Amended in Senate June 17, 2013

Amended in Senate May 14, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 989

Introduced by Assembly Member Mullin

February 22, 2013

An act to amend Sections 22309, 22661, 22662, 22663, 22801, 23104, 23203, begin insert 24615, end insert and 26214 of, and to add Section 22337 to, the Education Code, relating to state teachers’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 989, as amended, Mullin. State teachers’ retirement: account statements.

The State Teachers’ Retirement Law creates the State Teachers’ Retirement System (STRS) for the purpose of providing retirement benefits to teachers and other people employed in connection with the schools. STRS is administrated by the Teachers’ Retirement Board, which is required to issue each active and inactive member, no less frequently than annually, as specified, a statement of the member’s individual Defined Benefit Program and Defined Benefit Supplement Program accounts, if the system has the member’s mailing address. Existing law permits the board to make the account statement available by secured access through the system’s begin insert Internet end insert Web site. Existing law creates the Cash Balance Benefit Program, also referred to as the cash balance plan, administrated by the Teachers’ Retirement Board, to provide a retirement plan for teachers working less than half time. Existing law requires the board, in connection with the cash balance plan, to provide each participant a statement regarding the balance of his or her account with the plan at the close of the year, as specified.

This bill would permit the board to make an electronic delivery of the account statements described above, subject to specified requirements. The bill would permit the begin delete board, by resolution, to make the end delete begin insert system to designate end insert electronic delivery of the account statements the default method by which active and inactive members and participants receive the information in the statements. The bill would require the begin delete board, if it makes this resolution, end delete begin insert system end insert to notify begin delete each member that he or she has end delete begin insert the affected parties that they have end insert the right to request begin delete that a copy of the individual account statement be mailed and to provide the statement by mail if requested, as specified end delete begin insert delivery by mail, and that unless the affected party elects, in a manner specified by the board, delivery will be provided electronically end insert . The bill would provide that, until this begin delete resolution end delete begin insert designation end insert is made, begin delete the end delete delivery by mail is the default delivery method begin insert , except as specified end insert . The bill would apply similar authorizations and requirements regarding electronic delivery of communications and other actions to provisions regarding refund of retirement contributions, redeposit of retirement contributions, and the purchase of service credit. If specified provisions mandate that actions be taken within a certain number of days of a mailing date and electronic delivery has been substituted for mail, the bill would require that date of electronic delivery be substituted for mailing date for purposes of measuring when those actions are to be taken.

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 22309 of the Education Code is amended
to read:

22309.  

(a) Except as provided in subdivision (c), the begin delete board end delete
begin insert system end insert shall begin delete issue end delete begin insert make available end insert to each active and inactive
member, begin delete no less frequently than end delete begin insert at least end insert annually after the close
of the school year, a statement of the member’s individual Defined
Benefit Program and Defined Benefit Supplement begin delete accounts, end delete
begin insert accounts. The system shall mail a copy of the member’s statement, end insert
provided the employer or member has informed the system of the
member’s current begin delete United States Postal Service end delete mailing address begin delete .
If end delete begin insert and end insert the member begin delete indicates that he or she prefers end delete begin insert has not requested end insert
to receive that annual statement begin delete through the Web site of the system,
the board may end delete begin insert electronically end insert , in lieu of mailing begin delete , issue the annual
statement by secured access through the Web site of the system end delete .

(b) The begin delete board end delete begin insert system end insert shall periodically make a good faith effort
to locate inactive members to provide these members with
information concerning any benefit for which they may be eligible.

(c) The mode of issuance described begin insert in end insert subdivision (a) is subject
to Section 22337.

SEC. 2.  

Section 22337 is added to the Education Code, to read:

22337.  

(a) The requirements and procedures described in this
section shall apply, to the extent that they are applicable, to the
following sections:

(1) Section 22309.

(2) Section 22661.

(3) Section 22662.

(4) Section 22663.

(5) Section 22801.

(6) Section 23104.

(7) Section 23203.

begin insert

(8) Section 24615.

end insert begin delete

(8)

end delete

begin insert (9) end insert  Section 26214.

(b) A communication or other action described in a section listed
in subdivision (a) may be made by electronic delivery pursuant to
the requirements of this section. The begin delete board end delete begin insert system end insert may begin delete , by
resolution, make end delete begin insert designate end insert electronic delivery the default method
of communication or other action with regard to these begin delete sections. If
the board makes this resolution, then the board shall notify each
party affected by the resolution that he or she has end delete begin insert sections, provided
that the system notifies the parties affected that they have end insert the right
to request delivery by mail and that, unless the affected party elects
begin delete to continue delivery by mail within 60 days end delete begin insert , in a manner specified
by the system, to continue delivery by mail end insert , delivery shall be
provided electronically. begin delete The option to elect delivery by mail shall
be provided by mail unless the affected party has indicated that he
or she prefers to receive communications in another manner, in
which case the option to elect shall be provided by the method that
the party has selected. end delete

(c)  begin delete Until the board makes the resolution end delete begin insert Prior to the designation end insert
described in subdivision (b), mail shall continue to be the default
method of communication unless begin delete a different preferred method of
communication has been selected by end delete the member, nonmember
spouse, participant, nonparticipant spouse, or beneficiary begin insert has
requested that he or she receive that communication electronically,
pursuant to a procedure specified by the system end insert .

(d) If a provision in a section listed in subdivision (a) requires
that action be taken within a specified number of days of a mailing
date, and electronic delivery has been substituted for delivery by
mail, date of electronic delivery shall substitute for date of mailing
for purposes of measuring the number of days within which an
action is to be taken.

SEC. 3.  

Section 22661 of the Education Code is amended to
read:

22661.  

(a) The nonmember spouse who is awarded a separate
account under this part shall have the right to a refund of the
accumulated retirement contributions in the account under the
Defined Benefit Program, and a return of the Defined Benefit
Supplement account balance, of the nonmember spouse under this
part.

(b) The nonmember spouse shall file an application on a form
provided by the system to obtain a refund or lump-sum payment.

(c) Except as provided in subdivision (i), the refund of
accumulated retirement contributions in the account under the
Defined Benefit Program and the return of the accumulated Defined
Benefit Supplement account balance under this part are effective
when the system deposits in the United States mail an initial
warrant drawn in favor of the nonmember spouse and addressed
to the latest address for the nonmember spouse on file with the
system.

(d) Except as provided in subdivision (i), if the nonmember
spouse has elected on a form provided by the system to transfer
all or a specified portion of the accumulated retirement
contributions or accumulated Defined Benefit Supplement account
balance that are eligible for direct trustee-to-trustee transfer to the
trustee of a qualified plan under Section 402 of the Internal
Revenue Code of 1986 (26 U.S.C. Sec. 402), deposit in the United
States mail of a notice that the requested transfer has been made
constitutes a refund of the nonmember spouse’s accumulated
retirement contributions as defined in Section 22161.5 or the return
of the accumulated Defined Benefit Supplement account balance.
This subdivision shall not apply to a nonmember domestic partner,
consistent with Section 402 of the Internal Revenue Code.

(e) The nonmember spouse is deemed to have permanently
waived all rights and benefits pertaining to the service credit,
accumulated retirement contributions, and accumulated Defined
Benefit Supplement account balance under this part when the
refund and lump-sum payment become effective.

(f) The nonmember spouse may not cancel a refund or lump-sum
payment under this part after it is effective.

(g) The nonmember spouse shall not have a right to elect to
redeposit the refunded accumulated retirement contributions under
this part after the refund is effective, to redeposit under Section
22662 or purchase additional service credit under Section 22663
after the refund becomes effective, or to redeposit the accumulated
Defined Benefit Supplement account balance after the lump-sum
payment becomes effective.

(h) If the total service credit in the separate account of the
nonmember spouse under the Defined Benefit Program, including
service credit purchased under Sections 22662 and 22663, is less
than two and one-half years, the begin delete board end delete begin insert system end insert shall refund the
accumulated retirement contributions in the account.

(i) The mode of deposit described in subdivision (c) and the
mode of notice described in subdivision (d) are subject to Section
22337.

SEC. 4.  

Section 22662 of the Education Code is amended to
read:

22662.  

The nonmember spouse who is awarded a separate
account under the Defined Benefit Program may redeposit
accumulated retirement contributions previously refunded to the
member in accordance with the determination of the court pursuant
to Section 22652.

(a) The nonmember spouse may redeposit under the Defined
Benefit Program only those accumulated retirement contributions
that were previously refunded to the member and in which the
court has determined the nonmember spouse has a community
property interest.

(b) The nonmember spouse shall inform the system in writing
of his or her intent to redeposit within 180 days after the judgment
or court order that specifies the redeposit rights of the nonmember
spouse is entered. Except as provided in subdivision (g), the
nonmember begin delete spouses’ end delete begin insert spouse’s end insert election to redeposit shall be made
on a form provided by the system within 30 days after the system
mails an election form and the billing.

(c) If the nonmember spouse elects to redeposit under the
Defined Benefit Program, he or she shall repay all or a portion of
the member’s refunded accumulated retirement contributions that
were awarded to the nonmember spouse and shall pay regular
interest from the date of the refund to the date payment of the
redeposit is completed.

(d) All payments shall be received by the system before the
effective date of the nonmember spouse’s retirement under this
part. If any payment due because of the election is not received at
the system’s headquarters office, as established pursuant to Section
22375, within 120 days of its due date, the election shall be
canceled and any payments made under the election shall be
returned to the nonmember spouse.

(e) The right of the nonmember spouse to redeposit shall be
subject to Section 23203.

(f) The member shall not have a right to redeposit the share of
the nonmember spouse in the previously refunded accumulated
retirement contributions under this part whether or not the
nonmember spouse elects to redeposit. However, any accumulated
retirement contributions previously refunded under this part and
not explicitly awarded to the nonmember spouse under this part
by the judgment or court order shall be deemed the exclusive
property of the member.

(g) The measurement of time within which the election to
redeposit described in subdivision (b) shall be made is subject to
Section 22337.

SEC. 5.  

Section 22663 of the Education Code is amended to
read:

22663.  

The nonmember spouse who is awarded a separate
account under this part has the right to purchase additional service
credit in accordance with the determination of the court pursuant
to Section 22652.

(a) The nonmember spouse may purchase only the service credit
that the court, pursuant to Section 22652, has determined to be the
community property interest of the nonmember spouse.

(b) The nonmember spouse shall inform the system in writing
of his or her intent to purchase additional service credit within 180
days after the date the judgment or court order addressing the right
of the nonmember spouse to purchase additional service credit is
entered. Except as provided in subdivision (f), the nonmember
spouse shall elect to purchase additional service credit on a form
provided by the system within 30 days after the system mails an
election form and billing.

(c) If the nonmember spouse elects to purchase additional
service credit, he or she shall pay, prior to retirement under this
part, all contributions with respect to the additional service at the
contribution rate for additional service credit in effect at the time
of election and regular interest from July 1 of the year following
the year upon which contributions are based.

(1) (A) The nonmember spouse shall purchase additional service
credit by paying the required contributions and interest in one lump
sum, or in not more than 120 monthly installments, provided that
no installment, except the final installment, is less than twenty-five
dollars ($25). Regular interest shall be charged on the monthly,
unpaid balance if the nonmember spouse pays in installments.

(B) If any payment due, because of the election, is not received
at the system’s headquarters office, as established pursuant to
Section 22375, within 120 days of its due date, the election shall
be canceled and any payments made under the election shall be
returned to the nonmember spouse.

(2) The contributions shall be based on the member’s
compensation earnable in the most recent school year during which
the member was employed, preceding the date of separation
established by the court pursuant to Section 22652.

(3) All payments of contributions and interest shall be received
by the system before the effective date of the retirement of the
nonmember spouse.

(d) The nonmember spouse does not have a right to purchase
additional service credit under this part after the effective date of
a refund of the accumulated retirement contributions in the separate
account of the nonmember spouse.

(e) The member does not have a right to purchase the community
property interest of the nonmember spouse of additional service
credit under this part whether or not the nonmember spouse elects
to purchase the additional service credit. However, any additional
service credit eligible for purchase that is not explicitly awarded
to the nonmember spouse by the judgment or court order shall be
deemed the exclusive property of the member.

(f) The measurement of time within which the election to
purchase additional service credit described in subdivision (b) shall
be made is subject to Section 22337.

SEC. 6.  

Section 22801 of the Education Code is amended to
read:

22801.  

(a) A member who requests to purchase additional
service credit as provided in this chapter and Chapter 14.2
(commencing with Section 22820) shall pay, prior to retirement,
all contributions with respect to that service at the contribution
rate for additional service credit, adopted by the board as a plan
amendment, in effect on the date of the request to purchase
additional service credit. If the system is unable to inform the
member or beneficiary of the amount required to purchase
additional service credit prior to the effective date of the applicable
allowance, the member or beneficiary may make the required
payment within 30 working days after the date of mailing of the
statement of contributions and interest required or the effective
date of the appropriate allowance, whichever is later, except as
provided in subdivision (i). The payment shall be paid in full before
a member or beneficiary receives any adjustment in the appropriate
allowance due because of that payment. Contributions shall be
made in a lump sum, or in not more than 120 monthly installments,
not to exceed ten years. No installment, except the final installment,
shall be less than twenty-five dollars ($25).

(b) If the member is employed to perform creditable service
subject to coverage by the Defined Benefit Program on the date
of the request to purchase additional service credit, the
contributions shall be based upon the compensation earnable in
the current school year or either of the two immediately preceding
school years, whichever is highest.

(c) If the member is not employed to perform creditable service
subject to coverage by the Defined Benefit Program on the date
of the request to purchase additional service credit, the
contributions shall be based upon the compensation earnable in
the last school year of credited service or either of the two
immediately preceding school years, whichever is highest, and
additional regular interest shall be added to the contributions from
July 1 of the subsequent year in which the member last performed
creditable service subject to coverage by the Defined Benefit
Program to 20 days after the date of the request.

(d) The employer may pay the amount required as employer
contributions for additional service credited under paragraphs (7),
(8), (9), and (10) of subdivision (a) of Section 22803.

(e) The Public Employees’ Retirement System shall transfer
the actuarial present value of the assets of a person who makes an
election pursuant to paragraph (11) of subdivision (a) of Section
22803.

(f) Regular interest shall be charged on the monthly unpaid
balance if the member pays in installments. Regular interest may
not be charged or be payable for the period of a delay caused by
the system’s inability or failure to determine and inform the
member or beneficiary of the amount of contributions and interest
that is payable. The period of delay shall commence on the 20th
day following the day on which the member or beneficiary who
wishes to make payment evidences in writing to the system that
he or she is ready, willing, and able to make payment to the system.
The period of delay shall cease on the first day of the month
following the mailing of notification of contributions and interest
payable.

(g) If the payment described in subdivision (a) is not received
at the system’s headquarters office, as described in Section 22375,
within 120 days of the due date, the election pursuant to this section
shall be canceled. The member shall receive credit for additional
service based on the payments that were made or the member may
request a return of his or her payments.

(h) If the election to purchase additional service credit is
canceled as described in subdivision (g), the member may, prior
to the effective date of his or her retirement, elect to purchase
additional service credit pursuant to this section.

(i) The measurement of time within which the purchase of
additional service credit described in subdivision (a) shall be made
is subject to Section 22337.

SEC. 7.  

Section 23104 of the Education Code is amended to
read:

23104.  

(a) Deposit in the United States mail of an initial
warrant drawn as directed by the member as a refund of
contributions upon termination of employment, and addressed to
the address directed by the member, constitutes a return of the
member’s accumulated retirement contributions under this part.

(b) Except as provided in subdivision (e), if the member has
elected on a form provided by the system to transfer all or a
specified portion of the accumulated retirement contributions that
are eligible for direct trustee-to-trustee transfer to the trustee of a
qualified plan under Section 402 of the Internal Revenue Code of
1986 (26 U.S.C. Sec. 402), deposit in the United States mail of a
notice that the requested transfer has been made constitutes a return
of the member’s accumulated retirement contributions under this
part.

(c) Except as provided in subdivision (e), for refunds not
involving direct trustee-to-trustee transfers, if the member returns
the total gross distribution amount to the system’s headquarters
office, as established pursuant to Section 22375, within 30 days
from the mailing date, the refund shall be canceled and the person
shall be restored as a member of the Defined Benefit Program with
all the rights and privileges under this part restored.

(d) Except as provided in subdivision (e), for refunds involving
direct trustee-to-trustee transfers, if the member returns the warrant
drawn to the trustee of the qualified plan or the trustee returns the
amount of the qualified refund and, if applicable, any additional
amounts necessary to equal, but in no event to exceed, the total
gross distribution amount to the system’s headquarters office, as
established pursuant to Section 22375, within 30 days from the
mailing date, the refund shall be canceled and the person shall be
restored as a member of the Defined Benefit Program with all the
rights and privileges under this part restored.

(e) The mode of notice described in subdivision (b) and the
measurement of time within which the return of total gross
distribution amounts described in subdivisions (c) and (d) shall be
made are subject to Section 22337.

SEC. 8.  

Section 23203 of the Education Code is amended to
read:

23203.  

(a) A member who elects to redeposit refunded
accumulated retirement contributions shall pay, prior to retirement,
all contributions and interest as determined under Section 23200.

(b) If the system is unable to inform the member or beneficiary
of the amount required to redeposit the refunded accumulated
retirement contributions prior to the effective date of the applicable
allowance, the member or beneficiary may make the required
payment within 30 working days after the date of mailing of the
statement of contributions and interest required or the effective
date of the appropriate allowance, whichever is later, except as
provided in subdivision (d). The payment shall be paid in full
before a member or beneficiary receives any adjustment in the
appropriate allowance due because of that payment.

(c) Redeposit of refunded accumulated retirement contributions
shall be made in one sum, or in not more than 120 monthly
installments, not to exceed ten years, provided that no installment,
except the final installment, is less than twenty-five dollars ($25).

(d) The measurement of time within which a redeposit described
in subdivision (b) shall be made is subject to Section 22337.

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 24615 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

24615.  

(a) If the begin delete board end delete begin insert system end insert determines that contributions
are due begin delete the system end delete under this part from a retired member, disabled
member, or a person who has died, and the person is unable to pay
the amount due, the begin delete board end delete begin insert system end insert may withhold all or part of
subsequent payments due the retired member, disabled member,
or survivor, until the amounts withheld equal the contributions due
plus regular interest to the date of payment. Total contributions
plus regular interest due shall be recovered by the system within
18 months.

(b) Any payment of contributions that a member or beneficiary
is required by law to make to the system shall be paid upon receipt
of written notice from the system begin insert , except as provided in subdivision
(c) end insert . Payment may be made either in a lump sum or installments,
as permitted by the system. Payment of contributions due the
system not discovered or unpaid, for whatever reason, prior to the
time of retirement, disability, or death shall be paid prior to
granting an allowance or benefit to the member or beneficiary
unless, in the opinion of the board, the making of the payment
prior to receipt of an allowance or benefit would impose an undue
hardship, in which case payment may be made by the system
withholding not more than 18 consecutive monthly installments
from payments due from the system. Those installments may not
be less than twenty-five dollars ($25) per month, except for the
last installment, which may be less than twenty-five dollars ($25).

begin insert

(c) The mode of notice and the measurement of time within
which a redeposit described in subdivision (b) shall be made is
subject to Section 22337.

end insert

begin delete SEC. 9. end delete
begin insert SEC. 10. end insert   

Section 26214 of the Education Code is amended to
read:

26214.  

(a) Except as provided in subdivision (b), the begin delete board end delete
begin insert system end insert shall begin delete issue end delete begin insert make available end insert , after the end of the plan year,
to each participant having a balance in his or her employee account
or employer account, a statement setting forth the balance as of
the close of the plan year and amounts credited for the begin delete year, end delete begin insert year.
The system shall mail a copy of the participant’s statement, end insert
provided that the employer or participant has informed the system
of the participant’s current begin delete United States Postal Service end delete mailing
address begin delete . If end delete begin insert and end insert the participant begin delete indicates that he or she prefers end delete begin insert has
not requested end insert to receive that statement begin delete through the Web site of the
system, the board may end delete begin insert electronically end insert , in lieu of mailing begin delete , issue the
statement by secured access through the Web site of the system.
The board shall prescribe the form and content of the account
statement end delete .

(b) The mode of issuance described begin insert in end insert subdivision (a) is subject
to Section 22337.