1. (a) A contracting agency or school employer may report the value of all or part of the normal contributions required to be paid by a member, for an individual or “group or class” of employees.

   1. (1) The period of final compensation must be the 12 months or 36 months immediately preceding the effective date of retirement.
   2. (2) The provision must be fully funded for the group or class of employees, based on PERS' actuarial assumptions with the right of review set forth in subsection (b).
   3. (3) The provision must conform to federal Internal Revenue Code standards for “qualified plan status” of the System in Section 401(a), including “non-discrimination testing”.
   4. (4) The provision must be contained in applicable current written labor agreements as well as in adopted resolutions.
   5. (5) The conversion of EPMC to compensation earnable is an increase in payrate for all purposes.
   6. (6) If an employee does not provide 12 months or 36 months notice of retirement, the employer shall make necessary corrections to the payrate and report adjustments to PERS.
   7. (7) If an employee cancels his/her retirement date, this provision shall be applied to his/her new final compensation period.

   A contracting agency may also, by contract amendment(s), convert Employer-Paid Member Contributions (EPMC) to compensation earnable for a group or class of employees, only during the period of final compensation. A school employer may also, by contract amendment(s), convert EPMC to compensation earnable if all districts under the County Office of Education pass Resolutions for same.

   Either provision: (1) reporting the value of EPMC as compensation; or (2) converting EPMC to compensation earnable, can only be provided to an individual if the most closely related group also has the same EPMC provision.

   The contract amendment(s) to convert, must conform with the following standards as well as other applicable provisions of law:

2. (b) A contracting agency, school employer or recognized employee organization may request a review by PERS of the additional employer contributions required to fund the contract amendment provision to convert EPMC described in subsection (a). The request must comply with the following procedures:

   1. (1) PERS will provide written notice of the rate increase to the employer by certified mail. The employer will send a copy of PERS' written notice within ten days of its receipt to all affected employee organizations, by certified mail.
   2. (2) The request must be submitted in writing to PERS within 30 days of the date of certified receipt of the rate increase. The request should be addressed and submitted to the Actuarial Office, Public Employees' Retirement System, P.O. Box 942709, Sacramento, California, 94229-2709.
   3. (3) A request made by an employer must be accompanied by an ordinance or resolution adopted by the governing body stating the rationale and factual basis and a copy of the receipt of certified mail and proof of service that a written notice of the rate change was sent to specified employee organization(s). A request made by an employee group must be accompanied by a signed statement of an officer of the employee organization who is authorized to contractually bind the organization, setting forth the rationale and factual basis.

   4. (4) The request must contain actuarial evidence, prepared by a certified actuary independent of PERS, sufficient to demonstrate why a different rate may be justified to fund the contract amendment. All economic and non-economic assumptions relied upon by the independent actuary must be submitted to PERS along with the request.

      PERS will acknowledge the request in writing within 15 calendar days of its receipt. PERS will issue a substantive determination to grant or deny the request for a different rate within 45 days from the date of acknowledgement. PERS will specify the reason(s) for its grant or denial, and will give the requestor a copy of all actuarial evidence and any other factual data relied upon in making its determination.

3. (c) An employer or recognized employee organization directly affected by the PERS determination may petition the Board of Administration to adopt a different rate for fully funding the conversion of EPMC during final compensation, based on the administrative record established during the review. The Board will not conduct an administrative hearing in accordance with the Administrative Procedure Act, but will respond to the petition in open session at one of its regularly scheduled meetings.

   Both the petitioner and PERS may submit a written statement to the Board in support of its position in advance of the meeting. This statement must not be longer than three pages, single spaced. It must be received by the Executive Office, Public Employees' Retirement System, P.O. Box 942701, Sacramento, CA 94229-2701, at least 15 days prior to the scheduled meeting.

   Research Note: See Internal Revenue Code Sections 401 and 415; Oden v. Public Employees' Retirement System (1994) 23 Cal.App.4th 194 [28 Cal.Rptr. 388]; City of Sacramento v. Public Employees' Retirement System (1991) 229 Cal.App.3d 1470 [280 Cal.Rptr. 847].

Note: Authority cited: Sections 20120-20124 and 21760, Government Code. Reference: Sections 20691, 20692, 20636 and 20636.1, Government Code.

History

1. New section filed 7-5-94 as an emergency; operative 7-5-94 (Register 94, No. 27). A Certificate of Compliance must be transmitted to OAL by 11-2-94 or emergency language will be repealed by operation of law on the following day.

2. Certificate of Compliance as to 7-5-94 order transmitted to OAL 10-28-94; disapproved by OAL and order of repeal as to 7-5-94 order filed on 12-14-94 (Register 94, No. 50).

3. New section refiled 12-15-94 as an emergency, with amendments; operative 12-15-94 (Register 94, No. 50). A Certificate of Compliance must be transmitted to OAL by 4-14-95 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 12-15-94 order including amendments transmitted to OAL 4-11-95 and filed 5-23-95 (Register 95, No. 21).

5. Change without regulatory effect amending Note filed 9-22-2011 pursuant to section 100, title 1, California Code of Regulations (Register 2011, No. 38).