BILL ANALYSIS Ó AB 611 Page 1 Date of Hearing: April 24, 2013 ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL SECURITY Rob Bonta, Chair AB 611 (Bonta) - As Introduced: February 20, 2013 SUBJECT : State teachers' retirement. SUMMARY : Requires, rather than allows, specified employer contributions to be deposited into the Teachers' Retirement Program Development Fund. FISCAL EFFECT : Unknown. COMMENTS : The Teachers' Retirement Program Development Fund was established to pay any costs related to the development of programs authorized by statute to enhance the financial security of members or beneficiaries of the California State Teachers' Retirement System (CalSTRS). For example, $245,000 of employer contributions were deposited into this fund during the fiscal year ended June 30, 2008, for the development of 403(b)Comply. The total amount to be transferred cannot exceed 0.01 percent of the total of the creditable compensation for the fiscal year ending in the immediately preceding calendar year. Current law allows, but does not require, the depositing of contributions into the fund. Although the Teachers' Retirement Board determines how much can be deposited into the fund, it isn't clear who decides whether the funds are deposited. AB 611 addresses this situation by requiring the depositing of the funds in the amount determined by the board. The Committee is informed that the author intends to use this bill as a vehicle for addressing the CalSTRS long-term funding needs once a solution is reached this legislative session. SCR 105 (Negrete McLeod), Resolution Chapter123, Statutes of 2012, encouraged CalSTRS to develop and submit to the Legislature by February 15, 2013, at least three options that would address the long-term funding needs of the Defined Benefit Program. CalSTRS submitted its report of possible funding strategies, "Sustaining Retirement Security for Future Generations: Funding AB 611 Page 2 the California State Teachers' Retirement System," to the Legislature as requested by the resolution on February 14, 2013. The report provides an analysis of the issues the Legislature and Governor need to consider to develop a sustainable funding strategy that secures the long-term funding needs of the Defined Benefit Program as directed in the resolution. The report, developed with input from affected stakeholders, identifies funding options and illustrates the implications of gradual, incremental contribution increases necessary to close the $64 billion funding gap and secure the long-term needs of the fund. CalSTRS and the affected stakeholders have been working with the author and Committee staff to develop a funding strategy utilizing the information provided in the report. REGISTERED SUPPORT / OPPOSITION : Support None on file Opposition None on file Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957