20570-20593
GOVERNMENT CODE
SECTION 20570-20593
20570. (a) If the contract has been in effect for at least five
years and was approved by an ordinance or resolution adopted by the
governing body of the contracting agency, the governing body may
terminate it by the adoption of a resolution giving notice of
intention to terminate, and by the adoption, not less than one year
thereafter by the affirmative vote of two-thirds of the members of
the governing body, of an ordinance or resolution terminating the
contract. Termination shall be effective with board approval on the
date designated in the ordinance or resolution terminating the
contract.
(b) If the contract is a joint contract and the joint contract has
been in effect for at least five years, the contract may be
terminated by the adoption of trial court and county resolutions
giving notice of intention to terminate, and by the adoption, not
less than one year thereafter by the affirmative vote of two-thirds
of the members of the governing body of the county, and by the
presiding officer of the trial court, of an ordinance or resolution
terminating the contract. Termination shall be effective with board
approval on the date designated in the ordinance terminating the
contract.
20571. If the contract has been in effect for at least five years
and was approved by an ordinance adopted by a majority vote of the
electorate, termination by the contracting agency may be effected not
less than one year after authority has been granted by ordinance
adopted by a majority vote of the electorate of the contracting
agency voting thereon. Termination shall be effective with board
approval on the date designated in the ordinance or resolution
terminating the contract.
20571.5. Notwithstanding any other provision of this article, the
board may enter into an agreement with the governing body of a
contracting agency for the termination of a portion of the contract
with respect to a member classification with no active employees. The
terms of the agreement shall be reflected in an amendment to the
agency's contract with the board. The board may require that the
portion of the contract being terminated be in effect for at least
five years. Upon the termination of a portion of a contract, the
board shall do the following:
(a) Hold for the benefit of the members of this system who are
credited with service rendered as employees of the contracting
agency, and for the benefit of beneficiaries of this system who are
entitled to receive benefits on account of that service, the portion
of the accumulated contributions then held by this system and
credited to, or as having been made by, the agency. This portion of
the accumulated contributions shall not exceed the difference between
the following:
(1) An amount actuarially equivalent, including contingencies for
mortality fluctuations, as determined by the actuary and approved by
the board, to the amount this system is obligated to pay after the
effective date of termination to, or on account of, persons who are
or have been employed by, and on account of service rendered by them
to, the agency.
(2) The contributions, with credited interest thereon, then held
by this system as having been made by those persons as employees of
the agency.
(b) Merge all plan assets and liabilities into the terminated
agency pool to provide exclusively for the payment of benefits to
members of these plans.
(1) If the sum of the accumulated contributions is less than the
actuarial equivalent specified in paragraph (1) of subdivision (a),
the agency shall contribute to the system, under the terms fixed by
the board, an amount equal to the difference between the amount
specified in paragraph (1) of subdivision (a) and the accumulated
contributions.
(2) If the sum of accumulated contributions exceeds the amount
specified in paragraph (1) of subdivision (a), the excess
contributions shall be merged into the active plan or plans of the
contracting agency, as determined by the chief actuary.
(c) Enter into an agreement with the governing body of a
contracting agency terminating a portion of a contract in order to
ensure both of the following:
(1) The final compensation used in the calculation of benefits of
its employees is calculated in the same manner as the benefits of
employees of agencies that are not terminating, regardless of whether
the employees of the terminating agency retire directly from
employment with the contracting agency terminating a portion of a
contract or continue in other public service.
(2) Related necessary adjustments in the employer's contribution
rate are made, from time to time, by the board prior to the date of
termination to ensure adequate funding of benefits or the governing
body of the contracting agency terminating a portion of a contract
and the board agree to another actuarially sound payment technique,
including a lump-sum payment at termination.
20572. (a) If a contracting agency fails for 30 days after demand
by the board to pay any installment of contributions required by its
contract, or fails for three months after demand by the board
therefor to file any information required in the administration of
this system with respect to that agency's employees, or if the board
determines that the 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 Section 20537, if a contracting agency fails
to remit 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, the contracting
agency may be assessed a penalty of 10 percent of the delinquent
amount. That penalty may be assessed once during each 30-day period
that the amount remains unpaid.
20573. Notwithstanding any other provision of law, the board may
negotiate with the governing board of the terminating agency, or the
governing board of any agency or agencies which may be assuming any
portion of the liabilities of the terminating agency as to the
effective date of termination and the terms and conditions of the
termination and of the payment of unfunded liabilities.
For purposes of payment of unfunded actuarial liabilities this
section shall also apply to inactive contracting agencies, or an
inactive member category as determined by the board.
20574. A terminated agency shall be liable to the system for any
deficit in funding for earned benefits, as determined pursuant to
Section 20577, interest at the actuarial rate from the date of
termination to the date the agency pays the system, and for
reasonable and necessary costs of collection, including attorney's
fees. The board shall have a lien on the assets of a terminated
contracting agency, subject only to a prior lien for wages, in an
amount equal to the actuarially determined deficit in funding for
earned benefits of the employee members of the agency, interest, and
collection costs. The assets shall also be available to pay actual
costs, including attorneys' fees, necessarily expended for collection
of the lien.
20575. Notwithstanding any other provision of this part to the
contrary, upon request of a terminating agency, the board shall enter
into an agreement with the governing body of a terminating agency in
order to ensure that (a) the final compensation used in the
calculation of benefits of its employees shall be calculated in the
same manner as the benefits of employees of agencies that are not
terminating, regardless of whether they retire directly from
employment with the terminating agency or continue in other public
service; and (b) related necessary adjustments in the employer's
contribution rate are made, from time to time, by the board prior to
the date of termination to ensure that benefits are adequately funded
or any other actuarially sound payment technique, including a
lump-sum payment at termination, is agreed to by the governing body
of the terminating agency and the board.
The terminating agency that will cease to exist shall notify the
board not sooner than three years nor later than one year prior to
its termination date of its intention to enter into agreement
pursuant to this section. The terms of the agreement shall be
reflected in an amendment to the agency's contract with the board.
If the board, itself, determines that it is not in the best
interests of the system, it may choose not to enter into an agreement
pursuant to this section.
20576. (a) Upon the termination of a contract, the board shall hold
for the benefit of the members of this system who are credited with
service rendered as employees of the contracting agency and for the
benefit of beneficiaries of this system who are entitled to receive
benefits on account of that service, the portion of the accumulated
contributions then held by this system and credited to or as having
been made by the agency that does not exceed the difference between
(1) an amount actuarially equivalent, including contingencies for
mortality fluctuations, as determined by the actuary and approved by
the board, the amount this system is obligated to pay after the
effective date of termination to or on account of persons who are or
have been employed by, and on account of service rendered by them to,
the agency, and (2) the contributions, with credited interest
thereon, then held by this system as having been made by those
persons as employees of the agency.
(b) All plan assets and liabilities of agencies whose contracts
have been terminated shall be merged into a single pooled account to
provide exclusively for the payment of benefits to members of these
plans. Recoveries from terminated agencies for any deficit in funding
for earned benefits for members of plans of terminated agencies, and
interest thereon, shall also be deposited to the credit of the
terminated agency pool.
20577. If, at the date of termination, the sum of the accumulated
contributions credited to, or held as having been made by, the
contracting agency and the accumulated contributions credited to or
held as having been made by persons who are or have been employed by
the agency, as employees of the agency, is less than the actuarial
equivalent specified in clause (1) of subdivision (a) of Section
20576, the agency shall contribute to this system under terms fixed
by the board, an amount equal to the difference between the amount
specified in clause (1) of subdivision (a) of Section 20576 and the
accumulated contributions. The amount of the difference shall be
subject to interest at the actuarial rate from the date of contract
termination to the date the agency pays this system. If the agency
fails to pay to the board the amount of the difference, all benefits
under the contract, payable after the board declares the agency in
default therefor, shall be reduced by the percentage that the sum is
less than the amount in clause (1) of subdivision (a) of Section
20576 as of the date the board declared the default. If the sum of
the accumulated contributions is greater than the amount in clause
(1) of subdivision (a) of Section 20576, an amount equal to the
excess shall be paid by this system to the contracting agency,
including interest at the actuarial rate from the date of contract
termination to the date this system makes payment. The market value
used shall be the value calculated in the most recent annual closing.
The right of an employee of a contracting agency, or his or her
beneficiary, to a benefit under this system, whether before or after
retirement or death, is subject to the reduction.
20577.5. Notwithstanding Section 20577, the board may merge a plan
that has been terminated pursuant to Section 20572 into the
terminated agency pool without benefit reduction, or with a lesser
reduction, if (a) the board has made all reasonable efforts to
collect the amount necessary to fully fund the liabilities of the
plan, and (b) the board finds that the merger of the plan into the
terminated agency pool without benefit reduction will not impact the
actuarial soundness of the terminated agency pool.
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.
20579. For purposes of Sections 20576 and 20577 in the case of a
contracting agency that is an employer for purposes of Chapter 9
(commencing with Section 20790), the contracting agency shall cease
to be an employer on the day preceding the effective date of
termination, and all accumulated contributions held by this system
and made by or credited to the contracting agency shall be determined
in accordance with Section 20834.
20580. Upon the termination of a contract, all memberships in this
system existing because of that contract continue in existence to the
extent that there are accumulated contributions to the credit of
each local member, but any member may elect to withdraw his or her
accumulated contributions if the member is not employed in a position
subject to coverage by the system at the time of election. The
status of any member who does not withdraw his or her accumulated
contributions shall be the same as if the public agency had continued
as a contracting agency. The membership of any member who is
eligible and who elects to withdraw his or her accumulated
contributions shall be terminated forthwith, and he or she shall not
be entitled to any further benefit based upon service credited as an
employee of the contracting agency, nor shall he or she have the
right to redeposit those withdrawn contributions upon again becoming
a member of this system. The portion of the contributions of the
contracting agency held under Section 20576 to the credit of each
member shall be determined by the board, and may be adjusted from
time to time prior to termination of membership. A member whose
membership continues under this section is subject to the same age
and incapacity requirements as apply to other members for service or
for disability retirement, but he or she is not subject to a minimum
service requirement. Except as provided in Section 20578, he or she
shall receive the retirement benefits as his or her accumulated
contributions, together with the portion of the excess of the
contributions of the contracting agency as are credited to him or
her, shall provide, as determined by the board, but the provisions of
this part relative to minimum retirement allowances shall not apply
to him or her, nor shall those benefits exceed the benefits provided
by the contract prior to its termination. Upon the death of a member,
the basic death benefit shall be his or her accumulated
contributions.
20581. If a public agency that terminated its contract enters into
a contract for participation in this system, the contract may provide
for increase in benefits of persons retired or members who retained
rights under this system, if the benefits were reduced under this
article at the time of termination, to the level provided in the
contract for members, and for redeposit of any contributions for
service to the agency not credited under a local system maintained by
the agency after termination, withdrawn at termination by a person
who becomes a member on contract date. Unless the redeposit is made,
the member shall not receive credit for the service. All service
rendered prior to the contract date and credited as a result of the
contract shall constitute prior service whether or not rendered
during the period of the terminated contract. All liabilities for
service performed under the terminated contract shall become
liabilities of a plan under the new contract. The ratio of assets to
liabilities that existed at the time the previous contract was
terminated shall be used to calculate the amount of assets to be
transferred to a plan under the new contract.
20582. Any event occurring on or after the date on which
termination of a contract becomes effective shall not be considered
in determining the right of any member to retire for service or
disability or the rights of his or her beneficiaries.
20583. The right to a retirement allowance, of a person who had
retired prior to the effective date of the termination of a contract,
or who has qualified and applied for retirement by written document
received at the board's office in Sacramento, prior to the effective
date, even though the board does not approve the application until a
later date, and the right of any person to a benefit on account of a
death that occurred prior to the effective date, is not affected by
termination of the contract, unless the contracting agency fails to
make the contributions required of it because of the participation of
its employees in this system.
20584. The board may postpone the payment of any amount due a
contracting agency on termination of a contract if payment would
require the sale of securities, that, in the opinion of the board,
would affect adversely the interests of this system.
If the board delays a payment longer than the period reasonably
necessary for the determination of the amount due and for the
necessary action by the board, interest shall be allowed on the
amount remaining due and unpaid from time to time at the rate then in
use under this system, and paid to the contracting agency at the
same time and in the manner as the original amount due.
20585. (a) Notwithstanding any other provision of this article, the
board may enter into an agreement with the governing body of a
contracting agency whose contract has been in effect for at least
five years and the board of supervisors of a county maintaining a
county retirement system for termination of the contracting agency's
participation in this system and inclusion of its employees in the
county retirement system.
(b) The agreement shall contain provisions the board finds
necessary to protect the interests of this system, including
provisions for determination of the amount, time, and manner of
transfer of cash or securities, or both, to be transferred to the
county system representing the value of the interests in the
retirement fund of the contracting agency and its employees by reason
of accumulated contributions credited to the agency and its
employees. However, the amount transferred may not exceed the amount
of the accumulated contributions. Any amount representing the
difference between the value of the interests in the retirement fund
of the contracting agency and its employees, and the accumulated
contributions credited to the agency and its employees, shall be
credited to the reserve under Section 20174. The agreement may also
contain any other provisions that the board deems necessary to
address issues related to the transfer, including, but not limited
to, benefits subject to an outstanding domestic relations order and
benefits subject to a lien.
(c) All liability of this system with respect to members and
retired persons under the contract shall cease and shall become the
liability of the county system as of the date of termination
specified in the agreement. Liability of the county retirement system
shall be for payment of benefits in accordance with Chapter 3
(commencing with Section 31450) of Part 3 of Division 4 of Title 3
applicable to it except that allowances of persons retired on the
termination date and their beneficiaries and of beneficiaries of
deceased members or retired persons who are receiving allowances on
that date, shall be continued in at least the amount provided under
the agency's contract as it was on that date. The termination may not
affect the contribution rate of any member in any other employment
under this system on the date of termination or any retirement
allowance or other benefit based on service to another employer being
paid on the termination date.
(d) Any member who becomes a member of a county retirement system
upon the contract termination shall be subject to this part and
Chapter 3 (commencing with Section 31450) of Part 3 of Division 4 of
Title 3 extending rights to a member or subjecting him or her to
limitations because of membership in another retirement system to the
same extent that he or she would have been had he or she been a
member of the county retirement system during his or her membership
in this system under the terminated contract.
(e) Upon execution of the agreement, a contracting agency that is
an employer under Chapter 9 (commencing with Section 20790) shall
cease to have that status, and the accumulated contributions of the
contracting agency shall be determined and thereafter held as
provided in Section 20834.
20586. The board may enter into an agreement in accordance with
Section 20585 for termination of a contract that has been in effect
for at least five years with respect to local firefighters if the
firefighting function of the contracting agency and local
firefighters have been transferred to a district which participates
in a county retirement system. The contract shall continue with
respect to all employees of the contracting agency other than local
firefighters.
20587. The board may enter into an agreement in accordance with
Section 20585 for termination of a contract that has been in effect
for at least five years with respect to local members if particular
functions of the contracting agency and local members have been
transferred to a district or a county service area that participates
in a county retirement system. The contract shall continue with
respect to all other employees of the contracting agency.
20588. (a) Notwithstanding any other provision of this article, the
board may, pursuant to this section and Section 31657, enter into an
agreement with the board of retirement of a county maintaining a
county retirement system, for termination of participation of a
public agency whose contract has been in effect for at least five
years in this system or the state with respect to certain safety
members who have ceased to be employed by the public agency or the
state and have been employed by a county, fire authority, or district
as a result of a transfer of firefighting or law enforcement
functions from the public agency or the state to the county, fire
authority, or district and inclusion of the former public agency
employees in that county retirement system.
(b) The agreement shall contain provisions the board finds
necessary to protect the interests of this system, including
provisions for determination of the amount, time, and manner of
transfer of cash or securities, or both, to be transferred to the
county system representing the actuarial value of the interests in
the retirement fund of the public agency or the state and the
transferred employees by reason of accumulated contributions credited
to that public agency or the state and the employees transferred.
The agreement may also contain any other provisions that the board
deems necessary to address issues related to the transfer, including,
but not limited to, benefits subject to an outstanding domestic
relations order and benefits subject to a lien. The agreement shall
apply only to employees who are employed by the county or district on
the effective date of the agreement.
(c) All liability of this system with respect to the members
transferred under that agreement shall cease and shall become the
liability of the county retirement system as of the date of transfer
specified in the agreement. Liability of the county retirement system
shall be for payment of benefits to transferred employees in
accordance with Chapter 3 (commencing with Section 31450) of Part 3
of Division 4 of Title 3.
(d) Any member transferred who becomes a member of a county
retirement system upon that transfer date shall be subject to
provisions of this part and of Chapter 3 (commencing with Section
31450) of Part 3 of Division 4 of Title 3 extending rights to a
member or subjecting him or her to limitations because of membership
in another retirement system to the same extent that he or she would
have been had he or she been a member of the county retirement system
during his or her membership in this system.
(e) This section shall apply only in Kern, Los Angeles, and Orange
Counties.
20589. (a) Notwithstanding any other provision of this article, the
board may enter into an agreement with the board of retirement of
the San Francisco City and County Employees' Retirement System, for
termination of participation of a public agency whose contract has
been in effect for at least five years in this system or the state
with respect to certain safety members who have ceased to be employed
by the public agency or the state and have been employed by the city
and county, fire authority, or district as a result of a transfer of
firefighting or law enforcement functions from the public agency or
the state to the city and county, fire authority, or district and
inclusion of the former public agency employees in that retirement
system.
(b) The agreement shall contain provisions the board finds
necessary to protect the interests of this system, including
provisions for determination of the amount, time, and manner of
transfer of cash or securities, or both, to be transferred to the
city and county system representing the actuarial value of the
interests in the retirement fund of the public agency or the state
and the transferred employees by reason of accumulated contributions
credited to that public agency or the state and the employees
transferred. The agreement may also contain any other provisions that
the board deems necessary to address issues related to the transfer,
including, but not limited to, benefits subject to an outstanding
domestic relations order and benefits subject to a lien. The
agreement shall apply only to employees who are employed by the city
and county or district on the effective date of the agreement.
(c) All liability of this system with respect to the members
transferred under that agreement shall cease and shall become the
liability of the San Francisco City and County Employees' Retirement
System as of the date of transfer specified in the agreement.
Liability of the city and county retirement system shall be for
payment of benefits to transferred employees.
(d) Any member transferred who becomes a member of the city and
county retirement system upon that transfer date shall be subject to
provisions of this part and the provisions of the San Francisco City
Charter and Administrative Code extending rights to a member or
subjecting him or her to limitations because of membership in another
retirement system to the same extent that he or she would have been
had he or she been a member of the city and county retirement system
during his or her membership in this system.
(e) This section shall apply only in the City and County of San
Francisco.
20590. (a) Notwithstanding any other provision of this article, the
board may enter into an agreement with the governing body of a
contracting agency, other than a housing authority, and the governing
body of a city with a population in excess of 2,000,000 and
maintaining its own retirement system, for termination of the
contracting agency's participation in this system and inclusion of
the employees in the city retirement system.
(b) The agreement shall contain provisions the board finds
necessary to protect the interests of this system, including
provisions for determination of the amount, time, and manner of
transfer of cash or securities, or both, to be transferred to the
city system representing the value of the interests in the retirement
fund of the contracting agency and its employees by reason of
contributions and interest credited to the agency and its employees.
The agreement may also contain any other provisions that the board
deems necessary to address issues related to the transfer, including,
but not limited to, benefits subject to an outstanding domestic
relations order and benefits subject to a lien.
(c) All liability of this system with respect to members and
retired persons under the contract shall cease and shall become the
liability of the city system as of the date of termination specified
in the agreement. Liability of the city system shall be for payment
of benefits to persons retired on the termination date and their
beneficiaries and of beneficiaries of deceased members in at least
the amount provided under the agency's contract as it was on that
date. The termination may not affect the contribution rate of any
member in any other employment under this system on the date of
termination or any retirement allowance or other benefit based on
service.
(d) Any member who becomes a member of a city system upon the
contract termination shall be subject to those provisions of this
part extending rights to a member or subjecting the member to
limitations because of membership in another retirement system to the
same extent that the member would have been had he or she been a
member of the city system during his or her membership in this system
under the terminated contract.
20591. Notwithstanding any other provision of this article, the
board may enter into an agreement in accordance with Section 20590
with the governing body of a contracting agency, and the governing
body of a city maintaining its own retirement system for termination
of the contracting agency's participation in this system with respect
to local firefighters and inclusion of those local firefighters in
that city retirement system if the firefighting function of the
contracting agency and the local firefighters have been transferred
to that city. The contract shall continue with respect to all
employees of the contracting agency other than local firefighters.
20592. Notwithstanding any other provision of law, when all or part
of an employer's function is transferred to an entity that is not an
employer, the board may, by contract between the board, the
employer, and the succeeding entity, transfer all or part of the
assets and liabilities accumulated in this system by the employer to
the succeeding entity.
Members employed by that employer shall have an individual
election whether all accumulated contributions shall be transferred
to the succeeding entity or left on deposit with this system.
The accumulated contributions may be directly transferred to the
succeeding entity by the board for those members who so request.
20593. Notwithstanding any other provision of law, when the
management of a health district is assumed by the governing body of
San Joaquin County, the contract shall be construed as a continuation
of the district's contract for all purposes of this part. Section
20834 shall not apply upon the execution of an agreement with the
board and the governing body of the county for the assumption.