California Legislature—2015–16 Regular Session

Assembly Bill No. 991

Introduced by Committee on Public Employees, Retirement, and Social Security (Assembly Members Bonta (Chair), Cooley, Jones-Sawyer, O'Donnell, and Rendon)

February 26, 2015

An act to amend Sections 22001.5, 22121, 22141, 22404, 22509, 22714, 22900, 22903, 22950, 23001, 24114, 24214, 24214.5, 26000, 26002.5, 26132, 26400, 26506, 26806, 26807.6, 26812, 26906.6, and 27100 of, and to add Section 26142.5 to, the Education Code, relating to state teachers’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 991, as introduced, Committee on Public Employees, Retirement, and Social Security. State teachers’ retirement.

Existing law, the Teachers’ Retirement Law, establishes the State Teachers’ Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is governed by the Teachers’ Retirement Board. Existing law defines credited service for these purposes as service from which required contributions have been paid. Existing law permits the board to amend the plan to dispense with payment for amounts less than $10. Existing law permits specified employers participating in STRS, if it is in the best interests of the school district or office of education, to grant an additional 2 years of service credit in order to encourage retirement, if specified conditions are met. Existing law authorizes specified payments made pursuant to the Teachers’ Retirement Law, including disability retirement benefits and compensation for postretirement activities, to be reduced if they are in excess of specified limits. Existing law permits members retired for disability or service from STRS to perform member activities without reinstatement into the system if certain conditions are met.

This bill would revise the definition of credited service for purposes of STRS to include service for which required contributions would have been made in absence of specified federal limits. The bill would revise the provisions authorizing the board to dispense with the payment for amounts less than $10 to be more specific in regard to the types of payments and to include adjustments to those payments. The bill would require, in regard to the grant of additional service credit to encourage retirement, to require as a condition of that grant that necessary documentation be provided to the retirement system within a specified time. The bill would make various technical changes to accurately cross-reference current law regarding contributions to fund the system. The bill would specify how reductions in payments are to be made in connection with the amount received in a particular month. The bill would make other technical, conforming changes, and corrections.

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. Existing law states legislative findings and declarations regarding the purpose of the Cash Balance Plan offered pursuant to the program. Existing law defines a participant for these purposes and prescribes the circumstances pursuant to which a person is permitted to participate in the program and how participation may be terminated and service be subject to the Defined Benefit Program offered by STRS. Existing law provides that the normal form of retirement benefit under the Cash Balance Benefit Program is a lump-sum payment.

This bill would revise the statement of legislative findings regarding the Cash Balance Benefit Program to specify that it applies to a person working for an employer, except a community college district, that offers the plan, a person who is employed on temporary basis, as specified, by a community college district offering the plan, or a person employed as a substitute employee. The bill would revise the definition of a participant in the plan to require that he or she has not received a lump-sum retirement benefit, as specified. The bill would define the system’s headquarters office for purposes of the program. The bill would revise the circumstances pursuant to which a person providing creditable service would be eligible to participate in the plan with reference to whether a person has elected an alternative retirement program, whether a participant’s employment with a community college district precludes continued participation in the plan, and how a substitute employee may become and remain a member of the plan. The bill would prohibit payment of a lump-sum retirement benefit before 180 days have elapsed following termination of employment and would require automatic termination of an application for the retirement benefit based on the participant performing creditable service with 180 days of terminating employment, except as specified. The bill would specify how reductions in payments under the Cash Balance Benefit Program are to be made in connection with the amount received in a particular month. The bill would require, with regard to a participant retired for service, that the retired participant application for the retirement benefit be canceled automatically if he or she is anticipated to receive the retirement in a lump-sum payment and earns compensation for performing creditable service with 180 days after termination of employment. The bill would make other technical, conforming changes, and corrections in the Cash Balance Benefit Program.

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

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

SECTION 1.  

Section 22001.5 of the Education Code is
amended to read:

22001.5.  

The Legislature hereby finds and declares that on
July 1, 1996, the State Teachers’ Retirement System Cash Balance
Plan was created and established to provide a retirement plan for
persons employed begin insert by an employer offering the Cash Balance Plan,
excluding community college districts, end insert to perform creditable service
for less than 50 percent of the full-time equivalent for the position
begin insert or employed by a community college district offering the Cash
Balance Plan to perform creditable service on a temporary basis
pursuant to Section 87474, 87478, 87480, 87481, 87482, or
87482.5, or employed by an employer offering the Cash Balance
Plan to perform creditable service as a substitute employee end insert . The
persons eligible for the Cash Balance Plan were excluded from
mandatory membership in the State Teachers’ Retirement System
Defined Benefit Plan. Both plans are administered by the Teachers’
Retirement Board. Prior to the creation and establishment of the
Cash Balance Plan, the State Teachers’ Retirement System Defined
Benefit Plan had been identified simply as the State Teachers’
Retirement System. As a result, the system was identified as both
the administrative body and the retirement plan. The State
Teachers’ Retirement Law was amended to identify the retirement
plan as the State Teachers’ Retirement System Defined Benefit
Plan in order to distinguish that plan from the Cash Balance Plan.
Because both plans were intended to provide for the retirement of
teachers and other persons employed in connection with public
schools of this state and schools supported by this state, a merger
of these two plans is now hereby made for the purpose of
establishing a single retirement plan that shall be known and may
be cited as the State Teachers’ Retirement Plan consisting of the
different benefit programs set forth in this part and Part 14
(commencing with Section 26000). This plan shall be administered
by the Teachers’ Retirement Board as set forth in this part and Part
14 (commencing with Section 26000). This part, together with
Part 14 (commencing with Section 26000) shall be known and
may be cited as the Teachers’ Retirement Law.

SEC. 2.  

Section 22121 of the Education Code is amended to
read:

22121.  

(a) “Credited service” means service for which the
required contributions have been paid begin insert and service for which
required contributions would have been paid in absence of the
limit prescribed by Section 401(a)(17) of Title 26 of the United
States Code as described in Section 22317.5 end insert .

(b) “Credited service” for members who are subject to the
California Public Employees’ Pension Reform Act of 2013 means
service for which required contributions have been paid and service
for which required contributions would have been paid in absence
of the limit established by subdivision (c) of Section 22119.3.

(c) “Credited service” for the limited purpose of determining
eligibility for benefits pursuant to Section 22134.5, 24203.5, or
24203.6 also includes up to two-tenths of one year of service
granted pursuant to Section 22717.

SEC. 3.  

Section 22141 of the Education Code is amended to
read:

22141.  

(a)  Notwithstanding Section 22140, “improvement
factor” means an increase of 2 percent in benefits provided under
Sections 24408 and 24409 for each year commencing on September
1, 1981, and under Section 24410.5 for each year commencing
September 1, 2001, and under Sections 24410.6 and begin delete 24110.7 end delete
begin insert 24410.7 end insert for each year commencing September 1, 2002. The
begin insert improvement end insert factor shall not be compounded nor shall it be
applicable to annuities payable from the accumulated annuity
deposit contributions or the accumulated tax-sheltered annuity
contributions. The Legislature reserves the right to adjust the
amount of the improvement factor up or down as the economic
conditions dictate. No adjustments of the improvement factor shall
reduce the monthly retirement allowance or benefit below that
which would be payable to the recipient under this part had this
section not been enacted.

(b) Beginning July 1, 2014, the improvement factor shall vest
for an active member in any calendar year in which active members
paid increased member contributions pursuant to Section 22901.7.

(c) If, for any reason, the increased employee contribution
referenced in subdivision (b), and as required by subdivisions (a)
and (b) of Section 22901.7, ceases to be legally required to be
made pursuant to the act that added this subdivision, then the
Legislature reserves the right to adjust the amount of the
improvement factor up or down as the economic conditions dictate
for all members who retire on or after January 1, 2014. No
adjustments of the improvement factor shall reduce the monthly
retirement allowance or benefit below that which would be payable
to the recipient under this part had this section not been enacted.

(d) For members who retired before the calendar year in which
Section 22901.7 was added, the Legislature reserves the right to
adjust the amount of the improvement factor up or down as the
economic conditions dictate. No adjustments of the improvement
factor shall reduce the monthly retirement allowance or benefit
below that which would be payable to the recipient under this part
had this section not been enacted.

SEC. 4.  

Section 22404 of the Education Code is amended to
read:

22404.  

(a) Notwithstanding any other provision of this part
or Part 14 (commencing with Section 26000) to the contrary, the
board may establish by plan amendment a specified amount or
amounts, not to exceed ten dollars ($10), below which the system
may dispense begin delete with the end delete begin insert with: end insert

begin insert (1) end insert begin insert   end insert begin insert The end insert processing of begin delete benefit or other payments or end delete begin insert a benefit
payment, an annuity payment, or any other payment, including
adjustments to those payments, payable to a member, participant,
or beneficiary. end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert collection of begin delete benefit or other overpayments that result
from adjustments made to the benefit or other amount end delete begin insert a benefit
overpayment, annuity overpayment, or any other overpayments end insert
paid to a member, participant, or beneficiary.

(b) When the cumulative dollar amount associated with one or
more begin delete benefit or other adjustments end delete begin insert benefit payments or
overpayments, annuity payments or overpayments, or other
payments or overpayments end insert equals or exceeds the amount described
in subdivision (a), that amount shall be paid to, or collected from,
the member, participant, or beneficiary. That cumulative amount
paid or collected shall not be credited with interest.

SEC. 5.  

Section 22509 of the Education Code is amended to
read:

22509.  

(a) Within 10 working days of the date of hire of an
employee who has the right to make an election pursuant to Section
22508 or 22508.5, the employer shall inform the employee of the
right to make an election and shall make available to the employee
written information provided by each retirement system concerning
the benefits provided under that retirement system to assist the
employee in making an election.

(b) Any election made pursuant to subdivision (a) of Section
22508 or subdivision (a) of Section 22508.5 shall be filed with the
office of the State Teachers’ Retirement System and a copy of the
election shall be filed with the other public retirement system. Any
election made pursuant to subdivision begin delete (b) end delete begin insert (c) end insert of Section 22508 or
subdivision (b) of Section 22508.5 shall be filed with the office
of the Public Employees’ Retirement System and a copy of the
election shall be filed with the office of this system.

(c) Any election made pursuant to Section 22508 or Section
22508.5 shall become effective as of the first day of employment
in the position that qualified the employee to make an election.

SEC. 6.  

Section 22714 of the Education Code is amended to
read:

22714.  

(a) Whenever the governing board of a school district
or a community college district or a county office of education,
by formal action, determines pursuant to Section 44929 or 87488
that, because of impending curtailment of, or changes in, the
manner of performing services, the best interests of the district or
county office of education would be served by encouraging
certificated employees or academic employees to retire for service
and that the retirement will result in a net savings to the district or
county office of education, an additional two years of service credit
shall be granted under this part to a member of the Defined Benefit
Program if all of the following conditions exist:

(1) The member is credited with five or more years of service
credit and retires for service under Chapter 27 (commencing with
Section 24201) during a period of not more than 120 days or less
than 60 days, commencing no sooner than the effective date of the
formal action of the employer that shall specify the period.

begin insert

(2) The documentation required by this section is received by
the system no later than 30 calendar days after the last day of the
window period established in paragraph (1).

end insert begin delete

(2)

end delete

begin insert (3) end insert  (A) The employer transfers to the retirement fund an amount
determined by the Teachers’ Retirement Board to equal the
actuarial equivalent of the difference between the allowance the
member receives after receipt of service credit pursuant to this
section and the amount the member would have received without
the service credit and an amount determined by the Teachers’
Retirement Board to equal the actuarial equivalent of the difference
between the purchasing power protection supplemental payment
the member receives after receipt of service credit pursuant to this
section and the amount the member would have received without
the service credit. The payment for purchasing power shall be
deposited in the Supplemental Benefit Maintenance Account
established by Section 22400 and shall be subject to Section 24415.
The transfer to the retirement fund shall be made in a manner and
a time period, not to exceed eight years, that is acceptable to the
Teachers’ Retirement Board. The employer shall transfer the
required amount for all eligible employees who retire pursuant to
this section.

(B) Regular interest shall be charged on the unpaid balance if
the employer makes the transfer to the retirement fund in
installments.

begin delete

(3)

end delete

begin insert (4) end insert  The employer transmits to the retirement fund the
administrative costs incurred by the system in implementing this
section, as determined by the Teachers’ Retirement Board.

begin delete

(4)

end delete

begin insert (5) end insert  The employer has considered the availability of teachers or
academic employees to fill the positions that would be vacated
pursuant to this section.

(b) (1) The school district shall demonstrate and certify to the
county superintendent that the formal action taken would result in
a net savings to the district.

(2) The county superintendent shall certify to the Teachers’
Retirement Board that the result specified in paragraph (1) can be
demonstrated. The certification shall include, but not be limited
to, the information specified in subdivision (c) of Section 14502.1.

(3) The school district shall reimburse the county superintendent
for all costs to the county superintendent that result from the
certification.

(c) (1) The county office of education shall demonstrate and
certify to the Superintendent of Public Instruction that the formal
action taken would result in a net savings to the county office of
education.

(2) The Superintendent of Public Instruction shall certify to the
Teachers’ Retirement Board that the result specified in paragraph
(1) can be demonstrated. The certification shall include, but not
be limited to, the information specified in subdivision (c) of Section
14502.1.

(3) The Superintendent of Public Instruction may request
reimbursement from the county office of education for all
administrative costs that result from the certification.

(d) (1) The community college district shall demonstrate and
certify to the chancellor’s office that the formal action taken would
result in a net savings to the district.

(2) The chancellor shall certify to the Teachers’ Retirement
Board that the result specified in paragraph (1) can be
demonstrated. The certification shall include, but not be limited
to, the information specified in subdivision (c) of Section 84040.5.

(3) The chancellor may request reimbursement from the
community college district for all administrative costs that result
from the certification.

(e) The opportunity to be granted service credit pursuant to this
section shall be available to all members employed by the school
district, community college district, or county office of education
who meet the conditions set forth in this section.

(f) The amount of service credit shall be two years.

(g) Any member of the Defined Benefit Program who retires
under this part for service under Chapter 27 (commencing with
Section 24201) with service credit granted under this section and
who subsequently reinstates shall forfeit the service credit granted
under this section.

(h) Any member of the Defined Benefit Program who retires
under this part for service under Chapter 27 (commencing with
Section 24201) with service credit granted under this section and
who takes any job with the school district, community college
district, or county office of education that granted the member the
service credit less than five years after receiving the credit shall
forfeit the ongoing benefit he or she receives from the additional
service credit granted under this section.

(i) This section does not apply to any member otherwise eligible
if the member receives any unemployment insurance payments
arising out of employment with an employer subject to this part
within one year following the effective date of the formal action
under subdivision (a), or if the member is not otherwise eligible
to retire for service.

SEC. 7.  

Section 22900 of the Education Code is amended to
read:

22900.  

By accepting employment to perform creditable service,
a person consents to make contributions pursuant to begin delete Section 22901 end delete
begin insert Sections 22901 and 22901.7 end insert for service and compensation credited
under this part.

SEC. 8.  

Section 22903 of the Education Code is amended to
read:

22903.  

Notwithstanding Sections 22901, begin insert 22901.3, 22901.7, end insert
22956, and 23000, begin insert the state and end insert each school district, community
college district, county board of education, and county
superintendent of schools, may pick up, for the sole purpose of
deferring taxes, as authorized by Section 414(h)(2) of the Internal
Revenue Code of 1986 (26 U.S.C.A. Sec. 414(h)(2)) and Section
17501 of the Revenue and Taxation Code, all of the contributions
required to be paid under this part by a member of the Defined
Benefit Program, provided that the contributions are deducted from
the creditable compensation of the member.

SEC. 9.  

Section 22950 of the Education Code is amended to
read:

22950.  

(a) Employers shall contribute monthly to the system
8 percent of the creditable compensation upon which members’
contributions under this part are based.

(b) From the contributions required under subdivision (a), there
shall be deposited in the Teachers’ Retirement Fund an amount,
determined by the board, that is not less than the amount,
determined in an actuarial valuation of the Defined Benefit
Program pursuant to Section 22311.5, necessary to finance the
liabilities associated with the benefits of the Defined Benefit
Program over the funding period adopted by the board, after taking
into account the contributions made pursuant to Sections 22901,
begin delete 22951, and 22955. end delete begin insert 22901.7, 22950.5, 22951, 22955, and 22955.1. end insert

(c) The amount of contributions required under subdivision (a)
that is not deposited in the Teachers’ Retirement Fund pursuant
to subdivision (b) shall be deposited directly into the Teachers’
Health Benefits Fund, as established in Section 25930, and shall
not be deposited into or transferred from the Teachers’ Retirement
Fund.

(d) (1) Notwithstanding subdivisions (b) and (c), there may be
deposited into the Teachers’ Retirement Program Development
Fund, as established in Section 22307.5, from the contributions
required under subdivision (a), an amount determined by the board,
not to exceed the limit specified in paragraph (2).

(2) The balance of deposits into the Teachers’ Retirement
Program Development Fund, minus the subsequent transfer of
funds, with interest, into the Teachers’ Retirement Fund pursuant
to subdivision (e) of Section 22307.5, shall not exceed 0.01 percent
of the total of the creditable compensation of the fiscal year ending
in the immediately preceding calendar year upon which member’s
contributions to the Defined Benefit Program are based.

(3) The deposits described in this subdivision shall not be
deposited into, or transferred from, the Teachers’ Retirement Fund.

SEC. 10.  

Section 23001 of the Education Code is amended to
read:

23001.  

Each county superintendent, district superintendent,
chancellor of a community college district, or other employing
agency that reports directly to the system shall draw requisitions
for contributions required by Sections begin delete 22901 and 22950 end delete begin insert 22901,
22901.7, 22950, and 22950.5 end insert in favor of the State Teachers’
Retirement System, and the requisitions, when allowed and signed
by the county auditor, shall constitute a warrant against the county
treasury. The county superintendent, district superintendent,
chancellor of a community college district, or other employing
agency thereupon shall forward the warrants to the board in the
system’s headquarters office. The amounts received shall be
deposited immediately in the State Treasury to the Teachers’
Retirement Fund.

SEC. 11.  

Section 24114 of the Education Code is amended to
read:

24114.  

(a) A member receiving a disability retirement benefit
under this part may be employed or self-employed in any capacity,
notwithstanding Section 22132, but may not make contributions
to the retirement fund with respect to the Defined Benefit Program
or accrue service credit under this part based on earnings from any
employment.

(b) A member receiving a disability retirement benefit under
this part may earn in any one calendar year up to the limitation
specified in subdivision (c) without a reduction in his or her
disability retirement allowance.

(c) The limitation that shall apply to the earnings of a member
receiving a disability retirement benefit under this part shall be
fifteen thousand dollars ($15,000), in any one calendar year,
adjusted annually by the board effective each January 1 by the
amount of increase in the All Urban California Consumer Price
Index using December 1989 as the base.

(d) If a member receiving a disability retirement benefit under
this part earns in excess of the limitation specified in subdivision
(c) from all employment in any calendar year, notwithstanding
Section 22132, his or her retirement allowance shall be reduced
by the amount of the excess earnings. The amount of the reduction
begin delete may be equal to end delete begin insert in an individual month shall be no more than end insert the
monthly allowance payable begin delete but may end delete begin insert in that month, and the total
amount of the reduction shall end insert not exceed the amount of the annual
allowance payable under this part for the calendar year in which
the excess compensation was earned.

(e) The earnings limitation specified in this section does not
apply to a member receiving a disability retirement benefit under
this part who is participating in an approved rehabilitation program
pursuant to Section 24111.

(f) This section does not apply to a member receiving a disability
retirement benefit under this part who began receiving a disability
retirement allowance prior to October 16, 1992.

SEC. 12.  

Section 24214 of the Education Code, as amended
by Section 21 of Chapter 32 of the Statutes of 2014, 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
annualized 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 that are not wholly
or in part supported by state, local, or federal funds.

(f) (1) The limitation that shall apply to the compensation paid
in cash to the retired 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 system 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) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or
amended on or after January 1, 2014, the limitation in paragraph
(1) shall also apply to payments begin insert made for the performance of
retired member activities end insert , 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.

(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 begin delete may be equal to end delete begin insert in an individual month
shall be no more than end insert the monthly allowance begin delete payable but end delete begin insert payable
in that month, and the total amount of the reduction end insert 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:

(1) As a trustee appointed by the Superintendent pursuant to
Section 41320.1.

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

(3) As a receiver or trustee appointed by the state board pursuant
to Article 3.1 (commencing with Section 52055.57) of Chapter
6.1 of Part 28 of Division 4 of Title 2.

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

(i) The Superintendent, 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 retired 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) The amendments to this section enacted during the second
year of the 2011-12 Regular Session shall apply to compensation
paid during the 2012-13 and 2013-14 fiscal years.

(n) The amendments to this section enacted during the first year
of the 2013-14 Regular Session shall apply to compensation paid
on or after January 1, 2014.

(o) This section shall become inoperative on July 1, 2017, and,
as of January 1, 2018, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2018, deletes or
extends the dates on which it becomes inoperative and is repealed.

SEC. 13.  

Section 24214 of the Education Code, as amended
by Section 22 of Chapter 32 of the Statutes of 2014, 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
annualized 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 that are not wholly
or in part supported by state, local, or federal funds.

(f) (1) The limitation that shall apply to the compensation paid
in cash to the retired 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 system 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) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or
amended on or after January 1, 2014, the limitation in paragraph
(1) shall also apply to payments begin insert made for the performance of
retired member activities end insert , 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.

(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), the member’s
retirement allowance shall be reduced by the amount of the excess
compensation. The amount of the reduction begin delete may be equal to end delete begin insert in an
individual month shall be no more than end insert the monthly allowance
payable begin delete but may end delete begin insert in that month, and the total amount of the
reduction shall end insert 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 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, 2017.

SEC. 14.  

Section 24214.5 of the Education Code is amended
to read:

24214.5.  

(a) (1) Notwithstanding subdivision (f) of Section
24214, the postretirement compensation limitation that shall apply
to the compensation paid in cash to the retired 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 be zero dollars ($0) during the first 180 calendar
days after the most recent retirement of a member retired for service
under this part.

(2) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or
amended on or after January 1, 2014, the limitation in paragraph
(1) shall also apply to payments begin insert made for the performance of
retired member activities end insert , 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.

(b) If the retired 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 calendar 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 retired 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 begin delete may be equal to end delete begin insert in an
individual month shall be no more than end insert the monthly allowance
begin delete payable but may end delete begin insert payable in that month and the total amount of
the reduction shall end insert not exceed the amount of the allowance payable
during the first 180 calendar days, after a member retired for
service under this part.

(i) The amendments to this section enacted during the first year
of the 2013-14 Regular Session shall apply to compensation paid
on or after January 1, 2014.

SEC. 15.  

Section 26000 of the Education Code is amended to
read:

26000.  

The Legislature hereby finds and declares that the State
Teachers’ Retirement System Cash Balance Plan was created and
established on July 1, 1996, to provide a retirement plan for persons
employed begin insert by an employer offering the Cash Balance Plan,
excluding a community college district, end insert to perform creditable
service for less than 50 percent of the full-time equivalent for the
position begin insert , or employed by a community college district offering the
Cash Balance Plan to perform creditable service on a temporary
basis pursuant to Section 87474, 87478, 87480, 87481, 87482, or
87482.5, or employed by an employer offering the Cash Balance
Plan to perform creditable service as a substitute employee end insert . The
persons eligible for the Cash Balance Plan were excluded from
mandatory membership in the State Teachers’ Retirement System
Defined Benefit Plan. Both plans are administered by the Teachers’
Retirement Board. Because both plans were intended to provide
for the retirement of teachers and other persons employed in
connection with the public schools of this state and schools
supported by this state, a merger of these two plans is now hereby
made for the purpose of establishing a single retirement plan that
shall be known and may be cited as the State Teachers’ Retirement
Plan consisting of the different benefit programs set forth in this
part and Part 13 (commencing with Section 22000). The plan shall
be administered by the Teachers’ Retirement Board as set forth in
this part and Part 13 (commencing with Section 22000). As a result
of this merger, a Cash Balance Benefit Program will be provided
under the State Teachers’ Retirement Plan and that program is set
forth in this part.

The governing board of a school district, community college
district, or county office of education may, by formal action, elect
to provide the benefits of the Cash Balance Benefit Program under
this part for their employees.

SEC. 16.  

Section 26002.5 of the Education Code is amended
to read:

26002.5.  

Except as excluded in subdivision (d) of Section
26807.5 or subdivision begin delete (d) end delete begin insert (c) end insert of Section 26906.5, a person who
is the registered domestic partner of a member, as established
pursuant to Section 297 or 299.2 of the Family Code, shall be
treated in the same manner as a “spouse,” as defined in Section
26140.

SEC. 17.  

Section 26132 of the Education Code is amended to
read:

26132.  

“Participant” means a person who has performed
creditable service subject to coverage by the Cash Balance Benefit
begin delete Program, end delete begin insert Program end insert and who has contributions credited under the
Cash Balance Benefit Program or is receiving an annuity under
the Cash Balance Benefit Program by reason of creditable service
begin insert or has not yet met the conditions of subdivision (b) of Section
26806 end insert .

SEC. 18.  

Section 26142.5 is added to the Education Code, to
read:

26142.5.  

“System’s headquarters office” means the office
building established as the permanent headquarters facility for the
system, pursuant to Section 22375.

SEC. 19.  

Section 26400 of the Education Code is amended to
read:

26400.  

(a)  begin insert (1) end insert begin insert   end insert A person employed on a part-time basis by begin delete a
school district or county office of education end delete begin insert an employer, excluding
community college districts, end insert to perform creditable service for less
than 50 percent of each full-time position shall become a participant
on the later of the first day that creditable service is performed for
an employer that provides the Cash Balance Benefit Program or
the effective date of the employer’s governing board’s action to
provide the Cash Balance Benefit Program, provided that creditable
service is not performed for the same employer with whom the
person is subject to mandatory membership in the Defined Benefit
begin delete Program. end delete begin insert Program, and that the person has not made an election
pursuant to subdivision (d). end insert

begin insert

(2) If the participant’s basis of employment with an employer,
excluding community college districts, that provides the Cash
Balance Benefit Program changes to employment to perform
creditable service for 50 percent or more of the full-time position
during one school year with the same employer, creditable service
performed for that employer shall no longer be covered under the
Cash Balance Benefit Program as of the last day of the pay period
in which the change in the participant’s basis of employment
occurred. Creditable service performed for that employer shall be
subject to coverage by the Defined Benefit Program as of the first
day of the pay period following the change in the participant’s
basis of employment.

end insert

(b)  begin insert (1) end insert begin insert   end insert A person employed on a temporary basis begin insert pursuant to
Section 87474, 87478, 87480, 87481, 87482, or 87482.5 end insert by a
community college district, who is not subject to mandatory
membership in the Defined Benefit Program pursuant to Section
begin insert 22501, end insert 22502 or 22504 for each position with the same employer,
shall become a participant on the later of the first day that creditable
service is performed for an employer that provides the Cash
Balance Benefit Program or the effective date of the employer’s
governing board’s action to provide the Cash Balance Benefit
Program begin insert , provided that the person has not made an election
pursuant to subdivision (d) end insert .

begin insert

(2) If the participant’s basis of employment with a community
college district changes to employment that is subject to mandatory
membership in the Defined Benefit Program pursuant to Section
22501, 22502, or 22504 during one school year with the same
employer, creditable service performed for that employer shall no
longer be covered under the Cash Balance Benefit Program as of
the last day of the pay period in which the change in the
participant’s basis of employment occurred. Creditable service
performed for that employer shall be subject to coverage by the
Defined Benefit Program as of the first day of the pay period
following the change in the participant’s basis of employment.

end insert begin insert

(c) (1) Any person employed to perform creditable service as
a substitute employee for an employer shall become a participant
on the later of the first day that creditable service is performed
for an employer that provides the Cash Balance Benefit Program
or the effective date of the employer’s governing board’s action
to provide the Cash Balance Benefit Program, provided that
creditable service is not performed for the same employer with
whom the person is subject to mandatory membership in the
Defined Benefit Program, and that the person has not made an
election pursuant to subdivision (d).

end insert begin insert

(2) If the participant’s basis of employment as a substitute
employee for an employer changes to employment that is subject
to mandatory membership in the Defined Benefit Program pursuant
to Section 22501, 22502, or 22504 during one school year with
the same employer, creditable service performed for that employer
shall no longer be covered under the Cash Balance Benefit
Program as of the last day of the pay period in which the change
in the participant’s basis of employment occurred. Creditable
service performed for that employer shall be subject to coverage
under the Defined Benefit Program as of the first day of the pay
period following the change in the participant’s basis of
employment.

end insert begin delete

(c)

end delete

begin insert (d) end insert  If the employer’s governing board’s action to provide the
Cash Balance Benefit Program gives employees the right to elect
coverage under begin delete social security end delete begin insert the federal Social Security Act end insert or
an alternative retirement plan offered by the employer in addition
to the Cash Balance Benefit Program, the employee may elect
within 60 calendar days of the latest of the first day that creditable
service is performed, the date of the employer’s governing board’s
action to provide the Cash Balance Benefit Program, or the
effective date of the employer’s governing board’s action to provide
the Cash Balance Benefit Program to be covered by begin delete social security end delete
begin insert the federal Social Security Act end insert or to participate in the alternative
retirement plan in lieu of participating in the Cash Balance Benefit
Program. An election may not preclude an employee from
participating in the Cash Balance Benefit Program at a later date
so long as the Cash Balance Benefit Program is provided by the
employer and the employee is eligible to participate in the Cash
Balance Benefit Program.

begin delete

(d)

end delete

begin insert (e) end insert  If subdivision begin delete (c) end delete begin insert (d) end insert is applicable, the employer shall inform
employees pursuant to subdivision (c) of Section 26300 of their
right to make an election and the election shall be made on a
properly executed form provided by the system and filed with the
employer. The employer shall retain a copy of the employee’s
signed election form and mail the original election form to the
begin insert system’s end insert headquarters begin delete office of the system as described in Section
22375. end delete begin insert office. end insert The election shall become effective on the later of
the first day that creditable service is performed or the effective
date of the employer’s governing board’s action to provide the
Cash Balance Benefit Program.

begin delete

(e) If the participant’s basis of employment with a school district
or county office of education that provides the Cash Balance
Benefit Program changes to employment to perform creditable
service for 50 percent or more of the full-time position during one
school year with the same employer, creditable service performed
for that employer shall no longer be covered under the Cash
Balance Benefit Program. Creditable service performed for that
employer shall be subject to coverage by the Defined Benefit
Program as of the first day of the pay period following the change
in the participant’s basis of employment.

(f) If the participant’s basis of employment with a community
college district changes to employment that is subject to mandatory
membership in the Defined Benefit Program pursuant to Section
22501, 22502, or 22504 during one school year with the same
employer, creditable service performed for that employer shall no
longer be covered under the Cash Balance Benefit Program.
Creditable service performed for that employer shall be subject to
coverage by the Defined Benefit Program as of the first day of the
pay period following the change in the participant’s basis of
employment.

(g)

end delete

begin insert (f) end insert  If the governing board of an employer subsequently provides,
in addition to the Cash Balance Benefit Program, begin delete social security end delete
begin insert federal Social Security Act end insert coverage, a participant covered by the
Cash Balance Benefit Program who is performing creditable service
for that employer may elect to be covered by begin delete social security end delete begin insert the
federal Social Security Act end insert in lieu of the Cash Balance Benefit
Program. That participant’s election shall be made within 60
calendar days of the date the governing board acted to provide
coverage under begin delete social security end delete begin insert the federal Social Security Act end insert or
the effective date of the governing board’s action to provide begin insert federal
Social Security Act end insert coverage, whichever is later. An election under
this subdivision may not preclude an employee from participating
in the Cash Balance Benefit Program at a later date if the employee
is eligible to participate in the Cash Balance Benefit Program and
the employer provides the Cash Balance Benefit Program.

begin delete

(h)

end delete

begin insert (g) end insert  If the governing board of an employer provided begin delete social
security end delete begin insert federal Social Security Act end insert coverage with an effective
date prior to January 1, 2007, and the employer offered the Cash
Balance Benefit Program as of the effective date of the governing
board’s action to provide begin delete social security end delete begin insert federal Social Security
Act end insert coverage, a participant who was performing creditable service
for that employer may elect to be covered by begin delete social security end delete begin insert the
federal Social Security Act end insert in lieu of the Cash Balance Benefit
Program. The participant’s election shall be made on or after March
1, 2008, and on or before May 1, 2008. The election to participate
in begin delete social security end delete begin insert the federal Social Security Act end insert shall be effective
on July 1, 2008. An election under this subdivision may not
preclude an employee from participating in the Cash Balance
Benefit Program at a later date if the employee is eligible to
participate in the Cash Balance Benefit Program and the employer
provides the Cash Balance Benefit Program.

begin delete

(i)

end delete

begin insert (h) end insert  An election by an employee to terminate his or her
participation in the Cash Balance Benefit Program as described in
subdivision begin delete (g) or (h) end delete begin insert (f) or (g) end insert shall be made on a properly
executed form provided by the system and filed with the employer.
The employer shall retain a copy of the employee’s signed election
form and mail the original election form to the headquarters office
of the begin delete system, as described in Section 22375. end delete begin insert system. end insert

SEC. 20.  

Section 26506 of the Education Code is amended to
read:

26506.  

(a) Except as provided in subdivision (b), participants
shall not make voluntary pretax or post-tax contributions into the
Cash Balance Benefit Program, nor shall participants redeposit
amounts previously distributed from employee accounts or
employer accounts.

(b) Pursuant to terms and conditions established by the board,
participants may be permitted to transfer funds from eligible
retirement plans into the Cash Balance Benefit Program to the
extent that the transfers are allowable under and are completed in
a manner prescribed by applicable federal and state laws, and any
related regulations.

(c) Funds deposited with the Cash Balance Benefit Program by
a participant pursuant to subdivision (b) shall be credited to the
participant and identified separately from credits in the participant’s
employee and employer accounts. Funds so deposited shall be
begin delete credited with interest pursuant to Section 26604. end delete begin insert treated as credits
to the participant’s employee account for all other purposes under
this part. end insert

SEC. 21.  

Section 26806 of the Education Code is amended to
read:

26806.  

begin insert (a) end insert begin insert   end insert The normal form of retirement benefit under this
part is a lump-sum payment. Upon distribution of the lump-sum
payment to the participant, no further benefits shall be payable
from the plan with respect to the Cash Balance Benefit Program.

begin insert

(b) The lump-sum payment in subdivision (a) shall not be
payable before 180 calendar days have elapsed following the date
of termination of employment.

end insert begin insert

(c) Except as provided in subdivision (d) or subdivision (e) of
Section 26812, the application for the retirement benefit in the
form of a lump-sum payment shall be automatically canceled if
the participant performs creditable service within 180 calendar
days following the date of termination of employment.

end insert begin insert

(d) Subdivision (c) does not apply if the participant has reached
that age at which the Internal Revenue Code of 1986 requires a
distribution of benefits. A participant who has reached this age
shall receive a distribution commencing on the earlier of the date
that the participant has met the conditions of subdivision (b) or
the conditions of subdivision (c) of Section 26004.

end insert

SEC. 22.  

Section 26807.6 of the Education Code is amended
to read:

26807.6.  

(a) A participant who retired and elected an annuity
pursuant to Section 26807 may elect to change annuities, subject
to all of the following:

(1) A participant who elected a single life annuity with or
without a cash refund feature or a period certain annuity may not
change his or her annuity.

(2) A participant who elected an annuity under paragraph (3)
or (4) of subdivision (b) of Section 26807 may elect an annuity
under paragraph (3) of subdivision (a) of Section 26807.5.

(3) The election of the participant under this section is made on
or after January 1, 2007, and prior to July 1, 2007.

(4) The participant designates the same annuity beneficiary that
was designated under the prior annuity elected by the participant,
if the annuity and annuity designation were effective on December
31, 2006.

(5) The annuity beneficiary is not afflicted with a known
terminal illness and the participant declares, under penalty of
perjury under the laws of this state, that to the best of his or her
knowledge, the annuity beneficiary is not afflicted with a known
terminal illness.

(6) The annuity beneficiary has not predeceased the participant
as of the effective date of the change in the annuity by the
participant.

(b) The change in the annuity by the participant shall be effective
on the date the election is signed, provided that the election is on
a properly executed form provided by the system and that election
is received at the system’s headquarters office begin delete as described in
Section 22375 end delete within 30 days after the date the election is signed.

(c) After receipt of a participant’s election document, the system
shall mail an acknowledgment notice to the participant that sets
forth the new annuity elected by the participant.

(d) If the participant and the annuity beneficiary are alive and
not afflicted with a known terminal illness, a participant may cancel
the election to change annuities and elect to receive the benefit
according to the preexisting annuity election. After cancellation,
the participant may elect to make a one-time change from the
preexisting annuity to any other annuity provided by and subject
to the restrictions of paragraph (1), (2), (3), or (4) of subdivision
(a). The cancellation or the cancellation and one-time change shall
be made on a properly executed form provided by the system and
shall be received at the system’s headquarters office begin delete as described
in Section 22375 end delete no later than 30 calendar days following the date
of mailing of the acknowledgment notice. If the participant elects
to make the one-time change provided by this subdivision, the
change shall be effective as of the participant’s signature date on
the initial election to change.

(e) If the system is unable to mail an acknowledgment notice
to the participant on or before June 1, 2007, or prior to the end of
the election period, provided that the participant and the annuity
beneficiary are alive and not afflicted with a known terminal
illness, the system shall allow a participant to cancel the election
to change annuities and elect to receive the benefit according to
the preexisting annuity election. After cancellation, the participant
may elect to make a one-time change from the preexisting annuity
to any other annuity provided by and subject to the restrictions of
paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation
or the cancellation and one-time change may be made after the
end of the election period if it is made on a properly executed form
provided by the system and is received at the system’s headquarters
office begin delete as described in Section 22375 end delete no later than 30 calendar days
following the date of mailing of the acknowledgment notice. If
the participant elects to make the one-time change provided by
this subdivision, the change shall be effective as of the participant’s
signature date on the initial election to change.

(f) If the participant elects to change his or her annuity as
described in subdivision (a) or (d), the participant’s annuity shall
be modified in a manner determined by the board to prevent any
additional liability to the plan.

(g) References to a “participant” in paragraph (1) of subdivision
(a) shall apply to the nonmember spouse.

(h) The participant shall not change annuities in derogation of
a spouse’s or former spouse’s community property rights as
specified in a court order.

SEC. 23.  

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
annualized 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) (1) If all of the following apply to a participant retired for
service under this part, the participant’s annuity shall be reduced
by the amount of the compensation:

(A) The participant is receiving an annuity under the Cash
Balance Benefit Program.

(B) The participant is below normal retirement age or retired
on or after January 1, 2014.

(C) The participant earns compensation paid in cash for
performing retired participant activities, excluding reimbursements
paid by an employer for expenses incurred by the participant in
which payment of the expenses by the participant is substantiated.

(2) The reduction in paragraph (1) shall only be made for
compensation paid in cash during the first 180 calendar days after
a participant retired for service under this part. The amount of the
reduction begin delete may be equal to end delete begin insert in an individual month shall be no more
than end insert the monthly annuity payable begin delete but end delete begin insert in that month and the total
amount of the reduction end insert shall not exceed the amount of the annuity
payable during the first 180 calendar days after a participant retired
for service under this part. For written agreements pertaining to
the performance of retired participant activities entered into,
extended, renewed, or amended on or after January 1, 2014, the
reduction in paragraph (1) shall also be made for payments begin insert made
for the performance of retired participant activities end insert , 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.

begin insert

(3) Subject to the limitation described in paragraph (4), if all
of the following apply to a participant retired for service under
this part, the participant’s application for the retirement benefit
shall automatically be canceled:

end insert begin insert

(A) The participant is anticipated to receive the retirement
benefit in the form of a lump-sum payment.

end insert begin insert

(B) The participant earns compensation for performing
creditable service within 180 calendar days following the date of
termination of employment.

end insert begin insert

(4) Paragraph (3) does not apply if the participant has reached
that age at which the Internal Revenue Code of 1986 requires a
distribution of benefits. A participant who has reached that age
shall receive a distribution commencing on the earlier of the date
that the participant has met the conditions of subdivision (b) of
Section 26806 or the conditions of subdivision (c) of Section 26004.

end insert

(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 shall 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).

SEC. 24.  

Section 26906.6 of the Education Code is amended
to read:

26906.6.  

(a) A participant who is disabled and elected an
annuity pursuant to Section 26906 may elect to change annuities,
subject to all of the following:

(1) A participant who elected a single life annuity with or
without a cash refund feature or a period certain annuity may not
change his or her annuity.

(2) A participant who elected an annuity under paragraph (3)
or (4) of subdivision (b) of Section 26906 may elect an annuity
under paragraph (3) of subdivision (a) of Section 26906.5.

(3) The election by the participant under this section is made
on or after January 1, 2007, and prior to July 1, 2007.

(4) The participant designates the same annuity beneficiary that
was designated under the prior annuity elected by the participant,
if the annuity and the annuity beneficiary designation were effective
on December 31, 2006.

(5) The annuity beneficiary is not afflicted with a known
terminal illness and the participant declares, under penalty of
perjury under the laws of this state, that to the best of his or her
knowledge, the annuity beneficiary is not afflicted with a known
terminal illness.

(6) The annuity beneficiary has not predeceased the participant
as of the effective date of the change in the annuity by the
participant.

(b) The change in the annuity by the participant shall be effective
on the date the election is signed, provided that the election is on
a properly executed form provided by the system and that election
is received at the system’s headquarters office begin delete as described in
Section 22375 end delete within 30 days after the date the election is signed.

(c) After receipt of a participant’s election document, the system
shall mail an acknowledgment notice to the participant that sets
forth the new annuity elected by the participant.

(d) If the participant and the annuity beneficiary are alive and
not afflicted with a known terminal illness, a participant may cancel
the election to change annuities and elect to receive the benefit
according to the preexisting annuity election. After cancellation,
the participant may elect to make a one-time change from the
preexisting annuity to any other annuity provided by and subject
to the restrictions of paragraph (1), (2), (3), or (4) of subdivision
(a). The cancellation or the cancellation and one-time change shall
be made on a properly executed form provided by the system and
shall be received at the system’s headquarters office begin delete as described
in Section 22375 end delete no later than 30 calendar days following the date
of mailing of the acknowledgment notice. If the participant elects
to make the one-time change provided by this subdivision, the
change shall be effective as of the participant’s signature date on
the initial election to change.

(e) If the system is unable to mail an acknowledgment notice
to the participant on or before June 1, 2007, or prior to the end of
the election period, provided that the participant and the annuity
beneficiary are alive and not afflicted with a known terminal
illness, the system shall allow a participant to cancel the election
to change annuities and elect to receive the benefit according to
the preexisting annuity election. After cancellation, the participant
may elect to make a one-time change from the preexisting annuity
to any other annuity provided by and subject to the restrictions of
paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation
or the cancellation and one-time change may be made after the
end of the election period if it is made on a properly executed form
provided by the system and is received at the system’s headquarters
office begin delete as described in Section 22375 end delete no later than 30 calendar days
following the date of mailing of the acknowledgment notice. If
the participant elects to make the one-time change provided by
this subdivision, the change shall be effective as of the participant’s
signature date on the initial election to change.

(f) If the participant elects to change his or her annuity as
described in subdivision (a) or (d), the participant’s annuity shall
be modified in a manner determined by the board to prevent any
additional liability to the plan.

(g) The participant shall not change annuities in derogation of
a spouse’s or former spouse’s community property rights as
specified in a court order.

SEC. 25.  

Section 27100 of the Education Code is amended to
read:

27100.  

A participant may at any time designate or change the
designation of one or more primary beneficiaries and one or more
contingent beneficiaries to receive any lump-sum death benefit
that may be payable under the plan. The beneficiary for the
lump-sum death benefit under this part may be a person, trust, or
the estate of the participant. The beneficiary shall be designated
on a form prescribed by the system that is received in the system’s
headquarters begin delete office, as established pursuant to Section 22375, end delete
begin insert office end insert before the participant’s death.