Amended in Senate June 14, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 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, begin insert 22146.2, end insert 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 amended, Committee on Public Employees, Retirement and Social Security. State begin delete Teacher’s end delete begin insert Teachers end insert begin insert ’ end insert 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 1⁄4 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. begin insert The bill would define a member subject to PEPRA and would except from that definition a member who is also a member in certain other retirement systems, prior to January 1, 2013 end insert begin insert , as specified. end insert 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.

begin insert

The bill would also revise provisions that permit the use of a one-year period for the calculation of final compensation for members who are not subject to PEPRA, subject to negotiation by a teacher employer and an exclusive classroom teacher representative, to require that a written agreement addressing this subject be entered into prior to January 1, 2014. The bill would prohibit an employer from paying member contributions for defined benefits for employees who are not subject to PEPRA on or after January 1, 2014, as specified. The bill would provide that compensation for postretirement activities that are not supported by state, local, or federal funds is not subject to postretirement earnings limitations. The bill would apply postretirement compensation limitations to employer payments for, among other things, deferred compensation plans, the purchase of annuities, and payments to various tax qualified retirement plans.

end insert

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert The Legislature finds and declares that this act,
as it applies to the State Teachers’ Retirement Plan, clarifies the
California Public Employees’ Pension Reform Act of 2013, is
declaratory of existing law, and is intended to apply concurrently
with the initial operation of that act. The amendments made by
this act shall be deemed to be operative January 1, 2013, unless
otherwise stated. end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

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

22109.8.  

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

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 22115 of the Education Code is amended to
read:

22115.  

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

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

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

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

(e) (1) Except as provided in subdivision begin delete (g) end delete begin insert (f) end insert , for purposes
of determining compensation earnable for a member employed by
a community college prior to July 1, 1996, full time shall be defined
pursuant to Section 22138.5 and pursuant to Section 20521 of Title
5 of the California Code of Regulations, as those provisions read
on June 30, 1996, if application of that definition will increase the
compensation earnable or otherwise enhance the benefits of the
member.

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

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

(i) Base hours.

(ii) Actual earnings.

(iii) Compensation earnable.

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

(i) Base hours.

(ii) Actual earnings.

(iii) Compensation earnable.

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

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

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

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 22119.2 of the Education Code is amended to
read:

22119.2.  

(a) “Creditable compensation” means remuneration
that is paid in cash by an employer to all persons in the same class
of employees and is paid to an employee for performing creditable
service in that position. Creditable compensation shall include:

(1) Salary or wages paid in accordance with a salary schedule,
employment agreement, or any other publicly available written
contractual agreement that specifies compensation.

(2) Remuneration that is paid in addition to salary or wages,
provided it is paid to all persons who are in the same class of
employees in the same dollar amount, the same percentage of
salary or wages, or the same percentage of the amount being
distributed.

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

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

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

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

(b) Any creditable compensation determined by the board to
have been paid to enhance a member’s benefits shall not be credited
under the Defined Benefit Program. Contributions on that
compensation shall be credited to the Defined Benefit Supplement
Program. A presumption by the board that creditable compensation
was paid to enhance a member’s benefits may be rebutted by the
member or by the employer on behalf of the member. Upon receipt
of sufficient evidence to the contrary, a presumption by the board
that creditable compensation was paid to enhance the member’s
benefits may be reversed.

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

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

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

(3) Remuneration that is paid in addition to salary or wages if
it is not paid to all persons in the same class of employees in the
same dollar amount, the same percentage of salary or wages, or
the same percentage of the amount being distributed pursuant to
paragraph (2) of subdivision (a).

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

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

(6) Fringe benefits provided by an employer.

(7) Expenses paid or reimbursed by an employer.

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

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

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

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

(f) This definition of “creditable compensation” reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member’s career, consistent treatment
of compensation among an entire class of employees, consistent
treatment of compensation for a position, preventing adverse
selection, and excluding from compensation earnable remuneration
that is paid to enhance a member’s benefits. The board shall
determine the appropriate crediting of contributions between the
Defined Benefit Program and the Defined Benefit Supplement
Program according to these principles, to the extent not otherwise
specified pursuant to this part.

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

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

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 22119.3 of the Education Code is repealed.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

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

22119.3.  

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

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

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

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

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

(5) Notwithstanding paragraph (11) of subdivision (b),
remuneration that is paid based on the allocation of funds from
the California State Lottery Education Fund pursuant to Section
8880.5 of the Government Code.

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

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

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

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

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

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

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

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

(6) Fringe benefits provided by an employer.

(7) Expenses paid or reimbursed by an employer.

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

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

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

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

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

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

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

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

(2) The board shall adjust the limit in paragraph (1) based on
changes to the Consumer Price Index for All Urban Consumers.
Notwithstanding paragraph (1) of subdivision (d) of Section
7522.10 of the Government Code, the adjustment shall be effective
annually on July 1, beginning July 1, 2014.

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

(4) This subdivision shall apply to compensation paid during
the begin delete 2013-14 end delete begin insert 2013-14 end insert fiscal year and each fiscal year thereafter.

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

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

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

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Section 22134.5 of the Education Code is amended to
read:

22134.5.  

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

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

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

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

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

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

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

(f) This section shall apply to the following:

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

(A) Section 22714.

(B) Section 22715.

(C) Section 22717, except as provided in subdivision (b) of
Section 22121.

(D) Section 22826.

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

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

begin delete SEC. 7. end delete
begin insert SEC. 8. end insert   

Section 22135 of the Education Code is amended to
read:

22135.  

(a) Notwithstanding subdivisions (a) and (b) of Section
22134, “final compensation” means the highest average annual
compensation earnable by an active member who is a classroom
teacher begin insert not subject to the California Public Employees’ Pension
Reform Act of 2013 and end insert who retires, becomes disabled, or dies,
after June 30, 1990, during any period of 12 consecutive months
during his or her membership in the plan’s Defined Benefit
Program.

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

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

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

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

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

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

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

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

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

(5) Classified employees.

(e) This section shall apply only to teachers employed by an
employer that has, pursuant to Chapter 10.7 (commencing with
Section 3540) of Division 4 of Title 1 of the Government Code,
entered into begin insert , extended, renewed, or amended end insert a written agreement
with an exclusive representative, begin insert prior to January 1, 2014, end insert that
makes this section applicable to all of its classroom teachers, as
defined in subdivision (c).

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

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

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

(i) For a nonmember spouse, final compensation shall be
determined pursuant to paragraph begin delete (2) end delete begin insert (5) end insert of subdivision (c) of
Section 22664. The employer, within 30 days of receiving an
invoice from the system, shall reimburse the retirement fund
pursuant to subdivision (f). Interest shall be charged at the regular
interest rate for payments not received within the prescribed
timeframe. Payments not received within 30 days of invoicing
may be collected pursuant to Section 23007.

begin delete

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

end delete

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 22146.2 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 22146.2. end insert   

(a) Notwithstanding subdivision (f) of Section 7522.04
of the Government Code, “member subject to the California Public
Employees’ Pension Reform Act of 2013” means a person who
first becomes employed to perform creditable service subject to
coverage under the Defined Benefit Program on or after January
1, 2013.

(b) A member as defined in subdivision (a) does not include a
person who was a member on or before December 31, 2012, of
the California Public Employees’ Retirement System, the
Legislators’ Retirement System, the University of California
Retirement System, a county retirement system established under
Chapter 3 (commencing with Section 31450) of Part 3 of Division
4 of Title 3 of the Government Code, or the San Francisco
Employees’ Retirement System and the person performed service
in the other retirement system within the six months prior to the
commencement of creditable service under the Defined Benefit
Program.

(c) This section shall be deemed to have become operative on
January 1, 2013.

end insert

begin delete SEC. 8. end delete
begin insert SEC. 10. end insert   

Section 22148 of the Education Code is amended to
read:

22148.  

“Normal retirement” and “normal retirement age” mean
60 years of age, or 62 years of age for a member subject to the
California Public Employees’ Pension Reform Act of 2013, which
is the age upon attainment of which the member becomes eligible
under the Defined Benefit Program for a service retirement
allowance without reduction because of age and without special
qualifications.

begin delete SEC. 9. end delete
begin insert SEC. 11. end insert   

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

22160.5.  

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

begin delete SEC. 10. end delete
begin insert SEC. 12. end insert   

Section 22327 of the Education Code is amended to
read:

22327.  

Notwithstanding any other provision of law, the
Employment Development Department shall disclose to the begin delete board end delete
begin insert system end insert information in its possession relating to the earnings of
any person who is a member of the Defined Benefit Program begin insert , end insert begin insert if
the member is receiving a disability benefit or performing retired
member activities end insert . The earnings information shall be released to
the begin delete board end delete begin insert system end insert only upon written request from the begin delete board end delete begin insert system end insert
specifying that the person is a member of the Defined Benefit
Program begin insert and is receiving a disability benefit or performing retired
member activities. The system shall use the information obtained
pursuant to this section only for purposes of Chapter 25
(commencing with Section 24001), Chapter 26 (commencing with
the Section 24100), Section 24214, or Section 24214.5 end insert . The request
may be made by the chief executive officer of the system or by an
employee of the system so authorized and identified by name and
title by the chief executive officer in writing. The begin delete board end delete begin insert system end insert
shall notify members begin insert receiving a disability benefit or performing
retired member activities end insert that earnings information shall be
obtained from the Employment Development Department upon
request by the begin delete board end delete begin insert system end insert . The begin delete board end delete begin insert system end insert shall not release
any earnings information received from the Employment
Development Department to any person, agency, or other entity.
The system shall reimburse the Employment Development
Department for all reasonable administrative expenses incurred
pursuant to this section.

begin delete SEC. 11. end delete
begin insert SEC. 13. end insert   

Section 22664 of the Education Code is amended to
read:

22664.  

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

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

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

(2) The nonmember spouse has at least 21⁄2 years of credited
service in his or her separate account.

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

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

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

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

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

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

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

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

 

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

 

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

(5) Final compensation, for purposes of calculating the service
retirement allowance of the nonmember spouse under this
subdivision, shall be calculated according to the definition of final
compensation in Section 22134, 22134.5, 22135, or 22136,
whichever is applicable, and shall be based on the member’s
compensation earnable up to the date the parties separated, as
established in the judgment or court order pursuant to Section
22652. The nonmember spouse shall not be entitled to use any
other calculation of final compensation.

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

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

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

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

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

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

(f) The nonmember spouse who receives a retirement allowance
is not a retired member under this part. However, the allowance
of the nonmember spouse shall be increased by application of the
improvement factor and shall be eligible for the application of
supplemental increases and other benefit maintenance provisions
under this part, including, but not limited to, Sections 24412 and
24415 based on the same criteria used for the application of these
benefit maintenance increases to the service retirement allowances
of members.

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

begin delete SEC. 12. end delete
begin insert SEC. 14. end insert   

Section 22826 of the Education Code is amended to
read:

22826.  

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

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

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

begin delete SEC. 13. end delete
begin insert SEC. 15. end insert   

Section 22901 of the Education Code is amended to
read:

22901.  

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

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

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

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

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

begin delete SEC. 14. end delete
begin insert SEC. 16. end insert   

Section 22901.3 of the Education Code is amended
to read:

22901.3.  

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

(b) Except as provided in subdivision (c), begin insert the end insert Director of Human
Resources may establish the begin delete normal rate of end delete contribution begin insert rate end insert for
a state employee who is a member of the Defined Benefit Program
who is excepted from the definition of “state employee” in
subdivision (c) of Section 3513 of the Government Code, and an
officer or employee of the executive branch of state government
who is not a member of the civil service. The begin delete normal rate of end delete
contribution begin insert rate end insert shall be the same for all members identified in
this subdivision. The contribution rate shall be effective the
beginning of the pay period indicated by the Director of Human
Resources but shall be no earlier than the beginning of the pay
period following the date the begin delete board end delete begin insert system end insert receives notification.

(c)  begin delete The end delete begin insert Notwithstanding any other provision of law, the end insert normal
contribution rate for members subject to the California Public
Employees’ Pension Reform Act of 2013 who are state employees
is subject to the provisions of subdivision (e) of Section 7522.30
of the Government Code.

begin delete SEC. 15. end delete
begin insert SEC. 17. end insert   

Section 22905 of the Education Code is amended to
read:

22905.  

(a) Member contributions pursuant to Section 22901,
employer contributions pursuant to Section 22903 or 22904, and
member contributions made by an employer pursuant to Section
22909 shall be credited to the member’s individual account under
the Defined Benefit Program or the Defined Benefit Supplement
Program, whichever is applicable pursuant to the provisions of
this part.

(b) Except as provided in subdivision (f), member and employer
contributions, exclusive of contributions pursuant to Section 22951,
on a member’s compensation under the following circumstances
shall be credited to the member’s Defined Benefit Supplement
account:

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

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

(3) Compensation that is paid for a begin delete specified end delete begin insert limited end insert number of
times as begin delete limited end delete begin insert specified end insert by law, a collective bargaining
agreement, or an employment agreement.

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

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

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

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

begin delete SEC. 16. end delete
begin insert SEC. 18. end insert   

Section 22909 of the Education Code is amended to
read:

22909.  

(a) Notwithstanding Sections 22901, 22956, and 23000,
an employer may pay all or a portion of the contributions required
to be paid by a member of the Defined Benefit Program. Where
the member is included in a group or class of employment begin insert in which
no members are subject to the California Public Employees’
Pension Reform Act of 2013 end insert , the payment shall be for all members
in the group or class of employment. The payments shall be
credited to member accounts pursuant to Section 22905. The
employer shall report contributions to the system as if the member
and the employer were paying the contributions in accordance
with this part, notwithstanding this section. For purposes of this
chapter, the member’s contributions shall be considered to be the
percentage of the member’s creditable compensation that would
have been paid pursuant to this chapter, notwithstanding this
section. Notwithstanding Section 22119.2, contributions paid
pursuant to this section may not be included in creditable
compensation.

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

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

begin delete

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

end delete

begin insert (d) end insert begin insert   end insert begin insert As of January 1, 2013, this section shall not apply if the
group or class of employment includes members who are subject
to the Public Employees’ Pension Reform Act of 2013 end insert begin insert If the terms
of a written agreement with an exclusive representative that is in
effect on January 1, 2013, would be impaired by this subdivision,
this subdivision shall not apply to the employer and members
subject to that written agreement until the expiration of that written
agreement. A renewal, amendment, or any other extension of that
written agreement shall be subject to the requirements of this
subdivision. end insert

begin insert

(e) As of January 1, 2014, this section shall not apply if the
group or class of employment does not include members who are
subject to the Public Employees’ Pension Reform Act 2013. If the
terms of a written agreement with an exclusive representative that
is in effect on January 1, 2014, would be impaired by this
subdivision, this subdivision shall not apply to the employer and
members subject to that written agreement until the expiration of
that written agreement. A renewal, amendment, or any other
extension of that written agreement shall be subject to the
requirements of this subdivision.

end insert

begin delete SEC. 17. end delete
begin insert SEC. 19. end insert   

Section 23855 of the Education Code is amended to
read:

23855.  

(a) The survivor benefit allowance is a monthly
allowance equal to one-half of the modified retirement allowance
the member would have received at normal retirement age, if the
member had retired and elected Option 3 pursuant to Section
24300, as that section read on December 31, 2006, naming the
spouse as the option beneficiary.

(b) The allowance payable under this subdivision shall be based
on the member’s actual service credit and final compensation as
of the date of his or her death, the retirement factor at normal
retirement age, and the member’s and spouse’s ages as of the date
the member would have attained normal retirement age. If the
member’s death occurs after he or she attains normal retirement
age, his or her actual final compensation, the retirement factor at
normal retirement age, and the member’s and spouse’s ages as of
the date of the member’s death shall be used in the allowance
calculation.

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

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

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

(B) The increase of the monthly allowance pursuant to Section
24203.6.

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

(e) The surviving spouse may elect to begin receiving the
survivor benefit allowance immediately as of the date of the
member’s death or to defer receipt of the allowance to the date the
member would have attained normal retirement age. If allowance
payments to the surviving spouse commence prior to the date the
member would have attained normal retirement age, the allowance
payable shall be actuarially reduced.

(f) If the spouse elects, pursuant to Section 23852, to receive
the survivor benefit allowance, an additional 10 percent of final
compensation shall be payable for each dependent child who is
under 21 years of age, up to a maximum of 50 percent of final
compensation. The child’s portion shall begin to accrue on the day
following the member’s date of death and shall be payable even
if the spouse elects to postpone receipt of the spouse’s survivor
benefit allowance until the date the member would have attained
normal retirement age.

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

begin delete SEC. 18. end delete
begin insert SEC. 20. end insert   

Section 24202 of the Education Code is amended to
read:

24202.  

(a) A member who retires for service after June 30,
1972, shall receive a retirement allowance consisting of both of
the following:

(1) An annual allowance payable in monthly installments, upon
retirement at normal retirement age but less than age 601⁄4, equal
to 2 percent of the final compensation for each year of credited
service. If the member’s retirement is effective at less than normal
retirement age and between early retirement age and normal
retirement age, the member’s allowance shall be reduced by
one-half of 1 percent for each full month, or fraction of a month
that will elapse until the member will attain normal retirement age.

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

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

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

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

begin delete SEC. 19. end delete
begin insert SEC. 21. end insert   

Section 24202.5 of the Education Code is amended
to read:

24202.5.  

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

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

 

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

 

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

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

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

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

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

begin delete SEC. 20. end delete
begin insert SEC. 22. end insert   

Section 24202.6 of the Education Code is amended
to read:

24202.6.  

(a) A member begin delete who is end delete subject to the California Public
Employees’ Pension Reform Act of 2013 begin delete , end delete shall receive a retirement
allowance consisting of all of the following:

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

 

Age at Retirement	Percentage
62	2.000
621⁄4	2.033
621⁄2	2.067
623⁄4	2.100
63	2.133
631⁄4	2.167
631⁄2	2.200
633⁄4	2.233
64	2.267
641⁄4	2.300
641⁄2	2.333
643⁄4	2.367
65	2.400

 

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

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

(c) Creditable compensation used to calculate the defined benefit
shall be limited as described in Section 22119.3.

begin delete SEC. 21. end delete
begin insert SEC. 23. end insert   

Section 24202.7 of the Education Code is amended
to read:

24202.7.  

Notwithstanding any other provision of this part, for
a member subject to the California Public Employees’ Pension
Reform Act of 2013, the minimum retirement age shall be 55 years
of age, the early retirement age shall be 55 years of age, and the
normal retirement age shall be 62 years of age.

begin delete SEC. 22. end delete
begin insert SEC. 24. end insert   

Section 24203 of the Education Code is amended to
read:

24203.  

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

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

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

begin delete SEC. 23. end delete
begin insert SEC. 25. end insert   

Section 24205 of the Education Code is amended to
read:

24205.  

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

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

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

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

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

(e) The annual improvement factor provided for in Sections
22140 and 22141 shall be based upon the retirement allowance as
calculated under subdivision (a) or (b). The improvement factor
shall begin to accrue on September 1 following the retired
member’s 60th birthday. These increases shall be accumulated
and shall become payable when the full retirement allowance for
normal retirement age first becomes payable.

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

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

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

(i) This section shall not apply to a member who retires for
service pursuant to Section 24201.5, 24209, 24209.3, 24210,
24211, or 24212.

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

begin delete SEC. 24. end delete
begin insert SEC. 26. end insert   

Section 24206 of the Education Code is amended to
read:

24206.  

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

begin delete SEC. 25. end delete
begin insert SEC. 27. end insert   

Section 24209 of the Education Code is amended to
read:

24209.  

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

(1) An amount equal to the monthly allowance the member was
eligible to receive immediately preceding reinstatement, exclusive
of any amounts payable pursuant to Section 22714 begin delete , end delete or 22715,
increased by the improvement factor that would have been applied
to the allowance if the member had not reinstated.

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

(b) If the total amount of credited service, other than that accrued
pursuant to Sections 22714, 22715, 22717, 22717.5, and 22826,
is equal to or greater than 30 years, the amounts identified in
paragraphs (1), for members who initially retired on or after
January 1, 1999, and (2) of subdivision (a) shall be calculated
pursuant to Section 24203.5.

(c) If the total amount of credited service, other than that accrued
pursuant to Sections 22714, 22715, 22717, 22717.5, and 22826,
is equal to or greater than 30 years, upon retirement for service
following reinstatement, a member who retired pursuant to Section
24213, and received the terminated disability allowance for the
prior retirement, shall receive a service retirement allowance equal
to the sum of the following:

(1) An amount based on the service credit accrued prior to the
effective date of the disability allowance, the member’s age at the
prior retirement increased by the factor provided in Section
24203.5, and projected final compensation.

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

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

begin delete SEC. 26. end delete
begin insert SEC. 28. end insert   

Section 24210 of the Education Code is amended to
read:

24210.  

Upon retirement for service following a prior disability
retirement granted pursuant to Chapter 26 (commencing with
Section 24100) that was terminated, the member shall receive a
service retirement allowance calculated pursuant to Section 24202,
24202.5, 24202.6, 24203, 24203.5, or 24206 and equal to the sum
of both of the following:

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

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

begin delete SEC. 27. end delete
begin insert SEC. 29. end insert   

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

24214.  

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

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

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

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

(e) The postretirement compensation limitation provisions set
forth in this section are not applicable to compensation earned for
the performance of retired member activities begin delete for which the
employer is not eligible to receive state apportionment or to
compensation that is not creditable pursuant to Section 22119.2
or 22119.3 end delete begin insert that are not wholly or in part supported by state, local,
or federal funds end insert .

(f) (1) The limitation that shall apply to the compensation paid
in cash to the begin insert retired end insert member for performance of retired member
activities, excluding reimbursements paid by an employer for
expenses incurred by the member, in which payment of the
expenses by the member is substantiated, shall, in any one school
year, be an amount calculated by the begin delete board end delete begin insert system end insert each July 1
equal to one-half of the median final compensation of all members
who retired for service during the fiscal year ending in the previous
calendar year.

(2) The limitation in paragraph (1) shall also apply to begin insert payments,
including, but not limited to, those for participation in a deferred
compensation plan; to purchase an end insert annuity begin delete contracts end delete begin insert contract end insert ,
tax-deferred retirement begin delete plans end delete begin insert plan end insert , or insurance begin delete programs end delete begin insert program; end insert
and begin insert for end insert contributions to begin delete plans that meet end delete begin insert a plan that meets end insert the
requirements of Section 125, 401(a), 401(k), 403(b), 457(b) begin insert , end insert or
457(f) of Title 26 of the United States Code when the cost is
covered by an employer.

(g) If a member retired for service under this part earns
compensation for performing retired member activities, in excess
of the limitation specified in subdivision (f), and if that
compensation is not exempt from that limitation under subdivision
(e) or (h) or any other law, the member’s retirement allowance
shall be reduced by the amount of the excess compensation. The
amount of the reduction may be equal to the monthly allowance
payable but shall not exceed the amount of the annual allowance
payable under this part for the fiscal year in which the excess
compensation was earned after any reduction made in accordance
with subdivision (h) of Section 24214.5.

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

(1)  begin insert As a trustee appointed by the Superintendent of Public
Instruction pursuant to end insert Section 41320.1.

(2)  begin insert As a fiscal adviser or fiscal expert appointed by a county
superintendent of schools pursuant to end insert Article 2 (commencing with
Section 42122) of Chapter 6 of Part 24 of Division 3 of Title 2.

(3)  begin insert As a receiver or trustee appointed by the State Board of
Education pursuant to end insert Article 3.1 (commencing with Section
52055.57) of Chapter 6.1 of Part 28 of Division 4 of Title 2.

(4)  begin insert As a special trustee appointed by the Board of Governors
of the California Community Colleges pursuant to end insert Section 84040.

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

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

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

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

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

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

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

(l) The amendments to this section enacted during the 1995-96
Regular Session shall be deemed to have become operative on July
1, 1996.

(m) This section shall apply to compensation paid during the
2012-13 and 2013-14 fiscal years.

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

begin delete SEC. 28. end delete
begin insert SEC. 30. end insert   

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

24214.  

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

(b) If a member is retired for service under this part, the
begin insert annualized end insert rate of pay for retired member activities performed by
that member begin delete as an employee of the employer, as an employee of
a third party, or as an independent contractor within the California
public school system end delete shall not be less than the minimum, nor
exceed the maximum begin insert , end insert paid by the employer to other employees
performing comparable duties.

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

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

(e) The postretirement compensation limitation provisions set
forth in this section are not applicable to compensation earned for
the performance of retired member activities begin delete for which the
employer is not eligible to receive state apportionment or to
compensation that is not creditable pursuant to Section 22119.2
or 22119.3 end delete begin insert that are not wholly or in part supported by state, local,
or federal funds end insert .

(f) (1) The limitation that shall apply to the compensation paid
in cash begin insert to the retired member end insert for performance of retired member
activities, excluding reimbursements paid by an employer for
expenses incurred by the member, in which payment of the
expenses by the member is substantiated, shall, in any one school
year, be an amount calculated by the begin delete board end delete begin insert system end insert each July 1
equal to one-half of the median final compensation of all members
who retired for service during the fiscal year ending in the previous
calendar year.

(2) The limitation in paragraph (1) shall also apply to begin insert payments,
including, but not limited to, those for participation in a deferred
compensation plan; to purchase an end insert annuity begin delete contracts end delete begin insert contract end insert ,
tax-deferred retirement begin delete plans end delete begin insert plan end insert , or insurance begin delete programs end delete begin insert program; end insert
and begin insert for end insert contributions to begin delete plans that meet end delete begin insert a plan that meets end insert the
requirements of Section 125, 401(a), 401(k), 403(b), 457(b) begin insert , end insert or
457(f) of Title 26 of the United States Code when the cost is
covered by an employer.

(g) If a member retired for service under this part earns
compensation for performing begin delete activities end delete retired member activities,
in excess of the limitation specified in subdivision (f), the
member’s retirement allowance shall be reduced by the amount
of the excess compensation. The amount of the reduction may be
equal to the monthly allowance payable but may not exceed the
amount of the annual allowance payable under this part for the
fiscal year in which the excess compensation was earned after any
reduction made in accordance with subdivision begin delete (b) end delete begin insert (h) end insert of Section
24214.5.

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

(i) This section shall become operative on July 1, 2014.

begin delete SEC. 29. end delete
begin insert SEC. 31. end insert   

Section 24214.5 of the Education Code is amended
to read:

24214.5.  

(a)  begin insert (1) end insert begin insert   end insert Notwithstanding subdivision (f) of Section
24214, the postretirement compensation limitation begin insert end insert begin insert that shall apply
to the compensation paid in cash to the retired member end insert for
performance of retired member activities begin insert , excluding
reimbursements paid by an employer for expenses incurred by the
member, in which payment of the expenses by the member is
substantiated, end insert shall be zero dollars ($0) during the first 180
calendar days after the most recent retirement of a member retired
for service under this part.

begin insert

(2) The limitation in paragraph (1) shall also apply to payments,
including, but not limited to, those for participation in a deferred
compensation plan; to purchase an annuity contract, tax-deferred
retirement plan, or insurance program; and for contributions to
a plan that meets the requirements of Section 125, 401(a), 401(k),
403(b), 457(b), or 457(f) of Title 26 of the United States Code
when the cost is covered by an employer.

end insert

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

(1) The nature of the employment.

(2) A finding that the appointment is necessary to fill a critically
needed position before 180 begin insert calendar end insert days have passed.

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

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

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

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

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

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

(g) Within 30 calendar days after the receipt of all
documentation required by the system pursuant to this section, the
system shall inform the entity seeking application of the exemption
specified in subdivision (b), and the retired member whether the
compensation paid to the member will be subject to the limitation
specified in subdivision (a).

(h) If a member retired for service under this part earns
compensation for performing retired member activities in excess
of the limitation specified in subdivision (a), the member’s
retirement allowance shall be reduced by the amount of the excess
compensation. The amount of the reduction may be equal to the
monthly allowance payable but may not exceed the amount of the
allowance payable during the first 180 calendar days, after a
member retired for service under this part.

begin delete SEC. 30. end delete
begin insert SEC. 32. end insert   

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

24252.  

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

begin delete SEC. 31. end delete
begin insert SEC. 33. end insert   

Section 24600 of the Education Code is amended to
read:

24600.  

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

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

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

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

(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have
attained normal retirement age or on the day following the day of
the member’s death, as elected by the surviving spouse, and ceases
on the day of the surviving spouse’s death.

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

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

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

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

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

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

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

(2) In the case of a retirement allowance, as defined in Section
22166, not later than April 1 of the calendar year following the
later of (A) the calendar year in which the member attains the age
at which the Internal Revenue Code of 1986 requires a distribution
of benefits or (B) the calendar year in which the member terminates
employment within the meaning of subdivision (i), to continue
over the life of the member or the lives of the member and the
member’s option beneficiary, or over the life expectancy of the
member or the life expectancy of the member and the member’s
option beneficiary.

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

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

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

begin delete SEC. 32. end delete
begin insert SEC. 34. end insert   

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

26132.5.  

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

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

begin delete

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

end delete begin insert

(c) This section shall be deemed to have become operative on
January 1, 2013.

end insert

begin delete SEC. 33. end delete
begin insert SEC. 35. end insert   

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

26135.5.  

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

begin delete SEC. 34. end delete
begin insert SEC. 36. end insert   

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

26135.7.  

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

(1) An employee of an employer.

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

(3) An independent contractor.

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

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

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

(3) The activities performed by the individual are not normally
performed by employees of an employer, as defined in Section
22131.

begin delete SEC. 35. end delete
begin insert SEC. 37. end insert   

Section 26139 of the Education Code is amended to
read:

26139.  

(a) “Salary” means remuneration paid in cash by an
employer to a participant for creditable service performed in that
position subject to coverage under the Cash Balance Benefit
Program. Salary shall include:

(1) Money paid in accordance with a salary schedule based on
years of training and years of experience as specified in Section
45028 for creditable service performed.

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

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

(4) Employee contributions picked up by an employer under
Section 414(h)(2) of Title 26 of the United States Code and Section
17501 of the Revenue and Taxation Code.

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

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

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

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

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

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

(3) Fringe benefits provided by an employer.

(4) Expenses paid or reimbursed by an employer.

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

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

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

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

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

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

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

(e) This section shall be deemed to have become operative on
July 1, 1996.

begin delete SEC. 36. end delete
begin insert SEC. 38. end insert   

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

26139.5.  

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

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

(2) Employee contributions picked up by an employer under
Section 414(h)(2) of Title 26 of the United States Code and Section
17501 of the Revenue and Taxation Code.

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

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

(5) Notwithstanding paragraph (10) of subdivision (b),
remuneration that is paid based on the allocation of funds from
the California State Lottery Education Fund pursuant to Section
8880.5 of the Government Code.

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

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

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

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

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

(3) Fringe benefits provided by an employer.

(4) Expenses paid or reimbursed by an employer.

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

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

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

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

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

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

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

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

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

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

(2) The board shall adjust the limit in paragraph (1) based on
changes to the Consumer Price Index for All Urban Consumers.
Notwithstanding paragraph (1) of subdivision (d) of Section
7522.10 of the Government Code, the adjustment shall be effective
annually on July 1, beginning July 1, 2014.

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

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

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

begin delete SEC. 37. end delete
begin insert SEC. 39. end insert   

Section 26503.5 of the Education Code is amended
to read:

26503.5.  

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

begin delete SEC. 38. end delete
begin insert SEC. 40. end insert   

Section 26504 of the Education Code is amended to
read:

26504.  

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

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

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

(c)  begin delete For participants subject to the California Public Employees’
Pension Reform Act of 2013, the end delete begin insert The end insert begin insert end insert employee contribution rate
shall not be less than the employer contribution rate. begin insert end insert begin insert If the terms
of a collective bargaining agreement that is in effect on January
1, 2014, would be impaired by this subdivision, this subdivision
shall not apply to the employer and participants subject to that
contract until the expiration of that contract. A renewal,
amendment, or any other extension of that contract shall be subject
to the requirements of this subdivision. end insert

(d)  begin delete (1) end delete begin delete   end delete The employee contribution rate and employer
contribution rate shall be the same for each participant employed
by the employer begin delete who is not subject to the California Public
Employees’ Pension Reform Act of 2013 end delete .

begin delete

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

end delete

(e) The employee contribution rate and employer contribution
rate shall be in one-quarter percent increments.

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

(g) The employer has filed notice of the employee contribution
rate and the employer contribution rate on a form prescribed by
the system.

begin delete SEC. 39. end delete
begin insert SEC. 41. end insert   

Section 26800 of the Education Code is amended to
read:

26800.  

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

begin delete SEC. 40. end delete
begin insert SEC. 42. end insert   

Section 26810 of the Education Code is amended to
read:

26810.  

(a) A participant who is employed to perform creditable
service subject to coverage by the Cash Balance Benefit Program
while receiving an annuity under the program may voluntarily
terminate the annuity upon employment and make contributions
to the program based on salary paid by the employer for the
employment, provided the participant has attained normal
retirement age and has been receiving a retirement annuity for at
least one year. The participant shall continue to be subject to
Section 26808.

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

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

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

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

begin delete SEC. 41. end delete
begin insert SEC. 43. end insert   

Section 26812 of the Education Code is amended to
read:

26812.  

(a) A participant retired for service under this part may
perform retired participant activities, but the participant shall not
make contributions to the plan or accrue service credit under the
Defined Benefit Program based on compensation earned from that
service. The employer shall maintain accurate records of the
earnings of the retired participant and report those earnings monthly
to the system and retired participant.

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

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

(d) If a participant retired for service under this part begin delete and end delete on or
after January 1, 2014, is receiving an annuity under the Cash
Balance Benefit Program begin insert , end insert and earns compensation for performing
retired participant activities, the participant’s annuity shall be
reduced by the amount of the compensation. This reduction shall
only be made for compensation earned during the first 180 calendar
days after a participant retired for service under this part. The
amount of the reduction may be equal to the monthly annuity
payable but shall not exceed the amount of the annuity payable
during the first 180 calendar days after a participant retired for
service under this part.

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

(1) The nature of the employment.

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

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

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

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

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

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

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

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

begin delete SEC. 42. end delete
begin insert SEC. 44. end insert   

Section 26813 of the Education Code is amended to
read:

26813.  

A member retired for service under the Defined Benefit
Program may perform retired participant activities in any one
school year up to the limitation specified in Sections 24214 and
24214.5, but the member shall not make contributions to the fund.
The employer shall maintain accurate records of the earnings of
the retired member and report those earnings monthly to the system
and retired member as described in Section 22461.