(a) (1) Notwithstanding any other law, in accordance with a schedule provided by the Department of Finance, the Controller shall, in accordance with paragraph (2), transfer up to six billion dollars ($6,000,000,000) to the Public Employees’ Retirement Fund from the Surplus Money Investment Fund and other funds in the Pooled Money Investment Account that accrue interest to the General Fund as a cash loan to supplement the state’s employer contributions for the 2017–18 fiscal year. The schedule provided by the Department of Finance shall specify the timing and amounts of transfers to the Public Employees’ Retirement Fund.
(2) Notwithstanding any other law, no sooner than 30 calendar days after the Department of Finance has provided the schedule of payments described in paragraph (1) to the Joint Legislative Budget Committee, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or his or her designee, may determine, the Controller shall transfer funds pursuant to the payment schedule established by the Department of Finance described in paragraph (1).
(3) The supplemental payment to the Public Employees’ Retirement Fund described in paragraph (1) shall be apportioned to the following state employee member categories, as directed by the Department of Finance, not to exceed the following amounts:
(A) Three billion six hundred million dollars ($3,600,000,000) to the state miscellaneous member category.
(B) One hundred million dollars ($100,000,000) to the state industrial member category.
(C) Three hundred million dollars ($300,000,000) to the state safety member category.
(D) One billion five hundred million dollars ($1,500,000,000) to the state peace officer/firefighter member category.
(E) Five hundred million dollars ($500,000,000) to the patrol member category.
(b) The supplemental payment to the Public Employees’ Retirement Fund described in subdivision (a) is to be applied to unfunded liabilities for state-level pensions in excess of current base amounts for the 2017–18 fiscal year, and the repayment of the loan principal and the payment of interest from the General Fund constitutes an obligation described in subclause (IV) of clause (ii) of subparagraph (B) of paragraph (1) of subdivision (c) of Section 20 of Article XVI of the California Constitution.
(c) (1) Interest payments on outstanding loan amounts shall be calculated using the quarter to date yield at the two-year constant maturity United States Treasury rate for the calendar quarter concluded directly prior to the calculation. The interest payments shall be paid on a quarterly basis beginning in the 2017–18 fiscal year and shall continue until the loan has been fully repaid. The loan principal and interest shall be fully repaid on or before June 30, 2030. The interest payments are interest earnings of the Pooled Money Investment Account and shall be apportioned pursuant to Sections 16475 and 16480.6, unless modified by an agreement among the Department of Finance, the Controller, and the Treasurer, to comply with other laws or regulations.
(2) Repayment of the loan principal and the payment of interest shall be made from the General Fund and other funds and accounts that are required by law to fund the state’s employer contribution to the Public Employees’ Retirement Fund. Notwithstanding Section 13340, moneys for the repayment of the loan principal and payment of interest are hereby continuously appropriated for this purpose, and the timing and amounts to be transferred shall be pursuant to calculations provided by the Department of Finance. The Department of Finance shall devise a tracking mechanism and maintain records of payment by each fund in each fiscal year. The Department of Finance shall develop a repayment schedule that allocates the amount to each fund after evaluation of its share of costs and its fund availability. The Department of Finance shall ensure each fund pays its proportionate share of the loan principal and interest over the course of the loan.
(3) The Department of Finance shall certify to the Controller, and shall include in the published fund condition statement of the applicable funds and accounts, the amount determined to be the share of the loan principal and interest due and payable from each fund for the fiscal year described in paragraph (2). The Department of Finance may determine and direct the Controller to advance from the General Fund an amount up to the equivalent of the non-General Fund portion of the payment in each fiscal year for the repayment of the loan principal or payment interest. Upon notification by the Department of Finance of the timing and the amounts to be transferred, the Controller shall transfer the amount of the loan principal repayment or interest payment, as applicable, from all funds to the Surplus Money Investment Fund or to the General Fund if repayment or payments are made in advance from the General Fund.
(d) If a fund has an insufficient fund balance for the repayment of loan principal or payment of interest, the Controller shall request that the Department of Finance provide direction on effecting the transfer and its timing. The implementation of this section shall not obstruct any of the trust purposes of the programs supported by funds on deposit in the Surplus Money Investment Fund and other funds in the Pooled Money Investment Account that accrue interest to the General Fund. Within one month after each calendar quarter is concluded, the Department of Finance shall submit a report to the Joint Legislative Budget Committee identifying funds or accounts with an insufficient fund balance and the direction provided to the Controller on these funds.
(e) On or before September 1, 2017, the Department of Finance shall submit a report to the Joint Legislative Budget Committee that describes the actuarial impact on contribution rates for each state employee member category receiving a supplemental payment under this section. The report shall describe the economic risks and benefits associated with making the cash loan provided by this section, including, but not limited to, a discussion of mechanisms available to adjust the repayment schedule and cost-allocation methodology.
(Added by Stats. 2017, Ch. 50, Sec. 3. (SB 84) Effective July 10, 2017.)
Last modified: October 25, 2018