BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 989 (Mullin) - CalSTRS: Account Statements Amended: June 17, 2013 Policy Vote: PE&R 5-0 Urgency: No Mandate: No Hearing Date: June 24, 2013 Consultant: Maureen Ortiz This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 989 allows CalSTRS to provide the annual Retirement Progress Report to active and inactive members of the Defined Benefit Program and participants of the Cash Balance Program electronically unless the member requests to receive it by mail. Fiscal Impact: Initial costs of approximately $50,000 for changes to the START and MyCalSTRS programs followed by potential savings of up to $500,000 annually (Special Fund) Background: Existing law requires CalSTRS to issue an annual statement to each active and inactive member of the Defined Benefit Program (DB) and the Cash Balance Program (CB), unless the member has indicated that he or she prefers to receive it through the system's myCalSTRS website. There are an estimated 250,000 members that have created a myCalSTRS account to date, and an estimated 60,000 members have opted to receive their Retirement Progress Report electronically through myCalSTRS. Currently, unless a member specifically states that they would only like to receive their report electronically, they are able to receive it both by mail and electronically. In 2011, CalSTRS uploaded a total of 629,220 Retirement Progress Reports to myCalSTRS, and mailed an estimated 425,116 to those who had not opted to receive it electronically. Proposed Law: AB 989 allows CalSTRS to provide the annual Retirement Progress Report to active and inactive members of the Defined Benefit Program and the Cash Balance Program electronically unless the member requests to receive it by mail. AB 989 (Mullin) Page 1 Staff Comments: While providing the annual statement to members electronically will ultimately save a significant amount of printing/mailing costs, there will be initial costs associated with updating the START program, and for communicating the new electronic option to members. If members do not select the electronic version of the report, the paper statements will continue to be mailed. AB 989 provides CalSTRS with the authority to designate electronic delivery as the default method of communication. However, CalSTRS will notify affected individuals that they have the right to request to continue receiving delivery by mail. In addition, AB 989 provides an opportunity to discontinue the mailing of other documents or statements to the member, nonmember spouse, participant, nonparticipant spouse or beneficiary in favor of making them available only via myCalSTRS.