(a)  Notwithstanding any other provision of this chapter, the board shall adjust the purchasing power protection benefits payable pursuant to Sections 24415, 24416, and 24417 in accordance with subdivisions (b) and (c) of this section.

(b) If the board, in adopting the actuarial projection described in subdivision (a) of Section 22954.1, determines that the annual transfers to the Supplemental Benefit Maintenance Account described in Section 22954, combined with all other anticipated sources of income to the account, are likely to be less than sufficient over the term established by the board to continue providing the purchasing power protection being provided at the time of the projection, it shall identify the maximum level of purchasing power protection benefits that it expects to be sustainable over that term, as specified in subdivision (c) of Section 22954.1. The board, upon making the determination specified in subdivision (c) of Section 22954.1, shall reduce the purchasing power protection benefits payable pursuant to Sections 24415, 24416, and 24417 to the maximum sustainable level identified under this subdivision, except that these benefits shall not be adjusted below the 80 percent purchasing power protection level unless the board has made the determination of insufficient funds described in subdivision (a) of Section 24416.

(c) If the board, in adopting the actuarial projection described in subdivision (a) of Section 22954.1, determines that the annual transfers to the Supplemental Benefit Maintenance Account described in Section 22954, combined with all other anticipated sources of income to the account, are likely to be more than sufficient over the term established by the board to continue providing the purchasing power protection being provided at the time of the projection, it shall identify the maximum level of purchasing power protection benefits that it expects to be sustainable over that term, as specified in subdivision (b) of Section 22954.1. The board, upon making the determination specified in subdivision (b) of Section 22954.1, shall increase the purchasing power protection benefits payable pursuant to Sections 24415, 24416, and 24417 to the maximum sustainable level identified under this subdivision, except that these benefits shall not be adjusted above the 85 percent purchasing power protection level.

(d) If the board identifies, pursuant to subdivision (b) of Section 22954.1, that the maximum level of purchasing power protection benefits it expects to be sustainable over the term established by the board is greater than the 85 percent level, it shall develop one or more proposals for options for the use of the anticipated Supplemental Benefit Maintenance Account moneys in excess of those believed to be necessary to sustain purchasing power protection benefits at the 85 percent level over the term established by the board. The options that the board proposes for use of these moneys shall be for the exclusive benefit of members and beneficiaries, and at least one of these proposed options shall be an increase in benefits for any surviving members who retired prior to January 1, 1999, and any surviving beneficiaries of members who retired prior to January 1, 1999. The board shall either include a summary of these proposed options in the report described in subdivision (f) of Section 22954.1 or, within 60 days after submission of that report, submit a separate letter to the recipients of the report described in subdivision (f) of Section 22954.1 that contains a summary of these proposed options. The board shall also submit a summary of these proposed options to the Governor.

(e) The board shall adopt and, after such adoption, may amend and repeal regulations concerning its powers described in this section, and it shall file these regulations, and amended and repealed regulations, with the Secretary of State. The adoption, amendment, or repeal of a regulation authorized by this section is hereby exempted from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(Added by Stats. 2008, Ch. 751, Sec. 14. Effective September 30, 2008.)