SB 1038 California Senate · 2025-2026 Regular Session

The Public Employees' Retirement System.

Summary

The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) for the purpose of providing pension benefits to specified public employees and prescribes the rights and duties of members and annuitants of the system. PERL vests management and control of PERS in the Board of Administration. PERL authorizes the board, during the course of an audit, to require each state employer, school employer, including each school district represented by a school employer, and contracting agency to provide information as deemed necessary by the board to determine eligibility for, and the correctness of, retirement benefits, reportable compensation, enrollment in, and reinstatement to this system. PERL requires the board, before initiating an audit, to notify the subject of the audit of the estimated time required to completion. This bill would require the board, before initiating an audit, to list specific information about the audit on its internet website and provide written notice to the affected state employer, school employer, including each school district represented by a school employer, or contracting agency. The bill would specify the distribution of the notice, the final audit report, and a list of members affected by the final audit report, between the board, a state employer, school employer, or contracting agency, and any exclusive representative.

Issues: ✓ Labor & Employment

Bill status signed all 5 stages cleared

Introduction

Feb 2026

Committee Review

Aug 2026

Senate Passage

May 2026

Assembly Passage

Aug 2026

Signed into Law

Aug 2026

Introduced Feb 11, 2026 Signed Aug 27, 2026

Maddy AI version diff · 5 comparisons

What changed between versions

08/27/26 - Chaptered → SB1038 · 1 edit

MINOR

No substantive policy changes were made between these two versions of SB 1038. The diff reflects a change in document format from a clean chaptered legislative text to a web page rendering of the same bill on the California legislature website, adding navigation elements, metadata, and layout structure around identical bill content.

TECHNICAL

The document was reformatted from a plain-text chaptered bill into a web page layout, adding site navigation (home, FAQ, search, sitemap), bill metadata (version history, date published, vote/appropriation/fiscal committee flags), and UI elements. The underlying legislative text of Sections 20222.5 and 20222.6 is unchanged.

02/11/26 - Introduced → 03/16/26 - Amended Senate · 10 edits · Mar 16, 2026

MAJOR

The amended version significantly expands the bill's scope by adding amendments to Government Code Section 20222.5 (audit authority and procedures) in addition to the originally proposed new Section 20222.6 (notice and distribution requirements). The amendment gives PERS the board explicit authority to require employers to produce records during audits, requires written notice with an estimated timeline before audits begin, allows cost recovery for overruns, and relaxes several deadlines from three working days to ten working days for forwarding notices and reports to union representatives.

Scope change

The bill expanded from solely adding a new section (20222.6) governing notice and distribution of audit information to also amending the existing audit authority section (20222.5), adding record production powers, pre-audit notification with time estimates, cost recovery for overruns, and confidentiality provisions.

SCOPE

The bill now amends Section 20222.5 of the Government Code in addition to adding new Section 20222.6, expanding the bill from a single new section to modifications of existing audit authority.

Section 20222.6(a) now requires the website listing of the audit subject to occur after notice is provided pursuant to Section 20222.5, rather than simply before initiating the audit.

REQUIREMENT

New subsection (a) of Section 20222.5 authorizes the board to require employers to provide books, papers, data, personnel records, and payroll records during an audit as necessary to determine eligibility, correctness of benefits, reportable compensation, enrollment, and reinstatement.

New subsection (b) of Section 20222.5 requires the board to notify the audit subject in writing before initiating an audit, specifying purpose, scope, and estimated completion time based on factors including number of employees, classifications, benefits, contract provisions, geography, comparable audits, and additional factors raised by the subject.

FISCAL

New subsection (c) of Section 20222.5 allows the board to assess a reasonable charge to an employer to recover costs if an audit exceeds the estimated time. Contracting agencies are exempt from charges for delays reasonably outside their control.

DEFINITION

New subsection (d) of Section 20222.5 confirms that information obtained from employers under this section remains confidential pursuant to Section 20230.

TIMELINE

In Section 20222.6, the deadline for employers to forward audit notice to exclusive representatives changed from three working days to as soon as practicable but no later than ten working days.

In Section 20222.6, the deadline for providing the list of affected members to the board and exclusive representative changed from a flat 60 days to a period measured from receipt of the final audit report (specific number appears left blank in markup).

In Section 20222.6, the deadline for forwarding the final audit report to exclusive representatives changed from three working days to as soon as practicable but no later than ten working days.

TECHNICAL

The word certify was replaced with communicate in multiple places in Section 20222.6, softening the obligation language for employers notifying the board that they have shared information with union representatives.

Floor votes · Senate May 7, 2026 · Assembly Aug 13, 2026

How they voted

36–0

Passed · 4 other

Total votes 40

May 7, 2026

D Democratic30

29 Yea 1

96% Yea

R Republican10

7 Yea 3

70% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Aug 27, 2026

Signed into law

Approved by the Governor.

legislature

Aug 13, 2026

Upper · Passed

In Senate. Ordered to engrossing and enrolling.

upper

Aug 13, 2026

Lower · Passed

Read third time. Passed. Ordered to the Senate.

lower

Jun 24, 2026

Lower · Passed

From committee: Do pass. (Ayes 15. Noes 0.) (June 24).

lower

Jun 10, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (June 10). Re-referred to Com. on APPR.

lower

May 18, 2026

Committee

Referred to Com. on P. E. & R.

lower

May 7, 2026

Upper · Passed

Read third time. Passed. (Ayes 36. Noes 0. Page 4166.) Ordered to the Assembly.

upper

Apr 29, 2026

Upper · Passed

Read third time and amended.

upper

Apr 13, 2026

Upper · Passed

From committee: Be ordered to second reading pursuant to Senate Rule 28.8.

upper

Mar 25, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0. Page 3690.) (March 25). Re-referred to Com. on APPR.

upper

Mar 16, 2026

Upper · Passed

From committee with author's amendments. Read second time and amended. Re-referred to Com. on L., P.E. & R.

upper

Feb 18, 2026

Committee

Referred to Com. on L., P.E. & R.

upper

Feb 11, 2026

Introduced

Introduced. Read first time. To Com. on RLS. for assignment. To print.

upper

1 primary · 0 co-sponsors