FROM: Barbara Hannah, Chief Counsel
SUBJECT: SBCERA By-Laws
RECOMMENDATION:
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Approve and adopt proposed amendments to the SBCERA By-Laws
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BACKGROUND:
The Board last approved amendments to the SBCERA By-Laws on June 3, 2021.
The proposed amendments refine and clarify the requirements for employee membership eligibility and participating employer obligations. These amendments will enhance compliance with federal tax laws and ensure the integrity of SBCERA membership criteria.
Proposed Amendments
1. Article III. Section (1) - Required Reporting of Employees
In accordance with Government Code section 31526, SBCERA’s By-Laws permits SBCERA to require an SBCERA Participating Employer to submit employee/member information (personally identifiable information, including reported contributions) to SBCERA in a form prescribed by SBCERA. This employer requirement to provide the necessary information is already included in the current By-Laws.
The proposed amendment removes the requirement to submit a membership enrollment affidavit and instead focuses on ensuring that an SBCERA Participating Employer furnishes this information to SBCERA. The amendment aligns with the SBCERA’s Employer Reporting Initiative, which aims to standardize the data reporting to ensure that employee/member information received from the employer is complete, timely, and accurate.
2. Article III. Section (2)(b) - Included in SBCERA Membership - Regular Members
The proposed amendment is necessary to ensure that SBCERA membership is limited to employees/members who meet the legal and IRS regulatory requirements for participation. By clearly defining the eligibility criteria, the amendment helps prevent unauthorized enrollments, ensures compliance with SBCERA governing laws, and protects SBCERA tax-qualified status. The proposed amendment specifies that for an employee to qualify for SBCERA membership, they must:
• Hold a regular position with an SBCERA participating employer.
• Perform services primarily for the SBCERA Participating Employer.
Thus, an SBCERA Participating Employer must certify these conditions before reporting the employee to SBCERA. If the conditions are not met, SBCERA may:
• Deny membership.
• Require corrective actions, including refunding employee contributions.
The amendment also clarifies that payment for services alone does not determine primary employment with an SBCERA Participating Employer.
3. Article III. Section (2)(c) - Delayed Effective Date of Membership
Government Code section 31527 allows SBCERA By-Laws to include a provision that lets new employees postpone their SBCERA membership start date after the beginning of employment with an SBCERA Participating Employer. The proposed amendment seeks to reduce this deferral period from 12 weeks to 4 weeks. The amendment will reduce the delay period to ensure the member does not lose significant service credit while still providing a brief window for adjustments in employment status and minimizes gaps in retirement contributions.
4. Article IV. SBCERA Participating Employer
The proposed amendment is necessary to ensure SBCERA’s continued compliance to maintain its status as a tax-qualified plan under Internal Revenue Code sections 401(a) and 414(d). SBCERA must ensure that all Participating Employers meet the legal definitions of a governmental entity and adhere to strict reporting and administrative requirements. Specifically, all Participating Employers must be:
• A governmental entity in accordance with IRS guidelines and the CERL.
• Be one of the following: San Bernardino County, Superior Court, or a District defined under Government Code section 31468.
• Be formally approved by the SBCERA Board to participate in the retirement system.
To maintain their status as an SBCERA Participating Employer, entities must:
• Adopt required resolutions and execute a Participating Employer Agreement, either upon joining SBCERA or at a later date if necessary for compliance.
• Follow all SBCERA reporting requirements, including submitting complete and accurate employee data to preserve SBCERA’s tax-qualified status.
5. Nonsubstantive Changes
a. Rename “County of San Bernardino” to “San Bernardino County.”
b. Renumber Article IV to Article V. Disability Retirement
Based on the above, staff recommends the Board approve the proposed amendments to the SBCERA By-Laws to ensure compliance with the County Employees’ Retirement Law (CERL), the Internal Revenue Code, and SBCERA’s governance policies.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Operational Excellence & Efficiency
STAFF CONTACT:
Barbara Hannah
ATTACHMENTS:
Exhibit A: Redline SBCERA By-Laws