Question: Why are temporary employees required to enroll in an alternate retirement plan if they not eligible for enrollment in the CalPERS retirement system and do not pay into Social Security?
Answer: Beginning in 1951, states were allowed to enter voluntary agreements with the federal government to provide Social Security coverage to public employees. These agreements are called Section 218 Agreements. Local public agencies were also allowed to voluntarily provide Social Security coverage to their employees by adopting their own Section 218 Agreements and notifying the state. Then, the Omnibus Budget Reconciliation Act of 1990 (OBRA) went into effect July 1, 1991, which made Social Security coverage mandatory for all state and local government employees who are not members of a public retirement system of such state or political subdivision. For public agency employees who were not members of a public retirement systems, the OBRA resulted in a choice where public agencies could either: (1) start providing Social Security coverage to these employees and deducting/paying Social Security taxes; or (2) enroll them in a public retirement system. Many public agencies took the second option. In order to avoid mandatory Social Security coverage for temporary employees under the OBRA, these agencies began enrolling temporary employees in an alternative retirement plan.