BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 963|
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THIRD READING
Bill No: AB 963
Author: Bonilla (D)
Amended: 7/16/15 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 7/13/15
AYES: Pan, Morrell, Beall, Fuller, Hall
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/17/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 77-0, 5/7/15 (Consent) - See last page for
vote
SUBJECT: Teachers Retirement LawTeachers Retirement Law.
SOURCE: California State Teachers Retirement System
DIGEST: This bill clarifies the definition of service that can
be reported to the California State Teachers' Retirement System
(CalSTRS) and provides CalSTRS membership and creditable service
for those in partial certificated positions. This bill also
remedies membership issues for individuals in classified
positions who were erroneously reported to CalSTRS by their
employers and revises the definition of "compensation earnable"
for outgrowth activities.
ANALYSIS:
Existing law:
1)Establishes CalSTRS, which is the state retirement system for
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certificated educators of students from prekindergarten
through community college level and specifies that employees
reported to CalSTRS must adhere to certification or
credentialing requirements, such as those adopted by the
Commission on Teacher Credentialing, the minimum standards
adopted by the California Community Colleges Board of
Governors, or provisions required under an approved charter
for the operation of charter schools, as specified.
2)Establishes, in CalSTRS, both a traditional defined benefit
plan (DB) and a cash balance plan, known as the Defined
Benefit Supplement Plan (DBS), which pays an annuity or a lump
sum at retirement or separation based on the cash balance in
the DBS at that time. In general, employer and member
contributions for regular credited service are deposited in
the DB and contributions on non-regular service (e.g., service
beyond a full year for teaching overload classes) are
deposited in the DBS.
3)Requires that school employers report "creditable service" to
CalSTRS and defines which types of employment, or creditable
service, may be attributable to the DB for purposes of
determining a retirement allowance and which types may be
attributable to the DBS. In addition to teachers, school
counselors, health professionals, those who design curriculum
and train teachers, superintendents, and other educational
professionals may have their service credited in CalSTRS. The
State is also a CalSTRS school employer because it administers
teaching programs in the Department of Corrections and
Rehabilitation and state schools for the deaf and blind.
4)Gives the CalSTRS board the final authority on how educational
service not specifically identified in statute may or may not
be credited in CalSTRS.
5)Defines which types of "creditable compensation" may be
credited under the DB plan and which types of compensation may
be credited under the DBS plan and gives CalSTRS final
authority on whether to credit compensation to the DB or the
DBS.
6)Requires that compensation earnable for outgrowth activities
be determined as if the creditable compensation is earned at
the lowest pay rate for other creditable service activities
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that the member performs for the same employer during the same
year.
7)Requires that the service of non-certificated employees, such
as clerical, maintenance, and law-enforcement staff, be
reported and credited in the California Public Employees'
Retirement System (CalPERS), as specified.
8)Allows an individual whose service has been credited under
CalSTRS, who then changes positions to perform service that
would be credited under CalPERS, to elect to remain in
CalSTRS, and vice versa, as specified.
This bill:
1)Revises the definition of "compensation earnable" for
"outgrowth activities" (i.e., the performance of public school
activities relating to, and an outgrowth of, the instructional
and guidance program of the school) to be an amount calculated
annually by CalSTRS using the average compensation earnable by
all active members during the fiscal year ending in the
previous calendar year. Section 22115
2)Reorganizes the definition of "creditable service" and
creditable service "activities" in the DB and DBS Programs to
clarify the certification qualifications, minimum standards
and other requirements that need to be met in order to perform
creditable service for prekindergarten through grade 12,
community colleges, and charter school employers. Sections
22119.5, 26113
3)Specifies that activities connected with the enforcement of
laws relating to compulsory education and child welfare
activities, and mentoring, including program support advisors
and coaches working in teacher and administrator preparation
programs, as specified, are creditable in CalSTRS. Sections
22119.5, 26113
4)Clarifies that a prekindergarten through grade 12 employer may
include the State. Sections 22119.5, 26113
5)Specifies that the work of community college presidents and
chancellors is creditable service along with the work of
superintendents currently in statute if the work is listed as
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a creditable activity. Sections 22119.5, 26113
6)Ensures that the work of consulting teachers participating in
the Peer Assistance and Review Program for Teachers is
considered creditable service if that work is listed as a
creditable activity. Sections 22119.5, 26113
7)Clarifies that specified work that does not meet the
Commission on Teacher Credentialing certification
qualifications or the California Community Colleges Board of
Governors minimum standards must be any of the creditable
service activities listed in order to be creditable. Sections
22119.5, 26113
8)Clarifies that outgrowth activities do not require a
credential and are only creditable when they are performed in
addition to other creditable service. Sections 22119.5, 26113
9)Allows individuals performing service in a partial
certificated full-time position (e.g., a superintendent who
also acts as a budget director) on a part-time basis to have
their service entirely creditable in CalSTRS. Sections
22119.5, 26113
10)Provides that the service of individuals whose employers
have erroneously reported their service to CalSTRS is
creditable to the DB Program if the service was performed on
or before December 31, 2015, and reported to CalSTRS as
creditable service. Section 22119.6
11)Requires employers, upon request from CalSTRS, to provide
information regarding the requirements that need to be met in
order to perform creditable service. Section 22458.5
12)Allows individuals whose employers have erroneously reported
their service to CalSTRS, whose service is deemed creditable,
including those who retired on or before December 31, 2015,
to elect to have that service covered by a different public
retirement system, as specified. Section 22508.7
13)Specifies that if a CalSTRS member elects to have service
moved to a different public retirement system, any member
contributions, credited interest and employer contributions,
less amounts already paid to the individual, shall be
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returned to the employer. Any amounts due to CalSTRS shall
be collected from the individual before he or she can be
covered by another public retirement system. Section 22508.7
14)Allows individuals who had service removed from CalSTRS and
reported to a different public retirement system, at the
direction of CalSTRS, including those receiving a benefit on
or before December 31, 2015, to elect to have that service
covered by the DB Program, as specified. Individuals making
this election become CalSTRS members and have all rights of a
member, including electing to stay in CalSTRS if he or she is
hired into a position that requires membership in a different
public retirement system as specified in current statute.
Section 22508.7
15)Provides that all individuals who make such an election as
outlined above, maintain their current status pursuant to the
California Public Employees' Pension Reform Act of 2013
(PEPRA). Section 22508.7
16)Specifies that the election made by an individual who
performs service deemed creditable, as specified, is
irrevocable and must be made in writing on a form prescribed
by CalSTRS on or before June 30, 2016, as specified. Section
22508.7
17)Specifies that CalSTRS is under no obligation to identify,
locate, or notify individuals who may have had service
erroneously reported by their employers to CalSTRS. Section
22508.7
18)Makes other technical and conforming changes and mirrors
amendments also included in AB 991(Assembly Public Employees,
Retirement and Social Security Committee, Chapter 123,
Statutes of 2015), CalSTRS annual housekeeping bill.
Sections 22119.2, 22119.322146, 22164.5, 26135.7
Comments
According to CalSTRS, among the activities listed as creditable
service are school activities related to, and an outgrowth of,
the instructional and guidance program of the school when they
are performed in addition to other creditable service. When
reporting compensation earnable for outgrowth activities,
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employers have limited visibility of whether a member performed
creditable service in prior months. For large population
employers, this can create a huge manual workload each month.
Additionally, while the employer may have been reporting the
lowest pay rate accurately throughout the year, the employer
would have to make reporting adjustments if a member takes a
position with a lower pay rate later that year.
Employees reported to CalSTRS must adhere to credentialing
requirements adopted by the Commission on Teacher Credentialing,
minimum standards adopted by the California Community Colleges
Board of Governors or provisions required under an approved
charter for the operation of a charter school. The work of
superintendents is excluded from these requirements. In
addition, if a CalSTRS member is hired in a position to perform
activities not creditable to CalSTRS, he or she can elect in
writing within 60 days from the date of hire to stay in CalSTRS,
as specified.
If CalSTRS discovers that an individual has not performed
creditable service, the system requires employers to re-report
that service to the appropriate retirement system, and
contributions received would be returned to the employer.
Employers and constituent groups claim that service is being
misreported because the credential requirements are confusing,
and some of the activities listed in the law are vague. Those
groups recommend CalSTRS should, consequently, broaden the
definition of "creditable service" to allow certain positions,
which they believe are generally performing activities included
in the definition of "creditable service," to be reported to and
accepted by the system.
Prior Legislation
SB 1220 (Torres, Chapter 755, Statutes of 2014) made various
technical, conforming or minor changes to the Teachers'
Retirement Law to facilitate efficient administration of the
State Teachers' Retirement Plan, including specifying how to
determine compensation earnable for outgrowth activities.
AB 1381 (Assembly Public Employees, Retirement and Social
Security Committee, Chapter 559, Statutes of 2013) made various
technical corrections and conforming changes that align the
Teachers' Retirement Law with the provisions of PEPRA, as
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enacted in AB 340 (Furutani).
AB 340 (Furutani, Chapter 296, Statutes of 2012) made various
changes to the CalSTRS benefit structure that affect all CalSTRS
members, including adding the definition of "retired member
activities" for the DB Program.
AB 2700 (Lempert, Chapter 1021, Statutes of 2000) made all
compensation for creditable service creditable to CalSTRS and
credited member and employer contributions for service in excess
of 1.000 years of service per school year to the DBS Program.
AB 948 (Gallegos, Chapter 394, Statutes of 1995) established
definitions of various employment activities that are considered
creditable service and provided that the earnings limitation on
postretirement service is applied only to compensation earned
from creditable service.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, CalSTRS
anticipates one-time technology costs estimated at below
$100,000 (non General fund). Other administration costs will be
minor and absorbable.
SUPPORT: (Verified8/18/15)
California State Teachers' Retirement System (source)
Alliance of Schools for Cooperative Insurance Programs
Association of California Community College Administrators
Association of California School Administrators
Association of Chief Human Resources Officers/Equal Employment
Officers
California Association of School Business Officials
California Retired Teachers Association
California School Boards Association
California Teachers Association
Community College League of California
Foothill-De Anza Community College District
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Los Angeles Community College District
Los Rios Community College District
North Orange County Community College District
Rancho Santiago Community College District
Riverside Community College District
Riverside County Superintendent of Schools
Santa Clarita Community College District
School Employers Association of California
Schools Excess Liability Fund
Shasta-Tehama-Trinity Joint Community College District
Siskiyou Joint Community College District
South Orange County Community College District
Statewide Association of Community Colleges
West Kern Community College District
Two individuals
OPPOSITION: (Verified8/18/15)
None received
ARGUMENTS IN SUPPORT: CalSTRS states that some employers have
erroneously reported service to CalSTRS due to confusion
surrounding the definition of "creditable service" in the
Teachers' Retirement Law. Due to this perceived vagueness,
individuals have been removed from CalSTRS or have had service
incorrectly reported to a different public retirement system.
Additionally, CalSTRS has found that determining compensation
earnable for outgrowth activities is administratively burdensome
for employers.
CalSTRS is sponsoring AB 963 to ensure more effective and
efficient administration of the retirement plan and to help
alleviate confusion among employers on how to determine what
service is creditable to CalSTRS.
ASSEMBLY FLOOR: 77-0, 5/7/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
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Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Campos, Roger Hernández, Steinorth
Prepared by:Pamela Schneider / P.E. & R. / (916) 651-1519
8/19/15 20:34:27
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