or before January 1, 1991, becomes employed by another covered employer after the date of termination, including an employer subject to reciprocity, the benefits shall be calculated by using the highest compensation earned by the individual. In accordance with Section 20580, an individual who has withdrawn his or her accumulated contributions from the terminated agency shall not be permitted to redeposit any withdrawn contributions upon again becoming a member of this system.  Except as provided in Section 20577.5, benefits shall be reduced proportionally pursuant to Section 20577 prior to the transfer of assets to the pool if the amount of the terminating agency's assets are less than the actuarial equivalent described in clause (1) of subdivision (a) of Section 20576 and if the agency fails to pay the difference.  (b) If a contracting agency has not paid the system for any deficit in funding for earned benefits, as determined pursuant to Section 20577, members shall be entitled to the benefits to which members of the plan were entitled 36 months prior to the date the agency notified the board of its intention to terminate its contract or 36 months prior to the date the board notified the agency of its intent to terminate the contract, whichever is earlier. Entitlement to earned benefits under this subdivision shall be subject to Section 20577.5. SEC. 22. Section 20638 of the Government Code is amended to read: 20638. The  average monthly salary   highest   annual average compensation  during any  consecutive 12- or 36-month  period of  service   employment  as a member of a county retirement system shall be considered compensation earnable by a member of this system for purposes of computing final compensation for the member provided: (a) (1) Entry into employment in which he or she became a member in one system occurred on or after October 1, 1957, and within 90 days of discontinuance of employment as a member of the other system. (2) This subdivision shall not deny the benefit of this section to any person retiring after October 1, 1963, who entered membership prior to October 1, 1957, if he or she entered the employment in which he or she became a member within 90 days of termination of employment in which he or she was a member of the other system, and he or she became a member within seven months of entry into employment, or, if an employee of a district as defined in Section 31468, became a member at the time the district was included in a county retirement system. (b) He or she retires concurrently under both systems and is credited with the period of service under the county system at the time of retirement. SEC. 23. Section 20963 of the Government Code is amended to read: 20963. (a) A state, school, or school safety member, whose effective date of retirement is within four months of separation from employment with the employer subject to this section that granted the sick leave credit, shall be credited at his or her retirement with 0.004 year of service credit for each unused day of sick leave certified to the board by the employer.  A day of unused sick leave is the equivalent of an eight-hour day.  The certification shall report only those days of unused sick leave that were accrued by the member during the normal course of his or her employment and shall not include any additional days of sick leave reported for the purpose of increasing the member's retirement benefit. Reports of unused days of sick leave shall be subject to audit and retirement benefits may be adjusted where improper reporting is found. For purposes of this subdivision, sick leave shall not include sick leave earned as a National Guard member as described in Section 20380.5. (b) Until receipt of certification from an employer concerning unused sick leave, the board may pay an estimated allowance pursuant to this section. At the time of receipt of the certification, the allowance shall be adjusted to reflect any necessary changes. (c) Notwithstanding any other provisions of this part, this section shall not apply to local members other than local miscellaneous members employed before July 1, 1980, by a school district that is a contracting agency or those school safety members employed before July 1, 1980, by a contracting agency that is a school district or community college district, as defined in subdivision (i) of Section 20057. (d) This section shall not apply to any of the following: (1) A person who becomes a school member on and after July 1, 1980, and any person who becomes a local member employed, on and after July 1, 1980, by a school district that is a contracting agency whether or not the person was ever a school member or local member prior to that date. (2) A state employee, with respect to sick leave credits earned as a state member under Section 21353.5, except that the member shall be entitled to receive credit under this section for the sick leave he or she has earned as a state member subject to any other retirement formula, provided the member has a sick leave credit balance remaining at the time of retirement. (e) For the purposes of this section, sick leave benefits provided to state employees pursuant to the state sick leave system shall be construed to mean compensation paid to employees on approved leaves of absence because of sickness. SEC. 24. Section 20963.1 of the Government Code is amended to read: 20963.1. (a) A state member whose effective date of retirement is within four months of separation from employment of the state, shall be credited at his or her retirement with 0.004 year of service for each unused day of educational leave credit, as certified to the board by the employer.  A day of unused educational leave is the equivalent of an eight-hour day.  The provisions of this section shall be effective for eligible state members who retire directly from state employment on and after January 1, 2000. (b) This section shall apply to eligible state members in state bargaining units that have agreed to this section in a memorandum of understanding, or as authorized by the Director of Human Resources for classifications of state employees that are excluded from the definition of "state employee" by paragraph (c) of Section 3513 of the Government Code. SEC. 25. Section 20965 of the Government Code is amended to read: 20965. A local miscellaneous member and a local safety member, whose effective date of retirement is within four months of separation from employment with the employer which granted the sick leave credit, shall be credited at his or her retirement with 0.004 year of service credit for each unused day of sick leave certified to the board by his or her employer.  A day of unused sick leave is the equivalent of an eight-hour day.  The certification shall report only those days of unused sick leave that were accrued by the member during the normal course of his or her employment and shall not include any additional days of sick leave reported for the purpose of increasing the member's retirement benefit. Reports of unused days of sick leave shall be subject to audit and retirement benefits may be adjusted where improper reporting is found. This section shall not apply to any contracting agency nor to the employees of a contracting agency until the agency elects to be subject to this section by contract or by amendment to its contract made in the manner prescribed for approval of contracts, except that an election among the employees is not required, or, in the case of contracts made after September 26, 1974, by express provision in the contract making the contracting agency subject to this section. This section shall only apply to members who retire after the effective date of the contract amendments. SEC. 26. Section 21499 of the Government Code is amended to read: 21499. (a) Notwithstanding Section 21498, when either an initial payment of a preretirement or postretirement death allowance or a preretirement or postretirement lump-sum benefit is payable in an amount of ten dollars ($10) or more, it shall be authorized to the Controller within 45 days of receipt by this system of all the necessary information, including the return of warrants issued or any overpayment outstanding after the date of the death of the annuitant. (b) If any payment is not made within that time limitation, the payment shall also include interest at the  greater of the interest crediting rate specified in Section 20178 or the net earnings rate (including capital gains and losses) in effect at the time the payment is made,   default interest rate established in Section 1 of Article XV of the California Constitution  for time following the expiration of that time limitation. SEC. 27. Section 21626.5 of the Government Code is amended to read: 21626.5.  (a)    For purposes of Section 21624, 21626, 21627, 21629, or 21630, a surviving domestic partner shall be treated in the same manner as a surviving spouse if either:  (a)   (1)  The domestic partnership was registered for one year prior to the member's service retirement date or at the disability retirement date and continuously until the date of the member's death.  (b)   (2)  The member retired prior to January 1, 2006, and both the member and his or her domestic partner, who currently are in a state-registered domestic partnership, sign an affidavit stating that, at the time prescribed by the retirement system for married spouses to qualify for survivor continuance, the member and the domestic partner would have qualified to be registered as domestic partners pursuant to Section 297 of the Family Code.  (b) For purposes of Section 21624, 21626, 21627, 21629, or 21630, an individual who is the same gender as the member shall be treated in the same manner as a surviving spouse if the following conditions are satisfied:   (1) The individual entered into marriage with the member on or after the date when individuals of the same gender were legally allowed to enter into marriage and was married continuously until the date of the member's death.   (2) Either of the following applies:   (A) The member retired prior to the date when individuals of the same gender were legally allowed to enter into marriage, and both the member and his or her spouse, who are currently married, sign an affidavit stating that, at the time prescribed by the retirement system for spouses to qualify for a survivor continuance, the member and the individual would have qualified to be legally married had it been legally possible for people of the same gender to marry.   (B) The individual originally qualified to become a surviving spouse under subdivision (a).