BILL ANALYSIS Ó AB 989 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 989 (Mullin) As Amended June 17, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |76-0 |(April 25, |SENATE: |37-0 |(August 19, | | | |2013) | | |2013) | ----------------------------------------------------------------- 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 AB 989 Page 2 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 Page 3 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, AB 989 Page 4 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 FN: 0001362