Public employees' retirement: deferred retirement option program: public employee health benefits.

The actuarial analysis reporting deadline was changed from a fixed date of July 1, 2027 to July 1 of the fiscal year the program is implemented, making the schedule relative to actual program launch rather than a hard-coded date.

Eligibility language for State Bargaining Unit 5 (CHP) members was simplified. The definition in Section 21717.6(a) no longer requires the member to be a 'state safety member whose duties consist of active law enforcement highway patrol service' and removes the cross-reference to Section 20045, relying solely on the 'patrol member' definition in Section 20390 plus the peace officer definition in Penal Code Section 830.2.

The actuarial analysis section was renumbered from Section 21717.18 to Section 21717.20, with all cross-references throughout the bill updated accordingly.

Standard enrollment formatting changes: removal of amendment history headers and author information, addition of Assembly and Senate passage dates (August 26, 2026), clerk signatures, and Governor receipt block.

The timing trigger for performing the actuarial analysis changed from 'prior to the adoption of regulations' to 'upon agreement by the department and the respective State Bargaining Unit to implement the program,' shifting when the cost-neutrality determination must be completed in the implementation sequence.

The definition of 'Regulations' in Section 21717.3(k) was simplified from referencing specific authorizing sections (21717.2(c), 21717.4, 21717.5, and 21717.21) to a general statement that they are 'administrative regulations adopted by the board providing for the implementation and administration of the program.'

Supervisory or managerial employees of CHP or CAL FIRE who would otherwise be in State Bargaining Unit 5 or 8 but for their supervisory/managerial designation are now eligible to participate in DROP. This is a meaningful expansion beyond sworn peace officers and firefighters.

Eligibility now explicitly requires 'five years of credited service' rather than the prior open-ended language about 'requisite minimum age and years of credited service.'

A new provision amends Section 22760 of the Government Code to expand the definition of 'annuitant' under PEMHCA, allowing DROP participants (or their surviving family members) whose deferred retirement date falls within 120 days of separation from the program to enroll in a health benefit plan. This closes a gap where DROP participants could lose postretirement health coverage.

New restriction: service during the DROP program period shall not be counted as 'state service' for postretirement health vesting, and members are prohibited from purchasing any service credit after their election date.

Members can no longer 'accrue or purchase' additional service credit during the program (previously only 'accrue' was restricted).

New cap: a patrol member shall not participate in the program beyond the requirements set in Section 21130, tying DROP participation to existing retirement eligibility limits.

Implementation prerequisites were reordered: the bargaining agreement (MOU) is now listed first, followed by actuarial analysis and then regulations. Previously actuarial analysis came first. The reference was also updated from 'State Employer-Employee Relations Act' to 'Ralph C. Dills Act.'

The recurring actuarial report date changed from a fixed 'July 1, 2027' to 'July 1 of the fiscal year the program is implemented,' making it relative to actual launch rather than a hard-coded date.

Terminology was broadened: 'peace officer' for Unit 5 became 'patrol member' and 'firefighter' for Unit 8 became 'state peace officer/firefighter,' reflecting the inclusion of non-sworn supervisory and managerial staff.

The Legislature now reserves the right to suspend the program through legislative action ratified by the Governor under certain circumstances. If suspended, all participants' benefit accrual terminates and no participant, eligible spouse, or beneficiary has any vested right to any prospective program benefit.

Section 21717.7(b) was changed from 'on the effective date of this chapter' to 'on or after the effective date of this chapter,' broadening the exclusion so that anyone who retires for service, retires for disability, or is employed under Section 7522.56 at any point after the bill takes effect is also barred from participating in the program.

Section 21717.21(a)(3) added 'system minus 1.5 percent' as an alternative basis for calculating the semiannual interest rate credited to participant accounts, alongside the existing options of the applicable employee contribution interest rate or a board-determined rate.

The minimum annual interest rate floor in Section 21717.21(a)(3) was changed from '5 percent' to '5 0 percent,' which appears to be a typographical error introduced during the Senate amendment.

Section 21717.1(b) contains what appears to be a drafting error, duplicating the reference to Section 21717.5 (reading 'Sections 21717.4, 21717.5 21717.5, and 21717.6' instead of the prior 'Sections 21717.4, 21717.5 and 21717.6').

Added a coauthor (Assembly Member Alanis) to the bill.

Legislative findings were restructured from 9 items into 6 more detailed items, with an explicit statement of legislative intent to establish the DROP for eligible PERS safety members of State Bargaining Units 5 and 8.

Removed the nonsubstantive amendment to Section 20000 of the Government Code (which only changed the name citation of the Public Employees' Retirement Law).

Added detailed eligibility criteria: participants must be peace officers in active law enforcement highway patrol service (SBU 5) or members rendering active fire suppression, search and rescue, or investigatory service (SBU 8), who have met minimum age and service requirements for retirement. Already-retired, disability-retired, or Section 7522.56 employees are excluded.

Added extensive participant requirements: waiver of age/discrimination claims, waiver of disability retirement rights (including pre-existing conditions), irrevocable one-time election with a 30-day withdrawal window, spousal acknowledgment form required for married members, prohibition on reduced worktime schedules, no re-election after reinstatement from retirement, and concurrent retirement from any other public retirement system.

Added death during program period provisions: participant is deemed retired as of date of death, no additional benefits accrue beyond interest through date of death, and the account balance (including accrued interest) is distributed to the eligible spouse or designated beneficiary.

Added termination for cause provisions: if a participant's employment is terminated for cause, program participation ceases immediately; if reversed by final decision, the election is reinstated; if not reversed, the board disburses the account balance minus interest accrued from the termination date.

Added a grandfathering provision: participants who entered the program before any legislative modification may elect to remain under the original program terms or accept the modified provisions.

Added detailed program account funding rules: participants continue making normal member contributions; employers are not required to contribute but may do so per a negotiated MOU; interest is credited semiannually at no less than 5 percent annually; participants may optionally credit pre-election sick leave balance and unused sick/vacation leave accrued during the program period. The old version stated the program would be 'funded entirely by enrolled members' contributions as well as any accrued interest,' which is now more nuanced to allow negotiated employer contributions.

Changed the fiscal committee designation from 'no' to 'yes,' indicating the bill now requires fiscal committee review due to its expanded financial implications.

Added a maximum program period of 60 consecutive months from the election date. Added a five-year actuarial reporting requirement starting July 1, 2027, with the Department of Finance empowered to recommend legislative modifications if the program results in significant increased costs.

Added conditions precedent for program effectiveness: the PERS board must complete an actuarial analysis confirming cost neutrality, adopt implementing regulations, and the department must reach a MOU with the applicable bargaining unit. The MOU cannot be agreed to before the actuarial analysis and regulations are complete.

Added a vested right provision: participants have a vested right to 100 percent of their account balance, but if found guilty of a felony, they forfeit all employer contributions and associated interest, which are returned to the employer.

Added a comprehensive definitions section (Section 21717.3) defining terms including deferred retirement date, deferred retirement calculation date, election date, participant, program account, program period, and regulations.

Added an entirely new Chapter 20 (Sections 21717 and 21717.1) to the Government Code establishing a Deferred Retirement Option Program for State Bargaining Units 5 (CHP) and 8 (CAL FIRE firefighters).

Added legislative findings declaring that CHP and CAL FIRE face increasingly dangerous missions, chronic personnel shortages, and that other public safety agencies have successfully used DROP to retain experienced sworn personnel.

Members may voluntarily participate once they have met minimum service requirements applicable for service retirement. Participation requires the applicable bargaining unit to have entered into a memorandum of understanding.

The program must result in cost savings or be cost neutral, and shall be funded entirely by enrolled members' contributions and any accrued interest - no state general fund money.

Fiscal committee designation changed from 'no' to 'yes', indicating the bill now has fiscal implications requiring committee review.

State Bargaining Units 5 and 8 are required to bargain with the Department of Human Resources to implement the program. The Department must work with the PERS board of administration to develop it.

The program's design and administration must conform with Title 26 of the United States Code (federal tax law) and the California Revenue and Taxation Code.