BILL NUMBER: AB 2663 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 20, 2012
INTRODUCED BY Committee on Public Employees, Retirement and Social
Security (Furutani (Chair), Allen, Ma, and Wieckowski)
FEBRUARY 29, 2012
An act to amend Sections 22119.2, 22220, 22324, 22352, 22455,
22461, 22717, 22718, 23007, 23854, 24109, 24214, 24214.5,
24604, 25018, 25114, and 26812 of , and to repeal Sections
22218.5 and 24400 of, the Education Code, and to amend Section
6217.5 of the Public Resources Code, relating to teachers'
retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 2663, as amended, Committee on Public Employees, Retirement and
Social Security. Teachers' Retirement Law.
(1) The Teachers' Retirement Law, which is administered by the
Teachers' Retirement Board, prescribes a comprehensive system of
rights and benefits for members of the State Teachers' Retirement
System (STRS). That law establishes the Defined Benefit Program,
which provides service and disability retirement benefits to members,
subject to members and employers making specified contributions to
the Teachers' Retirement Fund for that purpose, and also establishes
the Defined Benefit Supplement Program to provide supplemental
benefits for members of the Defined Benefit Plan.
Under that law, any salary or other remuneration determined by the
board to have been paid for the principle purpose of enhancing a
member's benefits under the plan is not credited under the Defined
Benefit Program, but contributions on that compensation are credited
to the Defined Benefit Supplement Program.
This bill would expand the application of that provision, by
replacing the term "salary or other remuneration" with "creditable
compensation," as defined.
(2) Existing law requires the Teachers' Retirement Board to file
an annual report with the Governor and the Legislature by March 1 of
each year, accompanied by specified information on the assets of the
plan, including a certification letter from the system's consulting
actuary concerning the findings of the most recent actuarial
valuation, along with summaries of the actuarial cost method,
assumptions, and demographic data. Existing law also requires the
board to annually report other investment information, including the
cost of investment contracts used, to the Governor, the Legislature,
the Department of Finance, and the Joint Legislative Budget
Committee.
This bill would revise, recast and consolidate these reporting
requirements. Among other changes, the bill would require that the
certification letter from the system's consulting actuary concerning
the most recent actuarial valuation, provided along with the annual
report, be accompanied by analysis of funding progress and include
actual payroll subject to the system. The bill would require the
board, as part of the annual report to the Governor and the
Legislature, to also provide a report on the nature and cost of
investment contract services used and a report for the prior fiscal
year on the percentage of purchasing power protection and any changes
adopted by the board, the extent to which inflation has eroded
purchasing power of benefits, and other related information. The bill
would delete a requirement that the board report to the fiscal
committees of the Legislature and to the Director of Finance on the
return on investments and actual payroll for the prior fiscal year
and would also delete a requirement that the board report to the
Governor, the Legislature, and the Joint Legislative Budget Committee
on the nature, duration, and cost of investment contract services
used. The bill would additionally delete a provision requiring the
board report to the Governor and the Legislature no later than June 1
of each year on the extent to which inflation has eroded the
purchasing power of benefits provided under the Defined Benefit
Program.
(3) Existing law allows the Teachers' Retirement Board to perform
any acts necessary for the administration of the State Teachers'
Retirement System. Existing law also requires each member or
beneficiary of the system to furnish to the board any information
affecting his or her status as a member or beneficiary of the Defined
Benefit Program as the board requires. Existing law also requires
the county superintendent and other employing agencies to furnish any
further information concerning any member or beneficiary the board
may require.
This bill would further require that any information or report
required to be submitted to the system by an employer pursuant to
specified provisions of law be submitted in a form, including, but
not limited to, electronic transmission, as directed by the system.
(2)
(4) Under the Teachers' Retirement Law, upon retaining
the services of a retired member, the school district, community
college district, county superintendent of schools, California State
University, or other employing agency is required to advise the
retired member of certain limits on earnings and to maintain accurate
records of the retired member's earnings.
This bill would require those employing agencies to also advise a
retired member who is receiving a disability retirement or who is
subject to postretirement employment within the California public
school system, pursuant to specified provisions, of these earning
limits, and to maintain accurate earnings' records.
(3)
(5) The Teachers' Retirement Law grants a member
credit, at service retirement, for each day of accumulated and unused
leave of absence for illness or injury for which full salary is
allowed to which the member was entitled on the member's final day of
employment with the employer subject to coverage by the Defined
Benefit Program.
This bill would instead grant a member credit, at service
retirement, for each day of accumulated sick leave days for which
full salary is allowed to which the member was entitled on the member'
s final day of employment with the employer or employers subject to
coverage by the Defined Benefit Program during the last school year
in which he or she performed creditable service. The bill would
require STRS to accept certification from each employer for that
period with which the member has accumulated unused sick leave, if
this leave has not been transferred to another employer.
(4)
(6) Under existing law, the Teachers' Retirement Board
is required to bill school employers for service credit granted for
unused excess sick leave. These provisions require that excess sick
leave days granted by an employer other than the member's last
employer be deemed to be granted by the last employer and be included
in the certification if the member was eligible to use those excess
sick leave days while he or she was employed by the last employer.
This bill would additionally specify that if, during the last year
a member is employed to perform creditable service subject to
coverage by the Defined Benefit Program that member is employed by
more than one employer, unused excess sick leave days shall be
certified and paid for by the employer for the period in which the
member was eligible to use those excess sick leave days.
(5)
(7) Existing law requires the Controller, in cases in
which a county superintendent has failed to make payment of
assessments by the Teachers' Retirement Board, upon order of the
board, to withhold subsequent payments from the State School Fund to
the county, or to take other related actions until the contributions
are received.
This bill would apply this requirement to district
superintendents, chancellors of a community college district, or
other employing agencies that report directly to the retirement
system.
(6)
(8) Under the Teachers' Retirement Law, a survivor
benefit allowance is payable upon the death of a member of the
Defined Benefit Program who has one or more years of credited
service, upon meeting certain conditions. These conditions include
that the member's death occurs during specified periods, including,
among others, that death occurs within 4 months after termination of
a disability allowance.
This bill would delete that condition.
(7)
(9) Existing law authorizes a retired member of STRS to
perform specified activities as an employee in the system, an
employee of a 3rd party, or as an independent contractor within the
California public school system, but prohibits the member from making
contributions to the retirement fund or accruing service credit
based on compensation earned from that service. Existing law
conditions this authorization on a variety of factors, including that
a member not be required to reinstate for performing specified work,
and allows a member to earn limited compensation as "creditable
service" for those activities without a reduction in his or her
retirement allowance.
Existing law establishes the Cash Balance Benefit Program,
administered by the State Teachers' Retirement Board, as a separate
benefit program within the State Teachers' Retirement Plan.
This bill would expand the authorization to perform postretirement
work to include additional employment activities that within the
definition of "creditable service" under the Cash Balance Benefit
Program.
(8)
(10) Existing law requires STRS to reduce the
retirement allowance of a retired member who performs postretirement
service that exceeds specified limitations for that work by the
amount of the excess compensation. Existing law specifies that 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 the retirement system for the fiscal year in which the
excess compensation was earned.
This bill would further specify that this reduction may not exceed
the remaining amount of the annual allowance payable for the fiscal
year in which the excess compensation was earned after any reduction
is made, as specified.
(9)
(11) Existing law requires STRS to make an electronic
copy of benefit payment information available to any member,
nonmember spouse, or beneficiary who receives a monthly benefit
payment, and requires STRS to send a copy of this information to
those individuals when there is an adjustment in the allowance or
change in the amount deducted from the allowance.
This bill would require that information to be provided when there
is an adjustment in the allowance due to an annual benefit
enhancement, as specified, or a change in the amount deducted from
the allowance due to an adjustment to an income tax withholding tax
table made by the Internal Revenue Service or the Franchise Tax
Board, except as specified.
(10)
(12) Under the Teachers' Retirement Law, if a
participant who is retired for service and is receiving an annuity
under the Cash Balance Benefit Program is below the normal retirement
age and earns compensation for performing certain employment
activities, the participant's annuity is required to be reduced by
the amount of the compensation. That law prohibits the reduction from
exceeding the annual annuity payable for the fiscal year in which
the compensation was earned.
This bill would instead prohibit the reduction from exceeding the
amount of the annuity payable during the first 180 calendar days
after a participant is retired for service, if the participant is
below the normal retirement age at the time the compensation is
earned.
(11)
(13) Existing law requires all net revenues, moneys,
and remittances from the use of school lands and lieu lands to be
deposited in the State Treasury to the credit of the Teachers'
Retirement Fund and to be expended, as specified.
This bill would correct an erroneous cross-reference in that
provision.
(12)
(14) The bill would also provide that if any other
provision of any act that is enacted by the Legislature during the
2012 calendar year amends, amends and renumbers, adds, repeals and
adds, or repeals a section contained in this act, that provision
would prevail over this act, regardless of when that other act is
chaptered.
(15) The bill would also make certain technical, nonsubstantive
changes to the provisions above.
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 provided 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 creditable compensation 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
creditable compensation 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
creditable compensation 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) 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.
SEC. 2. Section 22218.5 of the
Education Code is repealed.
22218.5. The board, on March 1, 1995, and annually thereafter,
shall report to the fiscal committees of the Legislature and to the
Director of Finance the return on investments and actual payroll
subject to the system for the prior fiscal year.
SEC. 2. SEC. 3. Section 22220 of the
Education Code is amended to read:
22220. In addition to the authority granted pursuant to Section
11181 of the Government Code, the board may subpoena witnesses and
compel their attendance to testify before it.
SEC. 4. Section 22324 of the Education
Code is amended to read:
22324. The board shall file an annual report with the Governor
and the Legislature by March 1 of each year on all phases of its work
that could affect the need for public contributions for costs of
administration of the system, including the subjects of benefits,
programs, practices, procedures, comments on trends and developments
in the field of retirement, and the following information on the
assets of the plan:
(a) A copy of the annual audit performed pursuant to Section
22217.
(b) A certification letter from the system's consulting actuary
concerning the findings of the most recent actuarial valuation,
accompanied by analysis of funding progress and summaries
of the actuarial cost method, assumptions, and demographic
data and analysis of funding progress data, including
actual payroll subject to the system .
(c) A review of the system's asset mix strategy, a market review
or the economic and financial environment in which investments were
made, and a summary of the system's general investment strategy.
(d) A description of the investments of the system at cost and
market value, and a summary of major changes that occurred since the
previous year.
(e) The annual return on investments and the following
information regarding the rate of return of the system by asset type:
(1) Time-weighted market value rate of return on a five-year,
three-year, and one-year basis.
(2) Time-weighted book value rate of return on a five-year,
three-year, and one-year basis.
(3) Portfolio return comparisons that compare investment returns
with universes and indexes.
(f) A report on the use of outside investment advisers and
managers.
(g) A report on the nature and cost of investment contract
services used, including either the start date of an existing
contract or, if there are multiple existing contracts with the same
contractor or vendor, the earliest start date.
(g)
(h) A report on shareholder voting.
(i) A report for the prior fiscal year on the following
information:
(1) The percentage of purchasing power protection and any changes
adopted by the board.
(2) The extent to which inflation has eroded the purchasing power
of benefits provided under the Defined Benefit Program.
(3) The amount of supplementary increases in retirement allowances
required to preserve the purchasing power of benefits provided by
the Defined Benefit Program.
SEC. 5. Section 22352 of the Education
Code is amended to read:
22352. (a) Upon a finding
by the board that necessary investment expertise is not available
within existing civil service classifications, and with the approval
of the State Personnel Board, the board may contract with qualified
investment managers having demonstrated expertise in the management
of large and diverse investment portfolios to render service in
connection with the investment program of the board.
(b) The board shall report to the Governor, the Legislature, and
the Joint Legislative Budget Committee on the nature, duration, and
cost of investment contract services used. The report shall first be
submitted in April 1987, and annually in April of every year
thereafter.
SEC. 6. Section 22455 of the Education
Code is amended to read:
22455. (a) The county superintendent and
other employing agencies shall furnish any further information
concerning any member or beneficiary the board may require.
(b) Any information or reports required to be submitted to the
system by an employer pursuant to this part or Part 14 (commencing
with Section 26000) shall be submitted in a form, including, but not
limited to, electronic transmission, as directed by the system.
SEC. 3. SEC. 7. Section 22461 of the
Education Code is amended to read:
22461. (a) Upon retaining the services of a retired member under
Section 24114, 24116, 24214, 24214.5, or 24215, the school district,
community college district, county superintendent of schools,
California State University, or other employing agency shall do both
of the following regardless of whether the retired member performs
the services as an employee of the employer, an employee of a third
party, or an independent contractor:
(1) Advise the retired member of the earnings limitation set forth
in Sections 24114, 24116, 24214, 24214.5, and 24215.
(2) Maintain accurate records of the retired member's earnings and
report those earnings monthly to the system and the retired member
regardless of the method of payment or the fund from which the
payments were made.
(b) This section shall not be construed to make any school
district, community college district, county superintendent of
schools, the California State University, or other employing agency
liable for any amount paid to the retired member in excess of the
earnings limitation under any circumstance, including the failure to
inform the retired member that continuation of service would exceed
the limitations.
SEC. 4. SEC. 8. Section 22717 of the
Education Code is amended to read:
22717. (a) A member shall be granted credit at service retirement
for each day of accumulated and unused sick leave days for which
full salary is allowed to which the member was entitled on the member'
s final day of employment with the employer or employers subject to
coverage by the Defined Benefit Program during the last school year
in which he or she performed creditable service. The system shall
accept certification from each employer with which the member has
accumulated sick leave days for that period, provided this leave has
not been transferred to another employer.
(b) The amount of service credit to be granted shall be determined
by dividing the number of days of accumulated and unused sick leave
days by the number of days of service the employer requires the
member's class of employees to perform in a school year during the
member's final year of creditable service subject to coverage by the
Defined Benefit Program, which shall not be less than the minimum
standard specified in Section 22138.5. The number of days shall not
include school and legal holidays. In no event shall the divisor be
less than 175. For members employed less than full time, the
standards identified in Section 22138.5 shall be considered as the
minimum full-time equivalent. For those standards identified in
Section 22138.5 that are applicable to teachers or instructors and
that are expressed only in terms of hours or instructional hours, the
number of hours or instructional hours shall be divided by six to
determine the number of days.
(c) When the member has made application for service retirement
under this part, the employer shall certify to the board, within 30
days following the effective date of the member's service retirement,
the number of days of accumulated and unused sick leave days that
the member was entitled to on the final day of employment. The board
may assess a penalty on delinquent reports.
(d) This section shall be applicable to any person who retires on
or after January 1, 1999.
SEC. 5. SEC. 9. Section 22718 of the
Education Code is amended to read:
22718. (a) The Teachers' Retirement Board shall bill school
employers for service credit granted for unused excess sick leave
under this part, subject to the following provisions:
(1) (A) In addition to the certification of sick leave days, the
employer shall also certify the number of unused excess sick leave
days.
(B) Excess sick leave days granted by an employer other than the
member's last employer shall be deemed to be granted by the last
employer and shall be included in the certification if the member was
eligible to use those excess sick leave days while he or she was
employed by the last employer. If, during the last year a member is
employed to perform creditable service subject to coverage by the
Defined Benefit Program, that member is employed by more than one
employer, unused excess sick leave days shall be certified and paid
for by the employer for the period in which the member was eligible
to use those excess sick leave days.
(2) The billing shall be authorized only if the employer grants
more than one day of sick leave per pay period of at least four weeks
to members of the Defined Benefit Program.
(3) The employer shall be billed only for the present value of the
unused excess sick leave days and any subsequent adjustments to the
billing shall be billed or refunded, as appropriate, to the employer.
(4) (A) The employer shall remit the amount billed to the system
with the certification required by Section 22717 within 30 days after
the effective date of the member's retirement or within 30 days
after the date the system has notified the employer that a
certification must be made, whichever is later.
(B) If payment is not received within 30 days, the present value
shall be recalculated to include regular interest from the due date
to the date full payment is received.
(C) If the system has billed the employer for an additional
amount, the employer shall remit the additional amount within 30 days
after the date of the billing. If payment is not received for the
additional amount within 30 days, the present value shall be
recalculated to include regular interest from the due date to the
date full payment is received.
(b) If a school employer fails to pay a bill charged according to
subdivision (a), the Teachers' Retirement Board may request the
Superintendent of Public Instruction or the Chancellor of the
California Community Colleges, as appropriate, to reduce state
apportionments to the school employer by an amount equal to the
amount billed. The Superintendent or chancellor shall make the
reduction, and if requested by the board, direct the Controller to
reduce the amount transferred from the General Fund to Section A or
Section B, as appropriate, of the State School Fund by an equal
amount, which shall instead be transferred to the Teachers'
Retirement Fund.
SEC. 6. SEC. 10. Section 23007 of
the Education Code is amended to read:
23007. Should If any county
superintendent, district superintendent, chancellor of a community
college district, or other employing agency that reports directly to
the system fail fails to make payment
of any assessment by the board, the Controller shall, upon order of
the board, withhold subsequent payments from the State School Fund to
the county for deposit in the county school service fund or, upon
the request of a county superintendent of schools to the county
auditor, he or she shall withhold payments to a school district for
deposit in the district general fund until the contributions and
report are received in acceptable form in the office of the system
and the board directs the Controller to make those payments ,
less the amount of the assessments to the county that would
have been paid had no payments been withheld. The Controller shall
thereupon then pay to the system the
amount of the assessments withheld for deposit in the State Treasury
to the Teachers' Retirement Fund.
SEC. 7. SEC. 11. Section 23854 of
the Education Code is amended to read:
23854. (a) A survivor benefit allowance is payable upon receipt
of proof of death of a member, as defined in Section 23850, who had
one or more years of credited service, including deemed service under
subparagraph (B) of paragraph (2) of subdivision (a) of Section
22851, at least one of which had been earned subsequent to the most
recent refund of accumulated retirement contributions.
(b) For the survivor benefit allowance to be payable upon the
death of a member, all of the following conditions shall be met at
the time of death:
(1) Death occurred after October 15, 1992.
(2) A preretirement election of an option is not in effect.
(3) Death occurs during any one of the following periods:
(A) While in employment for which compensation is paid.
(B) Within four months after termination of service or termination
of employment, whichever occurs first.
(C) Within four months after reinstatement from disability
retirement.
(D) Within 12 months following the last day for which compensation
was paid if the member was on an approved leave of absence without
compensation for reasons other than disability.
(E) While on a leave of absence to perform qualified military
service, if the death occurred on or after January 1, 2007.
(4) At least one-half year of credited service had been performed
subsequent to the end of the last break in service, if a break in
service of more than one year had occurred.
(5) At least one year of credited service had been performed
subsequent to the last reinstatement date, if reinstated from service
retirement.
(c) The survivor benefit allowance shall be paid in lieu of the
return of the member's accumulated retirement contributions.
(d) The survivor benefit allowance may be terminated, if all
eligible beneficiaries formally waive their rights in accordance with
the requirements established by the system.
SEC. 8. SEC. 12. Section 24109 of
the Education Code is amended to read:
24109. Retirement allowances payable pursuant to subdivision (a)
of Section 24106 shall be reduced by an amount equal to the
unmodified benefits paid or payable under a workers' compensation
program for the same impairment or impairments that qualify the
member for a disability retirement allowance under this part. For
purposes of this section, unmodified benefits are limited to benefits
for temporary disability, permanent disability, and for vocational
rehabilitation paid or payable under the Workers' Compensation Act.
SEC. 9. SEC. 13. Section 24214 of
the Education Code, as amended by Section 26 of Chapter 703 of the
Statutes of 2011, is amended to read:
24214. (a) A member retired for service under this part may
perform the activities identified in subdivision (a) or (b) of
Section 22119.5, or subdivision (a) or (b) of Section 26113, as an
employee of an employer, as an employee of a third party, or as an
independent contractor within the California public school system,
but the member shall not make contributions to the retirement fund or
accrue service credit based on compensation earned from that
service. The employer shall maintain accurate records of the earnings
of the retired member and report those earnings monthly to the
system and retired member as described in Section 22461.
(b) If a member is retired for service under this part, the rate
of pay for service performed by that member as an employee of the
employer, as an employee of a third party, or as an independent
contractor within the California public school system shall not be
less than the minimum, nor exceed that paid by the employer to other
employees performing comparable duties.
(c) A member retired for service under this part shall not be
required to reinstate for performing the activities identified in
subdivision (a) or (b) of Section 22119.5, or subdivision (a) or (b)
of Section 26113, as an employee of an employer, as an employee of a
third party, or as an independent contractor within the California
public school system.
(d) A member retired for service under this part may earn
compensation for performing activities identified in subdivision (a)
or (b) of Section 22119.5, or subdivision (a) or (b) of Section
26113, in any one school year up to the limitation specified in
subdivision (f) as an employee of an employer, as an employee of a
third party, or an independent contractor, within the California
public school system, without a reduction in his or her retirement
allowance.
(e) The postretirement compensation limitation provisions set
forth in this section are not applicable to compensation earned for
the performance of the activities described in subdivision (a) for
which the employer is not eligible to receive state apportionment or
to compensation that is not creditable pursuant to Section 22119.2.
(f) The limitation that shall apply to the compensation for
performance of the activities identified in subdivision (a) or (b) of
Section 22119.5, or subdivision (a) or (b) of Section 26113, by a
member retired for service under this part either as an employee of
an employer, an employee of a third party, or as an independent
contractor shall, in any one school year, be an amount calculated by
the board each July 1 equal to twenty-two thousand dollars ($22,000)
adjusted by the percentage change in the average compensation
earnable of active members of the Defined Benefit Program, as
determined by the system, from the 1998-99 fiscal year to the fiscal
year ending in the previous calendar year.
(g) If a member retired for service under this part earns
compensation for performing activities identified in subdivision (a)
or (b) of Section 22119.5, or subdivision (a) or (b) of Section
26113, in excess of the limitation specified in subdivision (f), 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 remaining amount
of the annual allowance payable under this part for the fiscal year
in which the excess compensation was earned after any reduction made
in accordance with subdivision (b) of Section 24214.5.
(h) The language of this section derived from the amendments to
the section of this number added by Chapter 394 of the Statutes of
1995, enacted during the 1995-96 Regular Session, is deemed to have
become operative on July 1, 1996.
(i) This section shall become operative on July 1, 2012.
SEC. 10. SEC. 14. 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, or subdivision (a) or (b)
of Section 26113, 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 the most recent retirement of 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, or subdivision (a) or (b) of Section
26113, 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
allowance payable 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.
SEC. 15. Section 24400 of the Education
Code is repealed.
24400. The Legislature recognizes that inflation erodes the
purchasing power of benefits paid under the plan under this part. It
is the intent of the Legislature to understand the degree of erosion
of these benefits. The board shall report to the Governor and
Legislature no later than June 1 of each year on the extent to which
inflation has eroded the purchasing power of benefits provided under
the Defined Benefit Program. The board shall indicate the amount of
supplementary increases in retirement allowances required to preserve
the purchasing power of benefits provided by the Defined Benefit
Program. The board shall also determine and report on the increases.
SEC. 11. SEC. 16. Section 24604 of
the Education Code is amended to read:
24604. (a) A member, nonmember spouse, or beneficiary under this
part shall specify whether monthly benefit payments are to be
disbursed by: (1) direct deposit (electronic funds transfer); (2)
direct mail to a financial or other institution; or (3) mailing to a
payment address provided by the member, nonmember spouse, or
beneficiary.
(b) A member, nonmember spouse, or beneficiary under this part to
whom a lump-sum payment or benefit is to be disbursed, and who is
receiving payment for an ongoing benefit by electronic funds
transfer, may have the
lump-sum payment disbursed by electronic funds transfer to the
financial institution on file for payment of the ongoing benefit.
(c) A member, nonmember spouse, or beneficiary under this part
who is not receiving payment for an ongoing benefit by electronic
funds transfer and to whom a lump-sum payment or benefit is to be
disbursed shall specify the address to which the payment shall be
mailed.
(d) (1) The system shall make available an electronic copy of the
benefit payment information to any member, nonmember spouse, or
beneficiary under this part who receives a monthly benefit payment.
(2) The board shall notify the member, nonmember spouse, or
beneficiary that he or she has the right to request that a copy of
the benefit payment information be mailed. The board shall send a
copy of the benefit payment information if the system has received a
written request from that person.
(3) The system shall send a copy of the benefit payment
information to any member, nonmember spouse, or beneficiary under
this part when there is an adjustment in the allowance due to an
annual benefit enhancement, pursuant to Sections 22140 and 24402, or
a change in any amount deducted from the allowance due to an
adjustment to an income tax withholding tax table made by the
Internal Revenue Service or the Franchise Tax Board, unless the
person has notified the system that he or she does not want to
receive a copy of the benefit payment information.
(e) A payment disbursed as specified by the member, nonmember
spouse, or beneficiary under this part shall fully discharge the
board, system, and plan from any claim resulting from actions taken
under this section.
SEC. 12. SEC. 17. Section 25018 of
the Education Code is amended to read:
25018. (a) A member may elect to receive the disability benefit
as an annuity, payable in monthly installments, provided the balance
of credits in the member's Defined Benefit Supplement account on the
date the disability benefit becomes payable equals at least three
thousand five hundred dollars ($3,500) after any lump-sum payment has
been made from this account.
(b) If the member elects to receive the disability benefit as an
annuity, the member shall elect one of the following forms of
payment:
(1) A single life annuity without a cash refund feature. This form
of payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the disability
benefit in a lump-sum payment. Upon the death of the member, no
other benefit shall be payable to the member's beneficiary under the
Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form of
payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the disability
benefit in a lump-sum payment. Upon the death of the member, an
amount equal to the remaining balance of credits, if any, transferred
from the member's Defined Benefit Supplement account to the
Annuitant Reserve shall be returned in a lump-sum payment to the
member's beneficiary.
(3) For a member receiving an allowance pursuant to Chapter 26
(commencing with Section 24100), a 100-percent joint and survivor
annuity with a "pop-up" feature. This form of payment is the
actuarial equivalent of the lump-sum payment modified to be payable
over the combined lives of the member and the member's annuity
beneficiary. Upon the death of the member, the same monthly amount
that was payable to the member shall be paid monthly to the member's
surviving annuity beneficiary. However, if the annuity beneficiary
predeceases the member, the annuity payable to the member shall be
the single life annuity with a cash refund feature that would have
been payable had the member elected that form of payment at the
commencement of the benefit. That single life annuity shall be
payable as of the day following the date of the annuity beneficiary's
death upon receipt by the system of proof of the annuity beneficiary'
s death. If the annuity beneficiary predeceases the member and the
member designates a new option beneficiary pursuant to Section 24300,
the new option beneficiary shall be the new annuity beneficiary. The
effective date shall be six months following the date notification,
on a properly executed form, is received by the board, provided both
the member and the new annuity beneficiary are then living. The new
annuity beneficiary under this paragraph shall be subject to an
actuarial modification of the single life annuity with a cash refund
feature and shall not result in any additional liability to the fund.
The new annuity beneficiary shall not be an existing annuity
beneficiary.
(4) For a member receiving an allowance pursuant to Chapter 26
(commencing with Section 24100), a 50-percent joint and survivor
annuity with a "pop-up" feature. This form of payment is the
actuarial equivalent of the lump-sum payment modified to be payable
over the combined lives of the member and the member's annuity
beneficiary. Upon the death of the member, one-half of the monthly
amount that was payable to the member shall be paid monthly to the
member's surviving annuity beneficiary. However, if the annuity
beneficiary predeceases the member, the annuity payable to the member
shall be the single life annuity with a cash refund feature that
would have been payable had the member elected that form of payment
at the commencement of the benefit. That single life annuity shall be
payable as of the day following the date of the annuity beneficiary'
s death upon receipt by the system of proof of the annuity
beneficiary's death. If the annuity beneficiary predeceases the
member and the member designates a new option beneficiary pursuant to
Section 24300, the new option beneficiary shall be the new annuity
beneficiary. The effective date shall be six months following the
date notification, on a properly executed form, is received by the
board, provided both the member and the new annuity beneficiary are
then living. The new annuity beneficiary under this paragraph shall
be subject to an actuarial modification of the single life annuity
with a cash refund feature and shall not result in any additional
liability to the fund. The new annuity beneficiary shall not be an
existing annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity
equal to the actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account on the date the
disability benefit becomes payable. The annuity shall be payable in
whole year increments over a period of years specified by the member,
from a minimum of three years to a maximum of 10 years. However, the
annuity period may not exceed the life expectancy of the member, or
the life expectancy of the member and the member's annuity
beneficiary. If the member's death occurs prior to the end of the
period certain, the remaining balance of payments shall be paid to
the member's annuity beneficiary pursuant to Section 25022.
(c) Except as described in subdivision (d) of Section 25018.1, on
or after January 1, 2007, a member may not make a new election for an
annuity described in subdivision (b).
(d) On or after January 1, 2007, a member may not make a new
election of a joint and survivor annuity described in subdivision
(b), except as provided by subdivision (e) of Section 25018.1.
(e) Any member with a disability benefit effective on or after
January 1, 2007, shall elect an annuity from the annuities described
in Section 25018.1.
SEC. 13. SEC. 18. Section 25114 of
the Education Code is amended to read:
25114. Except as provided in this section, an employee shall
select from registered 403(b) products.
(a) An employee of a local school district, community college
district, or county office of education may continue to make
contributions to unregistered products purchased or entered into
prior to November 30, 2004.
(b) A state employee of a state employer under the uniform state
payroll system, excluding the California State University System,
eligible to participate in an annuity contract and custodial account
as described in Section 403(b) of the Internal Revenue Code of 1986,
may continue to make contributions to unregistered products purchased
or entered into prior to January 1, 2009.
SEC. 14. SEC. 19. Section 26812 of
the Education Code is amended to read:
26812. (a) A participant retired for service under this part may
perform the activities identified in subdivision (a) or (b) of
Section 26113 as an employee of an employer, as an employee of a
third party, or as an independent contractor within the California
public school system, but the participant shall not make
contributions to the plan. The employer shall maintain accurate
records of the earnings of the retired member and report those
earnings monthly to the system and retired member.
(b) If a participant is retired for service under this part, the
rate of pay for service performed by that member as an employee of
the employer, as an employee of a third party, or as an independent
contractor shall not be less than the minimum, nor exceed that paid
by the employer to other employees performing comparable duties.
(c) A participant retired for service under this part shall not be
required to reinstate for performing the activities identified in
subdivision (a) or (b) of Section 26113 as an employee of an
employer, as an employee of a third party, or as an independent
contractor within the California public school system.
(d) If a participant retired for service under this part and
receiving an annuity under the Cash Balance Benefit Program is below
normal retirement age and earns compensation for performing
activities identified in subdivision (a) or (b) of Section 26113 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 participant's annuity shall be reduced by the amount of the
compensation. This reduction shall only be made for compensation
earned during the first 180 calendar days after a participant retired
for service under this part, if the participant is below normal
retirement age at the time the compensation is earned. The amount of
the reduction may be equal to the monthly annuity payable but shall
not exceed the amount of the annuity payable during the first 180
calendar days after a participant retired for service under this
part, if the participant is below normal retirement age at the time
the compensation is earned.
SEC. 15. SEC. 20. Section 6217.5 of
the Public Resources Code is amended to read:
6217.5. Except for the revenues distributed pursuant to Section
3826, all net revenues, moneys, and remittances from the use of
school lands and lieu lands shall be deposited in the State Treasury
to the credit of the Teachers' Retirement Fund and shall be expended
pursuant to Section 24412 of the Education Code.
SEC. 16. SEC. 21. Any section of any
other act enacted by the Legislature during the 2012 calendar year
that takes effect on or before January 1, 2013, and that 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 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 by this act shall not become operative
if any section of any other act that is enacted by the Legislature
during the 2012 calendar year and takes effect on or before January
1, 2013, amends, amends and renumbers, adds, repeals and adds, or
repeals any section contained in that article, chapter, part, title,
or division.