BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 989
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 989 (Mullin)
          As Amended June 17, 2013
          Majority vote
           
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          |ASSEMBLY:  |76-0 |(April 25,      |SENATE: |37-0 |(August 19,    |
          |           |     |2013)           |        |     |2013)          |
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           Original Committee Reference:    P.E.,R.& S.S.  

           SUMMARY  :  Authorizes the California State Teachers' Retirement  
          System (CalSTRS) to provide the annual Retirement Progress  
          Report along with various other retirement communications  
          electronically in lieu of mailing them, unless the member,  
          nonmember spouse, participant, nonparticipant spouse or  
          beneficiary to whom that communication is addressed specifically  
          request to continue receiving the communication by mail.   
          Specifically,  this bill  :

          1)Requires CalSTRS to make available to each active and inactive  
            member, at least annually after the close of the school year,  
            a statement of the member's individual Defined Benefit (DB)  
            Program and Defined Benefit Supplement (DBS) accounts.

          2)Requires CalSTRS to mail a copy of the member's statement,  
            provided the employer or member has informed CalSTRS of the  
            member's mailing address and the member has not requested to  
            receive that annual statement electronically, in lieu of  
            mailing.

          3)Requires CalSTRS to 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.

          4)Permits CalSTRS to designate electronic delivery as the  
            default method of communication or other action, provided that  
            CalSTRS notifies the parties affected that they have the right  
            to request delivery by mail and that, unless the affected  
            party elects, in a manner specified by the system, to continue  
            delivery by mail, delivery shall be provided electronically.

          5)Requires, prior to the designation described above, mail to  








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            continue to be the default method of communication unless the  
            member, nonmember spouse, participant, nonparticipant spouse,  
            or beneficiary has requested that he/she receive that  
            communication electronically, pursuant to a procedure  
            specified by CalSTRS.

          6)Requires, if a provision 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 to substitute for date of mailing for  
            purposes of measuring the number of days within which an  
            action is to be taken.

          7)Permits, if CalSTRS determines that contributions are due a  
            retired member, disabled member, or a person who has died, and  
            the person is unable to pay the amount due, CalSTRS to  
            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.

          8)Requires CalSTRS make available, 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 year.  

          9)Requires CalSTRS to mail a copy of the participant's  
            statement, provided that the employer or participant has  
            informed the system of the participant's current mailing  
            address and the participant has not requested to receive that  
            statement electronically, in lieu of mailing.

           The Senate amendments  :

          1)Permit CalSTRS to designate electronic communication as the  
            default method of communication or other action for specified  
            sections, provided that the system notify the parties affected  
            that they have the right to request delivery by mail.

          2)Require the board to notify each party affected by the  
            resolution that he or she has the right to request delivery by  
            mail.

          3)Permit the board to provide the Retirement Progress Report and  








                                                                  AB 989
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            other retirement-related documents to members, nonmember  
            spouses, participants, nonparticipant spouses or beneficiaries  
            electronically in lieu of mailing.

          4)Make other minor technical and clarifying changes, including  
            replacing the word "board" with "system" when the function is  
            administrative in nature.

           EXISTING LAW  requires the Teachers' Retirement Board to issue,  
          via mail, numerous retirement-related communications to members,  
          nonmember spouses, participants, nonparticipant spouses or  
          beneficiaries.  For example, current law requires that the board  
          mail an annual statement or Retirement Progress Report to each  
          active or inactive member of the DB Program or participant of  
          the Cash Balance Benefit Program, unless the member or  
          participant has indicated that he or she prefers to receive the  
          Retirement Progress Report only through CalSTRS' secure member  
          Web site.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, 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).

           COMMENTS  :  According to the sponsor of the bill, CalSTRS,  
          "CalSTRS mails various required retirement related  
          communications to the member, nonmember spouse, participant,  
          nonparticipant spouse or beneficiary to whom that communication  
          is addressed.  For example, CalSTRS mails an annual statement or  
          Retirement Progress Report to every active and inactive member  
          of the Defined Benefit Program and all participants of the Cash  
          Balance Program; unless, the member has opted to solely receive  
          an electronic version. 

          "CalSTRS also makes the Retirement Progress Report available to  
          all members electronically through the myCalSTRS secure member  
          website; however, members must have previously registered or go  
          through the registration process to establish a myCalSTRS  
          account in order to view their report through the secure web  
          portal."

          According to the author, "This proposal would provide CalSTRS  
          the authority to provide the annual Retirement Progress Report  
          along with various other required retirement communication  
          electronically in lieu of mailing them, unless the member,  








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          nonmember spouse, participant, nonparticipant spouse or  
          beneficiary to whom that communication is addressed,  
          specifically requests, in a manner specified by the board, to  
          continue receiving the communication by mail. Providing such  
          communication electronically would likely significantly decrease  
          the number of documents that are printed and mailed annually  
          resulting in a potential savings ranging from $500,000 -  
          $700,000 annually to the System and would help to support  
          CalSTRS' ongoing commitment to sustainability."

          This bill is similar to AB 2663 (Public Employees, Retirement,  
          and Social Security Committee), Chapter 864, Statutes of 2012,  
          which, in part, allowed CalSTRS to determine the form, including  
          electronic, that county superintendents and other employing  
          agencies must use to furnish any information concerning any  
          member or beneficiary the board may require.

          This bill is also similar to AB 232 (Hill and Fletcher), Chapter  
          90, Statutes of 2009, which allowed CalSTRS to 1) prescribe the  
          form of accepting electronically signed applications and  
          documents, and 2) not mail a copy of benefit payment information  
          when payments are made by electronic funds transfer, unless  
          there is a change in the net amount paid.


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. / (916)  
          319-3957 


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