California Legislature—2013–14 Regular Session

Assembly BillNo. 1381


Introduced by Committee on Public Employees, Retirement and Social Security (Bonta (Chair), Jones-Sawyer, Mullin, Rendon, and Wieckowski)

February 26, 2013


An act to amend Sections 22115, 22119.2, 22134.5, 22135, 22148, 22327, 22664, 22826, 22901, 22901.3, 22905, 22909, 23855, 24202, 24202.5, 24202.6, 24202.7, 24203, 24205, 24206, 24209, 24210, 24214, 24214.5, 24600, 26139, 26503.5, 26504, 26800, 26810, 26812, and 26813 of, to add Sections 22109.8, 22160.5, 24252, 26132.5, 26135.5, 26135.7, and 26139.5 to, and to repeal and add Section 22119.3 of, the Education Code, relating to public employees’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 1381, as introduced, Committee on Public Employees, Retirement and Social Security. State Teacher’s Retirement Law: pension reform.

Existing law, the Teachers’ Retirement Law, establishes the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program. The defined benefit is based on final compensation, credited service, and age at retirement, subject to certain variations. The State Teachers’ Retirement System (STRS) is administered by the Teachers’ Retirement Board. Existing law establishes the Defined Benefit Supplement Program, which provides supplemental retirement, disability, and other benefits, payable either in a lump-sum payment, an annuity, or both to members of the State Teachers’ Retirement Plan. Existing law establishes a program commonly referred to as the Replacement Benefits Program to provide benefit payments to members of STRS whose benefits exceed specified federal limits. Existing law establishes the Cash Balance Benefit Program, administered by the Teachers’ Retirement Board, as a separate benefit program within the State Teachers’ Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service.

The California Public Employees’ Pension Reform Act of 2013 (PEPRA), on and after January 1, 2013, generally requires a public retirement system, as defined, to modify its plan or plans to comply with the act, as specified. Among other things, PEPRA requires a public retirement system to modify its plan or plans to comply with the act and establishes new retirement formulas that a public employer offering a defined benefit pension plan may not exceed for new employees. PEPRA prohibits offering supplemental defined benefit plans for new employees. PEPRA defines pensionable compensation for the purposes of its provisions and requires new employees of specified public employers who participate in a defined benefit plan to have an initial contribution rate of at least 50% of the normal cost rate for that defined benefit plan, rounded to the nearest 14 of 1%, or the current contribution rate of similarly situated employees, whichever is greater. PEPRA generally prohibits a retired person who retires from a public employer from serving, being employed by, or being employed through a contract directly by, a public employer in the same retirement system from which the retiree receives a pension benefit without reinstatement, subject to certain exceptions and limitations. The act prohibits reemployment of a retiree pursuant to these provisions for a period of 180 days following the date of retirement unless he or she falls within certain exceptions to the prohibition.

This bill would make various changes in the Teachers’ Retirement Law to conform with the provisions of PEPRA. The bill would revise the definition of creditable compensation and salary, and specify exclusions from the definition of creditable compensation and salary, for purposes of the Defined Benefit Program and the Cash Balance Benefit Program, as specified. The bill would revise provisions prescribing the amounts that members are required to contribute to the retirement fund for the Defined Benefit Program, and that participants in the Cash Balance Benefit Program contribute, to reflect the requirements of PEPRA. The bill would provide, consistent with provisions of PEPRA, that the normal retirement age is 62 years of age for a new member of, or a participant in, these systems, with respect to various provisions of the programs, including those related to survivors’ benefits, retirement for service following reinstatement, and performance of post-retirement service. The bill would add new limitations on compensation that may be paid to a member of the Defined Benefit Program or a participant in the Cash Balance Benefit Program performing post-retirement activities, as defined. The bill would prohibit application of the Replacement Benefits Program to employees subject to PEPRA. The bill would define a participant in the Cash Balance Benefit Program who is subject to PEPRA to account for concurrent membership in that program and other public retirement systems. The bill would prescribe new requirements applicable to participants in the Cash Balance Benefit Program who perform retired participant activities, including requirements imposed on governing bodies seeking to employ these participants. The bill would make additional conforming and technical changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 22109.8 is added to the Education Code,
2to read:

3

22109.8.  

“California Public Employees’ Pension Reform Act
4of 2013” means the California Public Employees’ Pension Reform
5Act of 2013 (Article 4 (commencing with Section 7522) of Chapter
621 of Division 7 of Title 1 of the Government Code).

7

SEC. 2.  

Section 22115 of the Education Code is amended to
8read:

9

22115.  

(a) “Compensation earnable” means the creditable
10compensation a person could earn in a school year for creditable
11service performed on a full-time basis, excluding service for which
12contributions are credited by the system to the Defined Benefit
13Supplement Program.

14(b) The board may determine compensation earnable for persons
15employed on a part-time basis.

16(c) If service credit for a school year is less than 1.000,
17compensation earnable shall be the quotient obtained when
18creditable compensation paid in that year is divided by the service
19credit for that year, except as provided in subdivision (d).

20(d) If a member earns creditable compensation at multiple pay
21rates during a school year and service credit at the highest pay rate
P4    1is at least 0.900 of a year, compensation earnable shall be
2determined as if all service credit for that year had been earned at
3the highest pay rate. This subdivision shall be applicable only for
4purposes of determining final compensation. If a member earns
5creditable compensation at multiple pay rates during a school year
6and service credit at the highest pay rate is less than 0.900 of a
7year, compensation earnable shall be determined pursuant to
8subdivision (c).

9(e) (1) begin deleteFor end deletebegin insertExcept as provided in subdivision (g), for end insertpurposes
10of determining compensation earnable for a member employed by
11a community college prior to July 1, 1996, full time shall be defined
12pursuant to Section 22138.5 and pursuant to Section 20521 of Title
135 of the California Code of Regulations, as those provisions read
14on June 30, 1996, if application of that definition will increase the
15compensation earnable or otherwise enhance the benefits of the
16member.

17(2) For purposes of administering this subdivision, the board
18shall have the authority to do both of the following:

19(A) Establish and implement factors and assumptions necessary
20to calculate and compare the benefits payable under the definition
21of compensation earnable described in this subdivision. Those
22factors and assumptions may be based on information reported by
23the employer, including, but not limited to, all of the following:

24(i) Base hours.

25(ii) Actual earnings.

26(iii) Compensation earnable.

27(B) Review member benefit calculations that were performed
28using the factors and assumptions described in subparagraph (A).
29If the board determines that an employer failed to identify part-time
30service performed, the board shall consider that part-time service
31to be performed in a part-time lecture assignment as defined by
32the employer. If the board determines by the review of the member
33benefit calculations that the required information reported by the
34employer is inaccurate, incomplete, or the factors and assumptions
35were applied incorrectly, the board may recalculate member
36benefits using additional factors and assumptions that may include,
37but are not limited to, all of the following:

38(i) Base hours.

39(ii) Actual earnings.

40(iii) Compensation earnable.

P5    1(3) This subdivision shall apply to a member employed by a
2community college prior to July 1, 1996, if the community college
3subsequently acts to reduce the minimum standard for full time as
4described in subdivision (c) of Section 22138.5 for the class of
5employees, and that community college provides written notice
6to the system of the act of the community college to reduce that
7minimum standard.

8(4) This subdivision shall not apply to a member employed by
9a community college that has not reduced the minimum standard
10as described in subdivision (c) of Section 22138.5.

begin insert

11(f) Subdivision (e) shall not apply to a member subject to the
12California Public Employees’ Pension Reform Act of 2013.

end insert
13

SEC. 3.  

Section 22119.2 of the Education Code is amended to
14read:

15

22119.2.  

(a) “Creditable compensation” means remuneration
16that isbegin delete payableend deletebegin insert paidend insert in cash by an employer to all persons in the
17same class of employees and is paid to an employee for performing
18creditable servicebegin insert end insertbegin insertin that positionend insert. Creditable compensation shall
19include:

20(1) Salarybegin insert or wagesend insert paid in accordance with a salary schedule
21begin delete orend deletebegin insert,end insert employment agreementbegin insert, end insertbegin insertor any other publicly available written
22contractual agreement that specifies compensationend insert
.

23(2) Remuneration that is paid in addition to salarybegin insert or wagesend insert,
24provided it isbegin delete payableend deletebegin insert paidend insert to all persons who are in the same class
25of employees in the same dollar amount, the same percentage of
26salarybegin insert or wagesend insert, or the same percentage of the amount being
27distributed.

28(3) Remuneration that is paid for the use of sick leave, vacation,
29and other employer-approved leave, except as provided in
30paragraph (4) of subdivision (c).

31(4) Member contributions that are picked up by an employer
32pursuant to Section 22903 or 22904.

33(5) Amounts that are deducted from a member’sbegin delete compensationend delete
34begin insert salary or wagesend insert, including, but not limited to,begin delete salaryend delete deductions
35for participation in a deferred compensation plan; deductions to
36purchase an annuity contract, tax-deferred retirement plan, or
37insurance program; and contributions to a plan that meets the
38requirements of Section 125,begin insert 401(a),end insert 401(k),begin delete orend delete 403(b)begin insert, 457(b), or
39457(f)end insert
of Title 26 of the United States Code.

P6    1(6) Any other payments the board determines to be “creditable
2compensation.”

3(b) Any creditable compensation determined by the board to
4have been paid begin delete for the principal purpose of enhancingend delete begin insert to enhanceend insert
5 a member’s benefitsbegin delete under the planend delete shall not be credited under the
6Defined Benefit Program. Contributions on that compensation
7shall be credited to the Defined Benefit Supplement Program. A
8presumption by the board that creditable compensation was paid
9begin delete for the principal purpose of enhancing the member’s benefits under
10the planend delete
begin insert to enhance a member’s benefitsend insert may be rebutted by the
11member or by the employer on behalf of the member. Upon receipt
12of sufficient evidence to the contrary, a presumption by the board
13that creditable compensation was paidbegin delete for the principal purpose
14of enhancingend delete
begin insert to enhanceend insert the member’s benefitsbegin delete under the planend delete
15 may be reversed.

16(c) “Creditable compensation” does not mean and shall not
17include:

18(1) Remuneration that is notbegin delete payableend deletebegin insert paidend insert in cash or is not
19begin delete payableend deletebegin insert paidend insert to all persons who are in the same class of employees.

20(2) Remuneration that is paid for service that is not creditable
21service pursuant to Section 22119.5.

22(3) Remuneration that is paid in addition to salarybegin insert or wagesend insert if
23it is notbegin delete payableend deletebegin insert paidend insert to all persons in the same class of employees
24in the same dollar amount, the same percentage of salarybegin insert or wagesend insert,
25or the same percentage of the amount being distributed pursuant
26to paragraph (2) of subdivision (a).

27(4) Remuneration that is paidbegin insert in exchangeend insert forbegin insert the forfeiture ofend insert
28 unused accumulated leave.

29(5) Annuity contracts, tax-deferred retirement plans, or insurance
30programs and contributions to plans that meet the requirements of
31Section 125,begin insert 401(a),end insert 401(k),begin delete orend delete 403(b)begin insert, 457(b), or 457(f)end insert of Title
3226 of the United States Code when the cost is covered by an
33employerbegin delete and is not deducted from the member’s salaryend delete.

34(6) Fringe benefits provided by an employer.

35(7) begin deleteJob-related expenses end deletebegin insertExpenses end insertpaid or reimbursed by an
36employer.

37(8) Severancebegin delete pay or compensatory damages or money paid to
38a member in excess of salaryend delete
begin insert pay,end insertbegin insert including lump-sum and
39installment payments, or money paid in excess of salary or wages
P7    1to a member as compensatory damages orend insert
as a compromise
2settlement.

3(9) Any other payments the board determines not to be
4“creditable compensation.”

5(d) An employer or individual who knowingly or willfully
6reports compensation in a manner inconsistent with subdivision
7(a) or (c) may be subject to prosecution for fraud, theft, or
8embezzlement in accordance with the Penal Code. The system
9may establish procedures to ensure that compensation reported by
10an employer is in compliance with this section.

11(e) For purposes of this section, remuneration shall be considered
12begin delete payableend deletebegin insert paidend insert if it would bebegin delete paidend deletebegin insert distributedend insert to any personbegin insert in the
13same class of employeesend insert
who meets the qualifications or
14requirements specified in a collective bargaining agreementbegin delete orend deletebegin insert,end insert an
15employment agreementbegin insert, or any other publicly available written
16contractual agreement that specified compensation end insert
as a condition
17of receiving the remuneration.

18(f) This definition of “creditable compensation” reflects sound
19principles that support the integrity of the retirement fund. Those
20principles include, but are not limited to, consistent treatment of
21compensation throughout a member’s career, consistent treatment
22of compensation among an entire class of employees,begin insert consistent
23treatment of compensation for a position, end insert
preventing adverse
24selection, and excluding from compensation earnable remuneration
25that is paidbegin delete for the principal purpose of enhancingend deletebegin insert to enhanceend insert a
26member’s benefitsbegin delete under the planend delete. The board shall determine the
27appropriate crediting of contributions between the Defined Benefit
28Program and the Defined Benefit Supplement Program according
29to these principles, to the extent not otherwise specified pursuant
30to this part.

31(g) The section shall become operative on July 1, 2002, if the
32revenue limit cost-of-living adjustment computed by the
33Superintendent of Public Instruction for the 2001-02 fiscal year
34is equal to or greater than 3.5 percent. Otherwise this section shall
35become operative on July 1, 2003.

begin insert

36(h) This section shall not apply to a member subject to the
37California Public Employees’ Pension Reform Act of 2013.

end insert
38

SEC. 4.  

Section 22119.3 of the Education Code is repealed.

begin delete
39

22119.3.  

(a) “Creditable compensation” for members who are
40subject to the California Public Employees’ Pension Reform Act
P8    1of 2013 (Article 4 (commencing with Section 7522) of Chapter
221 of Division 7 of Title 1 of the Government Code) shall not mean
3and shall not include any compensation that is excluded from the
4definition of pensionable compensation pursuant to Section 7522.34
5of the Government Code.

6(b) Creditable compensation credited to the Defined Benefit
7Plan shall be consistent with requirements for pensionable
8compensation pursuant to Section 7522.34 of the Government
9Code.

10(c) Notwithstanding subdivision (a), member and employer
11 contributions, exclusive of contributions pursuant to Section 22951,
12on creditable compensation for creditable service that exceeds one
13year in a school year shall be credited to the Defined Benefit
14Supplement Program.

end delete
15

SEC. 5.  

Section 22119.3 is added to the Education Code, to
16read:

17

22119.3.  

(a) “Creditable compensation” for members who are
18subject to the California Public Employees’ Pension Reform Act
19of 2013 means regular, recurring remuneration that is paid in cash
20by an employer to all persons in the same class of employees in
21accordance with a salary schedule, employment agreement, or any
22other publicly available written contractual agreement that specifies
23compensation and is paid to an employee for performing creditable
24service in that position. Creditable compensation shall include:

25(1) Remuneration that is paid for the use of sick leave, vacation,
26and other employer-approved leave, except as provided in
27paragraph (4) of subdivision (b).

28(2) Member contributions that are picked up by an employer
29pursuant to Section 22903 or 22904.

30(3) Amounts that are deducted from a member’s salary or wages,
31including, but not limited to, deductions for participation in a
32deferred compensation plan; deductions to purchase an annuity
33contract, tax-deferred retirement plan, or insurance program; and
34contributions to a plan that meets the requirements of Section 125,
35401(a), 401(k), 403(b), 457(b) or 457(f) of Title 26 of the United
36States Code.

37(4) Notwithstanding paragraph (11) of subdivision (b),
38remuneration that is paid to achieve compensation parity between
39part-time and full-time faculty of California community colleges
40for similar work, as funded pursuant to the Budget Act.

P9    1(5) Notwithstanding paragraph (11) of subdivision (b),
2remuneration that is paid based on the allocation of funds from
3the California State Lottery Education Fund pursuant to Section
48880.5 of the Government Code.

5(6) Notwithstanding paragraph (11) of subdivision (b),
6remuneration that is paid when the number of students in the
7classroom exceeds the contractual amount.

8(7) Notwithstanding paragraphs (6) and (8) of subdivision (c)
9of Section 7522.34 of the Government Code, remuneration that is
10paid for creditable service that exceeds one year in a school year.

11(b) “Creditable compensation” does not mean and shall not
12include:

13(1) Remuneration that is not paid in cash or is not paid to all
14persons who are in the same class of employees.

15(2) Remuneration that is paid for service that is not creditable
16service pursuant to Section 22119.5.

17(3) Remuneration that is paid in addition to salary or wages.

18(4) Remuneration that is paid in exchange for the forfeiture of
19unused accumulated leave.

20(5) Annuity contracts, tax-deferred retirement plans, or insurance
21programs and contributions to plans that meet the requirements of
22Section 125, 401(a), 401(k), 403(b), 457(b) or 457(f) of Title 26
23of the United States Code when the cost is covered by an employer.

24(6) Fringe benefits provided by an employer.

25(7) Expenses paid or reimbursed by an employer.

26(8) Severance pay, including lump-sum and installment
27payments, or money paid in excess of salary or wages to a member
28as compensatory damages or as a compromise settlement.

29(9) Creditable compensation determined by the board to have
30been paid to enhance a member’s benefit.

31(10) Compensation paid to the member in lieu of benefits
32provided to the member by the employer or paid directly by the
33employer to a third party other than the retirement system for the
34benefit of the member.

35(11) Any one-time or ad hoc payments made to a member.

36(12) Any employer-provided allowance, reimbursement, or
37payment, including, but not limited to, one made for housing,
38vehicle, or uniform.

39(13) Any bonus paid in addition to compensation described in
40subdivision (a).

P10   1(14) Any other payments the board determines not to be
2“creditable compensation.”

3(c) (1) Except for purposes of calculating credited service in
4the Defined Benefit Program and for reporting compensation
5earnable on or after January 1, 2013, creditable compensation in
6any fiscal year shall not exceed 120 percent of the “contribution
7and benefit base,” as determined under Section 430(b) of the Social
8Security Act (42 U.S.C. Sec. 430(b)), on January 1, 2013.

9(2) The board shall adjust the limit in paragraph (1) based on
10changes to the Consumer Price Index for All Urban Consumers.
11Notwithstanding paragraph (1) of subdivision (d) of Section
127522.10 of the Government Code, the adjustment shall be effective
13annually on July 1, beginning July 1, 2014.

14(3) The Legislature reserves the right to modify the requirements
15of this subdivision with regard to all members subject to this
16subdivision, except that the Legislature may not modify these
17provisions in a manner that would result in a decrease in benefits
18accrued prior to the effective date of the modification.

19(4) This subdivision shall apply to compensation paid during
20the 2013-14 fiscal year and each fiscal year thereafter.

21(d) An employer or individual who knowingly or willfully
22reports compensation in a manner inconsistent with subdivision
23(a) or (b) may be subject to prosecution for fraud, theft, or
24embezzlement in accordance with the Penal Code. The system
25may establish procedures to ensure that compensation reported by
26an employer is in compliance with this section.

27(e) For purposes of this section, remuneration shall be considered
28paid if it would be distributed to any person in the same class of
29employees who meets the qualifications or requirements specified
30in a collective bargaining agreement, an employment agreement,
31or any other publicly available written contractual agreement that
32specifies compensation as a condition of receiving the
33remuneration.

34(f) This definition of “creditable compensation” reflects sound
35principles that support the integrity of the retirement fund. Those
36principles include, but are not limited to, consistent treatment of
37compensation throughout a member’s career, consistent treatment
38of compensation among an entire class of employees, consistent
39treatment of compensation for the position, preventing adverse
40selection, and excluding from creditable compensation
P11   1remuneration that is paid to enhance a member’s benefits. The
2board shall determine the appropriate crediting of contributions
3according to these principles, to the extent not otherwise specified
4pursuant to this part. A presumption by the board that creditable
5compensation was paid to enhance the member’s benefits may be
6rebutted by the member or by the employer on behalf of the
7member. Upon receipt of sufficient evidence to the contrary, a
8presumption by the board that creditable compensation was paid
9to enhance the member’s benefits may be reversed.

10

SEC. 6.  

Section 22134.5 of the Education Code is amended to
11read:

12

22134.5.  

(a) Notwithstanding Section 22134, “final
13compensation” means the highest average annual compensation
14earnable by a member during any period of 12 consecutive months
15while an active member of the Defined Benefit Program or time
16during which he or she was not a member but for which the
17member has received credit under the Defined Benefit Program,
18except time that was so credited for service performed outside this
19state prior to July 1, 1944.

20(b) For purposes of this section, periods of service separated by
21breaks in service may be aggregated to constitute a period of 12
22consecutive months, if the periods of service are consecutive except
23for the breaks.

24(c) The determination of final compensation of a member who
25has concurrent membership in any other retirement system pursuant
26to Section 22115.2 shall take into consideration the compensation
27earnable while a member of any other system, provided that both
28of the following exist:

29(1) Service under any other system was not performed during
30the same pay period with service under the Defined Benefit
31Program.

32(2) Retirement under the Defined Benefit Program is concurrent
33with the member’s retirement under any other system.

34(d) If a member has received service credit for part-time service
35performed prior to July 1, 1956, the member’s final compensation
36shall be adjusted for that service in excess of one year by the ratio
37that part-time service bears to full-time service.

38(e) The board may specify a different final compensation with
39respect to disability allowances, disability retirement allowances,
40family allowances, and children’s portions of survivor benefit
P12   1allowances payable on and after January 1, 1978. The compensation
2earnable for periods of part-time service shall be adjusted by the
3ratio that part-time service bears to full-time service.

4(f) This section shall apply to the following:

5(1) A member who has 25 or more years of credited service,
6excluding service credited pursuant to the following:

7(A) Section 22714.

begin delete

8(B) Section 22714.5.

end delete
begin delete

9(C)

end delete

10begin insert(B)end insert Section 22715.

begin delete

11(D)

end delete

12begin insert(C)end insert Section 22717, except as provided in subdivision (b) of
13Section 22121.

begin delete

14(E)

end delete

15begin insert(D)end insert Section 22826.

16(2) A nonmember spouse, if the member had 25 or more years
17of credited service, as calculated in paragraph (1), on the date the
18parties separated, as established in the judgment or court order
19pursuant to Section 22652.

begin insert

20(3) This section shall not apply to a member subject to the
21California Public Employees’ Pension Reform Act of 2013.

end insert
22

SEC. 7.  

Section 22135 of the Education Code is amended to
23read:

24

22135.  

(a) Notwithstanding subdivisions (a) and (b) of Section
2522134, “final compensation” means the highest average annual
26compensation earnable by an active member who is a classroom
27teacher who retires, becomes disabled, or dies, after June 30, 1990,
28during any period of 12 consecutive months during his or her
29membership in the plan’s Defined Benefit Program.

30(b) Section 22134, except subdivision (a) of that section, shall
31apply to classroom teachers who retire after June 30, 1990, and
32any statutory reference to Section 22134 or “final compensation”
33with respect to a classroom teacher who retires, becomes disabled,
34or dies, after June 30, 1990, shall be deemed to be a reference to
35this section.

36(c) As used in this section, “classroom teacher” means any of
37the following:

38(1) All teachers and substitute teachers in positions requiring
39certification qualifications who spend, during the last 10 years of
40their employment with the same employer which immediately
P13   1precedes their retirement, 60 percent or more of their contract time
2each year providing direct instruction. For the purpose of
3determining continuity of employment within the meaning of this
4subdivision, an authorized leave of absence for sabbatical or illness
5or other collectively bargained or employer-approved leaves shall
6not constitute a break in service.

7(2) Other certificated personnel who spend, during the last 10
8years of their employment with the same employer that
9immediately precedes their retirement, 60 percent or more of their
10contract time each year providing direct services to pupils,
11including, but not limited to, librarians, counselors, nurses, speech
12therapists, resource specialists, audiologists, audiometrists,
13hygienists, optometrists, psychologists, driver safety instructors,
14and personnel on special assignment to perform school attendance
15and adjustment services.

16(d) As used in this section, “classroom teacher” does not include
17any of the following:

18(1) Certificated employees whose job descriptions require an
19administrative credential.

20(2) Certificated employees whose job descriptions include
21responsibility for supervision of certificated staff.

22(3) Certificated employees who serve as advisers, coordinators,
23consultants, or developers or planners of curricula, instructional
24 materials, or programs, who spend, during the last 10 years of their
25employment with the same employer that immediately precedes
26their retirement, less than 60 percent of their contract time in direct
27instruction.

28(4) Certificated employees whose job descriptions require
29provision of direct instruction or services, but who are functioning
30in nonteaching assignments.

31(5) Classified employees.

32(e) This section shall apply only to teachers employed by an
33employer that has, pursuant to Chapter 10.7 (commencing with
34Section 3540) of Division 4 of Title 1 of the Government Code,
35entered into a written agreement with an exclusive representative,
36that makes this section applicable to all of its classroom teachers,
37as defined in subdivision (c).

38(f) The written agreement shall include a mechanism to pay for
39all increases in allowances provided for by this section through
40employer contributions or employee contributions or both, which
P14   1shall be collected and retained by the employer in a trust fund to
2be used solely and exclusively to pay the system for all increases
3in allowances provided by this section and related administrative
4costs; and a mechanism for disposition of the employee’s
5contributions if employment is terminated before retirement, and
6for the establishment of a trust fund board. The trust fund board
7shall administer the trust fund and shall be composed of an equal
8number of members representing classroom teachers chosen by
9the bargaining agent and the employer. If the employer agrees to
10pay the total cost of increases in allowances, the establishment of
11a trust fund and a trust fund board shall be optional to the employer.
12The employer, within 30 days of receiving an invoice from the
13system, shall reimburse the retirement fund the amount determined
14 by the Teachers’ Retirement Board to be the actuarial equivalent
15of the difference between the allowance the member or beneficiary
16receives pursuant to this section and the allowance the member or
17beneficiary would have received if the member’s final
18compensation had been computed under Section 22134 and the
19proportionate share of the cost to the plan’s Defined Benefit
20Program, as determined by the Teachers’ Retirement Board, of
21administering this section. The payment shall include the cost of
22all increases in allowances provided for by this section for all years
23of service credited to the member as of the benefit effective date.
24Interest shall be charged at the regular interest rate for any payment
25not received within 30 days of receipt of the invoice. Payments
26not received within 30 days after receipt of the invoice may be
27collected pursuant to Section 23007.

28(g) Upon the execution of the agreement, the employer shall
29notify all certificated employees of the agreement and any
30certificated employee of the employer, who is a member of the
31Public Employees’ Retirement System pursuant to Section 22508,
32that he or she may, within 60 days following the date of
33notification, elect to terminate his or her membership in the Public
34Employees’ Retirement System and become a member of this
35plan’s Defined Benefit Program. However, only service credited
36under the Defined Benefit Program subsequent to the date of that
37election shall be subject to this section.

38(h) An employer that agrees to become subject to this section,
39shall, on a form and within the timeframes prescribed by the
40system, certify the applicability of this section to a member
P15   1pursuant to the criteria set forth in this section when a retirement,
2disability, or family allowance becomes payable.

3(i) For a nonmember spouse, final compensation shall be
4determined pursuant to paragraph (2) of subdivision (c) of Section
522664. The employer, within 30 days of receiving an invoice from
6the system, shall reimburse the retirement fund pursuant to
7subdivision (f). Interest shall be charged at the regular interest rate
8for payments not received within the prescribed timeframe.
9Payments not received within 30 days of invoicing may be
10collected pursuant to Section 23007.

begin insert

11(j) This section shall not apply to a member subject to the
12California Public Employees’ Pension Reform Act of 2013.

end insert
13

SEC. 8.  

Section 22148 of the Education Code is amended to
14read:

15

22148.  

“Normal retirement” and “normal retirement age” mean
16begin delete the age ofend delete 60 yearsbegin insert of age, or 62 years of age for a member end insertbegin insertsubject
17to the California Public Employees’ Pension Reform Act of 2013end insert
,
18which is the age upon attainment of which the member becomes
19eligible under the Defined Benefit Program for a service retirement
20allowance without reduction because of age and without special
21qualifications.

22

SEC. 9.  

Section 22160.5 is added to the Education Code, to
23read:

24

22160.5.  

“Public employer” means a public employer as
25defined in subdivision (i) of Section 7522.04 of the Government
26Code.

27

SEC. 10.  

Section 22327 of the Education Code is amended to
28read:

29

22327.  

Notwithstanding any other provision of law, the
30Employment Development Department shall disclose to the board
31information in its possession relating to the earnings of any person
32who isbegin delete receiving a disability benefit underend deletebegin insert a member ofend insert the Defined
33Benefit Program. The earnings information shall be released to
34the board only upon written request from the board specifying that
35the person isbegin delete receiving disability benefits underend deletebegin insert a member ofend insert the
36Defined Benefit Program. The request may be made by the chief
37executive officer of the system or by an employee of the system
38so authorized and identified by name and title by the chief
39executive officer in writing. The board shall notifybegin delete recipients of
40disability benefitsend delete
begin insert membersend insert that earnings information shall be
P16   1obtained from the Employment Development Department upon
2request by the board. The board shall not release any earnings
3information received from the Employment Development
4Department to any person, agency, or other entity. The system
5shall reimburse the Employment Development Department for all
6reasonable administrative expenses incurred pursuant to this
7section.

8

SEC. 11.  

Section 22664 of the Education Code is amended to
9read:

10

22664.  

The nonmember spouse who is awarded a separate
11account shall have the right to a service retirement allowance and,
12if applicable, a retirement benefit under this part.

13(a) The nonmember spouse shall be eligible to retire for service
14under this part if the following conditions are satisfied:

15(1) The member had at least five years of credited service during
16the period of marriage, at least one year of which had been
17performed subsequent to the most recent refund to the member of
18accumulated retirement contributions. The credited service may
19include service credited to the account of the member as of the
20date of the dissolution or legal separation, previously refunded
21service, out-of-state service, and permissive service credit that the
22member is eligible to purchase at the time of the dissolution or
23legal separation.

24(2) The nonmember spouse has at least 212 years of credited
25service in his or her separate account.

26(3) The nonmember spouse has attained 55 years of age or more.

27(b) A service retirement allowance of a nonmember spouse
28under this part shall become effective upon a date designated by
29the nonmember spouse, provided:

30(1) The requirements of subdivision (a) are satisfied.

31(2) The nonmember spouse has filed an application for service
32retirement on a properly executed form provided by the system,
33that is executed no earlier than six months before the effective date
34of the retirement allowance.

35(3) The effective date is no earlier than the first day of the month
36that the application is received at the system’s headquarters office
37as described in Section 22375, and the effective date is after the
38date the judgment or court order pursuant to Section 22652 was
39entered.

P17   1(c) (1) Upon service retirement at normal retirement age under
2this part, the nonmember spouse shall receive a retirement
3allowance that shall consist of an annual allowance payable in
4monthly installments equal to 2 percent of final compensation for
5each year of credited service.

6(2) If the nonmember spouse’s retirement is effective at less
7than normal retirement age and between early retirement age under
8this part and normal retirement age, the retirement allowance shall
9be reduced by one-half of 1 percent for each full month, or fraction
10of a month, that will elapse until the nonmember spouse would
11have reached normal retirement age.

12(3) If the nonmember spouse’s service retirement is effective
13at an age greater than normal retirement age and is effective on or
14after January 1, 1999, the percentage of final compensation for
15each year of credited service shall be determined pursuant to the
16following table:


17

 

Age at Retirement

Percentage

60¼   

2.033

60½   

2.067

60¾   

2.10

61   

2.133

61¼   

2.167

61½   

2.20

61¾   

2.233

62   

2.267

62¼   

2.30

62½   

2.333

62¾   

2.367

63 and over   

2.40

P17  31

 

32(4) In computing the retirement allowance of the nonmember
33spouse, the age of the nonmember spouse on the last day of the
34month that the retirement allowance begins to accrue shall be used.

35(5) Final compensation, for purposes of calculating the service
36retirement allowance of the nonmember spouse under this
37subdivision, shall be calculated according to the definition of final
38compensation in Section 22134, 22134.5, 22135, or 22136,
39whichever is applicable, and shall be based on the member’s
40compensation earnable up to the date the parties separated, as
P18   1established in the judgment or court order pursuant to Section
222652. The nonmember spouse shall not be entitled to use any
3other calculation of final compensation.

4(d) Upon service retirement under this part, the nonmember
5spouse shall receive a retirement benefit based on an amount equal
6to the balance of credits in the nonmember spouse’s Defined
7Benefit Supplement account on the date the retirement benefit
8becomes payable.

9(1) A retirement benefit shall be a lump-sum payment, or an
10annuity payable in monthly installments, or a combination of both
11a lump-sum payment and an annuity, as elected by the nonmember
12spouse on the application for a retirement benefit. A retirement
13benefit paid as an annuity under this chapter shall be subject to
14Sections 22660, 25011, and 25011.1.

15(2) Upon distribution of the entire retirement benefit in a
16lump-sum payment, no other benefit shall be payable to the
17nonmember spouse or the nonmember spouse’s beneficiary under
18the Defined Benefit Supplement Program.

19(e) If the member is or was receiving a disability allowance
20under this part with an effective date before or on the date the
21parties separated as established in the judgment or court order
22pursuant to Section 22652, or at any time applies for and receives
23a disability allowance with an effective date that is before or
24coincides with the date the parties separated as established in the
25judgment or court order pursuant to Section 22652, the nonmember
26spouse shall not be eligible to retire until after the disability
27allowance of the member terminates. If the member who is or was
28receiving a disability allowance returns to employment to perform
29creditable service subject to coverage under the Defined Benefit
30Program or has his or her allowance terminated under Section
3124015, the nonmember spouse may not be paid a retirement
32allowance until at least six months after termination of the disability
33allowance and the return of the member to employment to perform
34creditable service subject to coverage under the Defined Benefit
35Program, or the termination of the disability allowance and the
36employment or self-employment of the member in any capacity,
37notwithstanding Section 22132. If at the end of the six-month
38period, the member has not had a recurrence of the original
39disability or has not had his or her earnings fall below the amounts
P19   1described in Section 24015, the nonmember spouse may be paid
2a retirement allowance if all other eligibility requirements are met.

3(1) The retirement allowance of the nonmember spouse under
4this subdivision shall be calculated as follows: the disability
5allowance the member was receiving, exclusive of the portion for
6dependent children, shall be divided between the share of the
7member and the share of the nonmember spouse. The share of the
8nonmember spouse shall be the amount obtained by multiplying
9the disability allowance, exclusive of the portion for dependent
10children, by the years of service credited to the separate account
11of the nonmember spouse, including service projected to the date
12of separation, and dividing by the projected service of the member.
13The nonmember spouse’s retirement allowance shall be the lesser
14of the share of the nonmember spouse under this subdivision or
15the retirement allowance under subdivision (c).

16(2) The share of the member shall be the total disability
17allowance reduced by the share of the nonmember spouse. The
18share of the member shall be considered the disability allowance
19of the member for purposes of Section 24213.

20(f) The nonmember spouse who receives a retirement allowance
21is not a retired member under this part. However, the allowance
22of the nonmember spouse shall be increased by application of the
23improvement factor and shall be eligible for the application of
24supplemental increases and other benefit maintenance provisions
25under this part, including, but not limited to, Sections 24412 and
2624415 based on the same criteria used for the application of these
27benefit maintenance increases to the service retirement allowances
28of members.

begin insert

29(g) Paragraphs (1) through (3), inclusive, of subdivision (c)
30shall not apply to a nonmember spouse of a member subject to the
31California Public Employees’ Pension Reform Act of 2013. For a
32person who is a nonmember spouse of a member subject to the
33California Public Employees’ Pension Reform Act of 2013 and is
34awarded a separate account, the retirement allowance shall equal
35the percentage of final compensation for each year of credited
36service that is equal to the percentage specified in Section 24202.6
37based on the age of the nonmember spouse on the effective date
38of the allowance.

end insert
39

SEC. 12.  

Section 22826 of the Education Code is amended to
40read:

P20   1

22826.  

(a) A member, other than a retired member, may
2request to purchase up to five years of nonqualified service credit
3provided the member is vested in the Defined Benefit Program as
4provided in Section 22156.

5(b) A member who requests to purchase nonqualified service
6credit as provided in this chapter shall contribute to the retirement
7fund the actuarial cost of the service, including interest as
8appropriate, as determined by the board based on the most recent
9valuation of the plan with respect to the Defined Benefit Program
10in effect on the date of the request, in accordance with subdivisions
11(a), (f), (g), and (h) of Section 22801.

begin insert

12(c) This section shall apply only to an application to purchase
13nonqualified service credit on a properly executed form provided
14by the system and received at the system’s headquarters office, as
15established pursuant to Section 22375, prior to January 1, 2013,
16that is subsequently approved by the system.

end insert
17

SEC. 13.  

Section 22901 of the Education Code is amended to
18read:

19

22901.  

(a) Each member of the Defined Benefit Program shall
20contribute to the retirement fund an amount equivalent to 8 percent
21of the member’s creditable compensationbegin insert, unless he or she is a
22member subject to the California Public Employees’ Pension
23Reform Act of 2013end insert
.

begin insert

24(b) Each member subject to the California Public Employees’
25Pension Reform Act of 2013 shall contribute to the retirement fund
26an amount equivalent to the percentage of the member’s creditable
27compensation calculated as follows:

end insert
begin insert

28(1) An initial percentage equal to 50 percent of the normal cost
29rate of benefits applicable to members subject to the California
30Public Employees’ Pension Reform Act of 2013, rounded to the
31nearest quarter of 1 percent.

end insert
begin insert

32(2) Notwithstanding paragraph (1), once established, the
33percentage described in paragraph (1) shall not be adjusted on
34account of a change to the normal cost rate unless the normal cost
35rate increases or decreases by more than 1 percent of payroll
36above or below the normal cost rate in effect at the time the
37percentage is first established or, if later, the normal cost rate in
38effect at the time of the last adjustment.

end insert
begin delete

39(b)

end delete

P21   1begin insert(c)end insert Notwithstanding Section 22905, any member contributions
2for service performed during the 2010-11 school year with a
3service period ending after December 31, 2010, shall be credited
4pursuant to subdivision (a).

5

SEC. 14.  

Section 22901.3 of the Education Code is amended
6to read:

7

22901.3.  

(a) Notwithstanding Section 22901, the normal rate
8of contribution for a “state employee,” as defined in subdivision
9(c) of Section 3513 of the Government Code, who is a member of
10the Defined Benefit Program, may be established by a
11memorandum of understanding reached pursuant to Section 3517.5
12of the Government Code. The memorandum of understanding shall
13be controlling without further legislative action, except that if the
14provisions of the memorandum of understanding require the
15expenditure of funds, the provisions may not become effective
16unless approved by the Legislature in the annual Budget Act.

17(b) begin deleteThe end deletebegin insertExcept as provided in subdivision (c), end insertDirector of
18Human Resources may establish the normal rate of contribution
19for a state employee who is a member of the Defined Benefit
20Program who is excepted from the definition of “state employee”
21in subdivision (c) of Section 3513 of the Government Code, and
22an officer or employee of the executive branch of state government
23who is not a member of the civil service. The normal rate of
24contribution shall be the same for all members identified in this
25subdivision. The contribution rate shall be effective the beginning
26of the pay period indicated by the Director of Human Resources
27but shall be no earlier than the beginning of the pay period
28following the date the board receives notification.

begin insert

29(c) The normal contribution rate for members subject to the
30California Public Employees’ Pension Reform Act of 2013 who
31 are state employees is subject to the provisions of subdivision (e)
32of Section 7522.30 of the Government Code.

end insert
33

SEC. 15.  

Section 22905 of the Education Code is amended to
34read:

35

22905.  

(a) Member contributions pursuant to Section 22901,
36employer contributions pursuant to Section 22903 or 22904, and
37member contributions made by an employer pursuant to Section
3822909 shall be credited to the member’s individual account under
39the Defined Benefit Program or the Defined Benefit Supplement
P22   1Program, whichever is applicable pursuant to the provisions of
2this part.

3(b) begin deleteMember end deletebegin insertExcept as provided in subdivision (f), member end insertand
4employer contributions, exclusive of contributions pursuant to
5Section 22951, on a member’s compensation under the following
6circumstances shall be credited to the member’s Defined Benefit
7Supplement account:

8(1) Compensation for creditable service that exceeds one year
9in a school year.

10(2) Compensation that is consistent with subdivision (b) of
11Section 22119.2.

12(3) Compensation that isbegin delete payableend deletebegin insert paidend insert for a specified number
13of times as limited by law, a collective bargaining agreement, or
14an employment agreement.

15(c) A member may not make voluntary pretax or posttax
16contributions under the Defined Benefit Supplement Program,
17except as provided in subdivision (d), nor may a member redeposit
18amounts previously distributed based on the balance in the
19member’s Defined Benefit Supplement account.

20(d) Member and employer contributions pursuant to paragraph
21(1) of subdivision (b) under the Defined Benefit Supplement
22Program shall be credited to the accounts of members as of July
231 each year following a determination by the system under the
24provisions of this part that those contributions should be credited
25to the Defined Benefit Supplement Program. Any other
26contributions under the Defined Benefit Supplement Program
27pursuant to paragraph (2) or (3) of subdivision (b), shall be credited
28to the individual account of the member upon receipt by the system.
29Contributions to a member’s Defined Benefit Supplement account
30shall be identified separately from the member’s contributions
31credited under the Defined Benefit Program.

32(e) The provisions of this section shall become operative on
33July 1, 2002, if the revenue limit cost-of-living adjustment
34computed by the Superintendent of Public Instruction for the
352001-02 fiscal year is equal to or greater than 3.5 percent.
36Otherwise this section shall become operative on July 1, 2003.

begin insert

37(f) Paragraphs (2) and (3) of subdivision (b) shall not apply to
38a member subject to the California Public Employees’ Pension
39Reform Act of 2013.

end insert
P23   1

SEC. 16.  

Section 22909 of the Education Code is amended to
2read:

3

22909.  

(a) Notwithstanding Sections 22901, 22956, and 23000,
4an employer may pay all or a portion of the contributions required
5to be paid by a member of the Defined Benefit Program. Where
6the member is included in a group or class of employment, the
7payment shall be for all members in the group or class of
8employment. The payments shall be credited to member accounts
9pursuant to Section 22905. The employer shall report contributions
10to the system as if the member and the employer were paying the
11contributions in accordance with this part, notwithstanding this
12section. For purposes of this chapter, the member’s contributions
13shall be considered to be the percentage of the member’s creditable
14compensation that would have been paid pursuant to this chapter,
15notwithstanding this section. Notwithstanding Section 22119.2,
16contributions paid pursuant to this section may not be included in
17creditable compensation.

18(b) Nothing in this section shall be construed to limit the
19authority of an employer to periodically increase, reduce, or
20eliminate the payment by the employer of all or a portion of the
21contributions required to be paid by members of the Defined
22Benefit Program, as authorized by this section.

23(c) This section shall only apply to an employer that is picking
24up members’ contributions pursuant to Section 22903 or 22904.

begin insert

25(d) This section shall not apply to a member subject to the
26California Public Employees’ Pension Reform Act of 2013.

end insert
27

SEC. 17.  

Section 23855 of the Education Code is amended to
28read:

29

23855.  

(a) The survivor benefit allowance is a monthly
30allowance equal to one-half of the modified retirement allowance
31the member would have received atbegin delete 60 years ofend deletebegin insert normal retirementend insert
32 age, if the member had retired and elected Option 3 pursuant to
33Section 24300, as that section read on December 31, 2006, naming
34the spouse as the option beneficiary.

35(b) The allowance payable under this subdivision shall be based
36on the member’s actual service credit and final compensation as
37of the date of his or her death, the retirement factor atbegin delete 60 years ofend delete
38begin insert normal retirementend insert age, and the member’s and spouse’s ages as of
39the date the member would have attainedbegin delete 60 years ofend deletebegin insert normal
40retirementend insert
age. If the member’s death occurs after he or she attains
P24   1begin delete 60 years ofend deletebegin insert normal retirementend insert age, his or her actual final
2compensation, the retirement factor atbegin delete 60 years ofend deletebegin insert normal
3retirementend insert
age, and the member’s and spouse’s ages as of the date
4of the member’s death shall be used in the allowance calculation.

5(c) The allowance calculation shall include service credit for
6the unused sick leave that had accrued to the member as of the
7date of his or her death. Eligibility for the inclusion of unused sick
8leave service credit and the calculation of that service credit shall
9be determined pursuant to Section 22717.

10(d) (1) The allowance calculation shall not include either of the
11following:

12(A) The increase in the percentage of final compensation
13pursuant to Section 24203.5.

14(B) The increase of the monthly allowance pursuant to Section
1524203.6.

16(2) The amendments to this section made by the act adding this
17paragraph do not constitute a change in, but are declaratory of,
18existing law.

19(e) The surviving spouse may elect to begin receiving the
20survivor benefit allowance immediately as of the date of the
21member’s death or to defer receipt of the allowance to the date the
22member would have attainedbegin delete 60 years ofend deletebegin insert normal retirementend insert age.
23If allowance payments to the surviving spouse commence prior to
24the date the member would have attainedbegin delete 60 years ofend deletebegin insert normal
25retirementend insert
age, the allowance payable shall be actuarially reduced.

26(f) If the spouse elects, pursuant to Section 23852, to receive
27the survivor benefit allowance, an additional 10 percent of final
28compensation shall be payable for each dependent child who is
29under 21 years of age, up to a maximum of 50 percent of final
30compensation. The child’s portion shall begin to accrue on the day
31following the member’s date of death and shall be payable even
32if the spouse elects to postpone receipt of the spouse’s survivor
33benefit allowance until the date the member would have attained
34begin delete 60 years ofend deletebegin insert normal retirementend insert age.

35(g) If there is no surviving spouse, an allowance in an amount
36equal to 10 percent of the deceased member’s final compensation
37shall be paid to each dependent child who is under 21 years of age,
38up to a maximum of 50 percent of final compensation. If there are
39more than five dependent children, they shall receive allowances
40in equal shares of the 50 percent of final compensation. A child’s
P25   1portion of the survivor benefit allowance shall begin to accrue on
2the day following the member’s date of death.

3

SEC. 18.  

Section 24202 of the Education Code is amended to
4read:

5

24202.  

(a) A member who retires for service after June 30,
61972, shall receive a retirement allowance consisting of both of
7the following:

8(1) An annual allowance payable in monthly installments, upon
9retirement at normal retirement age but less than age 6014, equal
10to 2 percent of the final compensation for each year of credited
11service. If the member’s retirement is effective at less than normal
12retirement age and between early retirement age and normal
13retirement age, the member’s allowance shall be reduced by
14one-half of 1 percent for each full month, or fraction of a month
15that will elapse until the member will attain normal retirement age.

16(2) An annuity that shall be the actuarial equivalent of the
17accumulated annuity deposit contributions standing to the credit
18of the member’s account at the time of retirement.

19(b) In computing the amounts described in subdivision (a), the
20age of the member on the last day of the month in which the
21retirement allowance begins to accrue or such later date as provided
22in Section 24204 shall be used.

23(c) The amendments to this section during the 1997-98 Regular
24Session of the Legislature shall not apply to state employees.

begin insert

25(d) This section shall not apply to a member subject to the
26California Public Employees’ Pension Reform Act of 2013.

end insert
27

SEC. 19.  

Section 24202.5 of the Education Code is amended
28to read:

29

24202.5.  

(a) A member who retires for service on or after
30January 1, 1999, shall receive a retirement allowance consisting
31of all of the following:

32(1) An annual allowance payable in monthly installments, upon
33retirement equal to the percentage of the final compensation set
34forth opposite the member’s age at retirement in the following
35table multiplied by each year of credited service:


36

 

Age at Retirement

Percentage

60   

2.00

60¼   

2.033

60½   

2.067

60¾   

2.10

61   

2.133

61¼   

2.167

61½   

2.20

61¾   

2.233

62   

2.267

62¼   

2.30

62½   

2.333

62¾   

2.367

63 and over   

2.40

P26  11

 

12If the member’s retirement is effective at less than normal
13retirement age and between early retirement age and normal
14retirement age, the member’s allowance shall be reduced by
15one-half of 1 percent for each full month, or fraction of a month
16that will elapse until the member will attain normal retirement age.

17(2) An annuity that shall be the actuarial equivalent of the
18member’s accumulated annuity deposit contributions at the time
19of retirement.

20(3) An annuity based on the balance of credits in the member’s
21Defined Benefit Supplement account, pursuant to Section 25012,
22if elected by the member pursuant to Section 25011 or 25011.1.

23(b) In computing the amounts described in paragraph (1) of
24subdivision (a), the age of the member on the last day of the month
25in which the retirement allowance begins to accrue or the later
26date as described in Section 24204 shall be used.

begin insert

27(c) This section shall not apply to a member subject to the
28California Public Employees’ Pension Reform Act of 2013.

end insert
29

SEC. 20.  

Section 24202.6 of the Education Code is amended
30to read:

31

24202.6.  

(a) A member who isbegin delete first hired on or after January
321, 2013end delete
begin insert subject to theend insertbegin insert California Public Employees’ Pension
33Reform Act of 2013end insert
, shall receive a retirement allowance consisting
34of all of the following:

35(1) begin delete(A)end deletebegin deleteend deleteAn annual allowance payable in monthly installments
36upon retirement equal to the percentage of the final compensation
37set forth opposite the member’s age at retirement in the following
38table multiplied by each year of credited service:


39

 

Age at Retirement

Percentage

62   

   2.000

6214   

   2.033

6212   

   2.067

6234   

   2.100

63   

   2.133

6314   

   2.167

6312   

   2.200

6334   

   2.233

64   

   2.267

6414   

   2.300

6412   

   2.333

6434   

   2.367

65   

   2.400

 

begin delete

15(B)

end delete

16begin insert(2)end insert If a member retires after attaining early retirement age but
17before attaining normal retirement age, the member’s allowance
18shall be reduced by one-half of 1 percent for each full month, or
19fraction of a month, that will elapse until the member will attain
20normal retirement age.

begin delete

21(2) An annuity that shall be the actuarial equivalent of the
22member’s accumulated annuity deposit contributions at the time
23of retirement.

24(3) An annuity based on the balance of credits in the member’s
25Defined Benefit Supplement account, pursuant to Section 25012,
26if elected by the member pursuant to Section 25011 or 25011.1.

end delete

27(b) In computing the amounts described in paragraph (1) of
28subdivision (a), the age of the member on the last day of the month
29in which the retirement allowance begins to be payable or the later
30date as described in Section 24204 shall be used.

31(c) begin deletePensionable end deletebegin insertCreditable end insertcompensation used to calculate the
32defined benefit shall be limited as described in Sectionbegin delete 7522.10
33of the Government Codeend delete
begin insert 22119.3end insert.

34

SEC. 21.  

Section 24202.7 of the Education Code is amended
35to read:

36

24202.7.  

Notwithstanding any other provision of this part, for
37begin delete any member who is first hired on or after January 1, 2013end deletebegin insert end insertbegin inserta member
38subject to the California Public Employees’ Pension Reform Act
39of 2013end insert
, the minimum retirement age shall be 55 years of age, the
P28   1early retirement age shall be 55 years of age, and the normal
2retirement age shall be 62 years of age.

3

SEC. 22.  

Section 24203 of the Education Code is amended to
4read:

5

24203.  

(a) A member who has 30 years of credited service
6under this part may retire at age 50 years or older and receive an
7annual allowance equal to 2 percent of final compensation for each
8year of credited service. If the member has attained age 50 years,
9but has not attained early retirement age, the allowance shall be
10reduced by one-quarter of 1 percent for each full month or fraction
11of a month that will elapse until the member will attain early
12retirement age and one-half of 1 percent for each full month, or
13fraction of a month between early retirement age and normal
14retirement age.

15(b) In computing the amounts described in subdivision (a), the
16age of the member on the last day of the month in which the
17retirement allowance begins to accrue or any later date provided
18in Section 24204 shall be used.

begin insert

19(c) This section shall not apply to a member subject to the
20California Public Employees’ Pension Reform Act of 2013.

end insert
21

SEC. 23.  

Section 24205 of the Education Code is amended to
22read:

23

24205.  

A member retiring prior to 60 years of age, and who
24has attained 55 years of age, may elect to receive one-half of the
25service retirement allowance for normal retirement age for a limited
26time and then revert to the full retirement allowance for normal
27retirement age.

28(a) The retirement allowance shall be based on service credit
29and final compensation as of the date of retirement for service and
30shall be calculated with the factor for normal retirement age.

31(b) If the member elects a joint and survivor option under
32Section 24300 or 24300.1, the actuarial reduction shall be based
33on the member’s and beneficiary’s ages as of the effective date of
34the early retirement. If the member elected a preretirement option
35under Section 24307, the actuarial reduction shall be based on the
36member’s and beneficiary’s ages as determined by the provisions
37of that section.

38(c) One-half of the retirement allowance as of 60 years of age
39shall be paid for a period of time equal to twice the elapsed time
P29   1between the effective date of retirement and the date of the retired
2member’s 60th birthday.

3(d) The full retirement allowance as calculated under subdivision
4(a) or (b) shall begin to accrue as of the first of the month following
5the reduction period as specified in subdivision (c). The full
6retirement allowance shall not begin to accrue prior to this time
7under any circumstances, including, but not limited to, divorce or
8death of the named beneficiary.

9(e) The annual improvement factor provided for in Sections
1022140 and 22141 shall be based upon the retirement allowance as
11calculated under subdivision (a) or (b). The improvement factor
12shall begin to accrue on September 1 following the retired
13member’s 60th birthday. These increases shall be accumulated
14and shall become payable when the full retirement allowance for
15normal retirement age first becomes payable.

16(f) Any ad hoc benefit increase with an effective date prior to
17the retired member’s 60th birthday shall not affect an allowance
18payable under this section. Only those ad hoc improvements with
19effective dates on or after the retired member’s 60th birthday shall
20be accrued and accumulated and shall first become payable when
21the full retirement allowance for normal retirement age becomes
22payable.

23(g) The cancellation of an option election in accordance with
24Section 24305 shall not cancel the election under this section.
25Upon cancellation of the joint and survivor option, one-half of the
26retired member’s retirement allowance as calculated under
27subdivision (a) shall become payable for the balance of the
28reduction period specified in subdivision (c).

29(h) If a retired member who has elected a joint and survivor
30option dies during the period when the reduced allowance is
31payable, the beneficiary shall receive one-half of the allowance
32payable to the beneficiary until the date when the retired member
33would have received the full retirement allowance for normal
34retirement age. At that time, the beneficiary’s allowance shall be
35increased to the full amount payable to the beneficiary plus the
36appropriate annual improvement factor increases and ad hoc
37increases.

38(i) This section shall not apply to a member who retires for
39service pursuant to Section 24201.5, 24209, 24209.3, 24210,
4024211, or 24212.

begin insert

P30   1(j) This section shall not apply to a member subject to the
2California Public Employees’ Pension Reform Act of 2013.

end insert
3

SEC. 24.  

Section 24206 of the Education Code is amended to
4read:

5

24206.  

The minimum unmodified allowance for service
6retirement under the Defined Benefit Program, exclusive of
7annuities payable from accumulated annuity deposit contributions
8and exclusive of the balance of credits in the member’s Defined
9Benefit Supplement account, shall not be less than ten dollars ($10)
10per month multiplied by the member’s years of credited service.
11This guaranteed amount shall be reduced by the amount of an
12unmodified allowance payable from a local system based on service
13credited under the Defined Benefit Program. If the retirement is
14effective at less thanbegin delete age 60 yearsend deletebegin insert normal retirement ageend insert this
15allowance shall be reduced by one-half of 1 percent for each full
16month or fraction of a month that will elapse until the member
17would have reachedbegin delete age 60 yearsend deletebegin insert normal retirement ageend insert.

18

SEC. 25.  

Section 24209 of the Education Code is amended to
19read:

20

24209.  

(a) Upon retirement for service following reinstatement,
21the member shall receive a service retirement allowance equal to
22the sum of both of the following:

23(1) An amount equal to the monthly allowance the member was
24begin delete receivingend deletebegin insert eligible to receiveend insert immediately preceding reinstatement,
25exclusive of any amounts payable pursuant to Section 22714,
26begin delete 22714.5,end delete or 22715, increased by the improvement factor that would
27have been applied to the allowance if the member had not
28reinstated.

29(2) An amount calculated pursuant to Section 24202, 24202.5,
30begin insert 24202.6end insert 24203, 24203.5, or 24206 on service credited subsequent
31to the most recent reinstatement, the member’s age at retirement,
32and final compensation.

33(b) If the total amount of credited service, other than that accrued
34pursuant to Sections 22714,begin delete 22714.5,end delete 22715, 22717, 22717.5, and
3522826, is equal to or greater than 30 years, the amounts identified
36in paragraphs (1), for members who initially retired on or after
37January 1, 1999, and (2) of subdivision (a) shall be calculated
38pursuant to Section 24203.5.

39(c) If the total amount of credited service, other than that accrued
40pursuant to Sections 22714,begin delete 22714.5,end delete 22715, 22717, 22717.5, and
P31   122826, is equal to or greater than 30 years, upon retirement for
2service following reinstatement, a member who retired pursuant
3to Section 24213, and received the terminated disability allowance
4for the prior retirement, shall receive a service retirement allowance
5equal to the sum of the following:

6(1) An amount based on the service credit accrued prior to the
7effective date of the disability allowance, the member’s age at the
8prior retirement increased by the factor provided in Section
924203.5, and projected final compensation.

10(2) An amount calculated pursuant to Section 24202, 24202.5,
11begin insert 24202.6,end insert 24203.5, or 24206 on service credited subsequent to the
12reinstatement, the member’s age at retirement, and final
13compensation.

14(d) For purposes of this section, final compensation shall not
15be based on a determination of compensation earnable as described
16in subdivision (e) of Section 22115.

17

SEC. 26.  

Section 24210 of the Education Code is amended to
18read:

19

24210.  

Upon retirement for service following a prior disability
20retirement granted pursuant to Chapter 26 (commencing with
21Section 24100) that was terminated, the member shall receive a
22service retirement allowance calculated pursuant to Section 24202,
2324202.5,begin insert 24202.6,end insert 24203, 24203.5, or 24206 and equal to the sum
24of both of the following:

25(a) An amount based on service credit accrued prior to the
26effective date of the disability retirement, the member’s age as of
27the effective date of the service retirement, and indexed final
28compensation to the effective date of the service retirement.

29(b) An amount based on the service credit accrued after
30termination of the disability retirement, the member’s age as of
31the effective date of service retirement, and final compensation.

32

SEC. 27.  

Section 24214 of the Education Code, as amended
33by Section 6 of Chapter 296 of the Statutes of 2012, is amended
34to read:

35

24214.  

(a) A member retired for service under this part may
36perform retired member activities, but the member shall not make
37contributions to the retirement fund or accrue service credit based
38on compensation earned from that service. The employer shall
39maintain accurate records of the earnings of the retired member
P32   1and report those earnings monthly to the system and retired member
2as described in Section 22461.

3(b) If a member is retired for service under this part, the rate of
4pay for retired member activities, performed by that member shall
5not be less than the minimum, nor exceed the maximum, paid by
6the employer to other employees performing comparable duties.

7(c) A member retired for service under this part shall not be
8required to reinstate for performing retired member activities.

9(d) A member retired for service under this part may earn
10compensation for performing retired member activities in any one
11school year up to the limitation specified in subdivision (f) without
12a reduction in his or her retirement allowance.

13(e) The postretirement compensation limitation provisions set
14forth in this section are not applicable to compensation earned for
15the performance of retired member activities for which the
16employer is not eligible to receive state apportionment or to
17compensation that is not creditable pursuant to Section 22119.2
18begin insert or 22119.3end insert.

19(f) begin insert(1)end insertbegin insertend insertThe limitation that shall apply to the compensationbegin insert paid
20in cash to the memberend insert
for performance of retired member activitiesbegin insert,
21excluding reimbursements paid by an employer for expenses
22incurred by the member, in which payment of the expenses by the
23member is substantiated,end insert
shall, in any one school year, be an
24amount calculated by the board each July 1 equal to one-half of
25the median final compensation of all members who retired for
26service during the fiscal year ending in the previous calendar year.

begin insert

27(2) The limitation in paragraph (1) shall also apply to annuity
28contracts, tax-deferred retirement plans, or insurance programs
29and contributions to plans that meet the requirements of Section
30125, 401(a), 401(k), 403(b), 457(b) or 457(f) of Title 26 of the
31United States Code when the cost is covered by an employer.

end insert

32(g) If a member retired for service under this part earns
33compensation for performing retired member activities, in excess
34of the limitation specified in subdivision (f), and if that
35compensation is not exempt from that limitation under subdivision
36begin insert (e) orend insert (h) or any other law, the member’s retirement allowance
37shall be reduced by the amount of the excess compensation. The
38amount of the reduction may be equal to the monthly allowance
39payable but shall not exceed the amount of the annual allowance
40payable under this part for the fiscal year in which the excess
P33   1compensation was earned after any reduction made in accordance
2with subdivisionbegin delete (b)end deletebegin insert (h)end insert of Section 24214.5.

3(h) The limitation specified in this section is not applicable to
4compensation paid to a member retired for service under this part
5who has returned to work after the date of retirement as a trustee,
6fiscal adviser, fiscal expert, receiver, or special trustee appointed
7by the Superintendent of Public Instruction, the State Board of
8Education, the Board of Governors of the California Community
9Colleges, or a county superintendent of schools to address academic
10or financial weaknesses in a school district pursuant to any of the
11following provisions:

12(1) Section 41320.1.

13(2) Article 2 (commencing with Section 42122) of Chapter 6
14of Part 24 of Division 3 of Title 2.

15(3) Article 3.1 (commencing with Section 52055.57) of Chapter
166.1 of Part 28 of Division 4 of Title 2.

17(4) Section 84040.

18(i) The Superintendent of Public Instruction, the Executive
19Director of the State Board of Education, the Chancellor of the
20California Community Colleges, or the county superintendent of
21schools exercising the exemption pursuant to subdivision (h) shall
22submit all documentation required by the system to substantiate
23the eligibility of the retired member for the exemption, including
24compliance with subdivisions (j) and (k). The documentation shall
25be received by the system prior to the retired member’s
26performance of retired member activities.

27(j) Subdivision (h) shall not apply to a member who has not
28attained normal retirement age at the time the compensation is
29earned by the member, received additional service credit pursuant
30to Section 22714 or 22715, or received from any public employer
31any financial inducement to retire in the previous six months. For
32purposes of this section and Section 24214.5, “financial inducement
33to retire” includes, but is not limited to, any form of compensation
34or other payment that is paid directly or indirectly by a public
35employer to the member, even if not in cash, either before or after
36retirement, if the member retires for service on or before a specific
37date or specific range of dates established by the public employer
38on or before the date the inducement is offered. The system shall
39liberally interpret this subdivision to further the Legislature’s intent
40to make subdivision (h) inapplicable to members if the member
P34   1received a financial incentive from any public employer to retire
2or otherwise terminate employment with the public employer.

3(k) The documentation required for subdivision (i) shall include
4certification of the following:

5(1) The position was first advertised for appointment to current
6active or inactive members of the program with the necessary
7qualifications to perform the requirements of the position and no
8qualified current active or inactive member was available to be
9appointed.

10(2) The appointing authority made a good faith effort to hire a
11retired member who reinstated to active membership for the
12position at the same salary that was offered as first advertised
13pursuant to paragraph (1).

14(3) The appointing authority, having tried and failed to hire a
15current active or inactive member or a reinstated retired member,
16hired a retired member and the salary offered to the retired member
17subject to this paragraph does not exceed the salary that was offered
18as first advertised pursuant to paragraph (1).

19(4) The salary paid shall be no greater than the salary offered
20to current active members for the appointed position.

21(l) The amendments to this section enacted during the 1995-96
22Regular Session shall be deemed to have become operative on July
231, 1996.

24(m) This section shall apply to compensation paid during the
252012-13 and 2013-14 fiscal years.

26(n) This section shall become inoperative on July 1, 2014, and,
27as of January 1, 2015, is repealed, unless a later enacted statute,
28that becomes operative on or before January 1, 2015, deletes or
29extends the dates on which it becomes inoperative and is repealed.

30

SEC. 28.  

Section 24214 of the Education Code, as amended
31by Section 7 of Chapter 296 of the Statutes of 2012, is amended
32to read:

33

24214.  

(a) A member retired for service under this part may
34performbegin delete the activities identified in subdivision (a) or (b) of Section
3522119.5, or subdivision (a) or (b) of Section 26113, as an employee
36of an employer, as an employee of a third party, or as an
37independent contractor within the California public school systemend delete
begin insert end insert
38begin insertretired member activitiesend insert, but the member shall not make
39contributions to the retirement fund or accrue service credit based
40on compensation earned from that service. The employer shall
P35   1maintain accurate records of the earnings of the retired member
2and report those earnings monthly to the system and retired member
3as described in Section 22461.

4(b) If a member is retired for service under this part, the rate of
5pay forbegin delete serviceend deletebegin insert retired member activitiesend insert performed by that member
6as an employee of the employer, as an employee of a third party,
7or as an independent contractor within the California public school
8system shall not be less than the minimum, nor exceedbegin delete thatend deletebegin insert the
9maximumend insert
paid by the employer to other employees performing
10comparable duties.

11(c) A member retired for service under this part shall not be
12required to reinstate for performingbegin delete the activities identified in
13subdivision (a) or (b) of Section 22119.5 as an employee of an
14employer, as an employee of a third party, or as an independent
15contractor within the California public school systemend delete
begin insert retired
16member activitiesend insert
.

17(d) A member retired for service under this part may earn
18compensation for performingbegin insert retired memberend insert activities begin delete identified
19in subdivision (a) or (b) of Section 22119.5end delete
in any one school year
20up to the limitation specified in subdivision (f)begin delete as an employee of
21an employer, as an employee of a third party, or as an independent
22contractor, within the California public school system,end delete
without a
23reduction in his or her retirement allowance.

24(e) The postretirement compensation limitation provisions set
25forth in this section are not applicable to compensation earned for
26the performance ofbegin delete the activities described in subdivision (a)end deletebegin insert retired
27member activitiesend insert
for which the employer is not eligible to receive
28state apportionment or to compensation that is not creditable
29pursuant to Section 22119.2begin insert or 22119.3end insert.

30(f) begin insert(1)end insertbegin insertend insertThe limitation that shall apply to the compensationbegin insert paid
31in cashend insert
for performance ofbegin delete the activities identified in subdivision
32(a) or (b) of Section 22119.5 by a member retired for service under
33this part either as an employee of an employer, an employee of a
34third party, or as an independent contractorend delete
begin insert retired member
35activities, excluding reimbursements paid by an employer for
36expenses incurred by the member, in which payment of the expenses
37by the member is substantiated,end insert
shall, in any one school year, be
38an amount calculated by the board each July 1 equal to one-half
39of the median final compensation of all members who retired for
40service during the fiscal year ending in the previous calendar year.

begin insert

P36   1(2) The limitation in paragraph (1) shall also apply to annuity
2contracts, tax-deferred retirement plans, or insurance programs
3and contributions to plans that meet the requirements of Section
4125, 401(a), 401(k), 403(b), 457(b) or 457(f) of Title 26 of the
5United States Code when the cost is covered by an employer.

end insert

6(g) If a member retired for service under this part earns
7compensation for performing activitiesbegin delete identified in subdivision
8(a) or (b) of Section 22119.5end delete
begin insert retired member activities,end insert in excess
9of the limitation specified in subdivision (f),begin delete as an employee of an
10employer, as an employee of a third party, or as an independent
11contractor, within the California public school system,end delete
the
12member’s retirement allowance shall be reduced by the amount
13of the excess compensation. The amount of the reduction may be
14equal to the monthly allowance payable but may not exceed the
15amount of the annual allowance payable under this part for the
16fiscal year in which the excess compensation was earned after any
17reduction made in accordance with subdivision (b) of Section
1824214.5.

begin delete

19(h) An employee of a third party shall not be subject to this
20section if he or she meets all of the following conditions:

21(1) He or she performs a limited-term assignment.

22(2) The third-party employer does not participate in a California
23public pension system.

24(3) The activities performed by the individual are not normally
25performed by employees of the employer, as defined in Section
2622131.

27(i)

end delete

28begin insert(h)end insert The language of this section derived from the amendments
29to the section of this number added by Chapter 394 of the Statutes
30of 1995, enacted during the 1995-96 Regular Session, is deemed
31to have become operative on July 1, 1996.

begin delete

32(j)

end delete

33begin insert(i)end insert This section shall become operative on July 1, 2014.

34

SEC. 29.  

Section 24214.5 of the Education Code is amended
35to read:

36

24214.5.  

(a) Notwithstanding subdivision (f) of Section 24214,
37the postretirement compensation limitationbegin insert for performance of
38retired member activitiesend insert
shall be zero dollars ($0)begin delete in either of the
39following circumstances:end delete

P37   1begin delete(1)end deletebegin deleteend deletebegin deleteDuring end deletebegin insert during end insertthe first 180begin insert calendarend insert days after the most
2recent retirement of a member retired for service under this part.

begin delete

3(2) During the first six consecutive months after the most recent
4retirement if the member received additional service credit pursuant
5to Section 22714 or 22715 or received from any public employer
6any financial inducement to retire, as defined by subdivision (j)
7of Section 24214.

end delete

8(b) If the member has attained normal retirement age at the time
9the compensation is earned, subdivision (a) shall not apply and
10Section 24214 shall apply if the appointment has been approved
11by the governing body of the employer in a public meeting, as
12reflected in a resolution adopted by the governing body of the
13employer prior to the performance of retired member activities,
14expressing its intent to seek an exemption from the limitation
15specified in subdivision (a). Approval of the appointment may not
16be placed on a consent calendar. Notwithstanding any other
17provision of Article 3.5 (commencing with Section 6250) of
18Division 7 of Title 1 of the Government Code or any state or
19federal law incorporated by subdivision (k) of Section 6254 of the
20Government Code, the resolution shall be subject to disclosure by
21the entity adopting the resolution and the system. The resolution
22shall include the following specific information and findings:

23(1) The nature of the employment.

24(2) A finding that the appointment is necessary to fill a critically
25needed position before 180 days have passed.

26(3) A finding that the member is not ineligible for application
27of this subdivision pursuant to subdivision (d).

28(4) A finding that the termination of employment of the retired
29member with the employer is not the basis for the need to acquire
30the services of the member.

31(c) Subdivision (b) shall not apply to a retired member whose
32termination of employment with the employer is the basis for the
33need to acquire the services of the member.

34(d) Subdivision (b) shall not apply if the member received
35additional service credit pursuant to Section 22714 or 22715 or
36received from any public employer any financial inducement to
37retire.begin insert end insertbegin insertFor purposes of this section, “financial inducement to
38 retire” includes, but is not limited to, any form of compensation
39or other payment that is paid directly or indirectly by a public
40employer to the member, even if not in cash, either before or after
P38   1retirement, if the participant retires for service on or before a
2specific date or specific range of dates established by a public
3employer on or before the date the inducement is offered. The
4system shall liberally interpret this subdivision to further the
5Legislature’s intent to make subdivision (b) inapplicable to
6members if the member received a financial incentive from any
7public employer to retire or otherwise terminate employment with
8a public employer.end insert

9(e) The Superintendent, the county superintendent of schools,
10or the chief executive officer of a community college shall submit
11all documentation required by the system to substantiate the
12eligibility of the retired member for application of subdivision (b),
13 including, but not limited to, the resolution adopted pursuant to
14that subdivision.

begin delete

15(f) If a member will be receiving compensation for performance
16of retired member activities before 180 days after the most recent
17retirement, the Superintendent, the county superintendent of
18schools, or the chief executive officer of a community college shall
19submit all documentation required by the system that certifies that
20the member did not receive from any public employer any financial
21inducement to retire.

end delete
begin delete

22(g)

end delete

23begin insert(f)end insert The documentation required by this section shall be received
24by the system prior to the retired member’s performance of retired
25member activities.

begin delete

26(h)

end delete

27begin insert(g)end insert Within 30 calendar days after the receipt of all
28documentation required by the system pursuant to this section, the
29system shall inform the entity seeking application of the exemption
30specified in subdivision (b),begin delete or seeking to employ a retired member
31pursuant to subdivision (f),end delete
and the retired member whether the
32compensation paid to the member will be subject to the limitation
33specified in subdivision (a).

begin delete

34(i)

end delete

35begin insert(h)end insert If a member retired for service under this part earns
36compensation for performing retired member activities in excess
37of the limitation specified in subdivision (a), the member’s
38retirement allowance shall be reduced by the amount of the excess
39compensation. The amount of the reduction may be equal to the
40monthly allowance payable but may not exceed the amount of the
P39   1allowance payable during the first 180begin insert calendarend insert days,begin delete in accordance
2with subdivision (a),end delete
after a member retired for service under this
3part.

4

SEC. 30.  

Section 24252 is added to the Education Code, to
5read:

6

24252.  

This chapter shall not apply to a member subject to the
7California Public Employees’ Pension Reform Act of 2013.

8

SEC. 31.  

Section 24600 of the Education Code is amended to
9read:

10

24600.  

(a) A retirement allowance under this part begins to
11accrue on the effective date of the member’s retirement and ceases
12on the earlier of the day of the member’s death or the day on which
13the retirement allowance is terminated for a reason other than the
14member’s death.

15(b) A retirement allowance payable to an option beneficiary
16under this part begins to accrue on the day following the day of
17the retired member’s death and ceases on the day of the option
18beneficiary’s death.

19(c) A disability allowance under this part begins to accrue on
20the effective date of the member’s disability allowance and ceases
21on the earlier of the day of the member’s death or the day on which
22the disability allowance is terminated for a reason other than the
23member’s death.

24(d) A family allowance under this part begins to accrue on the
25day following the day of the member’s death and ceases on the
26day of the event that terminates eligibility for the allowance.

27(e) A survivor benefit allowance payable to a surviving spouse
28under this part pursuant to Chapter 23 (commencing with Section
2923850) begins to accrue on the day the member would have
30attainedbegin delete 60 years ofend deletebegin insert normal retirementend insert age or on the day following
31the day of the member’s death, as elected by the surviving spouse,
32and ceases on the day of the surviving spouse’s death.

33(f) (1) Except as provided in paragraph (2), a child’s portion
34of an allowance under this part begins to accrue on the effective
35date of that allowance and ceases on the earlier of either the
36termination of the child’s eligibility or the termination of the
37allowance.

38(2) A child’s portion of a disability retirement allowance under
39Chapter 26 (commencing with Section 24100) ceases on the earlier
40of either:

P40   1(A) The termination date of the child’s eligibility.

2(B) The termination of the allowance for reasons other than
3death.

4(g) Supplemental payments issued under this part pursuant to
5Sections 24412 and 24415 to retired members, disabled members,
6and beneficiaries shall begin to accrue pursuant to Sections 24412
7and 24415 and shall cease to accrue as of the termination dates
8specified in subdivisions (a) to (f), inclusive, of this section.

9(h) Notwithstanding any other provision of this part or other
10law, distributions payable under the plan with respect to the
11Defined Benefit Program and the Defined Benefit Supplement
12Program shall be made in accordance with applicable provisions
13of the Internal Revenue Code of 1986 and related regulations. The
14required beginning date of benefit payments that represent the
15entire interest of the member in the plan with respect to the Defined
16Benefit Program and the Defined Benefit Supplement Program
17shall be either:

18(1) In the case of a refund of contributions, as described in
19Chapter 18 (commencing with Section 23100) of this part and
20distribution of an amount equal to the balance of credits in a
21member’s Defined Benefit Supplement account, as described in
22Chapter 38 (commencing with Section 25000) of this part, not
23later than April 1 of the calendar year following the later of (A)
24the calendar year in which the member attains the age at which
25the Internal Revenue Code of 1986 requires a distribution of
26benefits or (B) the calendar year in which the member terminates
27employment within the meaning of subdivision (i).

28(2) In the case of a retirement allowance, as defined in Section
2922166, not later than April 1 of the calendar year following the
30later of (A) the calendar year in which the member attains the age
31at which the Internal Revenue Code of 1986 requires a distribution
32of benefits or (B) the calendar year in which the member terminates
33employment within the meaning of subdivision (i), to continue
34over the life of the member or the lives of the member and the
35member’s option beneficiary, or over the life expectancy of the
36member or the life expectancy of the member and the member’s
37option beneficiary.

38(i) For purposes of subdivision (h), the phrase “terminates
39employment” means the later of:

P41   1(1) The date the member ceases to perform creditable service
2subject to coverage under this plan.

3(2) The date the member ceases employment in a position
4subject to coverage under another public retirement system in this
5state if the compensation earnable while a member of the other
6system may be considered in the determination of final
7compensation pursuant to Section 22134, 22135, or 22136.

8

SEC. 32.  

Section 26132.5 is added to the Education Code, to
9read:

10

26132.5.  

(a) “Participant subject to the California Public
11Employees’ Pension Reform Act of 2013” means, notwithstanding
12subdivision (f) of Section 7522.04 of the Government Code, a
13person who first becomes employed to perform creditable service
14subject to coverage under the Cash Balance Benefit Program on
15or after January 1, 2013.

16(b) A participant as defined in subdivision (a) does not include
17a person who was a member on or before December 31, 2012, of
18the California Public Employees’ Retirement System, the
19Legislators’ Retirement System, the University of California
20Retirement System, county retirement systems established under
21Chapter 3 (commencing with Section 31450) of Part 3 of Division
224 of Title 3 of the Government Code, or the San Francisco
23 Employees’ Retirement System, and the person performed service
24in the other retirement system within the six months prior to the
25commencement of creditable service under the Cash Balance
26Benefit Program.

27(c) Notwithstanding Section 7522.44 of the Government Code,
28if a participant is not subject to the California Public Employees’
29Pension Reform Act of 2013, creditable service performed on or
30after January 1, 2013, shall be subject to the provisions of this part
31in effect prior to January 1, 2013.

32

SEC. 33.  

Section 26135.5 is added to the Education Code, to
33read:

34

26135.5.  

“Public employer” means a public employer as
35defined by subdivision (i) of Section 7522.04 of the Government
36Code.

37

SEC. 34.  

Section 26135.7 is added to the Education Code, to
38read:

39

26135.7.  

(a) “Retired participant activities” means one or more
40activities identified in subdivision (a) or (b) of Section 22119.5 or
P42   1(a) or (b) of Section 26113 within the California public school
2system and performed by a participant retired for service under
3this part as one of the following:

4(1) An employee of an employer.

5(2) An employee of a third party, except as specified in
6subdivision (b).

7(3) An independent contractor.

8(b) The activities of an employee of a third party shall not be
9included in the definition of “retired participant activities” if all
10 of the following conditions apply:

11(1) The employee performs an assignment of 24 months or less.

12(2) The third-party employer does not participate in a California
13public pension system.

14(3) The activities performed by the individual are not normally
15performed by employees of an employer, as defined in Section
1622131.

17

SEC. 35.  

Section 26139 of the Education Code is amended to
18read:

19

26139.  

(a) “Salary” means remunerationbegin delete payableend deletebegin insert paidend insert in cash
20by an employer to a participant for creditable servicebegin insert performed
21in that positionend insert
subject to coverage under the Cash Balance Benefit
22Program. Salary shall include:

23(1) Money paid in accordance with a salary schedule based on
24years of training and years of experience as specified in Section
2545028 for creditable service performed.

26(2) For participants not paid according to a salary schedule,
27money paid for creditable service performed.

28(3) Money paid for the participant’s absence from performance
29of creditable service as approved by an employer, except as
30provided in paragraph (5) of subdivision (b).

31(4) Employee contributions picked up by an employer under
32Section 414(h)(2) of Title 26 of the United States Code and Section
3317501 of the Revenue and Taxation Code.

34(5) Amounts deducted by an employer from the participant’s
35salary, including deductions for participation in a deferred
36compensation plan; deductions for the purchase of annuity
37contracts, tax-deferred retirement plans, or other insurance
38programs; and deductions for participation in a plan that meets the
39requirements of Section 125,begin insert 401(a),end insert 401(k),begin delete orend delete 403(b)begin insert, 457(b), or
40457(f)end insert
of Title 26 of the United States Code.

P43   1(6) Money paid by an employer in addition to salary paid under
2paragraph (1) or (2) if paid to all employees in a class in the same
3dollar amount, the same percentage of salary, or the same
4percentage of the amount being distributed.

5(7) Any other payments the board determines by plan
6amendment to be “salary.”

7(b) “Salary” does not mean and shall not include:

8(1) Money paid for service that is not creditable service.

9(2) Money paid by an employer in addition to salary paid under
10paragraph (1) or (2) if not paid to all employees in a class in the
11same dollar amount, the same percentage of salary, or the same
12percentage of the amount being distributed.

13(3) Fringe benefits provided by an employer.

14(4) begin deleteJob-related expenses end deletebegin insertExpenses end insertpaid or reimbursed by an
15employer.

16(5) Money paidbegin insert in exchangeend insert forbegin insert the forfeiture ofend insert unused
17accumulated leave.

18(6) begin deleteCompensatory damages or money paid to a participant in
19excess of salary as a compromise settlement or as severance pay end delete

20begin insertSeverance pay, including lump-sum and installment payments, or
21money paid in excess of salary or wages to a member as
22compensatory damages or as a compromise settlementend insert
.

23(7) Annuity contracts, tax-deferred retirement programs, or
24other insurance programs, including, but not limited to, plans that
25meet the requirements of Section 125,begin insert 401(a),end insert 401(k),begin delete orend delete 403(b)begin insert,
26457(b), or 457(f)end insert
of Title 26 of the United States Code that are
27purchased by an employer for a participant.

28(8) Any payments determined by the board to have been made
29by an employerbegin delete for the principal purpose of enhancing a
30participant’s benefits under the planend delete
begin insert to enhance a participant’s
31benefitsend insert
.

32(9) Any other payments the board determines by plan
33amendment not to be “salary.”

34(c) Any employer or person who knowingly or willfully reports
35salary in a manner inconsistent with the provisions of subdivisions
36(a) or (b)begin delete shall reimburse the plan for any overpayment of benefits
37that occurs because of such inconsistent reporting andend delete
may be
38subject to prosecution for fraud, theft, or embezzlement in
39accordance with provisions of the Penal Code. The system may
P44   1establish procedures to ensure that salary reported by an employer
2is in compliance with this section.

begin insert

3(d) For purposes of this section, remuneration shall be
4considered paid if it would be distributed to any person in the same
5class of employees who meets the qualifications or requirements
6specified in a collective bargaining agreement, an employment
7agreement, or any other publicly available written contractual
8agreement that specifies compensation as a condition of receiving
9the remuneration.

end insert
begin delete

10(d)

end delete

11begin insert(e)end insert This section shall be deemed to have become operative on
12July 1, 1996.

13

SEC. 36.  

Section 26139.5 is added to the Education Code, to
14read:

15

26139.5.  

(a) “Salary,” for participants subject to the California
16Public Employees’ Pension Reform Act of 2013, means regular,
17recurring remuneration paid in cash by an employer to a participant
18for creditable service performed in that position subject to coverage
19under the Cash Balance Benefit Program in accordance with a
20salary schedule, employment agreement, or any other publicly
21available written contractual agreement that specifies compensation
22based on years of training and years of experience as specified in
23Section 45028. Salary shall include:

24(1) Money paid for the participant’s absence from performance
25of creditable service as approved by an employer, except as
26provided in paragraph (5) of subdivision (b).

27(2) Employee contributions picked up by an employer under
28Section 414(h)(2) of Title 26 of the United States Code and Section
2917501 of the Revenue and Taxation Code.

30(3) Amounts deducted by an employer from the participant’s
31salary, including deductions for participation in a deferred
32compensation plan; deductions for the purchase of annuity
33contracts, tax-deferred retirement plans, or other insurance
34programs; and deductions for participation in a plan that meets the
35requirements of Section 125, 401(a), 401(k), 403(b), 457(b) or
36457(f) of Title 26 of the United States Code.

37(4) Notwithstanding paragraph (10) of subdivision (b),
38remuneration that is paid to achieve compensation parity between
39part-time and full-time faculty of California community colleges
40for similar work, as funded pursuant to the Budget Act.

P45   1(5) Notwithstanding paragraph (10) of subdivision (b),
2remuneration that is paid based on the allocation of funds from
3the California State Lottery Education Fund pursuant to Section
48880.5 of the Government Code.

5(6) Notwithstanding paragraph (10) of subdivision (b),
6remuneration that is paid when the number of students in the
7classroom exceeds the contractual amount.

8(7) Any other payments the board determines by plan
9amendment to be “salary.”

10(b) “Salary” does not mean and shall not include:

11(1) Money paid for service that is not creditable service.

12(2) Money paid by an employer in addition to salary.

13(3) Fringe benefits provided by an employer.

14(4) Expenses paid or reimbursed by an employer.

15(5) Money paid in exchange for the forfeiture of unused
16accumulated leave.

17(6) Severance pay, including lump-sum and installment
18payments, or money paid in excess of salary to a participant as
19compensatory damages or as a compromise settlement.

20(7) Annuity contracts, tax-deferred retirement programs, or
21other insurance programs, including, but not limited to, plans that
22meet the requirements of Section 125, 401(a), 401(k), 403(b),
23457(b) or 457(f) of Title 26 of the United States Code that are
24purchased by an employer for a participant.

25(8) Any payments determined by the board to have been made
26by an employer to enhance a participant’s benefits under the plan.

27(9) Money paid to the member in lieu of benefits provided to
28the participant by the employer or paid directly by the employer
29to a third party other than the retirement system for the benefit of
30the participant.

31(10) Any one-time or ad hoc payments made to a member.

32(11) Any employer-provided allowance, reimbursement, or
33payment, including, but not limited to, one made for housing,
34vehicle, or uniform.

35(12) Any bonus paid in addition to compensation described in
36subdivision (a).

37(13) Any other payments the board determines by plan
38amendment not to be “salary.”

39(c) (1) Salary in any fiscal year shall not exceed 120 percent of
40the “contribution and benefit base,” as determined under Section
P46   1430(b) of the Social Security Act (42 U.S.C. Sec. 430(b)), on
2January 1, 2013.

3(2) The board shall adjust the limit in paragraph (1) based on
4changes to the Consumer Price Index for All Urban Consumers.
5Notwithstanding paragraph (1) of subdivision (d) of Section
67522.10 of the Government Code, the adjustment shall be effective
7annually on July 1, beginning July 1, 2014.

8(3) The Legislature reserves the right to modify the requirements
9of this subdivision with regard to all members subject to this
10subdivision, except that the Legislature may not modify these
11provisions in a manner that would result in a decrease in benefits
12accrued prior to the effective date of the modification.

13(d) Any employer or person who knowingly or willfully reports
14salary in a manner inconsistent with the provisions of subdivisions
15(a) or (b) may be subject to prosecution for fraud, theft, or
16embezzlement in accordance with provisions of the Penal Code.
17The system may establish procedures to ensure that salary reported
18by an employer is in compliance with this section.

19(e) For purposes of this section, remuneration shall be considered
20paid if it would be distributed to any person in the same class of
21employees who meets the qualifications or requirements specified
22in a collective bargaining agreement, an employment agreement,
23or any other publicly available written contractual agreement that
24specifies compensation as a condition of receiving the
25remuneration.

26

SEC. 37.  

Section 26503.5 of the Education Code is amended
27to read:

28

26503.5.  

If a person elects, pursuant to Section 26403, to
29participate in the Cash Balance Benefit Program, his or her
30employer shall make contributions, as provided in Section 26503,
31based on the salary or other compensation paid for trustee service.begin insert end insert
32begin insertFor a participant subject to the California Public Employees’
33Pension Reform Act of 2013, other compensation paid for trustee
34service is subject to the same requirements as “salary” as defined
35in Section 26139.5.end insert

36

SEC. 38.  

Section 26504 of the Education Code is amended to
37read:

38

26504.  

The employer may enter into a collective bargaining
39agreement to pay a different employer contribution rate and a
P47   1different employee contribution rate, provided all of the following
2conditions are met:

3(a) The sum of the employee contributions and employer
4contributions for each participant shall equal or exceed 8 percent
5of salary.

6(b) The employee contribution rate may exceed the employer
7contribution rate but in no event shall the employer contribution
8rate be less than 4 percent.

begin insert

9(c) For participants subject to the California Public Employees’
10Pension Reform Act of 2013, the employee contribution rate shall
11not be less than the employer contribution rate.

end insert
begin delete

12(c)

end delete

13begin insert(d)end insertbegin insertend insertbegin insert(1)end insertbegin insertend insertThe employee contribution rate and employer
14contribution rate shall be the same for each participant employed
15by the employerbegin insert end insertbegin insertwho is not subject to the California Public
16Employees’ Pension Reform Act of 2013end insert
.

begin insert

17(2) The employee contribution rate and employer contribution
18rate shall be the same for each participant employed by the
19employer who is subject to the California Public Employees’
20Pension Reform Act of 2013, but may vary from the rates described
21in paragraph (1).

end insert
begin delete

22(d)

end delete

23begin insert(e)end insert The employee contribution rate and employer contribution
24rate shall be in one-quarter percent increments.

begin delete

25(e)

end delete

26begin insert(f)end insert The employee contribution rate and employer contribution
27rate as determined under the collective bargaining agreement shall
28become effective on the first day of the plan year following
29notification to the system and shall remain in effect for at least one
30plan year. However, the employee contribution rate and the
31employer contribution rate as determined under the collective
32bargaining agreement may become effective as of the first day of
33the plan year in which notice is given if it is so provided in the
34collective bargaining agreement and if a lump-sum contribution
35is made to the plan equal to the additional employee and employer
36contributions, if any, that would have been required if the
37contribution rates had been in effect on the first day of the plan
38year. Interest shall be credited at the minimum interest rate with
39respect to the lump-sum contribution commencing with the first
40month after the contribution is made.

begin delete

P48   1(f)

end delete

2begin insert(g)end insert The employer has filed notice of the employee contribution
3rate and the employer contribution rate on a form prescribed by
4the system.

5

SEC. 39.  

Section 26800 of the Education Code is amended to
6read:

7

26800.  

The normal retirement age for the Cash Balance Benefit
8Program is 60 years of agebegin insert, or 62 years of age for a participant
9subject to the California Public Employees’ Pension Reform Act
10of 2013end insert
.

11

SEC. 40.  

Section 26810 of the Education Code is amended to
12read:

13

26810.  

(a) A participant who is employed to perform creditable
14service subject to coverage by the Cash Balance Benefit Program
15while receiving an annuity under the program may voluntarily
16terminate the annuity upon employment and make contributions
17to the program based on salary paid by the employer for the
18employment, provided the participant has attainedbegin delete age 60end deletebegin insert normal
19retirement ageend insert
and has been receiving a retirement annuity for at
20least one year. The participant shall continue to be subject to
21Section 26808.

22(b) The participant shall request in writing within 60 days of
23employment that the annuity be terminated. Termination of the
24participant’s annuity shall become effective on the first day of the
25month following the month in which verification of the
26participant’s employment is received by the system from the
27participant’s employer.

28(c) Upon voluntary termination of the annuity, the employee
29and employer account of the participant shall be credited with
30respective balances that reflect the actuarial equivalent of the
31participant’s retirement benefit as of the date the participant
32terminates the annuity and the Annuitant Reserve shall be reduced
33by the amount of the credits.

34(d) The portion of the annuity derived from the amounts credited
35to the employee account and employer account, as of the date the
36participant terminates the annuity, shall be calculated using the
37actuarial assumptions in effect on the initial retirement date using
38the age of the participant and, if the participant elected a joint and
39survivor option the age of the beneficiary on the current retirement
40date.

P49   1(e) Upon election of a subsequent annuity, the credits in the
2participant’s employee account and employer account shall be
3transferred to the Annuitant Reserve.

4

SEC. 41.  

Section 26812 of the Education Code is amended to
5read:

6

26812.  

(a) A participant retired for service under this part may
7performbegin delete the activities identified in subdivision (a) or (b) of Section
826113 as an employee of an employer, as an employee of a third
9party, or as an independent contractor within the California public
10school systemend delete
begin insert retired participant activitiesend insert, but the participant
11shall not make contributions to the planbegin insert or accrue service credit
12under the Defined Benefit Program based on compensation earned
13from that serviceend insert
. The employer shall maintain accurate records
14of the earnings of the retiredbegin delete memberend deletebegin insert participantend insert and report those
15earnings monthly to the system and retiredbegin delete memberend deletebegin insert participantend insert.

16(b) If a participant is retired for service under this part, the rate
17of pay forbegin delete serviceend deletebegin insert retired participant activitiesend insert performed by that
18begin delete member as an employee of the employer, as an employee of a third
19party, or as an independent contractorend delete
begin insert participantend insert shall not be less
20than the minimum, nor exceedbegin delete thatend deletebegin insert the maximumend insert paid by the
21employer to other employees performing comparable duties.

22(c) A participant retired for service under this part shall not be
23required to reinstate for performingbegin delete the activities identified in
24subdivision (a) or (b) of Section 26113 as an employee of an
25employer, as an employee of a third party, or as an independent
26contractor within the California public school systemend delete
begin insert retired
27participant activitiesend insert
.

28(d) If a participant retired for service under this part andbegin insert on or
29after January 1, 2014, isend insert
receiving an annuity under the Cash
30 Balance Benefit Programbegin delete is below normal retirement ageend delete and earns
31compensation for performingbegin delete activities identified in subdivision
32(a) or (b) of Section 26113 as an employee of an employer, as an
33employee of a third party, or as an independent contractor, within
34the California public school systemend delete
begin insert retired participant activitiesend insert,
35the participant’s annuity shall be reduced by the amount of the
36compensation. This reduction shall only be made for compensation
37earned during the first 180 calendar days after a participant retired
38for service under this partbegin delete, if the participant is below normal
39retirement age at the time the compensation is earnedend delete
. The amount
40of the reduction may be equal to the monthly annuity payable but
P50   1shall not exceed the amount of the annuity payable during the first
2180 calendar days after a participant retired for service under this
3partbegin delete, if the participant is below normal retirement age at the time
4the compensation is earnedend delete
.

begin insert

5(e) If the participant has attained normal retirement age at the
6time the compensation is earned, subdivision (d) shall not apply
7if the appointment has been approved by the governing body of
8the employer in a public meeting, as reflected in a resolution
9adopted by the governing body of the employer prior to the
10performance of retired participant activities, expressing its intent
11to seek an exemption from the limitation specified in subdivision
12(d). Approval of the appointment may not be placed on a consent
13calendar. Notwithstanding any other provision of Article 3.5
14(commencing with Section 6250) of Division 7 of Title 1 of the
15Government Code or any state or federal law incorporated by
16subdivision (k) of Section 6254 of the Government Code, the
17resolution shall be subject to disclosure by the entity adopting the
18resolution and the system. The resolution shall include the
19following specific information and findings:

end insert
begin insert

20(1) The nature of the employment.

end insert
begin insert

21(2) A finding that the appointment is necessary to fill a critically
22needed position before 180 calendar days has passed.

end insert
begin insert

23(3) A finding that the participant is not ineligible for application
24of this subdivision pursuant to subdivision (g).

end insert
begin insert

25(4) A finding that the termination of employment of the retired
26participant with the employer is not the basis for the need to
27acquire the services of the participant.

end insert
begin insert

28(f) Subdivision (e) shall not apply to a retired participant whose
29termination of employment with the employer is the basis for the
30need to acquire the services of the participant.

end insert
begin insert

31(g) Subdivision (e) shall not apply if the participant received
32additional service credit pursuant to Sections 22714 or 22715 or
33received from any public employer any financial inducement to
34retire. For purposes of this section, “financial inducement to
35retire” includes, but is not limited to, any form of compensation
36or other payment that is paid directly or indirectly by a public
37employer to the participant, even if not in cash, either before or
38after retirement, if the participant retires for service on or before
39a specific date or specific range of dates established by a public
40employer on or before the date the inducement is offered. The
P51   1system shall liberally interpret this subdivision to further the
2 Legislature’s intent to make subdivision (e) inapplicable to
3participants if the participant received a financial incentive from
4any public employer to retire or otherwise terminate employment
5with a public employer.

end insert
begin insert

6(h) The superintendent, the county superintendent of schools or
7the chief executive officer of a community college shall submit all
8documentation required by the system to substantiate the eligibility
9of the retired participant for application of subdivision (e),
10including, but not limited to, the resolution adopted pursuant to
11that subdivision.

end insert
begin insert

12(i) The documentation required by this section shall be received
13by the system prior to the retired participant’s performance of
14retired participant activities.

end insert
begin insert

15(j) Within 30 calendar days of the receipt of all documentation
16required by the system pursuant to this section, the system shall
17inform the entity seeking application of the exemption specified in
18subdivision (e) and the retired participant whether the
19compensation paid to the participant will be subject to the
20limitation specified in subdivision (d).

end insert
21

SEC. 42.  

Section 26813 of the Education Code is amended to
22read:

23

26813.  

A member retired for service under the Defined Benefit
24Program may performbegin delete the activities identified in subdivision (a)
25or (b) of Section 22119.5 and subdivision (a) or (b) of Section
2626113end delete
begin insert retired participant activitiesend insert in any one school year up to
27the limitation specified in Sections 24214 and 24214.5begin delete as an
28employee of an employer, as an employee of a third party, or as
29an independent contractor within the California public school
30systemend delete
, but the member shall not make contributions to the fund.
31The employer shall maintain accurate records of the earnings of
32the retired member and report those earnings monthly to the system
33and retired member as described in Section 22461.



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