(a) Where a contracting agency employer or a school employer has elected to pay all or a portion of the normal contributions of members of a group or class of employment pursuant to Section 20691, the employer may, pursuant to a labor policy or agreement, stop paying those contributions during the final compensation period applicable to the members and, instead, increase the payrate of the members by an amount equal to the normal contributions paid by the employer on behalf of the employees in the pay period immediately prior to the final compensation period or increase the payrate of the members by an amount established by a labor policy or agreement in existence and in effect on June 30, 1993. That amount shall not exceed the amount of the normal member contributions that are required to be paid by the members.

(b) This section shall not apply to any contracting agency or to any school employer unless and until the contracting agency or the school employer elects to be subject to this section by amendment to its contract made in the manner prescribed for approval of contracts, except an election among the employees is not required. In the case of contracts made after July 1, 1994, the section shall not apply unless incorporated by express provision in the contract. However, no school employer may act pursuant to this section unless and until the board approves a request for the amendment of the contract of a school employer to authorize termination of the payment. A school employer shall not submit a request for a contract amendment unless there is on file a request to terminate that payment from the county superintendent of schools office and each school district, community college district, and other school entity within the jurisdiction of that school employer.

(c) Before adopting this provision, the governing body of a contracting agency or school employer shall, with timely public notice, place the consideration of this section on the agendas of two consecutive public meetings of the governing body, at which time, full disclosure shall be made of the nature of the benefit, the additional employer contributions, and the funding therefor. Only after the second of these public meetings may the governing body adopt this section. The employer shall notify the board of the employer’s compliance with this subdivision at the time of the governing body’s application to adopt this section.

(d) Persons hired after the effective date of an employer’s contract amendment to include this section shall be informed by the employer of how this benefit relates to their total compensation and benefit package.

(e) The additional employer contributions required under this section shall be computed as a level percentage of member compensation. The additional contribution rate required at the time this section is added to a contract shall not be less than the sum of (1) the actuarial normal cost, plus (2) in the case of a contract amendment, the additional contribution required to amortize the increase in accrued liability attributable to the benefit elected under this section over the unfunded actuarial liability period currently in the agency’s contract, commencing from the date this section becomes effective in the agency’s contract.

(f) For the purposes of this section, all contributions, liabilities, actuarial interest rates, and other valuation factors necessary to calculate the employer’s contribution shall be determined on the basis of actuarial assumptions and methods which, in combination, provide the board’s best estimate of anticipated experience under the system. The board has the exclusive power and duty to make these determinations.

(g) Within 30 days of notification from the board to the contracting agency or school employer of the additional employer contributions required pursuant to this section, the contracting agency or school employer, or a recognized employee organization, or both, may file with the board a request for a review of the determination of the calculation of the additional employer contributions. The board shall promulgate regulations governing the conduct of the review, that shall include the means by which an employer or recognized employee organization may submit independent actuarial evidence regarding the additional contribution required by this section. The board shall make the final determination on the additional employer contributions needed to fund this contract amendment.

(h) This section shall not apply to a new member as defined in Section 7522.04.

(Amended by Stats. 2013, Ch. 526, Sec. 8. (SB 220) Effective January 1, 2014.)