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.