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:  8/31/15 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.

          Senate Floor Amendments of 8/31/15 eliminates an earlier  
          amendment specifying the manner in which compensation earnable  
          for the purpose of determining a retirement benefit is  
          calculated for outgrowth activities performed by a member of  
          CalSTRS, thus returning the statute to existing law.









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          ANALYSIS:
          
          Existing law:

           1) Establishes CalSTRS, which is the state retirement system  
             for 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.








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           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 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.


           7) 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) 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

           2) 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

           3) Clarifies that a prekindergarten through grade 12 employer  
             may include the State.  Sections 22119.5, 26113

           4) 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  
             a creditable activity.  Sections 22119.5, 26113







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           5) 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

           6) 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

           7) 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

           8) 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

           9) 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

           10)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

           11)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

           12)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  
             returned to the employer.  Any amounts due to CalSTRS shall  







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             be collected from the individual before he or she can be  
             covered by another public retirement system.  Section 22508.7

           13)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

           14)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

           15)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

           16)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

           17)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.








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          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  
          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  







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          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:   (Verified9/1/15)


          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
          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







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          Siskiyou Joint Community College District
          South Orange County Community College District
          Statewide Association of Community Colleges
          West Kern Community College District
          Two individuals


          OPPOSITION:   (Verified9/1/15)


          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.


          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,  
            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
          9/1/15 21:30:43









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