Cal. Government Code § 19816.18

(a) The department may either self-fund or self-insure any benefit program under its administration when it is cost effective to do so. The department may administer the self-funded or self-insured benefit program directly or may contract with a third-party administrator. The Treasurer, Controller, and the Department of Finance shall assist the department to ensure that the appropriate fiscal and administrative procedures are established. These procedures shall include, but not be limited to, processes, fund accounts, and transfers from each department’s operating budget, including a pro rata share of the cost of administration. Notwithstanding any other law, the Public Employees’ Retirement System shall assist the department upon request by providing retiree names and addresses to the department solely for the purpose of notifying retirees of eligibility for enrollment into a dental plan, vision plan, group legal insurance plan, or life insurance plan offered by the department. Any information provided to the department shall be treated as confidential by the department. (b) Funds appropriated for self-funded or self-insured benefit programs established pursuant to this section shall be maintained in the State Employees’ Self-Funded Benefit Fund, which is hereby created in the State Treasury. Moneys in this fund shall be used by the department to make benefit payments and pay related administrative costs. Income of whatever nature earned on the moneys in the State Employees’ Self-Funded Benefit Fund during any fiscal year shall be credited to the fund. The Controller and the Department of Finance may establish individual accounts within the fund, as deemed appropriate, for individual self-funded or self-insured benefit programs. Notwithstanding Section 13340, moneys in this fund and accounts within the fund that are used to pay benefits for a self-funded or self-insured program established pursuant to this section are continuously appropriated, without regard to fiscal years. (c) Any contract entered into pursuant to this section may provide for a claims fund reserve account to be maintained with respect to the benefit program for the purpose of administering benefit programs, including, but not limited to, deducting contracted benefit program expenses. The account may also be used to defray increases in future premiums, reduce contributions of employees, annuitants, and employers, to implement cost containment programs, or to increase benefits provided by a benefit plan. (d) An account established pursuant to subdivision (c) may be created outside of the centralized State Treasury System utilizing the taxpayer identification number of a contracted carrier, subject to the following provisions: (1) Funds deposited under the carrier’s tax identification number and any interest earned from those funds remain the property of the state, subject to all applicable laws, policies, and fiscal controls. (2) Any funds remaining in the account after the term of the contract are returned to the state. (3) Any funds shall be used solely for the purpose of benefit programs. (4) Deposited funds are segregated and clearly identifiable. (5) The carrier shall, upon request from the department, provide to the department account information, including the account number, account opening date, account closing date, account balance, and account transactions. (6) The funds shall be insured by the carrier under any law of the United States or the carrier shall provide security for the funds in any of the forms specified in Section 16522 or 16612.