BILL NUMBER: AB 2260 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 9, 2010
AMENDED IN ASSEMBLY MARCH 16, 2010
INTRODUCED BY Committee on Public Employees, Retirement and Social
Security (Hernandez (Chair), Furutani (Vice Chair), Beall, and
Torrico)
FEBRUARY 18, 2010
An act to amend Sections 22119.2, 22126, 22212.5,
22303, 22380, 22713, 22803, 22901, 22955, 23008, 23801,
23851, 24002, 24005, 24018, 24102, 24105, 24119, 24214.5, 24216,
24300.1, 24309, 24607, 24616, 26302, 27303, and 27406 of,
and to add Section 22307.6 Sections 22307.6,
24616.5, and 27303.5 to, the Education Code, relating to state
teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 2260, as amended, Committee on Public Employees, Retirement and
Social Security. State teachers' retirement: administration:
benefits.
The
(1) The State Teachers'
Retirement Law, which is administered by the Teachers' Retirement
Board, prescribes a comprehensive system of rights and benefits for
its members, including disability benefits, retirement, death
benefits, and absences under the Family Medical Leave Act.
This bill would authorize the Teachers' Retirement Board, by
resolution, to direct the Controller to transfer all or a portion of
the assets of the Teachers' Retirement Program Development Fund for
expenditure for the programs authorized to receive moneys from that
fund, if the board finds that the transfer would facilitate the
administration of those programs. This bill would also make
clarifying changes to those provisions of law, including changes that
would identify employees who are subject to conflict of interest
provisions, provide that a cancellation or change in a retirement
option may not be made on the effective date of a member's
retirement, clarify that applications for disability retirement are
required to be submitted on properly executed forms, and conform
those provisions with applicable provisions of federal law.
(2) Existing law provides that an employer shall reimburse the
retirement system for any overpayments of benefits that occur as a
result of erroneous reporting.
This bill would, in the case of employer-reported erroneous
information that result in an overpayment, require the system to
calculate the actuarial present value of the payments that should
have been received from a member, former member, or beneficiary and
would require the employer to pay the difference between the total
amount of the overpayment and the calculation of the actuarial
present value of expected payments.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22119.2 of the
Education Code is amended to read:
22119.2. (a) "Creditable compensation" means remuneration that is
payable in cash by an employer to all persons in the same class of
employees and is paid to an employee for performing creditable
service. Creditable compensation shall include:
(1) Salary paid in accordance with a salary schedule or employment
agreement.
(2) Remuneration that is paid in addition to salary, providing it
is payable to all persons who are in the same class of employees in
the same dollar amount, the same percentage of salary, or the same
percentage of the amount being distributed.
(3) Remuneration that is paid for the use of sick leave, vacation,
and other employer-approved leave, except as provided in paragraph
(4) of subdivision (c).
(4) Member contributions that are picked up by an employer
pursuant to Section 22903 or 22904.
(5) Amounts that are deducted from a member's compensation,
including, but not limited to, salary deductions for participation in
a deferred compensation plan; deductions to purchase an annuity
contract, tax- deferred retirement plan, or insurance program; and
contributions to a plan that meets the requirements of Section 125,
401(k), or 403(b) of Title 26 of the United States Code.
(6) Any other payments the board determines to be "creditable
compensation."
(b) Any salary or other remuneration determined by the board to
have been paid for the principal purpose of enhancing a member's
benefits under the plan shall not be credited under the Defined
Benefit Program. Contributions on that compensation shall be credited
to the Defined Benefit Supplement Program. A presumption by the
board that salary or other remuneration was paid for the principal
purpose of enhancing the member's benefits under the plan may be
rebutted by the member or by the employer on behalf of the member.
Upon receipt of sufficient evidence to the contrary, a presumption by
the board that salary or other remuneration was paid for the
principal purpose of enhancing the member's benefits under the plan
may be reversed.
(c) "Creditable compensation" does not mean and shall not include:
(1) Remuneration that is not payable in cash or is not payable to
all persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable
service pursuant to Section 22119.5.
(3) Remuneration that is paid in addition to salary if it is not
payable to all persons in the same class of employees in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed pursuant to paragraph (2) of
subdivision (a).
(4) Remuneration that is paid for unused accumulated leave.
(5) Annuity contracts, tax-deferred retirement plans, or insurance
programs and contributions to plans that meet the requirements of
Section 125, 401(k), or 403(b) of Title 26 of the United States Code
when the cost is covered by an employer and is not deducted from the
member's salary.
(6) Fringe benefits provided by an employer.
(7) Job-related expenses paid or reimbursed by an employer.
(8) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9) Any other payments the board determines not to be "creditable
compensation."
(d) An employer or individual who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (c)
shall reimburse the plan for benefit overpayments that occur
because of that inconsistent reporting and may be subject
to prosecution for fraud, theft, or embezzlement in accordance with
the Penal Code. The system may establish procedures to ensure that
compensation reported by an employer is in compliance with this
section.
(e) For purposes of this section, remuneration shall be considered
payable if it would be paid to any person who meets the
qualifications or requirements specified in a collective bargaining
agreement or an employment agreement as a condition of receiving the
remuneration.
(f) This definition of "creditable compensation" reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member's career, consistent treatment of
compensation among an entire class of employees, preventing adverse
selection, and excluding from compensation earnable remuneration that
is paid for the principal purpose of enhancing a member's benefits
under the plan. The board shall determine the appropriate crediting
of contributions between the Defined Benefit Program and the Defined
Benefit Supplement Program according to these principles, to the
extent not otherwise specified pursuant to this part.
(g) The section shall become operative on July 1, 2002, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2003.
SECTION 1. SEC. 2. Section 22126 of
the Education Code is amended to read:
22126. "Disability" or "disabled" means any medically
determinable physical or mental impairment that is permanent or that
can be expected to last continuously for at least 12 months, measured
from the onset of the disability, but no earlier than the day
following the last day of actual performance of service that prevents
a member from performing the member's usual duties for the member's
employer, the member's usual duties for the member's employer with
reasonable modifications, or the duties of a comparable level
position for which the member is qualified or can become qualified
within a reasonable period of time by education, training, or
experience. Any impairment from a willful self-inflicted injury shall
not constitute a disability.
SEC. 2. SEC. 3. Section 22212.5 of
the Education Code is amended to read:
22212.5. (a) Except as otherwise provided in subdivision (d),
this section shall apply to the following positions in the system:
chief executive officer, system actuary, general counsel, chief
investment officer, and other investment officers and portfolio
managers whose positions are designated managerial pursuant to
Section 18801.1 of the Government Code.
(b) Notwithstanding Sections 19816, 19825, 19826, 19829, and 19832
of the Government Code, the board shall fix the compensation for the
positions specified in subdivision (a). In so doing, the board shall
be guided by the principles contained in Sections 19826 and 19829 of
the Government Code, consistent with its fiduciary responsibility to
its members to recruit and retain highly qualified and effective
employees for these positions.
(c) When a position specified in subdivision (a) is filled through
a general civil service appointment, it shall be filled from an
eligible list based on an examination that was held on an open basis,
and tenure in those positions shall be subject to the provisions of
Article 2 (commencing with Section 19590) of Chapter 7 of Part 2 of
Division 5 of Title 2 of the Government Code. In addition to the
causes for action specified in that article, the board may take
action under the article for causes related to its fiduciary
responsibility to its members, including the employee's failure to
meet specified performance objectives.
(d) An individual who held a position designated in subdivision
(a), or was a member of the board, a chief of staff, a deputy chief
executive officer, chief financial officer, or was in an equivalent
senior management position, shall not, for a period of two years
after leaving that position, for compensation, act as agent or
attorney for, or otherwise represent, any other person, except the
state, by making any formal or informal appearance before or by
making any oral or written communication to the board, or any officer
or employee thereof, if the appearance or communication is made for
the purpose of influencing administrative or legislative action or
any action or proceeding involving the issuance, amendment, awarding,
or revocation of a permit, license, grant, contract, or sale or
purchase of goods or property.
SEC. 3. SEC. 4. Section 22303 of the
Education Code is amended to read:
22303. (a) Due to an increase in the demand for retirement
counseling services, the system, notwithstanding any other provision
of law, may contract with a county superintendent or other employer
to provide retirement counseling. Retired public employees may be
employed on a part-time basis for that purpose, unless and until the
study required by subdivision (b) of Section 7 of Chapter 1532 of the
Statutes of 1985 recommends against the employment of retired public
employees for these purposes. This authorization is subject to the
availability of funds appropriated for that purpose in the annual
Budget Act.
(b) The board may, by resolution, designate one or more official
contracted offices or benefits counselors that provide retirement
counseling pursuant to subdivision (a) to receive documents submitted
pursuant to this part, Part 13.5 (commencing with Section 25900)
, or Part 14 (commencing with Section 26000).
Notwithstanding any other provision of law, any document received by
an official contracted office or a benefits counselor designated by
the board pursuant to this subdivision during the office's regular
business hours or any benefits counseling activity shall be deemed to
have been received by the system's headquarters office, as
established pursuant to Section 22375, on the date received by the
designated official contracted office or benefits counselor.
SEC. 4. SEC. 5. Section 22307.6 is
added to the Education Code, to read:
22307.6. The board may, by resolution, direct the Controller to
transfer all or a portion of the assets in the Teachers' Retirement
Program Development Fund, established pursuant to Section 22307.5,
into the designated fund or account that is authorized to expend
funds for the same program for which the assets in the Teachers'
Retirement Program Development Fund were credited, if the board finds
that the transfer of the assets of the Teachers' Retirement Program
Development Fund into the designated fund or account would facilitate
the efficient administration of the program for which the fund or
account was established.
SEC. 5. SEC. 6. Section 22380 of the
Education Code is amended to read:
22380. (a) The board shall establish a building account for the
transfer of money appropriated for that purpose from the retirement
fund for the construction or remodeling of buildings and improvements
thereon, maintenance, repair, and improvement thereof.
(b) The board may contract with the Department of General Services
for the purchase of insurance against loss of, or damage to, the
property or the loss of use or occupancy of the building, liability
insurance, and other insurance that is customarily carried on state
office buildings. Premiums for this insurance shall be paid from the
building account.
(c) The land, building, equipment, and improvements thereon, shall
constitute an investment of the system and shall be carried on the
books thereof in accordance with generally accepted accounting
principles.
SEC. 6. SEC. 7. Section 22713 of the
Education Code is amended to read:
22713. (a) Notwithstanding any other provision of this chapter,
the governing board of a school district or a community college
district or a county superintendent of schools may establish
regulations that allow an employee who is a member of the Defined
Benefit Program to reduce his or her workload from full time to part
time, and receive the service credit the member would have received
if the member had been employed on a full-time basis and have his or
her retirement allowance, as well as other benefits that the member
is entitled to under this part, based, in part, on final compensation
determined from the compensation earnable the member would have been
entitled to if the member had been employed on a full-time basis,
and as further specified in Sections 44922, 87483, and 89516.
(b) The regulations shall include, but may not be limited to, the
following:
(1) The option to reduce the member's workload shall be exercised
at the request of the member and may be revoked only with the mutual
consent of the employer and the member. The agreement to reduce a
member's workload shall be in effect at the beginning of the school
year.
(2) The member shall have been employed on a full-time basis to
perform creditable service subject to coverage under the Defined
Benefit Program and have a minimum of 10 years of credited service
prior to the reduction in workload. Additionally, the member shall
have five years of full-time employment immediately preceding the
reduction in workload.
(3) The member may not have had a break in service during the five
years immediately preceding the reduction in workload. For purposes
of this subdivision, sabbaticals, other approved leaves of absence,
and unpaid absences from the performance of creditable service for
personal reasons from full-time employment do not constitute a break
in service. For purposes of this subdivision, the period of time
during which a member is retired for service shall constitute a break
in service and a member who reinstates from retirement shall be
required to be employed on a full-time basis to perform creditable
service for at least five school years immediately preceding the
reduction in workload.
(4) The member shall have reached 55 years of age prior to the
reduction in workload.
(5) The reduced workload shall be performed for a period of time,
as specified in the regulations, up to and including 10 years. The
period of time specified in the regulations may not exceed 10 years.
(6) The reduced workload shall be equal to at least one-half of
the time the employer requires for full-time employment in accordance
with Section 22138.5 pursuant to the member's contract of employment
during his or her last school year of full-time employment preceding
the reduction in workload.
(7) The member shall be paid creditable compensation that is the
pro rata share of the creditable compensation the member would have
been paid had the member not reduced his or her workload.
(c) Prior to the reduction of a member's workload under this
section, the employer, in conjunction with the administrative staff
of the State Teachers' Retirement Plan and the Public Employees'
Retirement System, shall verify the member's eligibility for the
reduced workload program.
(d) For each school year the member's workload is reduced pursuant
to this section, the member shall make contributions to the Teachers'
Retirement Fund in the amount that the member would have contributed
if the member had performed creditable service on a full-time basis
and if that service was subject to coverage under the Defined Benefit
Program.
(e) For each school year the member's workload is reduced pursuant
to this section, the employer shall contribute to the Teachers'
Retirement Fund at a rate adopted by the board as a plan amendment
with respect to the Defined Benefit Program an amount based upon the
creditable compensation that would have been paid to the member if
the member had performed creditable service on a full-time basis and
if that service was subject to coverage under the Defined Benefit
Program.
(f) The employer shall maintain the necessary records to
separately identify each member who participates in the reduced
workload program pursuant to this section.
(g) A member who retires or otherwise separates from service prior
to the end of the school year shall be in violation of this section
and the member's service credit for that period of the contract shall
be computed in accordance with Section 22701.
(h) A member performing service in accordance with this section
may not terminate his or her agreement pursuant to paragraph (1) of
subdivision (b) if the employer has a formalized agreement to pick up
member contributions pursuant to Section 22903. A member may
terminate the agreement only if the employee takes one of the
following actions:
(1) Terminates service.
(2) Retires from service under the Defined Benefit Program.
(3) Continues to perform service pursuant to this section under a
new arrangement to perform creditable service for at least one-half
of the time the employer requires for full-time employment in
accordance with Section 22138.5.
(4) Returns to full-time employment.
SEC. 7. SEC. 8. Section 22803 of the
Education Code is amended to read:
22803. (a) A member, other than a retired member, may request to
purchase service credit for any of the following:
(1) Service performed in a teaching position in the University of
California or California State University that is not covered by
another public retirement system.
(2) Service performed in a certificated teaching position in a
child care center operated by a county superintendent of schools or a
school district in this state.
(3) Service performed in a teaching position in the California
School for the Deaf or the California School for the Blind, or in
special classes maintained by the public schools of this state for
the instruction of the deaf, the hard of hearing, the blind, or the
semisighted.
(4) Service performed in a certificated teaching position in a
federally supported and administered Indian school in this state.
(5) Time served, not to exceed two years, in a certificated
teaching position in a job corps center administered by the United
States government in this state if the member was employed to perform
creditable service subject to coverage under the Defined Benefit
Program within one year prior to entering the job corps and returned
to employment to perform creditable service subject to coverage under
the Defined Benefit Program within six months following the date of
termination of service in the job corps.
(6) Time served, not to exceed two years, in a teaching position
as a member of the Peace Corps if the member was employed to perform
creditable service subject to coverage under the Defined Benefit
Program within one year prior to entering the Peace Corps and
returned to employment to perform creditable service subject to
coverage under the Defined Benefit Program within six months
following the date of termination of service in the Peace Corps.
(7) Time spent on a sabbatical leave, approved by an employer in
this state after meeting the requirements of Section 44969.
(8) Time spent on an approved leave, approved by an employer in
this state, to participate in any program under the federal Mutual
Educational and Cultural Exchange Program.
(9) Time spent on leave approved by an employer in this state as
maternity or paternity leave, not to exceed 24 consecutive months,
regardless of whether or not the leave was taken before or after the
addition of this subdivision.
(10) Time spent on an employer-approved leave based on the
guidelines for the Family and Medical Leave Act or the California
Family Rights Act, or both, up to a total of 12 workweeks in any
12-month period.
(11) Time spent employed by the Board of Governors of the
California Community Colleges in a position subject to coverage by
the Public Employees' Retirement System between July 1, 1991, and
December 31, 1997, provided the member has elected to return to
coverage under the State Teachers' Retirement System pursuant to
Section 20309 of the Government Code.
(b) In no event shall the member receive credit for service or
time described in paragraphs (1) to (11), inclusive, of subdivision
(a) if the member has received or is eligible to receive credit for
the same service or time in the Cash Balance Benefit Program under
Part 14 (commencing with Section 26000) or another public retirement
system.
SEC. 8. SEC. 9. Section 22901 of the
Education Code is amended to read:
22901. (a) Each member of the Defined Benefit Program shall
contribute to the retirement fund an amount equivalent to 8 percent
of the member's creditable compensation.
(b) Notwithstanding Section 22905, any member contributions for
service performed during the 2010-11 school year with a service
period ending after December 31, 2010, shall be credited pursuant to
subdivision (a).
SEC. 9. SEC. 10. Section 22955 of
the Education Code is amended to read:
22955. (a) Notwithstanding Section 13340 of the Government Code,
commencing July 1, 2003, a continuous appropriation is hereby
annually made from the General Fund to the Controller, pursuant to
this section, for transfer to the Teachers' Retirement Fund. The
total amount of the appropriation for each year shall be equal to
2.017 percent of the total of the creditable compensation of the
fiscal year ending in the immediately preceding calendar year upon
which members' contributions are based, as reported annually to the
Director of Finance, the Chairperson of the Joint Legislative Budget
Committee, and the Legislative Analyst pursuant to Section 22955.5,
and shall be divided into four equal payments. The payments shall be
made on, or the following business day after, July 1, October 1,
December 15, and April 15 of each fiscal year.
(b) Notwithstanding Section 13340 of the Government Code,
commencing October 1, 2003, a continuous appropriation, in addition
to the appropriation made by subdivision (a), is hereby annually made
from the General Fund to the Controller for transfer to the Teachers'
Retirement Fund. The total amount of the appropriation for each year
shall be equal to 0.524 percent of the total of the creditable
compensation of the fiscal year ending in the immediately preceding
calendar year upon which members' contributions are based, as
reported annually to the Director of Finance, the Chairperson of the
Joint Legislative Budget Committee, and the Legislative Analyst
pursuant to Section 22955.5, and shall be made on, or the following
business day after, July 1, October 1, December 15, and April 15 of
each fiscal year. The percentage shall be adjusted to reflect the
contribution required to fund the normal cost deficit or the unfunded
obligation as determined by the board based upon a recommendation
from its actuary. If a rate increase is required, the adjustment may
be for no more than 0.25 percent per year and in no case may the
transfer made pursuant to this subdivision exceed 1.505 percent of
the total of the creditable compensation of the fiscal year ending in
the immediately preceding calendar year upon which members'
contributions are based. At any time when there is neither an
unfunded obligation nor a normal cost deficit, the percentage shall
be reduced to zero. The funds transferred pursuant to this
subdivision shall first be applied to eliminating on or before June
30, 2027, the unfunded actuarial liability of the fund identified in
the actuarial valuation as of June 30, 1997.
(c) For the purposes of this section, the term "normal cost
deficit" means the difference between the normal cost rate as
determined in the actuarial valuation required by Section 22311 and
the total of the member contribution rate required under Section
22901 and the employer contribution rate required under Section
22950, and shall exclude (1) the portion for unused sick leave
service credit granted pursuant to Section 22717, and (2) the cost of
benefit increases that occur after July 1, 1990. The contribution
rates prescribed in Section 22901 and Section 22950 on July 1, 1990,
shall be utilized to make the calculations. The normal cost deficit
shall then be multiplied by the total of the creditable compensation
upon which member contributions under this part are based to
determine the dollar amount of the normal cost deficit for the year.
(d) Pursuant to Section 22001 and case law, members are entitled
to a financially sound retirement system. It is the intent of the
Legislature that this section shall provide the retirement fund
stable and full funding over the long term.
(e) This section continues in effect but in a somewhat different
form, fully performs, and does not in any way unreasonably impair,
the contractual obligations determined by the court in California
Teachers' Association v. Cory, 155 Cal.App.3d 494.
(f) Subdivision (b) shall not be construed to be applicable to any
unfunded liability resulting from any benefit increase or change in
contribution rate under this part that occurs after July 1, 1990.
(g) The provisions of this section shall be construed and
implemented to be in conformity with the judicial intent expressed by
the court in California Teachers' Association v. Cory, 155
Cal.App.3d 494.
(h) This section shall become operative on July 1, 2003, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2004.
SEC. 11. Section 23008 of the Education
Code is amended to read:
23008. (a) If more or less than the required contributions
specified in this part and Section 44987 are paid to the system based
on any payment of creditable compensation to a member, proper
adjustments shall be made on a monthly report, by the county
superintendent, district superintendent, chancellor of a community
college district, or other employing agency who submitted the report,
within 60 days after discovery or notification by the system and any
refunds shall be made to the member within the same time period by
the employing agency.
(b) The board shall, in accordance with regulations, assess
penalties for late or improper adjustments pursuant to Section 23006.
These penalties shall be no more than the regular interest as
defined in Section 22162. The penalty so assessed shall be deemed
interest earned in the year in which it was received.
(c) If a required report contains erroneous information and the
system, acting in good faith, disburses funds from the Teachers'
Retirement Fund based on that information, the county superintendent,
district superintendent, chancellor of a community college district,
or other employing agency who submitted the report shall reimburse
the retirement fund in full for the amount of the erroneous
disbursement. Reimbursement shall be made immediately upon
notification by the system.
SEC. 10.
SEC. 12. Section 23801 of the Education Code is amended to
read:
23801. (a) A death payment of no less than five thousand dollars
($5,000) shall be paid to the beneficiary upon receipt of proof of
death of a member who had one or more years of credited service, at
least one of which had been performed subsequent to the most recent
refund of accumulated retirement contributions, if the member died
during any one of the following periods:
(1) While in employment for which creditable compensation is paid.
(2) While disabled, if the disability had been continuous from the
last day for which creditable compensation had been paid.
(3) Within four months after termination of creditable service or
termination of employment, whichever occurs first.
(4) Within four months after termination of a disability allowance
if no service was performed after the termination.
(5) Within 12 months of the last day for which creditable
compensation was paid, if the member was on an approved leave of
absence without compensation for reasons other than disability or
military service.
(b) A death payment pursuant to this section shall not be payable
for the death of a member that occurs within one year commencing with
the effective date of reinstatement from service retirement pursuant
to Section 24208.
(c) The board may adjust the death payment amount following each
actuarial valuation based on changes in the All Urban California
Consumer Price Index and adopt any adjusted amount as a plan
amendment.
(d) A beneficiary may waive his or her right to the death payment
in accordance with the requirements established by the system.
SEC. 11. SEC. 13. Section 23851 of
the Education Code is amended to read:
23851. (a) A death payment of not less than twenty thousand
dollars ($20,000) shall be paid to the beneficiary, as designated
pursuant to Section 23300, upon receipt of proof of death of a
member, who had one or more years of credited service, at least one
of which had been performed subsequent to the most recent refund of
accumulated retirement contributions, if the member died during any
one of the following periods:
(1) While in employment for which creditable compensation is paid.
(2) Within four months after termination of creditable service or
termination of employment, whichever occurs first.
(3) Within 12 months of the last day for which creditable
compensation was paid, if the member was on an approved leave of
absence without creditable compensation for reasons other than
disability or military service.
(b) A death payment pursuant to this section shall not be payable
for the death of a member that occurs within one year commencing with
the effective date of termination of the service retirement
allowance pursuant to Section 24208 or during the six calendar months
commencing with the effective date of termination of the disability
retirement allowance pursuant to Section 24117.
(c) The board may adjust the death payment amount following each
actuarial valuation based on changes in the All Urban California
Consumer Price Index and adopt as a plan amendment with respect to
the Defined Benefit Program any adjusted amount.
(d) A designated beneficiary may waive the right to the death
payment in accordance with the requirements established by the
system.
SEC. 12. SEC. 14. Section 24002 of
the Education Code is amended to read:
24002. The board may authorize payment of a disability allowance
to any member who is qualified upon application under this part by
the member, the member's guardian or conservator, or the member's
employer, if the application is submitted on a properly executed form
prescribed by the system during any one of the following periods:
(a) While the member is employed or on a compensated leave of
absence.
(b) While the member is physically or mentally incapacitated for
performance of service and the incapacity has been continuous from
the last day of actual performance of service for which compensation
is payable to the member.
(c) While the member is on a leave of absence without
compensation, granted for reason other than mental or physical
incapacity for performance of service, and within four months after
the last day of actual performance of service for which compensation
is payable to the member, or within 12 months of that date if the
member is on an employer-approved leave to study at an approved
college or university.
(d) Within four months after the termination of the member's
employment subject to coverage under the Defined Benefit Program, if
the application was not made under subdivision (b) and was not made
more than four months after the last day of actual performance of
service for which compensation is payable to the member.
(e) A member with a dependent child, who becomes disabled prior to
normal retirement age, and whose sick leave will extend beyond
normal retirement age, may be awarded a disability allowance with an
effective date after normal retirement age, if the application is
filed prior to attaining normal retirement age.
(f) The member is not applying for a disability allowance because
of a physical or mental condition that existed at the time the most
recent membership in the Defined Benefit Program commenced and which
remains substantially unchanged at the time of application.
SEC. 13. SEC. 15. Section 24005 of
the Education Code is amended to read:
24005. (a) A disability allowance under this part shall become
effective upon any date designated by the member, provided all of the
following conditions are met:
(1) An application for disability allowance is filed on a properly
executed form prescribed by the system.
(2) The effective date is later than the last day of creditable
service for which compensation is payable to the member.
(3) The effective date is no earlier than either the first day of
the month in which the application is received by the system's
headquarters office, as established pursuant to Section 22375, or the
date upon and continuously after which the member is determined to
the satisfaction of the board to have been mentally incompetent.
(b) If the member is employed to perform creditable service
subject to coverage under the Defined Benefit Program at the time the
disability allowance is approved under this part, the member shall
notify the system in writing, within 90 days, of the last day on
which the member will perform service. If the member does not respond
within 90 days, or if the last day on which service will be
performed is more than 90 days after the date the system notifies the
member of approval of the disability allowance, the member's
application for a disability allowance shall be rejected and a
disability allowance shall not be payable to the member.
SEC. 14. SEC. 16. Section 24018 of
the Education Code is amended to read:
24018. When a disabled member returns to work in his or her
former position of employment or in a comparable level position and
within six months of return experiences a recurrence of the original
disability, that can be medically substantiated, it shall be
considered, for the purpose of determining the duration of the
disability, that the condition had its onset as of the date the
member first became disabled. The former disability allowance under
this part shall again become payable as of the later of the first day
of the month in which the recurrence of the disability occurred or
the last day of creditable service for which compensation is payable
to the member provided the member complies with the provisions of
Section 24003.
SEC. 15. SEC. 17. Section 24102 of
the Education Code is amended to read:
24102. The board may authorize payment of a disability retirement
allowance under this part to any member who is qualified upon
application by the member, the member's guardian or conservator, or
the member's employer, if the application is submitted on a properly
executed form prescribed by the system during any one of the
following periods:
(a) While the member is employed or on a compensated leave of
absence.
(b) While the member is physically or mentally incapacitated for
performance of service and the incapacity has been continuous from
the last day of actual performance of service for which compensation
is payable to the member.
(c) While the member is on a leave of absence without
compensation, granted for reason other than mental or physical
incapacity for performance of service, and within four months after
the last day of actual performance of service for which compensation
is payable to the member, or within 12 months of that date if the
member was on an employer-approved leave to study at an approved
college or university.
(d) Within four months after the termination of the member's
employment subject to coverage under the Defined Benefit Program, if
the application was not made under subdivision (b) and was not made
more than four months after the last day of actual performance of
service for which compensation is payable to the member.
(e) The member is not applying for a disability retirement
allowance because of a physical or mental condition that existed at
the time the most recent membership in the Defined Benefit Program
commenced and which remains substantially unchanged at the time of
application.
SEC. 16. SEC. 18. Section 24105 of
the Education Code is amended to read:
24105. (a) A disability retirement allowance under this part
shall become effective upon any date designated by the member,
provided that all of the following conditions are met:
(1) An application for disability retirement is filed on a
properly executed form prescribed by the system.
(2) The effective date is later than the last day of creditable
service for which compensation is payable to the member.
(3) The effective date is no earlier than either the first day of
the month in which the application is received at the system's
headquarters office, as established pursuant to Section 22375, or the
date upon and continuously after which the member is determined to
the satisfaction of the board to have been mentally incompetent.
(b) If a member's application for disability retirement under this
part does not contain an election of either an unmodified allowance
or an allowance modified under an option and if the member
subsequently submits an election, but not within the 30-day period
established pursuant to Section 24301, the board shall set a benefit
effective date which is no earlier than the first day of the month in
which the subsequent election is received by the system. If the
member fails to submit an election pursuant to Section 24301 and
within six months of the date the acknowledgment notice is mailed
pursuant to Section 24301, the member's application for disability
retirement under this part shall be rejected.
(c) If the member is employed to perform creditable service
subject to coverage under the Defined Benefit Program at the time the
disability retirement is approved, the member shall notify the
system in writing, within 90 days, of the last day on which the
member will perform service. If the member does not respond within 90
days, or if the last day on which service will be performed is more
than 90 days after the date the system notifies the member of the
approval of disability retirement, the member's application for
disability retirement shall be rejected and a disability retirement
allowance shall not be payable to the member.
SEC. 17. SEC. 19. Section 24119 of
the Education Code is amended to read:
24119. When a member retired for disability under this part
returns to work in the member's former position of employment or in a
comparable level position and within six months of return
experiences a recurrence of the original disability, which can be
medically substantiated, it shall be considered, for the purpose of
determining the duration of the disability, that the condition had
its onset as of the date the member first became disabled. The former
disability retirement allowance shall again become payable as of the
later of the first day of the month in which the recurrence of the
disability occurred or the last day of creditable service for which
compensation is payable to the member, provided the member complies
with Section 24103.
SEC. 18. SEC. 20. Section 24214.5 of
the Education Code is amended to read:
24214.5. (a) Notwithstanding Section 24214, as of July 1, 2010,
the postretirement compensation limitation that shall apply to the
compensation for performance of the activities identified in
subdivision (a) or (b) of Section 22119.5 either as an employee of an
employer, an employee of a third party, or as an independent
contractor, within the California public school system, shall be zero
dollars ($0) during the first six calendar months after a member
retired for service under this part, if the member is below normal
retirement age at the time the compensation is earned.
(b) If a member retired for service under this part earns
compensation for performing activities identified in subdivision (a)
or (b) of Section 22119.5 in excess of the limitation specified in
subdivision (a), as an employee of an employer, as an employee of a
third party, or as an independent contractor, within the California
public school system, the member's retirement allowance shall be
reduced by the amount of the excess compensation. The amount of the
reduction may be equal to the monthly allowance payable but may not
exceed the amount of the annual allowance payable under this part for
the fiscal year in which the excess compensation was earned.
SEC. 19. SEC. 21. Section 24216 of
the Education Code is amended to read:
24216. (a) (1) A member retired for service under this part who
is appointed as a trustee or administrator by the Superintendent
pursuant to Section 41320.1, or who is appointed as a trustee
pursuant to the Local Educational Agency Intervention provisions
(Article 3.1 (commencing with Section 52055.57) of Chapter 6.1
of Part 28 of Title 2), or a member retired for service who is
assigned by a county superintendent of schools pursuant to Article 2
(commencing with Section 42122) of Chapter 6 of Part 24, shall be
exempt from subdivisions (d) and (f) of Section 24214 for a maximum
period of 24 consecutive months.
(2) The period of exemption shall commence on the date the member
retired for service is appointed or assigned to the position and
shall end no more than 24 consecutive months from that date, after
which the limitation specified in subdivisions (d) and (f) of Section
24214 shall apply.
(3) An exemption under this subdivision shall be granted by the
system providing that the Superintendent or the county superintendent
of schools submits documentation required by the system to
substantiate the eligibility of the member retired for service for an
exemption under this subdivision. The documentation shall be
received by the system no later than June 30 of the school year for
which the exemption is to apply.
(b) (1) A member retired for service under this part who is
employed by an employer to perform creditable service in an emergency
situation to fill a vacant administrative position requiring highly
specialized skills shall be exempt from the provisions of
subdivisions (d) and (f) of Section 24214 for creditable service
performed up to one-half of the full-time position, if the vacancy
occurred due to circumstances beyond the control of the employer.
(2) The period of exemption shall commence on the date the member
retired for service is appointed or assigned to the position and
shall end no more than 24 consecutive months from that date, after
which the limitation specified in subdivisions (d) and (f) of Section
24214 shall apply.
(3) An exemption under this subdivision shall be granted by the
system subject to the following conditions:
(A) The recruitment process to fill the vacancy on a permanent
basis is expected to extend over several months.
(B) The employment is reported in a public meeting of the
governing body of the employer.
(C) The employer submits documentation required by the system to
substantiate the eligibility of the member retired for service for an
exemption under this subdivision. The documentation shall be
received by the system no later than June 30 of the school year for
which the exemption is to apply.
(4) An exemption under this subdivision shall not be granted to a
member retired for service whose termination of employment with the
employer is the basis for the vacant administrative position.
(c) This section does not apply to any person who has received
additional service credit pursuant to Section 22715 or 22716.
(d) A person who has received additional service credit pursuant
to Section 22714 or 22714.5 shall be ineligible for one year from the
effective date of retirement for the exemption provided in this
section for service performed in any school district, community
college district, or county office of education in the state.
(e) This section shall remain in effect only until June 30, 2012,
and shall be repealed on January 1, 2013, unless a later enacted
statute deletes or extends that date.
SEC. 20. SEC. 22. Section 24300.1 of
the Education Code is amended to read:
24300.1. (a) A member may, prior to the effective date of his or
her retirement, elect an option pursuant to this part that would
provide an actuarially modified retirement allowance payable
throughout the life of the member and the member's option beneficiary
or beneficiaries, as follows:
(1) One hundred percent beneficiary option. The modified
retirement allowance shall be paid to the member and upon the member'
s death, 100 percent of the modified allowance shall continue to be
paid to the option beneficiary.
(2) Seventy-five percent beneficiary option. The modified
retirement allowance shall be paid to the member and upon the member'
s death, 75 percent of the modified allowance shall continue to be
paid to the option beneficiary. Pursuant to Section 401(a)(9) of the
Internal Revenue Code, unless the option beneficiary is the member's
spouse or former spouse who has been awarded a community property
interest in the benefits of the member under this part, the member
may not designate an option beneficiary under this option who is more
than exactly 19 years younger than the member.
(3) Fifty percent beneficiary option. The modified retirement
allowance shall be paid to the member and upon the death of the
member, 50 percent of the modified allowance shall continue to be
paid to the option beneficiary.
(4) Compound option. The member may designate multiple option
beneficiaries or one or multiple option beneficiaries with a
designated percentage to remain unmodified. The member shall elect an
option as described in paragraph (1), (2), or (3) for each
designated option beneficiary that would provide an actuarially
modified retirement allowance payable throughout the lives of the
member and the member's option beneficiary or beneficiaries.
(A) The modified retirement allowance shall be paid to the member
as long as the member and at least one option beneficiary is living.
Upon the member's death, an allowance shall be paid to each surviving
option beneficiary in accordance with the option elected respective
to that option beneficiary. If an option beneficiary predeceases the
member, the member's allowance shall be adjusted in accordance with
the option elected for the deceased option beneficiary.
(B) The member shall specify the percent of the unmodified
allowance that will be modified by the election of each option
described in paragraph (1), (2), or (3) of this subdivision. The
percent of the unmodified allowance that is not modified by an
option, if any, shall be payable to the member. The sum of the
percentages specified for the option beneficiary or beneficiaries and
the member's remaining unmodified allowance, if any, shall equal 100
percent.
(C) The member's election of the Compound Option
compound option is subject to all of the
following:
(i) Pursuant to Section 401(a)(9) of the Internal Revenue Code,
unless the option beneficiary is the member's spouse or former spouse
who has been awarded a community property interest in the member's
benefits under this part, the member may not designate an option
beneficiary under the 100 percent beneficiary option within this
compound option who is more than exactly 10 years younger than the
member.
(ii) Pursuant to Section 401(a)(9) of the Internal Revenue Code,
unless the option beneficiary is the member's spouse or former spouse
who has been awarded a community property interest in the member's
benefits under this part, the member may not designate an option
beneficiary under the 75 percent beneficiary option within this
compound option who is more than exactly 19 years younger than the
member.
(b) For purposes of this section, the member shall designate an
option beneficiary on a properly executed form prescribed by the
system, which shall be duly executed and filed with the system at the
time of the member's retirement.
(c) A member may revoke or change an election of an option at any
time prior to the effective date of the member's retirement under
this part. A revocation of an option may not be made in derogation of
a spouse's or a former spouse's community property rights as
specified in a court order.
(d) If an option beneficiary designated pursuant to paragraphs (1)
to (3), inclusive, of subdivision (a) predeceases the member, the
retirement allowance shall be paid to the member without modification
for the option. If the option beneficiary predeceases the member,
the member may designate a new option beneficiary. The effective date
of the new designation shall be six months following the date of
notification is received by the board, provided both the member and
the designated option beneficiary are then living. Notification shall
be on a properly executed form provided by the system. The
designation of the new option beneficiary pursuant to this
subdivision is subject to an actuarial modification of the unmodified
retirement allowance and may not result in additional liability to
the fund. The new option beneficiary cannot be an existing option
beneficiary.
(e) Notwithstanding Section 297 or 299.2 of the Family Code, a
spouse described in paragraphs (2) and (4) of subdivision (a) does
not include the domestic partner of the member, pursuant to Section 7
of Title 1 of the United States Code.
(f) If there is a determination of community property rights as
described in Chapter 12 (commencing with Section 22650) of this part
on or before December 31, 2006, the member may elect the option that
is required by the judgment or court order. Nothing in this part
shall permit the member to change the option to the detriment of the
community property interest of the nonmember spouse.
(g) The board may evaluate the existing options and annuities
provided pursuant to this section, Chapter 38 (commencing with
Section 25000) of this part, and Part 14 (commencing with Section
26000) and adopt, as a plan amendment, any appropriate changes to the
options and annuities based on the needs of the members,
participants, and their beneficiaries, including, but not limited to,
providing economic security for beneficiaries and reducing the
complexity of the options and annuities. The changes to the options
and annuities may have no net actuarial impact on the retirement fund
and the board may establish any eligibility criteria the board deems
necessary to prevent an adverse actuarial impact to the fund. The
board shall designate the effective date of the plan amendment, which
shall be at least 18 months after the amendment is adopted by the
board, and notwithstanding any other provision of this section, the
options and annuities available to members and participants eligible
to retire pursuant to this part and Part 14 (commencing with Section
26000), after the effective date of the plan amendment made pursuant
to this subdivision, shall reflect the changes adopted as a plan
amendment to this subdivision.
SEC. 21. SEC. 23. Section 24309 of
the Education Code is amended to read:
24309. (a) A member may change or cancel the election of an
option made pursuant to Section 24307. The change or cancellation
shall be on a properly executed form provided by the system and
received at the system's headquarters office, as established pursuant
to Section 22375, within 30 days of the date of the member's
signature and, if applicable, the spouse's signature, and before the
effective date of retirement under this part or during the period
between termination of the retirement allowance pursuant to Section
24208 or 24117 24117 or 24208 and the
effective date of the subsequent retirement under this part. The
change or cancellation shall become effective as of the date of the
member's signature.
(1) Any change to an election of an option shall be made according
to Section 24307 and shall be considered a new preretirement
election of an option.
(2) Regardless of how the member elects to receive his or her
retirement allowance, a change made to an election of an option or a
cancellation of an option shall result in the reduction of that
allowance by an amount determined by the board to be the actuarial
equivalent of the coverage the member received as a result of the
preretirement election and that does not result in any adverse
funding to the plan.
(b) If the option beneficiary designated in the preretirement
election of an option pursuant to Section 24307 dies prior to the
member's retirement, the preretirement election shall be canceled as
of the day following the date of death and the member's subsequent
retirement allowance under this part shall be subject to the
allowance reduction prescribed in this section.
(c) If the option elected pursuant to Section 24307 is
Option 8 "Option 8" as described in paragraph
(7) of subdivision (a) of Section 24300 or the compound option as
described in paragraph (4) of subdivision (a) of Section 24300.1, a
member may cancel the designation of an option beneficiary. If the
member cancels the designation of the option beneficiary or the
option beneficiary predeceases the member prior to the member's
retirement, the member may elect to receive that portion of the
retirement allowance without modification for the option or elect one
or multiple new or existing option beneficiaries as described in
Section 24307. Any change or cancellation of the designation of the
option beneficiary
under this subdivision shall result in the allowance reduction
prescribed in this section.
SEC. 22. SEC. 24. Section 24607 of
the Education Code is amended to read:
24607. Any payment issued by the system under this part, for the
month in which a retired member or disabled member dies, or any
subsequent month shall be revoked by the system.
SEC. 25. Section 24616 of the Education
Code is amended to read:
24616. Any overpayment made to or on behalf of any member, former
member, or beneficiary, including but not limited to contributions,
interest, benefits of any kind, federal or state tax, or insurance
premiums, shall be deducted from any subsequent benefit that may be
payable under either the Defined Benefit Program, the Defined Benefit
Supplement Program, or the Cash Balance Benefit Program ,
except as provided in Section 24616.5 . These deductions shall
be permitted concurrently with any suit for restitution, and recovery
of overpayment by adjustment shall reduce by the amount of the
recovery the extent of liability for restitution.
SEC. 26. Section 24616.5 is added to the
Education Code , to read:
24616.5. If an employer reports erroneous information, the system
shall calculate the actuarial present value of the expected payments
from the member, the former member, or beneficiary pursuant to
Sections 22008 and 24617. The employer shall pay the difference
between the total amount of the overpayment and the calculation of
the actuarial present value of expected payments.
SEC. 27. Section 26302 of the Education
Code is amended to read:
26302. (a) If more or less
than the contributions required by this part are paid to the plan
based on salary paid to a participant, proper adjustment shall be
made by the employer within 60 days of discovery or of notification
by the system, and any contributions deducted in error from the
participant's salary shall be returned to the participant by the
employer within the same time period.
(b) If a report with respect to the Cash Balance Benefit Program
contains erroneous information and the system, acting in good faith,
makes a distribution from the Teachers' Retirement Fund with respect
to the Cash Balance Benefit Program based on that information, the
employer who submitted the report shall reimburse the Retirement Fund
in full for the amount of the erroneous disbursement, plus interest
on the amount of the erroneous disbursement at the minimum interest
rate from the date of disbursement to the date of reimbursement,
immediately upon notification by the system.
SEC. 28. Section 27303 of the Education
Code is amended to read:
27303. Any overpayment to a participant or beneficiary under this
part shall be deducted from any subsequent benefit payment that may
be payable under the plan, except as provided in Section
26302 27303.5 .
SEC. 29. Section 27303.5 is added to the
Education Code , to read:
27303.5. If an employer reports erroneous information, the system
shall calculate the actuarial present value of the expected payments
from the participant or beneficiary pursuant to Sections 22008 and
24617. The employer shall pay the difference between the total amount
of the overpayment and the calculation of the actuarial present
value of expected payments.
SEC. 23. SEC. 30. Section 27406 of
the Education Code is amended to read:
27406. The nonparticipant spouse who is awarded separate nominal
accounts with respect to the Cash Balance Benefit Program shall have
the right to a lump-sum distribution of amounts credited to the
account.
(a) The nonparticipant spouse shall file an application on a form
provided by the system to obtain the distribution.
(b) The distribution is effective when the system deposits in the
United States mail a warrant drawn in favor of the nonparticipant
spouse and addressed to the latest address for the nonparticipant
spouse on file with the system.
(c) If the nonparticipant spouse has elected on a form provided by
the system to transfer all or a specified portion of the accounts
that are eligible for direct trustee-to-trustee transfer under
Section 401(a)(31) of Title 26 of the United States Code to the
trustee of a qualified plan under Section 402 of Title 26 of the
United States Code, deposit in the United States mail of a notice
that the requested transfer has been made constitutes a distribution
of the nonparticipant spouse's credit balance from the separate
nominal accounts. This subdivision shall not apply to a
nonparticipant partner consistent with Section 402 of the Internal
Revenue Code.
(d) The nonparticipant spouse is deemed to have permanently waived
all rights to an annuity when the distribution becomes effective.
(e) The nonparticipant spouse may not cancel a distribution after
the distribution is effective.
(f) The nonparticipant spouse shall have no right to elect to
redeposit the distribution after the distribution is effective.
SEC. 24. SEC. 31. Any section of any
other act enacted by the Legislature during the 2010 calendar year
that takes effect on or before January 1, 2011, that also amends,
amends and renumbers, adds, repeals and adds, or repeals a section
that is amended, amended and renumbered, added, repealed and added,
or repealed by this act shall prevail over this act whether or not
that act is enacted prior to or subsequent to the enactment of this
act. The repeal, or repeal and addition of any article, chapter,
part, title, or division of any code made by this act shall not
become operative if any section of any other act that is also enacted
by the Legislature during the 2010 calendar year and takes effect on
or before January 1, 2011, also amends, amends and renumbers, adds,
repeals and adds, or repeals any section contained in that article,
chapter, part, title, or division.