Article 1 - General Provisions

California Government Code — §§ 7500-7514.7

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Sections (39)

Added by Stats. 1974, Ch. 1478.

Any city with a population of 1,000,000 or more, and any agency thereof, which has established any pension and retirement plan which requires officers and employees of one sex to pay greater contributions than those of another sex who are the same age shall revise the plan so that the contributions are the same commencing with contributions for service on and after January 1, 1975. This section shall not be construed as requiring or authorizing an increase in the contributions of any members of a pension and retirement plan.

This section shall not be applicable to the Public Employees’ Retirement System.

§ 7500.5

Added by Stats. 2012, Ch. 853, Sec. 1. (AB 1248) Effective January 1, 2013.

(a)This section shall only apply to the City of San Diego.

(b)For the purposes of this section, the following definitions shall apply:

(1)“Federal system” means the old age, survivors, disability, and health insurance provisions of the federal Social Security Act (42 U.S.C. Sec. 301 et seq.).

(2)“Local public employer” means the City of San Diego.

(c)A local public employer shall provide coverage under the federal system to all employees who are not covered under a

defined benefit plan.

(d)The requirements of this section shall not apply with regard to replacing or changing an employer’s defined contribution plan that was in place on July 1, 2012, unless the defined contribution plan will replace or change the employer’s existing defined benefit plan.

§ 7501

Amended by Stats. 1982, Ch. 821, Sec. 1.

It is the intent and purpose of the Legislature, in enacting this chapter, to safeguard the solvency of all public retirement systems and funds. The Legislature finds and declares that public agencies maintaining retirement systems can benefit from periodic and independent analysis of their financial condition. It is the purpose of Sections 7502, 7503, and 7504 to enable the State Controller to gather information to compare and evaluate the financial condition of such systems and to make such comparisons and evaluations.

§ 7502

Amended by Stats. 2016, Ch. 415, Sec. 2. (AB 2375) Effective January 1, 2017.

The Controller shall review the annual financial report of each state and local public retirement system submitted pursuant to Section 7504 giving particular consideration to the adequacy of funding of each system. The Controller shall also review the triennial valuation of each public retirement system submitted pursuant to Section 7504 and shall give particular consideration to the assumption concerning the inflation element in salary and wage increases, mortality, service retirement rates, withdrawal rates, disability retirement rates, and rate of return on total assets.

The

Controller shall establish an advisory committee that shall include actuaries who have attained the designation of Associate or Fellow of the Society of Actuaries and state and local public retirement system administrators to assist in carrying out the duties imposed by this section.

§ 7503

Amended by Stats. 1978, Ch. 388.

All state and local public retirement systems shall prepare an annual report in accordance with generally accepted accounting principles.

§ 7504

Amended by Stats. 2016, Ch. 415, Sec. 3. (AB 2375) Effective January 1, 2017.

(a)All state and local public retirement systems shall, not less than triennially, secure the services of an actuary. For the purposes of this section, “actuary” means an actuary who satisfies the qualification standards for actuaries issuing statements of actuarial opinion in the United States with regard to pensions or other postemployment benefits and who has demonstrated experience in public retirement systems. The actuary shall perform a valuation of the system utilizing actuarial assumptions and techniques established by the agency that are, in the aggregate, reasonably related to the experience and the actuary’s best estimate of anticipated experience under the system. Any differences between the actuarial assumptions and techniques used by the actuary that differ significantly from

those established by the agency shall be disclosed in the actuary’s report and the effect of the differences on the actuary’s statement of costs and obligations shall be shown.

(b)All state and local public retirement systems shall secure the services of a qualified person to perform an attest audit of the system’s financial statements. A qualified person means any of the following:

(1)A person who is licensed to practice as a certified public accountant in this state by the California Board of Accountancy.

(2)A person who is registered and entitled to practice as a public accountant in this state by the California Board of Accountancy.

(3)A county auditor in any county subject to the County Employees Retirement Law of 1937 (Chapter 3 (commencing

with Section 31450) of Part 3 of Division 4 of Title 3).

(4)A county auditor in any county having a pension trust and retirement plan established pursuant to Section 53216.

(c)All state and local public retirement systems shall submit audited financial statements to the Controller at the earliest practicable opportunity within six months of the close of each fiscal year. However, the Controller may delay the filing date for reports due in the first year until the time as report forms have been developed that, in his or her judgment, will satisfy the requirements of this section. The financial statements shall be prepared in accordance with generally accepted accounting principles in the form and manner

prescribed by the Controller. The penalty prescribed in Section 53895 shall be invoked for failure to comply with this section. Upon a satisfactory showing of good cause, the Controller may waive the penalty for late filing provided by this subdivision.

(d)The Controller shall compile and publish a report annually on the financial condition of all state and local public retirement systems containing, but not limited to, the data required in Section 7502. The report shall be published within 12 months of the receipt of the information, and in no case later than 18 months after the end of the fiscal year upon which the information in the report is

based.

§ 7505

Added by Stats. 1979, Ch. 454.

Every state and local public retirement system shall permit any person entitled to the receipt of benefits to designate that payment of such benefits shall be transmitted to a bank, savings and loan association, or credit union for deposit in the person’s account, and the transmittal of such payment pursuant to this section shall discharge the public agency’s obligations in respect to such payment.

§ 7506

Added by Stats. 1982, Ch. 1317, Sec. 1.

Notwithstanding any other provision of law, any person entitled to the receipt of benefits from any state retirement system may authorize the payment of the benefits to be directly deposited by electronic fund transfer into the person’s account at the financial institution of his or her choice under a program for direct deposit by electronic transfer established by the Controller pursuant to Section 7506.5. The direct deposit shall discharge the state agency’s obligation in respect to that payment.

§ 7506.5

Amended by Stats. 1985, Ch. 1344, Sec. 1. Operative January 1, 1987, by Sec. 3 of Ch. 1344.

The Controller shall make an agreement with one or more financial institutions participating in the Automated Clearing House pursuant to the local rules, and shall establish a program, for the direct deposit by electronic fund transfer of the benefits, after any withholding required by law and authorized deductions, of any person entitled to the receipt of benefits from any state retirement system who authorizes the direct deposit thereof by electronic fund transfer into the person’s account at the financial institution of his or her choice.

§ 7507

Amended by Stats. 2016, Ch. 415, Sec. 4. (AB 2375) Effective January 1, 2017.

(a)For the purpose of this section:

(1)“Actuary” means an actuary as defined in Section 7504.

(2)“Future annual costs” includes, but is not limited to, annual dollar changes, or the total dollar changes involved when available, as well as normal cost and any change in accrued liability.

(b)(1) Except as provided in paragraph (2), the Legislature and local legislative bodies, including community college district governing boards, when considering changes in retirement benefits or other postemployment benefits, shall secure the services of an actuary to provide a statement of the actuarial impact upon future annual

costs, including normal cost and any additional accrued liability, before authorizing changes in public retirement plan benefits or other postemployment benefits.

(2)The requirements of this subdivision do not apply to:

(A)An annual increase in a premium that does not exceed 3 percent under a contract of insurance.

(B)A change in postemployment benefits, other than pension benefits, mandated by the state or federal government or made by an insurance carrier in connection with the renewal of a contract of insurance.

(c)(1) (A) With regard to local legislative bodies, including community college district governing boards, the future costs of changes in retirement benefits or other

postemployment benefits, as determined by the actuary, shall be made public at a public meeting at least two weeks prior to the adoption of any changes in public retirement plan benefits or other postemployment benefits. If the future costs of the changes exceed one-half of 1 percent of the future annual costs, as defined in paragraph (2) of subdivision (a), of the existing benefits for the legislative body, an actuary shall be present to provide information as needed at the public meeting at which the adoption of a benefit change shall be considered. The adoption of any benefit to which this section applies shall not be placed on a consent calendar.

(B) The requirements of this paragraph do not apply to:

(i)An annual increase in a premium that does not exceed 3 percent under a contract of insurance.

(ii) A change

in postemployment benefits, other than pension benefits, mandated by the state or federal government or made by an insurance carrier in connection with the renewal of a contract of insurance.

(2)With regard to the Legislature, the future costs as determined by the actuary shall be made public at the policy and fiscal committee hearings to consider the adoption of any changes in public retirement plan benefits or other postemployment benefits. The adoption of any benefit to which this section applies shall not be placed on a consent calendar.

(d)Upon the adoption of any benefit change to which this section applies, the person with the responsibilities of a chief executive officer in an entity providing the benefit, however that person is denominated, shall acknowledge in writing that he or she understands the current and future cost of the benefit as determined by the actuary.

For the adoption of benefit changes by the state, this person shall be the Director of Human Resources.

(e)The requirements of this section do not apply to a school district or a county office of education, which shall instead comply with requirements regarding public notice of, and future cost determination for, benefit changes that have been enacted to regulate these entities. These requirements include, but are not limited to, those enacted by Chapter 1213 of the Statutes of 1991 and by Chapter 52 of the Statutes of 2004.

§ 7507.2

Amended by Stats. 2016, Ch. 415, Sec. 5. (AB 2375) Effective January 1, 2017.

(a)There is hereby enacted the California Actuarial Advisory Panel. The panel shall provide impartial and independent information on pensions, other postemployment benefits, and best practices to public agencies and shall meet quarterly.

(b)The responsibilities of the California Actuarial Advisory Panel shall include, but are not limited to:

(1)Defining the range of actuarial model policies and best practices for public retirement plan benefits, including pensions and other postemployment benefits.

(2)Developing pricing and disclosure standards for California public sector benefit

improvements.

(3)Developing quality control standards for California public sector actuaries.

(4)Gathering model funding policies and practices.

(5)Replying to policy questions from public retirement systems in California.

(6)Providing comment upon request by public agencies.

(c)The California Actuarial Advisory Panel shall consist of eight members. Each member shall be an actuary who has attained the designation of Associate or Fellow of the Society of Actuaries and who has demonstrated experience with public sector clients. Members shall be appointed by the entities listed below, and each member shall serve a three-year term, provided that, in the initial appointments only, the

panelists named by the University of California, the Senate, and one of the panelists named by the Governor shall serve two-year terms. The Governor shall appoint two panelists, and one panelist shall be appointed by each of the following:

(1)The Teachers’ Retirement Board.

(2)The Board of Administration of the Public Employees’ Retirement System.

(3)The State Association of County Retirement Systems.

(4)The Board of Regents of the University of California.

(5)The Speaker of the Assembly.

(6)The Senate Committee on Rules.

(d)The California Actuarial

Advisory Panel shall be located in the Controller’s office, which shall provide support staff to the panel.

(e)The opinions of the California Actuarial Advisory Panel are nonbinding and advisory only. The opinions of the panel shall not, in any case, be used as the basis for litigation.

(f)A member of the California Actuarial Advisory Panel shall receive reimbursement for expenses that shall be paid by the authority that appointed the member.

(g)The California Actuarial Advisory Panel shall report to the Legislature on or before February 1 of each year.

§ 7507.5

Added by Stats. 1984, Ch. 268, Sec. 16.95. Effective June 29, 1984.

It is the intent of the Legislature that the Regents of the University of California provide written notice to the Legislature of any proposed changes to retirement plan benefits, employer or employee contribution rates, or actuarial assumptions affecting the University of California Retirement System, at least 60 days prior to the effective date thereof. The written notice shall be provided to the Joint Legislative Budget Committee and the fiscal subcommittees and shall consist of:

(a)A description and explanation of each specific proposed change to the benefit structure, contribution rates, or actuarial assumptions.

(b)The actuarial impact upon future annual costs of each proposed change.

§ 7508

Amended by Stats. 1994, Ch. 879, Sec. 1. Effective September 27, 1994. Operative November 9, 1994, by Sec. 16 of Ch. 879.

A retired member of a state retirement system, other than the University of California Retirement System, the Judges’ Retirement System, the Judges’ Retirement System II, and the State Teachers’ Retirement System, may, notwithstanding Section 9359.12, serve on a public board or commission and be entitled to receive for that service, per diem compensation for every day or portion thereof of actual attendance at meetings of the board or commission or any committee thereof, and necessary traveling expenses incurred in connection with the performance of his or her official duties, without loss or interruption of benefits provided by the system, so long as the service does not exceed a total of 50 meeting days.

This section shall not apply to service as a member of a board or commission the annual salary for which is prescribed by Chapter 6 (commencing with Section 11550) of Division 3 of Title 2.

§ 7508.5

Added by Stats. 2009, Ch. 301, Sec. 2. (AB 1584) Effective October 11, 2009.

Except as otherwise provided in Section 20098 or 31528 of this code, or Section 22212.5 of the Education Code, an individual who was a member of the retirement board of a public pension or retirement system, as defined in subdivision (h) of Section 17 of Article XVI of the California Constitution, or an administrator, executive officer, investment officer, or general counsel of that board, shall not, for a period of two years after leaving that position, for compensation, act as agent or attorney for, or otherwise represent, any other person except the public entity maintaining that pension or retirement system, by making any formal or informal appearance before, or any oral or written communication to,

the pension or retirement system, or any officer or employee thereof, if the appearance or communication is made for the purpose of influencing administrative or legislative action, or any action or proceeding involving the issuance, amendment, awarding, or revocation of a permit, license, grant, contract, or sale or purchase of goods or property.

§ 7509

Amended by Stats. 2006, Ch. 538, Sec. 236. Effective January 1, 2007.

(a)The restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any loans made by, or forbearances of, any state or local public retirement system, including, but not limited to, any public retirement system authorized and regulated by the State Teachers’ Retirement Law, the Public Employees’ Retirement Law, the County Employees Retirement Law of 1937, any public retirement system administered by the Teachers Retirement Board or Board of Administration of the Public Employees’ Retirement System, or any public retirement system acting pursuant to the laws of this state or the laws of any local agency.

(b)For the purposes of this section, “local agency” means county, city, city and county, district, school district, or any public or municipal corporation, political subdivision, or other public agency of the state, or any instrumentality of one or more of these agencies.

(c)This section creates and authorizes any state or local retirement system as an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution.

§ 7510

Amended by Stats. 2015, Ch. 454, Sec. 1. (SB 803) Effective January 1, 2016.

(a)(1) Except as provided in subdivision (b), a public retirement system, which has invested assets in real property and improvements thereon for business or residential purposes for the production of income, shall pay annually to the city or county, in whose jurisdiction the real property is located and has been removed from the secured roll, a fee for general governmental services equal to the difference between the amount that would have accrued as real property secured taxes and the amount of possessory interest unsecured taxes paid for that property. The governing bodies of local entities may adopt ordinances and regulations authorizing retirement systems to invest assets in real property subject to the foregoing

requirements.

(2)This subdivision shall not apply to any retirement system which is established by a local governmental entity if that entity is presently authorized by statute or ordinance to invest retirement assets in real property.

(3)This subdivision shall not apply to property owned by any state public retirement system.

(b)(1) Whenever a state public retirement system, which has invested assets in real property and improvements thereon for business or residential purposes for the production of income, leases the property, the lease shall provide, pursuant to Section 107.6 of the Revenue and Taxation Code, that the lessee’s possessory interest may be subject to property taxation and that the party in whom the possessory interest is vested may be subject to the payment of property taxes

levied on that interest. The lease shall be valued in accordance with Section 21 of Title 18 of the California Code of Regulations, as that section was in effect on January 1, 2015, for the valuation of taxable possessory interests.

(2)Except as provided in this subdivision, the property shall be assessed and its taxes computed and collected in the same manner as privately owned property. The lessee’s possessory interest shall be placed on the unsecured roll and the tax on the possessory interest shall be subject to the collection procedures for unsecured property taxes.

(3)An investment by a state public retirement system in a legal entity that invests assets in real property and improvements thereon shall not constitute an investment by the state public retirement system of assets in real property and improvements thereon. For purposes of this paragraph, “legal entity”

includes, but is not limited to, partnership, joint venture, corporation, trust, or association. When a state public retirement system invests in a legal entity, the state public retirement system shall be deemed to be a person for the purpose of determining a change in ownership under Section 64 of the Revenue and Taxation Code.

(4)Notwithstanding any other provision of law, fees charged pursuant to this section and collected prior to July 1, 1992, shall be deemed valid and not refundable under any circumstance. Notwithstanding any other provision of law, fees, interest and penalties, if any, asserted to be due pursuant to this section that were not charged or collected prior to July 1, 1992, shall be deemed invalid and not collectable under any circumstance.

(5)This subdivision shall apply to the assessment, computation, and collection of taxes for the fiscal year beginning on

July 1, 1992, and each fiscal year thereafter. For the 1992–93 and 1993–94 fiscal years, in the case where a lessee’s possessory interest existed for less than the full fiscal year for which the tax was levied, the amount of tax shall be prorated in accordance with the number of months for which the lessee’s interest existed.

§ 7510.5

Added by Stats. 2018, Ch. 731, Sec. 2. (SB 964) Effective January 1, 2019. Repealed as of January 31, 2035, by its own provisions.

(a)For purposes of this section, the following definitions apply:

(1)“Board” means the Board of Administration of the Public Employees’ Retirement System or the Teachers’ Retirement Board.

(2)“Climate-related financial risk” means risk that may include material financial risk posed to the fund by the effects of the changing climate, such as intense storms, rising sea levels, higher global temperatures, economic damages from carbon emissions, and other financial and transition risks due to public policies to address climate change, shifting consumer attitudes, changing economics of traditional carbon-intense industries.

(3)“Fund” means the Public Employees’ Retirement Fund described in Section 20062 or the Teachers’ Retirement Fund described in Section 22167 of the Education Code.

(b)To the extent the board identifies climate-related financial risk as a material risk to the fund, that risk shall be analyzed.

(c)By January 1, 2020, and every three years thereafter, the board shall publicly report on its analysis of the climate-related financial risk of its public market portfolio, including the alignment of the fund with the Paris climate agreement and California climate policy goals and the exposure of the fund to long-term risks.

(d)The board shall include in the reports pursuant to subdivision (c) the methods and results of the board’s engagement related to climate-related financial risk with publicly traded

companies that are the most carbon intense, such as utilities, oil, and gas producers, within the fund. This component of the reports shall include both of the following:

(1)A summary of climate-related financial risk-related engagement activities undertaken.

(2)A description of additional action taken, or planned to be taken, by the board to address climate-related financial risk, including a list of proxy votes and shareholder proposals initiated by the board.

(e)Nothing in this section shall require the board to take action as described in this section unless the board determines in good faith that the action described in this section is consistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.

(f)This section shall remain in effect only until January 31, 2035, and as of that date is repealed.

§ 7511

Added by Stats. 1984, Ch. 1503, Sec. 4.

Notwithstanding any other provision to the contrary:

(a)A public retirement system may purchase insurance for its fiduciaries or for itself to cover liability or losses occurring by reason of the act or omission of a fiduciary, if the insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by the fiduciary.

(b)A fiduciary may purchase insurance to cover liability under this section from and for his or her own account.

(c)An employer or an employee organization may purchase insurance to cover potential liability of one or more persons who serve in a fiduciary capacity with regard to an employee benefit plan.

§ 7512

Amended by Stats. 1991, Ch. 281, Sec. 1.

Each state and local public pension or retirement system shall, on and after the 90th day following the completion of the annual audit of the system, mail or otherwise provide to any member who makes a request therefor and pays, if required, a fee, a concise annual report on the investments and earnings of the system and other related matters. The report shall be published in a low-cost format.

Each local public pension or retirement system may impose a fee for each copy of the report in an amount sufficient to pay all costs incurred in the preparation and dissemination of the report.

§ 7513

Added by Stats. 1992, Ch. 1047, Sec. 1. Effective January 1, 1993.

(a)In the case of a state or local retirement system or plan that is subject to Section 401(a)(31) of the Internal Revenue Code, if, under the terms of the system or plan, a person becomes entitled to a distribution that constitutes an “eligible rollover distribution” within the meaning of Section 401(a)(31)(C) of the Internal Revenue Code, the person may elect, under terms and conditions to be established by the administrator of the system or plan, to have the distribution or a portion thereof paid directly to a plan that constitutes an “eligible retirement plan” within the meaning of Section 401(a)(31)(D) of the Internal Revenue Code, as specified by the person. Upon the exercise of the election by a person with respect to a distribution or portion thereof, the distribution by the system or plan of the amount so designated, once distributable under the terms of the system or plan, shall be made in the form of a direct rollover to the eligible retirement plan so specified.

(b)The purpose and intent of this section is to enable the state and local retirement systems and plans that are subject to Section 401(a)(31) of the Internal Revenue Code of 1986, as amended, to comply with the requirements of that section regarding the provision of an election for direct rollover of certain plan distributions.

§ 7513.5