BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 349|
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UNFINISHED BUSINESS
Bill No: SB 349
Author: Negrete McLeod (D)
Amended: 8/29/11
Vote: 21
SEN. PUB. EMPLOY. & RETIRE. COMMITTEE : 5-0, 5/2/11
AYES: Negrete McLeod, Walters, Gaines, Padilla, Vargas
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 35-0, 5/16/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De León, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Harman, Hernandez,
Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Price, Rubio, Runner, Simitian,
Steinberg, Vargas, Wolk, Wright, Yee
NO VOTE RECORDED: Hancock, Huff, Strickland, Walters,
Wyland
ASSEMBLY FLOOR : 79-0, 8/31/11 - See last page for vote
SUBJECT : State Teachers Retirement System
SOURCE : California State Teachers Retirement System
DIGEST : This bill makes technical, clarifying and
non-controversial changes to various sections of the
Education Code administered by the California State
Teachers' Retirement System (CalSTRS) to improve, and
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continue effective administration of CalSTRS.
Assembly Amendments (1) delete two provisions regarding the
Medicare Premium Payment Program due to concerns raised by
the Department of Finance, and (2) make minor technical
changes.
ANALYSIS : Existing federal law, known as the Heroes
Earnings Assistance and Relief Tax (HEART) Act of 2008,
requires, among other provisions, that public pension
systems treat participants who die on or after January 1,
2007, while performing qualified military service, as being
reemployed and they dying while employed for purposes of
survivor and death benefits.
Existing State Law
1.Allows CalSTRS to designate one or more of its
contracted field counseling offices as an official
recipient of member benefit applications and other
documents from members, spouses and beneficiaries, and
allows CalSTRS members to submit documents to CalSTRS
through benefit counselors.
2.Allows the CalSTRS Board of Administration to establish
a $10 minimum threshold for the processing of benefit
payments or the collection of overpayments to a member.
3.Allows, under the MPP, CalSTRS to pay the Medicare Part
A premiums for eligible retired members of the DB
Program, effective July 1, 2011. The Teachers'
Retirement Board is authorized to extend this
eligibility date. To qualify for CalSTRS payment of the
premium, the member must be at least 65 years of age,
enrolled in Medicare Parts A and B at the age of 65 or
on July 1, 2011, whichever is later, and not eligible
for Medicare Part A without payment of a premium.
CalSTRS also pays the Medicare Parts A and B late
enrollment surcharges for DB members who retired prior
to January 1, 2001, provided they enrolled in Medicare
by July 1, 2001. To fund this program, CalSTRS
established a special trust fund known as the Teachers'
Health Benefits Fund (THBF), into which an amount from
employer contributions that otherwise would be credited
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to the DB Program would instead pay the premium of
Medicare Part A.
4.Establishes the DB and Cash Benefit (CB) programs
administered by CalSTRS as separate benefit programs for
full-time public school administrators and instructors,
and part-time or seasonal instructors who are not
eligible for the DB program, respectively.
5.Requires that an employer of a member of CalSTRS pay
eight percent of the member's creditable compensation to
the system and requires that these contributions first
be deposited in the Teachers' Retirement Fund in an
amount no less than the amount necessary to fund
benefits associated with the DB Program, requires that
the funds not first applied to funding the DB Program be
deposited in the THBF, and permits the Teachers'
Retirement Board to also deposit a specified amount into
the Teachers' Retirement Program Development fund to pay
any costs determined by the Board to be related to
developing programs that the Board determines directly
or indirectly enhance the financial security of members,
participants, or beneficiaries of the State Teachers'
Retirement Plan.
6.Requires CalSTRS to assess penalties and interest on
late remittance of contributions for both the DB Program
and the CB Program in accordance with regulations
established by the CalSTRS Board of Administration.
7.Allows a member to designate a beneficiary to receive
the member's benefits upon death of the member; allows a
member to make a preretirement election, change or
cancellation of an option, as specified, that designated
a beneficiary to receive a lifetime monthly benefit upon
the death of the member, and provides that upon death of
a member, beneficiaries or survivors may receive
specified benefits depending on the coverage that the
member was under, and eligibility of that member.
8.Allows a member to transfer all or a specified portion
of his/her contributions eligible for a direct
trustee-to-trustee transfer to another qualified plan
under Section 402 of the Internal Revenue Code of 1986;
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to cancel the transfer, and to refund the system with
the withdrawn funds.
9.Provides that upon proper application, a vested member
can receive disability benefits while the member is
either employed, on compensated leave of absence,
physically or mentally incapacitated, or on leave of
absence without compensation, as specified, and for
CalSTRS members who become members after October 16,
1992, allows a portion of the benefit to be paid to a
dependent child until the age of 21.
10.Requires a member to provide medical documentation to
substantiate an impairment qualifying the member for a
disability allowance, and allows CalSTRS to order a
medical examination of a member to determine whether the
member is incapacitated for performance of service.
11.Provides that a member may retire, as specified, change,
or modify the effective date of retirement form the
System if the application for retirement is
appropriately filed with the System.
12.Allows a member who retires between the ages of 55 and
60 under the Early Retirement Limited Term Reduction
Program, to elect to receive half of the amount of
his/her monthly retirement benefit for a limited time
and then revert to the full retirement benefit for
normal retirement age.
13.Provides specified postretirement earnings limitations
on members who return to CalSTRS-covered employment
after retirement, including a limited time for members
who retire under normal retirement age; prohibits a
retired member in the DB Program from making
contributions to the program, and provides for different
limitations on retired DB members and DB Program
participants who return to work in CalSTRS-covered
service.
This bill makes technical, clarifying and non-controversial
changes to various sections of the Education Code
administered by CalSTRS to improve and continue effective
administration of the System. Specifically, this bill:
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1.Amends the Education Code to comply with the requirement
of the federal HEART Act.
2.Provides additional options to CalSTRS members by
allowing them to submit CalSTRS forms and documents to
designated CalSTRS representatives during counseling
office hours or in the course or receiving counseling
services, regardless of whether the counseling takes
place in a counseling office.
3.Broadens the language in the Education Code to include
"other" payments and collection of overpayments that are
subject to the $10 threshold.
4.Deletes the requirement that employer contributions be
deposited in the Teachers' Retirement Fund for the
purpose of funding benefits associated with the DB
Program, revises the priority of application of the
contributions to require that they first be applied to
the THBF and then to the Teachers' Retirement Program
Development Fund before deposit in the Teachers'
Retirement Fund.
5.Clarifies the funding of the MPP Program to ensure that
the MPP Program may only be extended to the extent that
surplus employer contributions of the DB Program are
available.
6.Allows a member to terminate a retirement or disability
benefit and be eligible for a refund of the remaining
contributions and interest when properly executed on a
CalSTRS form.
7.Removes the $500 late reporting penalty for the DB and
CB programs, leaving the regular interest penalty, and
makes the penalties consistent for both the DB and CB
programs, among other related changes, as specified.
8.Clarifies that the beneficiary and option beneficiary
designations are invalidated when a member completes a
refund of his/her accumulated retirement contributions.
9.Clarifies that an amount equal to the refund that is
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returned to CalSTRS will be treated the same as if the
actual refund warrant had been returned.
10.Clarifies that the basis for eligibility for Family
Allowance and Survivor benefits lies with the member,
and not with the member's beneficiaries.
11.Clarifies that a member may not apply for a disability
benefit if the basis for the disability is an impairment
that began prior to the member's membership in CalSTRS.
12.Clarifies CalSTRS' authority to order a review of
medical documentation in lieu of a physical examination.
13.Clarifies provisions allowing members to specify when
their retirement benefits start, following termination
of employment.
14.Makes technical, non-controversial changes to provide
consistency and ease of administration of the Early
Retirement Limited Term Reduction Program.
15.Specifies that retired DB members are not allowed to
make contributions to the CB program, to provide
consistency among the two programs.
16.Specifies that the zero-dollar earnings limit applies to
a member's age at the most recent retirement.
17.Makes conforming changes to reconcile the differences
between the DB and the CB post-retirement employment
limitations; provides consistency in the post-retirement
limitations that are imposed on educators who retire
under CalSTRS, and also removes citations to provisions
related to two obsolete programs.
18.Aligns provisions, as specified, to allow an option
election to be made as part of the retirement
application process, or by the end of the month in which
the retirement takes effect.
19.Allows payment of a portion of disability retirement to
the member's dependent child, as specified.
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20.Makes other minor, technical changes to the Teachers'
Retirement Law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/31/11)
California State Teachers' Retirement System (source)
California Federation of Teachers
California Retired Teachers Association
California Teachers Association
ASSEMBLY FLOOR : 79-0, 8/31/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. Pérez
NO VOTE RECORDED: Gorell
CPM:cm 8/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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