Amended in Assembly May 27, 2016

Senate Bill No. 1352

Introduced by Committee on Public Employment and Retirement (Senators Pan (Chair), Beall, Hall, Moorlach, and Morrell)

February 19, 2016

An act to amend Sections 22106.1, begin insert 22115.2, end insert 22120, begin insert 22134, 22134.5, end insert 22508, 22508.5, 22509, 22515, begin insert 22664, end insert 22703, 22717, 22850, 22851, 22852, 22853, 22853.5, 22854, 24005, 24105, 24201.5, 24204, 24209, 24209.3, 24211, 24212, 24213, 24322, 24410, 24606, 25001, 25006, 26202, begin insert 26604, end insert 26808, 26810, 28000, 28001, and 28002 of, begin delete and end delete begin insert to amend, repeal, and add Sections 22905 and 26603 of, to add Section 22168.5 to, end insert to repeal begin insert Sections 22109.5 and 22136 of, and to repeal end insert and amend Section 22101.5 of, the Education Code, relating to state teachers’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

SB 1352, as amended, Committee on Public Employment and Retirement. 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 administrated by the Teachers’ Retirement Board. The Defined Benefit Program is funded by employer and employee contributions, as well as investment returns and state appropriations, which are deposited or credited to the Teachers’ Retirement Fund.

(1) Existing law authorizes a disabled member to apply for a disability allowance or a disability retirement if he or she has begin delete five end delete begin insert 5 end insert or more years of service and specified requirements are met. STRS provides retired and disabled members certain supplemental benefits, including those that maintain purchasing power up to a specified percent. Existing law prescribes base dates for purposes of applying postretirement benefit increases based on whether final compensation is used to calculate a service retirement upon termination of a disability allowance or if the disability allowance is continued, as specified. Existing law defines base allowance for these begin delete purposes end delete begin insert purposes. end insert

This bill would provide that definition of base allowance does not apply to provisions relating to base dates, as described above. The bill would, instead, revise the base date provisions to prescribe a method for their determination when applied to supplemental benefits and a disability allowance effective date is used.

begin insert

(2) Existing law defines a break in service for the purpose of defining a member’s final compensation and defines final compensation with respect to a member whose salary while an active member was reduced because of a reduction in school funds, as specified. Existing law provides that, for these purposes, periods in which a member’s salary was reduced may be aggregated, as specified.

end insert begin insert

This bill would repeal these provisions and revise definitions of final compensation to address breaks in service, including with reference to periods during which a member’s salary was reduced because of a reduction in school funds. The bill would define school term for these purposes. The bill would define final compensation for purposes of calculating a benefit that does not include service credit, which would include disability and family allowances. The bill, among other things, would also revise and clarify provisions relating to determining final compensation in connection with concurrent retirement when a member has concurrent membership in another retirement system. The bill would make various conforming changes in connection with these changes.

end insert begin delete

(2)

end delete

begin insert (3) end insert  Existing law authorizes members who become employed in specified capacities in positions that are covered by other retirement systems, or who perform service that may be excluded from coverage in certain respects, to elect coverage under the begin delete defined benefit program. end delete begin insert Defined Benefit Program. end insert These provisions prescribe requirements for making this election effective, generally providing that they be made on a form prescribed by the system begin delete with end delete begin insert within end insert 60 days of hire.

This bill would revise these requirements to require that the election forms be received by STRS, as specified, within 30 days of signature.

begin delete

(3)

end delete

begin insert (4) end insert  Federal law, the Uniformed Services Employment and Reemployment Rights begin delete Act, end delete begin insert Act of 1994, end insert requires pension plans to treat members who return from military service as if they did not have a break in service for purposes of certain provisions, which requirements are reflected in various provisions of the Teachers’ Retirement Law. Existing law establishes the Defined Benefit Supplement Program for the purpose of providing supplemental benefits to members whose earnings are in excess of specified amounts. 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.

This bill would make clarifying, conforming, and technical changes to reflect the requirements of federal law and specifically to account for its application to the Defined Benefit Supplement Program.

begin insert

(5) Existing law requires that specified member contributions and employer contributions be credited to a member’s individual account in the Defined Benefit Program or the Defined Benefit Supplement Program pursuant to the applicable provisions in the Teachers’ Retirement Law. Existing law requires the system to make a determination regarding the timing of the crediting of contributions relating compensation for creditable service in excess of one year. Existing law prescribes how these provisions become operative based on a computation to be made by the Superintendent of Public Instruction for the 2001-02 fiscal year.

end insert begin insert

This bill would repeal and reenact these provisions, as of July 1, 2018, eliminating obsolete language regarding their operation and establishing when contributions are credited without regard to a determination by the system.

end insert begin delete

(4)

end delete

begin insert (6) end insert  Existing law requires that disability allowances and disability retirement allowances become effective on a date designated by the member, subject to certain requirements, including that the date is later than the last day of creditable service for which compensation is payable.

This bill would revise the reference to creditable service to instead refer to the last day the member earned creditable compensation, as defined.

begin delete

(5)

end delete

begin insert (7) end insert  Existing law prescribes different methods of calculating a STRS service retirement, which depend on whether a member had previously received a disability allowance, disability retirement, or service retirement subsequent to which he or she reinstated in the system. Existing law identifies different methods of calculating service credit in this context, which may be applied to certain benefit enhancements such as that related to longevity. Existing law generally permits unused sick leave to be used for the purpose of calculating service credit, subject to a specified calculation.

This bill would provide, for purposes of the service retirements described above, that a certain amount of credited service that results from application of unused sick leave is to be applied to specified benefit enhancements. The bill would prohibit a member who elects a lump-sum retirement benefit from being eligible for specified disability benefits. The bill would prescribe a method for calculating service credit from unused sick leave for specified members.

begin delete

(6)

end delete

begin insert (8) end insert  Existing law requires amounts of benefits that cannot be paid because a member or beneficiary cannot be located be returned to the retirement fund. Existing law prohibits interest from accruing on returned warrants in payment of benefits and contributions that are drawn and canceled by the Controller.

This bill would prohibit the accruing of interest on payments rejected pursuant to electronic fund transfers.

begin delete

(7)

end delete

begin insert (9) end insert  Existing law permits a participant in the Cash Balance Benefit Program, who is employed while receiving an annuity under the program, to terminate the annuity and again make contributions to the program, subject to certain conditions, including that the participant has reached normal retirement age and has been receiving an annuity for at least a year.

This bill would revise the conditions pursuant to which an annuity may be terminated to eliminate the requirements that the participant has reached normal retirement age and has been receiving an annuity for at least a year, and prescribe administrative provisions.

begin insert

(10) Existing law requires that employee contributions and employer contributions for the Cash Balance Benefit Program be credited to their respective accounts as of the first working day following the date all contributions to fully satisfy the contribution report, as specified, are received by the system.

end insert begin insert

This bill, on and after July 1, 2018, would require that employee contributions and employer contributions be credited to their respective accounts as of the day contributions are required to be transmitted to the plan. The bill would also make a conforming change.

end insert begin delete

(8)

end delete

begin insert (1 end insert begin insert 1) end insert  This bill would also make other technical, clarifying, and conforming changes.

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 22101.5 of the Education Code, as added
by Section 3 of Chapter 74 of the Statutes of 2000, is repealed.

SEC. 2.  

Section 22101.5 of the Education Code, as added by
Section 1 of Chapter 1021 of the Statutes of 2000, is amended to
read:

22101.5.  

“Accumulated Defined Benefit Supplement account
balance” means the amount of credits equal to the sum of member
contributions, the member contributions picked up by an employer,
employer contributions, interest credited pursuant to Section 25005
and additional earnings credited pursuant to Section 25006.

SEC. 3.  

Section 22106.1 of the Education Code is amended to
read:

22106.1.  

For the purposes of determining supplemental benefits
pursuant to Sections 24412 and 24415, except as provided under
Section 24410, “base allowance” means a monthly allowance under
the Defined Benefit Program prior to all allowance increases by
this part and after modification for an option, if applicable.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 22109.5 of the end insert begin insert Education Code end insert begin insert is repealed. end insert

begin delete

22109.5.  

“Break in service,” for purposes of determining a
member’s final compensation, means:

(a) With respect to service of a member employed as a full-time
employee and service performed by a member employed as a
part-time employee, any period of time covering a pay period
during which a member is on an unpaid leave of absence or a pay
period in which a member has not performed any creditable service.

(b) For a member who has been employed in a substitute
position:

(1) And has a change in assignment during a school year to a
full-time or part-time position, a break in service is determined on
the same basis as for the full-time or part-time employment during
the same school year.

(2) For less than 50 percent of their teaching career for which
service is credited, a break in service is determined on the same
basis as full-time employment.

(3) For more than 50 percent of their teaching career for which
service is credited, a break in service is any period of time within
a school year for which compensation is not paid and service is
not credited.

(c) If a member commenced performing service at the beginning
of a school term, the months not recognized as part of the school
term are not a break in service; however, if the member commenced
performing service after the school term began, or did not complete
the school term, the months not recognized as part of the school
term are a break in service. The school term shall be no less than
the days or hours specified as full time in Section 22138.5.

(d) Earnable salaries for a full pay period, but not beyond the
effective date of retirement, shall be used in determining final
compensation when the member performed service within that pay
period.

end delete

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 22115.2 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22115.2.  

“Concurrent membership” means membership in the
Defined Benefit Program by an individual who is credited with
service that is not used as a basis for benefits under any other public
retirement system and is also a member of the California Public
Employees’ Retirement System, the Legislators’ Retirement
System, the University of California Retirement System, county
retirement systems established under Chapter 3 (commencing with
Section 31450) of Part 3 of Division 4 of Title 3 of the Government
Code, or the San Francisco Employees’ Retirement System. A
member with concurrent membership shall have the right to the
following:

(a) Have final compensation determined pursuant to subdivision
begin delete (c) end delete begin insert (d) end insert of Section 22134 or subdivision begin delete (c) end delete begin insert (d) end insert of Section 22134.5.

(b) Redeposit accumulated retirement contributions pursuant
to Section 23201.

(c) Apply for retirement pursuant to paragraph (2) of subdivision
(a) of Section 24201.

begin delete SEC. 4. end delete

begin insert SEC. 6. end insert   

Section 22120 of the Education Code is amended to
read:

22120.  

“Credited interest” means interest that is credited to
active members’ and inactive members’ accumulated retirement
contributions and accumulated annuity deposit contributions at a
rate set annually by the board as a plan amendment with respect
to the Defined Benefit Program.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 22134 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22134.  

(a) “Final compensation” means the highest average
annual compensation earnable, as defined by Section 22115, by a
member during any period of 36 consecutive months begin insert of service end insert
while an active member of the Defined Benefit Program or time
during which he or she was not a member but for which the
member has received credit under the Defined Benefit Program,
except time that was so credited for service performed outside this
state prior to July 1, 1944.

(b) For purposes of this section, periods of service separated by
breaks in service begin insert or by periods in which a member’s salary was
reduced because of a reduction in school funds as certified by the
employer end insert may be aggregated, if the periods of service are
consecutive except for the begin delete breaks. end delete begin insert breaks or periods of salary
reduction. end insert

begin insert

(c) The following shall be considered periods of service for the
purpose of determining final compensation:

end insert begin insert

(1) The full pay period if the member earns creditable
compensation within that pay period, but not beyond the benefit
effective date except as provided in paragraph (3).

end insert begin insert

(2) The months of the school year preceding the school term if
the member earns creditable compensation during the first pay
period of that school term.

end insert begin insert

(3) The months of the school year following the school term if
the member earns creditable compensation during the last pay
period of that school term.

end insert begin insert

(4) Any period that is excluded from the school term if a member
earns creditable compensation during the pay periods immediately
preceding and immediately following the excluded period.

end insert begin delete

(c)

end delete

begin insert (d) end insert  The determination of final compensation of a member who
is eligible for concurrent retirement as defined in Section 22115.5
shall take into consideration the compensation begin delete earnable end delete begin insert a person
could earn for services rendered on a full-time basis end insert while a
member of begin delete any other system, end delete begin insert end insert begin insert a retirement system with which the
member has concurrent membership, as defined in Section 22115.2, end insert
provided that both of the following exist:

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

(2) Retirement begin insert for service end insert under the Defined Benefit Program
is concurrent with the member’s retirement begin insert for service end insert under any
other system pursuant to Section 22115.5.

begin delete

(d)

end delete

begin insert (e) end insert  The begin insert creditable end insert compensation begin delete earnable end delete for the first begin delete position
in which California service was credited end delete begin insert end insert begin insert school year in which a
member earned creditable compensation end insert shall be used when
additional begin insert months of creditable end insert compensation begin delete earnable is end delete begin insert are end insert
required for the purpose of determining final begin delete compensation under
Section 23805. end delete begin insert compensation. end insert

begin delete

(e)

end delete

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

begin delete

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

end delete begin insert

(g) For purposes of calculating a benefit that does not include
service credit, final compensation shall be the highest average
annual creditable compensation earned by a member during any
period of 36 consecutive months of service, excluding compensation
for which contributions are credited to the Defined Benefit
Supplement Program. Final compensation determined pursuant
to this subdivision shall not exceed the amount determined pursuant
to subdivision (a).

end insert begin delete

(g)

end delete

begin insert (h) end insert  The amendment of former Section 22127 made by Chapter
782 of the Statutes of 1982 does not constitute a change in, but is
declaratory of, the existing law.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 22134.5 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22134.5.  

(a) Notwithstanding Section 22134, “final
compensation” means the highest average annual compensation
earnable, as defined in Section 22115, by a member during any
period of 12 consecutive months begin insert of service end insert while an active member
of the Defined Benefit Program or time during which he or she
was not a member but for which the member has received credit
under the Defined Benefit Program, except time that was so
credited for service performed outside this state prior to July 1,
1944.

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

begin insert

(c) The following shall be considered periods of service for the
purpose of determining final compensation:

end insert begin insert

(1) The full pay period if the member earns creditable
compensation within that pay period, but not beyond the benefit
effective date except as provided in paragraph (3).

end insert begin insert

(2) The months of the school year preceding the school term if
the member earns creditable compensation during the first pay
period of that school term.

end insert begin insert

(3) The months of the school year following the school term if
the member earns creditable compensation during the last pay
period of that school term.

end insert begin insert

(4) Any period that is excluded from the school term if a member
earns creditable compensation during the pay periods immediately
preceding and immediately following the excluded period.

end insert begin delete

(c)

end delete

begin insert (d) end insert  The determination of final compensation of a member who
is eligible for concurrent retirement as defined in Section 22115.5
shall take into consideration the compensation begin delete earnable end delete begin insert a person
could earn for services rendered on a full-time basis end insert while a
member of begin delete any other system, end delete begin insert a retirement system end insert begin insert with which the
member has concurrent membership, as defined in Section 22115.2, end insert
provided that both of the following exist:

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

(2) Retirement begin insert for service end insert under the Defined Benefit Program
is concurrent with the member’s retirement begin insert for service end insert under any
other system pursuant to Section 22115.5.

begin delete

(d)

end delete

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

begin delete

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

end delete begin insert

(f) For purposes of calculating a benefit that does not include
service credit, final compensation shall be the highest average
annual creditable compensation earned by a member during any
period of 12 consecutive months of service, excluding compensation
for which contributions are credited to the Defined Benefit
Supplement Program. Final compensation determined pursuant
to this subdivision shall not exceed the amount determined pursuant
to subdivision (a).

end insert begin delete

(f)

end delete

begin insert (g end insert begin insert ) end insert  This section shall apply to the following:

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

(A) Section 22714.

(B) Section 22715.

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

(D) Section 22826.

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

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

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 22136 of the end insert begin insert Education Code end insert begin insert is repealed. end insert

begin delete

22136.  

(a) “Final compensation” with respect to a member
whose salary while an active member was reduced because of a
reduction in school funds as certified by the employer means the
highest average annual compensation earnable, as defined by
Section 22115, by the member during any 36 months while
employed to perform creditable service subject to coverage by the
Defined Benefit Program.

(b) For the purposes of this section, periods of service separated
by breaks in service or periods in which a member’s salary was
reduced may be aggregated, if the periods of service are
consecutive except for the breaks or periods of the salary reduction.

end delete

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 22168.5 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 22168.5. end insert   

“School term” means a minimum period of 35 weeks
beginning the first day and ending the last day creditable service
is required to be performed by a member employed on a full-time
basis, excluding any period that has been excluded pursuant to a
publicly available written contractual agreement. The school term
shall also be the same for a member who is not employed on a
full-time basis who is performing the same duties as a member
employed on a full-time basis.

end insert

begin delete SEC. 5. end delete

begin insert SEC. 11. end insert   

Section 22508 of the Education Code is amended to
read:

22508.  

(a) A member who becomes employed by the same or
a different school district or community college district, or a county
superintendent, or who becomes employed by the state in a position
described in subdivision (b), to perform service that requires
membership in a different public retirement system, and who is
not excluded from membership in that public retirement system,
may elect to have that service subject to coverage by the Defined
Benefit Program of this plan and excluded from coverage by the
other public retirement system. If that election is made, the service
performed for the employer after the date of hire shall be
considered creditable service for purposes of this part.

(b) Subdivision (a) shall apply to a member who becomes
employed by the state only if the member is also one of the
following:

(1) Represented by a state bargaining unit that represents
educational consultants, professional educators, or librarians
employed by the state.

(2) Excluded from the definition of “state employee” in
subdivision (c) of Section 3513 of the Government Code, but
performing, supervising, or managing work similar to work
performed by employees described in paragraph (1).

(3) In a position not covered by civil service and in the executive
branch of government, but performing, supervising, or managing
work similar to work performed by employees described in
paragraph (1).

(c) (1) A member of the Public Employees’ Retirement System
described in paragraph (2) who is subsequently employed to
perform creditable service requiring coverage by the Defined
Benefit Program of this plan may elect to have that subsequent
service subject to coverage by the Public Employees’ Retirement
System and excluded from coverage by the Defined Benefit
Program pursuant to Section 20309 of the Government Code. If
the election is made, creditable service performed for the employer
after the date of hire shall be subject to coverage by the Public
Employees’ Retirement System.

(2) This subdivision shall apply to a member of the Public
Employees’ Retirement System who either (A) is employed by a
school district, community college district, a county superintendent,
or the State Department of Education or (B) has at least five years
of credited service under the system.

(d) An election made by a member pursuant to this section shall
be irrevocable.

begin delete SEC. 6. end delete

begin insert SEC. 12. end insert   

Section 22508.5 of the Education Code is amended
to read:

22508.5.  

(a) Any person who is a member of the Defined
Benefit Program of the State Teachers’ Retirement Plan employed
by a community college district who subsequently is employed by
the Board of Governors of the California Community Colleges to
perform duties that are subject to membership in a different public
retirement system may elect to have that service subject to coverage
by the Defined Benefit Program of this plan and excluded from
coverage by the other public retirement system. Only a person who
has achieved plan vesting is eligible to elect to continue as a
member of the program.

(b) A member of the Public Employees’ Retirement System
who is employed by the Board of Governors of the California
Community Colleges who subsequently is employed by a
community college district to perform creditable service subject
to coverage under the Defined Benefit Program, may elect to have
that service subject to coverage by the Public Employees’
Retirement System and excluded from coverage under the Defined
Benefit Program pursuant to Section 20309 of the Government
Code.

(c) This section shall apply to changes in employment effective
on or after January 1, 1998.

begin delete SEC. 7. end delete

begin insert SEC. 13. end insert   

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 made in
writing on a form prescribed by the system within 60 days from
the date of hire in the position requiring membership in the other
public retirement system and shall be received at the system’s
headquarters office within 30 days after the date begin delete or end delete begin insert of end insert the member’s
signature. A copy of the election shall be filed with the other public
retirement system.

(c) Any election made pursuant to subdivision (c) 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.

(d) 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.

begin delete SEC. 8. end delete

begin insert SEC. 14. end insert   

Section 22515 of the Education Code is amended to
read:

22515.  

(a) Persons excluded from membership pursuant to
Sections 22601.5, 22602, and 22604 may elect membership in the
Defined Benefit Program at any time while employed to perform
creditable service subject to coverage under that program.

(b) The election shall be in writing on a form prescribed by this
system and shall be received at the system’s headquarters office
within 30 days after the date of the member’s signature and prior
to submission of contributions. Membership in the Defined Benefit
Program shall become effective as of the first day of the pay period
following the election. The election is irrevocable and shall remain
in effect until the member terminates employment and receives a
refund of accumulated retirement contributions.

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

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert Section 22664 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22664.  

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

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

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

(2) The nonmember spouse has at least two and one-half years
of credited service in his or her separate account.

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

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

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

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

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

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

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

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

 

Age at Retirement	Percentage
60¼	2.033
60½	2.067
60¾	2.10
61	2.133
61¼	2.167
61½	2.20
61¾	2.233
62	2.267
62¼	2.30
62½	2.333
62¾	2.367
63 and over	2.40

 

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

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

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

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

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

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

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

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

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

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

begin delete SEC. 9. end delete

begin insert SEC. 16. end insert   

Section 22703 of the Education Code is amended to
read:

22703.  

(a) Service shall be credited to the Defined Benefit
Program, except as provided in subdivision (b).

(b) A member’s creditable service that exceeds 1.000 in a school
year shall not be credited to the Defined Benefit Program.
Commencing July 1, 2002, contributions by the employer and the
member that are deposited in the Teachers’ Retirement Fund for
creditable compensation paid to the member for service that
exceeds 1.000 in a school year, exclusive of contributions pursuant
to Sections 22901.7, 22950.5, and 22951, shall be credited to the
Defined Benefit Supplement Program.

(c) In lieu of any other benefits provided by this part, any
member who performed service prior to July 1, 1956, shall receive
retirement benefits for that service at least equal to the benefits
that the member would have received for that service under the
provisions of this part as they existed on June 30, 1956. This
subdivision shall not apply to service that is credited in the San
Francisco Employees’ Retirement System.

(d) The amendments to this section made during the second
year of the 1999-2000 Regular Session shall become operative on
July 1, 2002, if the revenue limit cost-of-living adjustment
computed by the Superintendent of Public Instruction for the
2001-02 fiscal year is equal to or greater than 3.5 percent.
Otherwise the amendments to this section made during the second
year of the 1999-2000 Regular Session shall become operative on
July 1, 2003.

begin delete SEC. 10. end delete

begin insert SEC. 17. end insert   

Section 22717 of the Education Code is amended to
read:

22717.  

(a) A member shall be granted credit at service
retirement for each day of accumulated and unused sick leave days
for which full salary is allowed to which the member was entitled
on the member’s final day of employment with the employer or
employers subject to coverage by the Defined Benefit Program
during the last school year in which he or she earned creditable
compensation pursuant to Section 22119.2 or 22119.3. The system
shall accept certification from each employer with which the
member has accumulated sick leave days for that period, provided
this leave has not been transferred to another employer.

(b) The amount of service credit to be granted shall be
determined by dividing the number of days of accumulated and
unused sick leave days by the number of days of service the
employer requires the member’s class of employees to perform in
a school year during the member’s final year of creditable service
subject to coverage by the Defined Benefit Program, which shall
not be less than the minimum standard specified in Section
22138.5. The number of days shall not include school and legal
holidays. In no event shall the divisor be less than 175. For
members employed less than full time, the standards identified in
Section 22138.5 shall be considered as the minimum full-time
equivalent. For those standards identified in Section 22138.5 that
are applicable to teachers or instructors and that are expressed only
in terms of hours or instructional hours, the number of hours or
instructional hours shall be divided by six to determine the number
of days.

(c) For members who are last employed with the state in a
position in which there are no contracted base service days, the
amount of service credit to be granted shall be 0.004 years of
service for each day of unused sick leave certified to the board by
the employer. The certification shall report only those days of
unused sick leave that were accrued by the member during the
normal course of his or her employment subject to coverage by
the Defined Benefit Program.

(d) When the member has made application for service
retirement under this part, the employer shall certify to the board,
within 30 days following the effective date of the member’s service
retirement or the date the application for retirement is received by
the system’s headquarters office, whichever is later, the number
of days of accumulated and unused sick leave days that the member
was entitled to on the final day of employment. The board may
assess a penalty on delinquent reports.

(e) This section shall be applicable to any person who retires
on or after January 1, 1999.

begin delete SEC. 11. end delete

begin insert SEC. 18. end insert   

Section 22850 of the Education Code is amended to
read:

22850.  

(a) The Legislature hereby declares its intent to provide
benefits under this part to reemployed members who have been
absent from a position of employment subject to coverage under
the Defined Benefit Program to perform service in the uniformed
services of the United States in accordance with the Uniformed
Services Employment and Reemployment Rights Act of 1994
(Chapter 43 (commencing with Section 4301) of Title 38 of the
United States Code).

(b) The system shall comply with Chapter 43 (commencing
with Section 4301) of Title 38 of the United States Code, as that
chapter may be amended from time to time.

(c) “Service in the uniformed services,” for purposes of
determining plan vesting, eligibility for membership, and accrual
of benefits, means the performance of duty on a voluntary or
involuntary basis in a uniformed service under competent authority
and includes active duty, active duty for training, initial active duty
for training, inactive duty training, a period for which a member
is absent from a position of employment for the purpose of an
examination to determine the fitness of the member to perform
any duty, and the period of time following the actual service in
the uniformed service through the last day a member is eligible to
report back to work or to apply for reemployment as specified
under Section 1002.259 of Title 20 of the Code of Federal
Regulations.

(d) “Uniformed services” means the Armed Forces of the United
States of America, the Army National Guard and the Air National
Guard when engaged in active duty for training, inactive duty
training, or full-time National Guard duty, the commissioned corps
of the begin insert United States end insert Public Health Service, and any other category
of persons designated by the President in time of war or emergency.

(e) Except as provided in Section 22851, no benefit shall accrue
during the period of service in the uniformed services if the
member does not return to employment, with the same employer
which had employed the member immediately prior to the eligible
period of service in the uniformed services, as prescribed in Chapter
43 (commencing with Section 4301) of Title 38 of the United
States Code.

begin delete SEC. 12. end delete

begin insert SEC. 19. end insert   

Section 22851 of the Education Code is amended to
read:

22851.  

The right to pension benefits under this part of a
member who dies or who returns to employment with the same
employer which had employed the member immediately prior to
the eligible period of service in the uniformed services, and is
subject to Chapter 43 (commencing with Section 4301) of Title
38 of the United States Code shall be determined under this section.

(a) (1) A reemployed or deceased member shall be treated as
not having incurred a break in service by reason of that member’s
eligible period or periods of service in the uniformed services.

(2) (A) Each eligible period of service served by a member in
the uniformed services shall, upon return to employment, with the
same employer which had employed the member immediately
prior to the eligible period of service in the uniformed services, or
upon death, be deemed to constitute service with the employer or
employers toward plan vesting and eligibility for membership in
the Defined Benefit Program. Service that is deemed to the member
pursuant to this subparagraph shall not be used for benefit
calculations.

(B) In cases of death during qualified military service or if a
member fails to remit the member contributions that would have
been required in respect of the eligible period of service in the
uniformed services, service shall be used exclusively for plan
vesting and eligibility for membership purposes. Service that is
deemed to the member pursuant to this subparagraph shall not be
used for benefit calculations.

(3) (A) Each eligible period of service served by a member in
the uniformed services shall, upon his or her payment of the
member contributions required under this part, be deemed to
constitute service for the purposes of accruing benefits in the
Defined Benefit Program and the Defined Benefit Supplement
Program.

(B) A member who returns to employment, with the same
employer which had employed the member immediately prior to
the eligible period of service in the uniformed services shall not
be entitled to any benefits under this part in respect of service in
the uniformed services to which the member would not otherwise
have been entitled had the member remained continuously
employed and not undertaken such service in the uniformed
services.

(b) For purposes of accruing benefits in the Defined Benefit
Program and Defined Benefit Supplement Program, a member
who returns to employment with the same employer which had
employed the member immediately prior to the eligible period of
service in the uniformed services shall be entitled to service credit,
compensation earnable, contributions, interest, and additional
earnings credits under this part for the eligible period of service
in the uniformed services upon his or her payment of the member
contributions required under Section begin delete 22901, end delete begin insert 22901 end insert and Section
22901.7, if applicable, that otherwise would have been due for
such period of service had the member remained continuously
employed and not undertaken such service in the uniformed
services. No such payment of member contributions may exceed
the amount the member would have been required to contribute
under this part had the member not served in the uniformed services
and had remained continuously employed by the employer
throughout the eligible period of service in the uniformed services.
If a member fails to remit the member contributions that would
have been required under Section begin delete 22901, end delete begin insert 22901 end insert and Section
22901.7 if applicable, in respect of the eligible period of service
in the uniformed services no benefits shall be provided under this
part for the period to which the omitted contributions relate.

(c) Any payment of member contributions to the Defined Benefit
Program or the Defined Benefit Supplement Program in this section
shall be made by the member during the period beginning with
the date of return to employment and may continue for three times
the period of the member’s eligible service in the uniformed
services, not to exceed five years. Any payment of member
contributions to the Defined Benefit Program in this section by a
member who returned to employment prior to January 1, 1997,
and qualifies for benefits in accordance with the federal Uniformed
Services Employment and Reemployment Rights Act begin insert of 1994 end insert (38
U.S.C. Secs. 4301 to 4335, incl.) shall be made by the member
during the period beginning with the date of notification of
eligibility by the employer to the system and may continue for
three times the period of the member’s eligible service in the
uniformed services, not to exceed five years. Any subsequent
request to purchase service credit for this service shall be subject
to the provisions of Chapter 14 (commencing with Section 22800).
If all contributions due under this part are not paid to the plan with
respect to the Defined Benefit Program within the specified
repayment period and in accordance with subdivision (b), the
member shall be entitled to the benefits attributable to the
contributions received or may request a return of his or her
payments. Credited interest on member contributions made for the
eligible period of service in the uniformed services shall not be
credited under this part until after the contributions due are paid
and then only prospectively to the member’s account in accordance
with Section 22216. For the Defined Benefit Supplement Program,
contributions, interest, and additional earnings credits the member
would have earned had the member remained continuously
employed during the period of eligible service in the uniformed
services shall be credited retroactively after all contributions due
are paid.

begin delete SEC. 13. end delete

begin insert SEC. 20. end insert   

Section 22852 of the Education Code is amended to
read:

22852.  

(a) An employer reemploying a member of the Defined
Benefit Program with service subject to the requirements of
Chapter 43 (commencing with Section 4301) of Title 38 of the
United States Code shall be liable to the plan for the employer
contributions under this part, provided that employer was the last
employer employing the member immediately prior to the period
served by the member in the uniformed services.

(b) For purposes of determining the amount of that liability
under this part and any obligation to the plan with respect to the
Defined Benefit Program, interest shall not be included in the
liability to the plan.

(c) Subject to subdivision (e), the employer shall pay the
employer contributions for the eligible period of service in the
uniformed services that would have been required under Sections
22950, 22950.5, and 22951 had the member remained continuously
employed during that period of eligible service in the uniformed
services.

(d) In addition to any amount required pursuant to subdivision
(c), the employer shall pay the full cost of any interest and
additional earnings credits credited to the member’s Defined
Benefit Supplement account pursuant to subdivision (b) of Section
22851.

(e) The employer shall not be liable for employer contributions
under this part for the eligible period of service in the uniformed
services to the extent that the member fails to remit the member
contributions for that period.

(f) The employer shall provide information regarding the
reemployment of a member who is subject to Chapter 43
(commencing with Section 4301) of Title 38 of the United States
Code on a form prescribed by the system within 30 days of the
date of reemployment.

(g) Employers shall remit to the plan with respect to the Defined
Benefit Program and the Defined Benefit Supplement Program,
the employer contributions required under subdivisions (c) and
(d) within 60 working days of the date the system notifies the
employer of the amount of contributions due with respect to the
member who elects to remit the member contributions for the
eligible period of service in the uniformed services.

(h) If the employee does not comply with subdivision (b) of
Section 22851 within the time period specified, the employer
contributions that were remitted for that period shall be adjusted
pursuant to Section 23008.

begin delete SEC. 14. end delete

begin insert SEC. 21. end insert   

Section 22853 of the Education Code is amended to
read:

22853.  

For purposes of this chapter, creditable compensation
during the period of service in the uniformed services shall be
computed as follows:

(a) The creditable compensation the member would have
received for the eligible period of service had the member remained
continuously employed.

(b) In the event the creditable compensation is not reasonably
certain, creditable compensation shall be based on the member’s
average creditable compensation during the 12-month period
immediately preceding the eligible period of service in the
uniformed services or, if shorter, the period of employment
immediately preceding that period of service.

begin delete SEC. 15. end delete

begin insert SEC. 22. end insert   

Section 22853.5 of the Education Code is amended
to read:

22853.5.  

For purposes of this chapter, compensation earnable
during the period of service in the uniformed services shall be
computed as follows:

(a) The compensation earnable that would have been applicable
for the eligible period of service had the member remained
continuously employed.

(b) In the event the compensation earnable that would have been
applicable is not reasonably certain, compensation earnable shall
be based on the member’s compensation earnable earned during
the 12-month period immediately preceding the eligible period of
service in the uniformed services or, if shorter, the period of
employment immediately preceding that period of service prorated
over the period of service in the uniformed services.

begin delete SEC. 16. end delete

begin insert SEC. 23. end insert   

Section 22854 of the Education Code is amended to
read:

22854.  

A reemployed member who has been absent from a
position of employment subject to coverage under the Defined
Benefit Program to perform service in the uniformed services,
pursuant to Section 22850, for a period in excess of five years shall
not be entitled to benefits or credit for plan vesting or eligibility
for membership purposes under this chapter for an amount
exceeding five years, except where the service in the uniformed
services has exceeded five years for the following reasons:

(a) The member is required to serve beyond five years to
complete an initial period of obligated service.

(b) The member was unable to obtain orders releasing the
member from a period of service in the uniformed services before
the expiration of the five-year period and that inability was through
no fault of the member.

(c) The member served in the uniformed services as required
pursuant to Section 270 of Title 10 of the United States Code,
Section 502(a) or 503 of Title 32 of the United States Code, or to
fulfill additional training requirements determined and certified
in writing by the Secretary of Defense, to be necessary for
professional development, or for completion of skill training or
retraining.

(d) The member is ordered to do any of the following:

(1) Ordered to or retained on active duty under Section 672(a),
672(g), 673, 673(b), 673(c), or 688 of Title 10 of the United States
Code or under Section 331, 332, 359, 360, 367, or 712 of Title 14
of the United States Code.

(2) Ordered to or retained on active duty, other than for training,
under any provision of law during a war or during a national
emergency declared by the President or the Congress.

(3) Ordered to active duty, other than for training, in support,
as determined by the secretary concerned, of an operational mission
for which personnel have been ordered to active duty under Section
673(b) of Title 10 of the United States Code.

(4) Ordered to active duty in support, as determined by the
secretary concerned, of a critical mission or requirement of the
uniformed services.

(5) Called into federal service as a member of the National
Guard under Chapter 15 (commencing with Section 331) of Title
10 of the United States Code or under Section 3500 or 8500 of
Title 10 of the United States Code.

begin insert

begin insert SEC. 24. end insert   

end insert

begin insert Section 22905 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22905.  

(a) Member contributions pursuant to Sections 22901,
22901.3, and 22901.7, employer contributions pursuant to Section
22903 or 22904, and member contributions made by an employer
pursuant to Section 22909 shall be credited to the member’s
individual account under the Defined Benefit Program or the
Defined Benefit Supplement Program, whichever is applicable
pursuant to the provisions of this part.

(b) Except as provided in subdivision (g), member and employer
contributions, exclusive of contributions pursuant to Sections
22901.7, 22950.5, and 22951, on a member’s compensation under
the following circumstances shall be credited to the member’s
Defined Benefit Supplement account:

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

(2) Compensation that is determined by the system to have been
paid to enhance a member’s benefits pursuant to subdivision (b)
of Section 22119.2 or to not reflect sound principles that support
the integrity of the retirement fund pursuant to subdivision (f) of
Section 22119.2.

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

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

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

(e) Any contributions on compensation that is creditable to the
Defined Benefit Supplement account shall be limited to the
contributions made pursuant to Sections 22901, 22901.3, 22950,
and 22951. Any excess member contributions, as determined by
the system, shall be returned to the member through the employer
and any excess employer contributions shall be returned to the
employer.

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

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

begin insert

(h) This section shall become inoperative on July 1, 2018, and,
as of January 1, 2019, is repealed.

end insert

begin insert

begin insert SEC. 25. end insert   

end insert

begin insert Section 22905 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 22905. end insert   

(a) Member contributions pursuant to Sections 22901,
22901.3, and 22901.7, employer contributions pursuant to Section
22903 or 22904, and member contributions made by an employer
pursuant to Section 22909 shall be credited to the member’s
individual account under the Defined Benefit Program or the
Defined Benefit Supplement Program, whichever is applicable
pursuant to the provisions of this part.

(b) Except as provided in subdivision (e), member and employer
contributions, exclusive of contributions pursuant to Sections
22901.7, 22950.5, and 22951, on a member’s compensation under
the following circumstances shall be credited to the member’s
Defined Benefit Supplement account:

(1) Compensation for creditable service that exceeds one year
in a school year shall be credited effective on the July 1
immediately following the period for which the compensation is
earned.

(2) Compensation that is determined by the system to have been
paid to enhance a member’s benefits pursuant to subdivision (b)
of Section 22119.2 or to not reflect sound principles that support
the integrity of the retirement fund pursuant to subdivision (f) of
Section 22119.2 shall be credited effective as of the earliest day
contributions are due in the office pursuant to Section 23002.

(3) Compensation that is paid for a limited number of times as
specified by law, a collective bargaining agreement, or an
employment agreement shall be credited effective as of the earliest
day contributions are due in the office pursuant to Section 23002.

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

(d) Any contributions on compensation that is creditable to the
Defined Benefit Supplement account shall be limited to the
contributions made pursuant to Sections 22901, 22901.3, 22950,
and 22951. Any excess member contributions, as determined by
the system, shall be returned to the member through the employer
and any excess employer contributions shall be returned to the
employer.

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

(f) This section shall become operative on July 1, 2018.

end insert

begin delete SEC. 17. end delete

begin insert SEC. 26. end insert   

Section 24005 of the Education Code is amended to
read:

24005.  

(a) A disability allowance under this part shall become
effective upon any date designated by the member, provided all
of the following conditions are met:

(1) An application for disability allowance is filed on a properly
executed form prescribed by the system.

(2) The effective date is later than the last day the member
earned creditable compensation pursuant to Section 22119.2 or
22119.3.

(3) The effective date is no earlier than either the first day of
the month in which the application is received by the system’s
headquarters office or the date upon and continuously after which
the member is determined to the satisfaction of the board to have
been mentally incompetent.

(b) If the member is employed to perform creditable service
subject to coverage under the Defined Benefit Program at the time
the disability allowance is approved under this part, the member
shall notify the system in writing, within 90 days, of the last day
on which the member will perform service. If the member does
not respond within 90 days, or if the last day on which service will
be performed is more than 90 days after the date the system notifies
the member of approval of the disability allowance, the member’s
application for a disability allowance shall be rejected and a
disability allowance shall not be payable to the member.

begin delete SEC. 18. end delete

begin insert SEC. 27. end insert   

Section 24105 of the Education Code is amended to
read:

24105.  

(a) A disability retirement allowance under this part
shall become effective upon any date designated by the member,
provided that all of the following conditions are met:

(1) An application for disability retirement is filed on a properly
executed form prescribed by the system.

(2) The effective date is later than the last day the member
earned creditable compensation pursuant to Section 22119.2 or
22119.3.

(3) The effective date is no earlier than either the first day of
the month in which the application is received at the system’s
headquarters office or the date upon and continuously after which
the member is determined to the satisfaction of the board to have
been mentally incompetent.

(4) The application for disability retirement contains an election
of either an unmodified allowance or an allowance modified under
an option as provided in Section 24332.

(b) If the member is employed to perform creditable service
subject to coverage under the Defined Benefit Program at the time
the disability retirement is approved, the member shall notify the
system in writing, within 90 days, of the last day on which the
member will perform service. If the member does not respond
within 90 days, or if the last day on which service will be
performed is more than 90 days after the date the system notifies
the member of the approval of disability retirement, the member’s
application for disability retirement shall be rejected and a
disability retirement allowance shall not be payable to the member.

begin delete SEC. 19. end delete

begin insert SEC. 28. end insert   

Section 24201.5 of the Education Code is amended
to read:

24201.5.  

(a) A member who is eligible and applies for a
disability allowance or retirement pursuant to Section 24001 or
24101 may apply to receive a service retirement allowance pending
the determination of his or her application for disability, subject
to all of the following:

(1) The member is eligible to retire for service under Section
24201 or 24203.

(2) The member submits the application on a form provided by
the system, subject to all of the following:

(A) The application is executed no earlier than the date the
application for disability benefits is executed and no earlier than
six months before the effective date of the retirement allowance.

(B) The effective date is no earlier than the first day of the month
in which the application for disability benefits is received at the
system’s headquarters office, unless the application for disability
benefits is denied or canceled and the member has indicated an
earlier service retirement date on the application to use if denied
or canceled. If the application for disability benefits is denied or
canceled, the service retirement date of a member who submits an
application for retirement pursuant to this section on or after
January 1, 2014, shall be no earlier than January 1, 2014.

(C) The effective date is later than the last day the member
earned creditable compensation pursuant to Section 22119.2 or
22119.3.

(D) The effective date is no earlier than one year following the
date on which a retirement allowance was terminated pursuant to
Section 24208, unless the application for disability benefits is
denied or canceled and the member has indicated an earlier service
retirement date on the application to use if denied or canceled. If
the application for disability benefits is denied or canceled, the
service retirement date is no earlier than one day after the date on
which a retirement allowance was terminated pursuant to Section
24208, provided that the retirement allowance is terminated on or
after January 1, 2014.

(E) The effective date is no earlier than one year following the
date on which a retirement allowance was terminated pursuant to
subdivision (a) of Section 24117.

(3) The effective date of the service retirement allowance can
be no earlier than the date upon and continuously after which the
member is determined to the satisfaction of the board to have been
mentally incompetent.

(4) A member who applies for service retirement under this
section is not eligible to receive a lump-sum payment and an
actuarially reduced monthly allowance pursuant to Section 24221.

(5) A member who applies for service retirement under this
section is not eligible to receive an allowance calculated pursuant
to Section 24205.

(6) A member who applies for service retirement under this
section and elects to receive his or her retirement benefit pursuant
to Section 25009 as a lump-sum payment is not eligible to elect a
disability benefit pursuant to Section 25016 or 25018.1.

(7) (A) Except as described in subparagraph (B), a member
who applies for service retirement under this section shall not
receive service credit for each day of accumulated and unused
leave of absence for illness or injury or for education pursuant to
Section 22717 or 22717.5.

(B) If the application for disability is denied or canceled, the
member’s service retirement allowance shall be adjusted to the
effective date of the service retirement to include service credited
pursuant to Section 22717 or 22717.5.

(8) If the application for disability is denied or canceled, a
member who applies for a service retirement allowance under this
section is subject to all of the following:

(A) Unless otherwise provided in this part, a member who, on
his or her application for service retirement, elects an option
pursuant to Section 24300.1 or 24307 may not change or revoke
that option.

(B) If the member receives a modified service retirement
allowance based on the election of an option pursuant to Section
24300.1 or 24307, that modified service retirement allowance shall
continue in effect and unchanged.

(C) If the member did not elect an option pursuant to Section
24300.1 or 24307 and receives an unmodified service retirement
allowance, that unmodified service retirement allowance shall
continue in effect and unchanged.

(b) A member who applies for service retirement under this
section may change or cancel his or her service retirement
application pursuant to Section 24204, or may terminate his or her
service retirement allowance pursuant to Section 24208.

(c) A member may not cancel his or her application for disability
prior to a determination of that application unless he or she submits
a written request to the system’s headquarters office. If a member
elects to cancel his or her service retirement application or elects
to terminate his or her service retirement allowance as described
in subdivision (b), that election shall not cancel the application for
disability.

(d) (1) Subparagraph (C) of paragraph (1) of subdivision (a)
of Section 24001 and paragraph (3) of subdivision (a) of Section
24101 shall not apply to a member who cancels an application for
service retirement pursuant to Section 24204 or who terminates a
service retirement allowance pursuant to Section 24208, if all of
the following apply:

(A) The member earned at least one year of credited service
subsequent to the most recent terminated service retirement
allowance.

(B) The member’s application for disability under this section
is pending determination by the board.

(2) If the member’s application for disability under this section
is denied or canceled, subparagraph (C) of paragraph (1) of
subdivision (a) of Section 24001 and paragraph (3) of subdivision
(a) of Section 24101 shall apply if the member submits a new
application for disability.

(e) (1) If the board approves the application for disability, and
notwithstanding subdivision (f) of Section 24204, the board shall
cancel the member’s application for service retirement and shall
authorize payment of a disability allowance or disability retirement.

(2) If the board approves the application for disability and the
member has received service retirement allowance payments under
this part, the effective date for the disability allowance or disability
retirement shall be the same as the effective date of the service
retirement allowance.

(f) If a member who applies for service retirement under this
section dies prior to a determination by the board on the application
for disability, the member shall be considered retired for service
at the time of death, and any subsequent benefits shall be paid
accordingly.

(g) If a member who applies for service retirement under this
section dies after the board has approved the member’s application
for disability, the member shall be considered a disabled member,
or retired for disability, at the time of death, and any subsequent
benefits shall be paid accordingly, even if the member died prior
to receiving notification of the approval of his or her application
for disability.

(h) If the member changes or cancels his or her service
retirement application or terminates his or her service retirement
allowance as described in subdivision (b), the system shall make
appropriate adjustments to the applicable service retirement
allowance, disability allowance, or disability retirement allowance,
retroactive to the effective date of the disability allowance or
disability retirement allowance. Subdivision (a) of Section 24617
shall not apply.

(i) The system may recover a service retirement allowance
overpayment made to a member by deducting that overpayment
from any subsequent disability benefit payable to the member.

(j) Nothing in this section shall be construed to allow a member
or beneficiary to receive more than one type of retirement or
disability allowance for the same period of time.

begin delete SEC. 20. end delete

begin insert SEC. 29. end insert   

Section 24204 of the Education Code is amended to
read:

24204.  

(a) A service retirement allowance under this part shall
become effective upon any date designated by the member,
provided all of the following conditions are met:

(1) An application for service retirement allowance is filed on
a form provided by the system, which is executed no earlier than
six months before the effective date of retirement allowance.

(2) The effective date is later than the last day the member
earned creditable compensation pursuant to Section 22119.2 or
22119.3.

(3) The effective date is no earlier than one day after the date
on which the retirement allowance was terminated under Section
24208.

(4) The effective date is no earlier than one year following the
date on which the retirement allowance was terminated under
subdivision (a) of Section 24117.

(5) The effective date is no earlier than the date upon and
continuously after which the member is determined to the
satisfaction of the board to have been mentally incompetent.

(6) The effective date is no earlier than the date upon which the
member completes payment of a service credit purchase pursuant
to Section 22801, 22820, or 22826, or payment of a redeposit of
contributions pursuant to Section 23200, except as provided in
Section 22801 or 22829.

(b) A member who files an application for service retirement
may change or cancel his or her retirement application, as long as
the form provided by the system is received in the system’s
headquarters office no later than 30 days from the date the
member’s initial benefit payment for the member’s most recent
retirement under the Defined Benefit Program is paid by the
system. If a member cancels his or her retirement application, the
member shall return the total gross distribution amount of all
payments for the canceled retirement benefit to the system’s
headquarters office no later than 45 days from the date of the
member’s initial benefit payment and shall be liable for any adverse
tax consequences that may result from these actions.

(c) The retirement date of a member who files an application
for retirement pursuant to Section 24201 on or after January 1,
2012, shall be no earlier than January 1, 2012.

(d) Nothing in this section shall be construed to allow a member
to receive more than one type of retirement or disability allowance
for the same period of time by virtue of his or her own membership.

begin delete SEC. 21. end delete

begin insert SEC. 30. end insert   

Section 24209 of the Education Code is amended to
read:

24209.  

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

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

(2) An amount calculated pursuant to Section 24202, 24202.5,
24202.6, 24203, 24203.5, or 24206 based on credited service
accrued, including any service granted pursuant to Section 22717
or 22717.5, subsequent to the most recent reinstatement, the
member’s age on the last day of the month in which the retirement
allowance begins to accrue, and final compensation.

(b) If the total amount of credited service accrued, other than
that accrued pursuant to Sections 22714, 22715, 22717, 22717.5,
and 22826, except as provided in subdivision (c) of Section 22121,
is equal to or greater than 30 years, the amounts identified in
paragraphs (1), for members who initially retired on or after
January 1, 1999, and (2) of subdivision (a) shall be calculated
pursuant to Section 24203.5.

(c) If the total amount of credited service accrued, other than
that accrued pursuant to Sections 22714, 22715, 22717, 22717.5,
and 22826, except as provided in subdivision (c) of Section 22121,
is equal to or greater than 30 years, upon retirement for service
following reinstatement, a member who retired pursuant to Section
24213, and received the terminated disability allowance for the
prior retirement, shall receive a service retirement allowance equal
to the sum of the following:

(1) An amount based on the credited service accrued, including
any service granted pursuant to Section 22717 or 22717.5, prior
to the effective date of the disability allowance, the member’s age
at the prior retirement increased by the factor provided in Section
24203.5, and projected final compensation.

(2) An amount calculated pursuant to Section 24202, 24202.5,
24202.6, 24203.5, or 24206 based on credited service accrued,
including any service granted pursuant to Section 22717 or
22717.5, subsequent to the reinstatement, the member’s age on
the last day of the month in which the retirement allowance begins
to accrue, and final compensation using compensation earnable,
or projected final compensation, or a combination of both.

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

begin delete SEC. 22. end delete

begin insert SEC. 31. end insert   

Section 24209.3 of the Education Code is amended
to read:

24209.3.  

(a) Notwithstanding subdivision (a) of Section 24209,
and exclusive of any amounts payable during the prior retirement
for service pursuant to Section 22714, or 22715:

(1) A member who retired, other than pursuant to Section 24210,
24211, 24212, or 24213, and who reinstates and performs creditable
service, as defined in Section 22119.5, after the most recent
reinstatement, in an amount equal to two or more years of credited
service, shall, upon retirement for service on or after the effective
date of this section, receive a service retirement allowance equal
to the sum of the following:

(A) An amount calculated pursuant to this chapter based on
credited service accrued, including any service granted pursuant
to Section 22717 or 22717.5, prior to the most recent reinstatement,
using the member’s age at the subsequent service retirement, from
which age shall be deducted the total time during which the
member was retired for service, and final compensation.

(B) An amount calculated pursuant to this chapter based on
credited service accrued, including any service granted pursuant
to Section 22717 or 22717.5, subsequent to the most recent
reinstatement, using the member’s age on the last day of the month
in which the retirement allowance begins to accrue, and final
compensation.

(2) A member who retired pursuant to Section 24210 and who
reinstates and performs creditable service, as defined in Section
22119.5, after the most recent reinstatement, in an amount equal
to two or more years of credited service, shall, upon retirement for
service on or after the effective date of this section, receive a
service retirement allowance equal to the sum of the following:

(A) An amount calculated pursuant to this chapter based on
credited service accrued, including any service granted pursuant
to Section 22717 or 22717.5, prior to the effective date of the
disability retirement, using the member’s age at the subsequent
service retirement, from which age shall be deducted the total time
during which the member was retired for service, and indexed final
compensation to the effective date of the initial service retirement.

(B) An amount calculated pursuant to this chapter based on the
credited service accrued, including any service granted pursuant
to Section 22717 or 22717.5, after termination of the disability
retirement, excluding credited service accrued or granted
subsequent to the most recent reinstatement, using the member’s
age at the subsequent service retirement, from which age shall be
deducted the total time during which the member was retired for
service, and final compensation.

(C) An amount calculated pursuant to this chapter based on
credited service accrued, including any service granted pursuant
to Section 22717 or 22717.5, subsequent to the most recent
reinstatement, using the member’s age on the last day of the month
in which the retirement allowance begins to accrue, and final
compensation.

(3) A member who retired pursuant to Section 24211 and who
reinstates and performs creditable service, as defined in Section
22119.5, after the most recent reinstatement, in an amount equal
to two or more years of credited service, shall, upon retirement for
service on or after the effective date of this section, receive a
service retirement allowance equal to the sum of the following:

(A) The greater of (i) the disability allowance the member was
eligible to receive immediately prior to termination of that
allowance, excluding the children’s portion, or (ii) an amount
calculated pursuant to this chapter based on credited service
accrued prior to the effective date of the disability allowance,
excluding credited service accrued or granted pursuant to Section
22717 or 22717.5 or Chapter 14 (commencing with Section 22800)
or Chapter 14.2 (commencing with Section 22820) or Chapter 19
(commencing with Section 23200), using the member’s age at the
subsequent service retirement, from which age shall be deducted
the total time during which the member was retired for service,
and final compensation using compensation earnable, or projected
final compensation earnable, or a combination of both.

(B) An amount equal to either of the following:

(i) For a member who was receiving a benefit pursuant to
subdivision (a) of Section 24211, an amount calculated pursuant
to this chapter based on credited service accrued at the time of the
retirement pursuant to Section 24211, excluding credited service
accrued or granted prior to the effective date of the disability
allowance or pursuant to Section 22717 or 22717.5 or Chapter 14
(commencing with Section 22800) or Chapter 14.2 (commencing
with Section 22820) or Chapter 19 (commencing with Section
23200), the member’s age at the subsequent service retirement,
from which age shall be deducted the total time during which the
member was retired for service, and final compensation using
compensation earnable, or projected final compensation, or a
combination of both.

(ii) For a member who was receiving a benefit pursuant to
subdivision (b) of Section 24211, an amount calculated pursuant
to this chapter based on projected service at the time of the
retirement pursuant to Section 24211, excluding credited service
accrued or granted prior to the effective date of the disability
allowance or pursuant to Section 22717 or 22717.5 or Chapter 14
(commencing with Section 22800) or Chapter 14.2 (commencing
with Section 22820) or Chapter 19 (commencing with Section
23200), the member’s age at the subsequent service retirement,
from which age shall be deducted the total time during which the
member was retired for service, and final compensation using
compensation earnable, or projected final compensation, or a
combination of both.

(C) An amount based on any credited service accrued or granted
pursuant to Section 22717 or 22717.5 or Chapter 14 (commencing
with Section 22800) or Chapter 14.2 (commencing with Section
22820) or Chapter 19 (commencing with Section 23200), at the
time of the retirement pursuant to Section 24211, using the
member’s age at the subsequent service retirement, from which
age shall be deducted the total time during which the member was
retired for service, and final compensation using compensation
earnable, or projected final compensation, or a combination of
both.

(D) An amount calculated pursuant to this chapter based on
credited service accrued subsequent to the most recent
reinstatement, including credited service accrued or granted
pursuant to Section 22714, 22715, 22717, or 22717.5 or Chapter
14 (commencing with Section 22800) or Chapter 14.2
(commencing with Section 22820) or Chapter 19 (commencing
with Section 23200), using the member’s age on the last day of
the month in which the retirement allowance begins to accrue, and
final compensation using compensation earnable, or projected final
compensation, or a combination of both.

(4) A member who retired pursuant to Section 24212 or 24213
and who reinstates and performs creditable service, as defined in
Section 22119.5, after the most recent reinstatement, in an amount
equal to two or more years of credited service, shall, upon
retirement for service on or after the effective date of this section,
receive a service retirement allowance equal to the sum of the
following:

(A) An amount calculated pursuant to this chapter based on the
member’s projected service at the time of the retirement pursuant
to Section 24212 or 24213, including credited service accrued or
granted pursuant to Section 22717 or 22717.5 or Chapter 14
(commencing with Section 22800) or Chapter 14.2 (commencing
with Section 22820) or Chapter 19 (commencing with Section
23200), using the member’s age at the subsequent service
retirement, from which age shall be deducted the total time during
which the member was retired for service, and final compensation
using compensation earnable, or projected final compensation, or
a combination of both.

(B) An amount calculated pursuant to this chapter based on
credited service accrued subsequent to the most recent
reinstatement, including credited service accrued or granted
pursuant to Section 22714, 22715, 22717, or 22717.5 or Chapter
14 (commencing with Section 22800) or Chapter 14.2
(commencing with Section 22820) or Chapter 19 (commencing
with Section 23200), using the member’s age on the last day of
the month in which the retirement allowance begins to accrue, and
final compensation using compensation earnable, or projected final
compensation, or a combination of both.

(b) If the total amount of credited service, other than projected
service, or service that accrued or was granted pursuant to Sections
22714, 22715, 22717, 22717.5, and 22826, except as provided in
subdivision (c) of Section 22121, is equal to or greater than the
number of years required to be eligible for an increased allowance
pursuant to this chapter or Section 22134.5, the amounts identified
in this section shall be calculated pursuant to the section authorizing
the increased benefit.

(c) For members receiving an allowance pursuant to Section
24410.5 or 24410.6, the amount payable pursuant to this section
shall not be less than the amount payable to the member as of the
effective date of reinstatement.

(d) The amount payable pursuant to this section shall not be
less than the amount that would be payable to the member pursuant
to Section 24209.

(e) For purposes of determining an allowance increase pursuant
to Sections 24415 and 24417, the calendar year of retirement shall
be the year of the subsequent retirement if the final compensation
used to calculate the allowance pursuant to this section is higher
than the final compensation used to calculate the allowance for
the prior retirement.

(f) The allowance paid pursuant to this section to a member
receiving a lump-sum payment pursuant to Section 24221 shall be
actuarially reduced to reflect that lump-sum payment.

(g) For purposes of this section, final compensation shall not
be based on a determination of compensation earnable as described
in subdivision begin delete (e) end delete begin insert (f) end insert of Section 22115.

begin delete SEC. 23. end delete

begin insert SEC. 32. end insert   

Section 24211 of the Education Code is amended to
read:

24211.  

When a member who has been granted a disability
allowance under this part after June 30, 1972, returns to
employment subject to coverage under the Defined Benefit
Program and performs:

(a) Less than three years of creditable service after termination
of the most recent disability allowance, the member shall receive
a retirement allowance which is the sum of the allowance calculated
on credited service accrued after the termination date of the
disability allowance, excluding credited service accrued or granted
pursuant to Section 22717 or 22717.5 or Chapter 14 (commencing
with Section 22800) or Chapter 14.2 (commencing with Section
22820) or Chapter 19 (commencing with Section 23200), the age
of the member on the last day of the month in which the retirement
allowance begins to accrue, and final compensation using
compensation earnable or projected final compensation, or a
combination of both, plus the greater of either of the following:

(1) A service retirement allowance calculated on credited service
accrued as of the effective date of the disability allowance,
excluding credited service accrued or granted pursuant to Section
22717 or 22717.5 or Chapter 14 (commencing with Section 22800)
or Chapter 14.2 (commencing with Section 22820) or Chapter 19
(commencing with Section 23200), the member’s age on the last
day of the month in which the retirement allowance begins to
accrue, and projected final compensation to the termination date
of the disability allowance.

(2) The disability allowance the member was eligible to receive
immediately prior to termination of the most recent disability
allowance, excluding children’s portions.

(b) Three or more years of creditable service after termination
of the most recent disability allowance, the member shall receive
a retirement allowance that is the greater of the following:

(1) A service retirement allowance calculated on all actual and
projected service, excluding credited service accrued or granted
pursuant to Section 22717 or 22717.5 or Chapter 14 (commencing
with Section 22800) or Chapter 14.2 (commencing with Section
22820) or Chapter 19 (commencing with Section 23200), the
member’s age on the last day of the month in which the retirement
allowance begins to accrue, and final compensation using
compensation earnable, or projected final compensation, or a
combination of both.

(2) The disability allowance the member was eligible to receive
immediately prior to termination of the most recent disability
allowance, excluding children’s portions.

(c) The allowance shall be increased by an amount based on
any credited service accrued or granted pursuant to Section 22714,
22715, 22717, or 22717.5 or Chapter 14 (commencing with Section
22800) or Chapter 14.2 (commencing with Section 22820) or
Chapter 19 (commencing with Section 23200), the member’s age
on the last day of the month in which the retirement allowance
begins to accrue, and final compensation using compensation
earnable, or projected final compensation, or a combination of
both.

(d) If the total amount of credited service, other than projected
service or credited service that accrued or was granted pursuant
to Sections 22714, 22715, 22717, 22717.5, and 22826, except as
provided in subdivision (c) of Section 22121, is equal to or greater
than 30 years, the amounts identified in subdivisions (a) to (c),
inclusive, shall be calculated pursuant to Sections 24203.5 and
24203.6.

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

(f) Upon retirement, the member may elect to modify the service
retirement allowance payable in accordance with any option
provided under this part.

begin delete SEC. 24. end delete

begin insert SEC. 33. end insert   

Section 24212 of the Education Code is amended to
read:

24212.  

(a) If a disability allowance granted under this part
after June 30, 1972, is terminated for reasons other than those
specified in Section 24213 and the member does not return to
employment subject to coverage under the Defined Benefit
Program, the member’s service retirement allowance, when
payable, shall be based on projected service, excluding credited
service accrued or granted pursuant to Section 22717 or 22717.5
or Chapter 14 (commencing with Section 22800) or Chapter 14.2
(commencing with Section 22820), or Chapter 19 (commencing
with Section 23200), projected final compensation, and the
member’s age on the last day of the month in which the retirement
allowance begins to accrue. The allowance payable under this
section, excluding annuities payable from accumulated annuity
deposit contributions, shall not be greater than the disability
allowance the member was eligible to receive immediately prior
to the earlier of the termination of that allowance or at normal
retirement age, excluding children’s portions.

(b) The allowance shall be increased by an amount based on
any credited service accrued or granted pursuant to Section 22717
or 22717.5 or Chapter 14 (commencing with Section 22800) or
Chapter 14.2 (commencing with Section 22820) or Chapter 19
(commencing with Section 23200), the member’s age on the last
day of the month in which the retirement allowance begins to
accrue, and final compensation using compensation earnable, or
projected final compensation, or a combination of both.

(c) If the total amount of credited service, other than projected
service or credited service that accrued or was granted pursuant
to Sections 22717, 22717.5, and 22826, except as provided in
subdivision (c) of Section 22121, is equal to or greater than 30
years, the amounts identified in subdivisions (a) and (b) shall be
calculated pursuant to Sections 24203.5 and 24203.6.

(d) Upon retirement, the member may elect to modify the service
retirement allowance payable in accordance with any option
provided under this part.

begin delete SEC. 25. end delete

begin insert SEC. 34. end insert   

Section 24213 of the Education Code is amended to
read:

24213.  

(a) When a member who has been granted a disability
allowance under this part after June 30, 1972, attains normal
retirement age, or at a later date when there is no dependent child,
the disability allowance shall be terminated and the member shall
be eligible for service retirement. The retirement allowance shall
be calculated on the projected final compensation and projected
service to normal retirement age, excluding credited service accrued
or granted pursuant to Section 22717 or 22717.5 or Chapter 14
(commencing with Section 22800) or Chapter 14.2 (commencing
with Section 22820) or Chapter 19 (commencing with Section
23200), and the member’s age on the last day of the month in
which the retirement allowance begins to accrue. The allowance
payable under this section, excluding annuities payable from
accumulated annuity deposit contributions, shall not be greater
than the disability allowance the member was eligible to receive
immediately prior to normal retirement age, excluding children’s
portions.

(b) The allowance shall be increased by an amount based on
any credited service accrued or granted pursuant to Section 22717
or 22717.5 or Chapter 14 (commencing with Section 22800) or
Chapter 14.2 (commencing with Section 22820) or Chapter 19
(commencing with Section 23200), the member’s age on the last
day of the month in which the retirement allowance begins to
accrue, and projected final compensation to normal retirement age.

(c) If the total amount of credited service accrued, other than
projected service or credited service that accrued or was granted
pursuant to Sections 22717, 22717.5, and 22826, except as
provided in subdivision (c) of Section 22121, is equal to or greater
than 30 years, the amounts identified in subdivisions (a) and (b)
shall be calculated pursuant to Sections 24203.5 and 24203.6.

(d) Upon retirement, the member may elect to modify the service
retirement allowance payable in accordance with any option
provided under this part.

begin delete SEC. 26. end delete

begin insert SEC. 35. end insert   

Section 24322 of the Education Code is amended to
read:

24322.  

(a) An option elected under Section 24300, 24300.1,
or 24307 may be canceled by a retired member if the option
beneficiary is the retired member’s spouse or former spouse and
a final decree of dissolution of marriage or a judgment of nullity
has been entered or an order of separate maintenance has been
made on or after January 1, 1978, by a court of competent
jurisdiction. A retired member may cancel the option before or
after issuance of the first retirement allowance payment.

(b) The retired member shall notify the board, in writing on a
properly executed form provided by the begin delete system end delete begin insert system, end insert of
cancellation of the option. Notification shall not be earlier than
the effective date of the decree, judgment, or order and shall include
a certified copy of the final decree of dissolution, or judgment of
nullity, or an order of separate maintenance, and any property
settlement agreement.

(c) Upon notification to the board, the retired member may elect:
(1) to receive the unmodified retirement allowance from the date
of receipt of the notification; or (2) a new joint and survivor option
under Section 24300.1 and may designate one or multiple new
option beneficiaries. Modification of the retirement allowance
because of the newly elected option or newly designated
beneficiary or beneficiaries shall be based on the ages of the retired
member and the new option beneficiary or beneficiaries as of the
effective date of the new option. The election of a new joint and
survivor option or the designation of a new option beneficiary or
beneficiaries shall be consistent with the final decree of dissolution,
judgment of nullity, order of separate maintenance, or property
settlement agreement, and shall not result in any additional liability
to the Teachers’ Retirement Fund. The effective date of the change
shall be the date notification is received by the board.

begin delete SEC. 27. end delete

begin insert SEC. 36. end insert   

Section 24410 of the Education Code is amended to
read:

24410.  

(a) If projected final compensation is used to calculate
the service retirement allowance following the termination of the
disability allowance or if the disability allowance is continued as
the lesser of the two allowance calculations under Section 24212
or 24213, then the original disability allowance effective date shall
be retained as the base date for purposes of determining
postretirement benefit increases.

(b) If the disability allowance effective date is used pursuant to
subdivision (a), then for purposes of determining supplemental
benefits pursuant to Sections 24412 and 24415, the base allowance
shall be determined as follows:

(1) If the disability allowance is continued pursuant to Section
24212 or 24213, the base allowance shall be equal to the disability
allowance prior to all allowance increases made pursuant to this
part.

(2) If the disability allowance is not continued pursuant to
Section 24212 or 24213, the base allowance shall be based on the
factors used to calculate the service retirement allowance, except
that projected final compensation shall be replaced with the final
compensation upon which the disability allowance was begin delete based using
compensation earnable without the adjustment pursuant to
subdivision (f) of Section 22134 and subdivision (e) of Section
22134.5. end delete begin insert based. end insert

(3) The base allowance determined pursuant to this subdivision
shall be modified for an option, if applicable.

(c) This section shall be applicable for determining the base
date for applicable postretirement increases made on or after
January 1, 1982.

(d) This section shall only apply to service retirements effective
the day after the termination date of the disability allowance.

begin delete SEC. 28. end delete

begin insert SEC. 37. end insert   

Section 24606 of the Education Code is amended to
read:

24606.  

(a) If any payment of contributions or accumulated
contributions or benefits under this plan remains unclaimed and,
after a good faith effort, the legal claimant cannot be found, the
board shall redeposit the proceeds in the retirement fund, and shall
hold the proceeds for the legal claimant without further
accumulation of interest. The redeposit does not operate to establish
the membership of the claimant in this plan.

(b) Subdivision (a) applies to warrants drawn and canceled by
the Controller and payments rejected via electronic funds transfer.
Upon notice of cancellation or rejection, the proceeds revert to
and become a part of the retirement fund, and shall be applied to
meet the liabilities of the retirement fund.

(c) The board may at any time after reversion of proceeds, as
provided above to the retirement fund, and upon receipt of proper
information satisfactory to it, return from the retirement fund an
amount equal to those proceeds to the credit of the legal claimant.

begin delete SEC. 29. end delete

begin insert SEC. 38. end insert   

Section 25001 of the Education Code is amended to
read:

25001.  

(a) The board shall establish a segregated account
within the retirement fund to be known as the Gain and Loss
Reserve, and the board shall have sole authority over the reserve.
The Gain and Loss Reserve shall be maintained for the Defined
Benefit Supplement Program and may be used to credit interest at
the minimum interest rate for plan years in which the board
determines that the obligation cannot be met from investment
earnings. The Gain and Loss Reserve may also be used to provide
additions to the Annuitant Reserve for monthly annuities payable
under the Defined Benefit Supplement Program.

(b) The board shall establish a goal for the balance of the Gain
and Loss Reserve and periodically shall review the sufficiency of
the reserve based on the recommendations of the actuary.

(c) The board may allocate excess earnings of the plan with
respect to assets attributable to the Defined Benefit Supplement
Program to the Gain and Loss Reserve. In addition, the board may
allocate any liability gains and losses attributable to the Defined
Benefit Supplement Program to the Gain and Loss Reserve. Upon
the recommendation of the actuary, the board shall determine
annually the amount, if any, that is to be allocated to the Gain and
Loss Reserve for that plan year. That determination shall be made
upon recommendation of the actuary based on the actuarial
valuation undertaken following the plan year pursuant to Section
22311.5, but no later than June 30 following the end of the plan
year. In determining whether to allocate excess earnings to the
Gain and Loss Reserve, the board shall consider all of the
following:

(1) Whether or not the plan has excess earnings attributable to
the Defined Benefit Supplement Program.

(2) The sufficiency of the Gain and Loss Reserve in light of the
goal established pursuant to subdivision (b).

(3) The amount required for the plan’s administrative costs with
respect to the Defined Benefit Supplement Program.

(4) The amount required for crediting members’ accounts at the
minimum interest rate.

(d) In determining whether to allocate liability gains and losses
to the Gain and Loss Reserve, the board shall consider the matters
described in paragraphs (2), (3), and (4) of subdivision (c).

begin delete SEC. 30. end delete

begin insert SEC. 39. end insert   

Section 25006 of the Education Code is amended to
read:

25006.  

(a) The board may declare an additional earnings credit
to be applied to Defined Benefit Supplement accounts for a plan
year. Prior to declaring an additional earnings credit, the board
shall consider all of the following:

(1) Whether the plan’s investment earnings with respect to the
Defined Benefit Supplement Program for the plan year exceed the
amount required to meet the liabilities identified in paragraphs (2),
(3), and (4).

(2) The amount required for the plan year to credit interest on
members’ nominal accounts at the minimum interest rate.

(3) The amount of the plan’s administrative expenses with
respect to the Defined Benefit Supplement Program for the plan
year.

(4) The sufficiency of the Gain and Loss Reserve and whether
any additions must be made to that reserve.

(b) For any plan year that the board declares an additional
earnings credit, the board shall specify the amount to be added to
members’ accounts as a percentage increase. The additional
earnings credit shall be applied to the balance of credits in each
member’s nominal account as of the last day of the plan year and
shall be applied as of the date specified by the board. The additional
earnings credit shall not be added to the balance of credits
transferred from a member’s Defined Benefit Supplement account
to the Annuitant Reserve.

(c) The declaration of an additional earnings credit shall be
made as a plan amendment adopted by the board with respect to
the Defined Benefit Supplement Program upon recommendation
of the actuary based on the actuarial valuation undertaken following
the plan year pursuant to Section 22311.5, but no later than June
30 following the end of the plan year.

begin delete SEC. 31. end delete

begin insert SEC. 40. end insert   

Section 26202 of the Education Code is amended to
read:

26202.  

(a) The board shall establish a Gain and Loss Reserve
within the Teachers’ Retirement Fund for the Cash Balance Benefit
Program. The board has sole authority to administer the Gain and
Loss Reserve to be drawn upon to the extent necessary to credit
interest to employee accounts and employer accounts at the
minimum interest rate during years in which the investment
earnings of the plan with respect to the Cash Balance Benefit
Program are not sufficient for that purpose, and, where necessary,
to provide additions to the Annuitant Reserve for monthly annuity
payments.

(b) The board shall establish and periodically review goals
regarding the sufficiency of the Gain and Loss Reserve based on
the recommendation of the actuary.

(c) In the event that the total amount of investment earnings of
the plan with respect to the Cash Balance Benefit Program for any
plan year exceeds the sum of the total amount required to credit
all employee and employer accounts at the minimum interest rate
for the plan year plus the administrative costs of the plan with
respect to the Cash Balance Benefit Program for the plan year, the
board shall determine the amount, if any, that is to be credited to
the Gain and Loss Reserve for the plan year. That determination
shall be made upon recommendation of the actuary based on the
actuarial valuation undertaken following the plan year pursuant to
Section 26211 but no later than June 30 following the end of the
plan year. In determining whether an amount is to be credited to
the Gain and Loss Reserve, the board shall consider the sufficiency
of the reserve in light of the goal established for the sufficiency
and the recommendations of the actuary.

begin insert

begin insert SEC. 41. end insert   

end insert

begin insert Section 26603 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

26603.  

begin insert (a) end insert begin insert   end insert All employee contributions shall be credited to
employee accounts and all employer contributions shall be credited
to employer accounts as of the first working day following the
date all contributions to fully satisfy the contribution report as
submitted by the employer are received by the system.

begin insert

(b) This section shall become inoperative on July 1, 2018, and,
as of January 1, 2019, is repealed.

end insert

begin insert

begin insert SEC. 42. end insert   

end insert

begin insert Section 26603 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 26603. end insert   

(a) All employee contributions shall be credited to
employee accounts and all employer contributions shall be credited
to employer accounts effective as of the day contributions are
required to be transmitted to the plan pursuant to subdivision (a)
of Section 26303.

(b) This section shall become operative on July 1, 2018.

end insert

begin insert

begin insert SEC. 43. end insert   

end insert

begin insert Section 26604 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

26604.  

(a) Beginning June 1, 1996, prior to the Cash Balance
Plan becoming effective, and prior to the beginning of each plan
year thereafter, the board, by plan amendment with respect to the
Cash Balance Benefit Program, shall declare the minimum interest
rate for crediting employee accounts and employer accounts with
respect to the Cash Balance Benefit Program during the following
plan year.

(b) All interest shall be computed at the minimum interest rate
on the balance of the employee account and the employer account
and shall be compounded daily.

begin delete

(c) Interest for contributions credited during that month to the
respective account shall accrue at the minimum interest rate from
the first working day following the date contributions are received
in full by the system pursuant to Section 26603.

end delete begin delete

(d)

end delete

begin insert (c) end insert  Interest shall not be credited to employee accounts and
employer accounts that have been transferred to the Annuitant
Reserve for payment of an annuity.

begin delete SEC. 32. end delete

begin insert SEC. 44. end insert   

Section 26808 of the Education Code is amended to
read:

26808.  

(a) The annuity elected under this chapter shall be
determined as a value actuarially equivalent to the sum of the
employee account and the employer account as of the retirement
date. The annuity shall be calculated using the age of the participant
and, if the participant elected a joint and survivor option, the age
of the beneficiary on the retirement date.

(b) In the case of a participant who previously received an
annuity that was terminated pursuant to Section 26810, the portion
of the annuity derived from the amounts credited to the employee
account and employer account as of the date of reemployment
shall be calculated using the actuarial assumptions in effect on the
previous retirement date using the age of the participant and, if the
participant elected a joint and survivor option, the age of the
beneficiary on the current retirement date.

begin delete SEC. 33. end delete

begin insert SEC. 45. end insert   

Section 26810 of the Education Code is amended to
read:

26810.  

(a) A participant who is employed to perform creditable
service subject to coverage by the Cash Balance Benefit Program
while receiving an annuity under the program may terminate the
annuity upon written request to the system and make contributions
to the program based on salary paid by the employer for the
employment, subject to the following conditions:

(1) The request for termination of the annuity is filed on a form
prescribed by the system, and the form is executed no earlier than
six months before the effective date of the termination.

(2) Termination of the participant’s annuity shall become
effective on the first day of the month designated by the participant.

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

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

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

begin delete SEC. 34. end delete

begin insert SEC. 46. end insert   

Section 28000 of the Education Code is amended to
read:

28000.  

(a) The Legislature hereby finds and declares its intent
to preserve and protect the rights of reemployed participants who
have been absent from a position of employment covered by the
Cash Balance Benefit Program to serve in the uniformed services
of the United States begin delete of America end delete in accordance with the Uniformed
Services Employment and Reemployment Rights Act of 1994
(Chapter 43 (commencing with Section 4301) of Title 38 of the
United States Code).

(b) The plan shall comply with Chapter 43 (commencing with
Section 4301) of Title 38 of the United States Code, as that chapter
may be amended from time to time.

(c) The term “service in the uniformed services,” for purposes
of determining plan vesting, eligibility for membership, and accrual
of benefits, means the performance of duty on a voluntary or
involuntary basis in a uniformed service under competent authority
and includes active duty, active duty for training, initial active duty
for training, inactive duty training, a period for which a participant
is absent from a position of employment for the purpose of an
examination to determine the fitness of the participant to perform
any such duty, and the period of time following the actual service
in the uniformed service through the last day a member is eligible
to report back to work or to apply for reemployment as specified
under Section 1002.259 of Title 20 of the Code of Federal
Regulations.

(d) The term “uniformed services” means the Armed Forces of
the United States of America, the Army National Guard and the
Air National Guard when engaged in active duty for training,
inactive duty training, or full-time National Guard duty, the
commissioned corps of the begin insert United States end insert Public Health Service,
and any other category of persons designated by the President in
time of war or emergency.

(e) No entitlement of the right to contribute toward credits under
the Cash Balance Benefit Program pursuant to this chapter by the
participant as a result of service in the uniformed services shall
accrue if the participant does not return to employment with the
same employer or employers which employed the participant
immediately prior to the eligible period of service in the uniformed
services as prescribed in Chapter 43 (commencing with Section
4301) of Title 38 of the United States Code.

begin delete SEC. 35. end delete

begin insert SEC. 47. end insert   

Section 28001 of the Education Code is amended to
read:

28001.  

(a) The participant who returns to employment with
the same employer which had employed the participant
immediately prior to the eligible period of service in the uniformed
services, in accordance with the requirements of Chapter 43
(commencing with Section 4301) of Title 38 of the United States
Code, shall be treated as not having incurred a break in the
performance of creditable service by reason of that participant’s
period or periods of service in the uniformed services. The length
of each period of service in the uniformed services shall not exceed
five years unless otherwise permitted pursuant to Section 28004.
Each period of service in the uniformed services by the participant
shall, upon that participant’s return to employment with the same
employer or employers which had employed the participant
immediately prior to the eligible period of service in the uniformed
services, constitute employment toward the performance of
creditable service provided that participant elects to remit the
employee contributions that would have been made during the
period of service in the uniformed services. The remittance of
employee contributions shall be calculated pursuant to Sections
26501 and 28003. In no event shall that remittance exceed the
amount the participant would have been required to contribute
during that period of performance of creditable service had the
participant remained continuously employed by the last employer
and not served in the uniformed services throughout that period.

(b) Notwithstanding Section 26506, remittance of employee
contributions in accordance with subdivision (a) shall be made by
the employer pursuant to Section 26502 upon the employer’s
receipt of written consent of the participant specifying a schedule
of repayments. That remittance shall commence during the period
beginning with the date of return to employment and may continue
for three times the period of the participant’s eligible period of
service in the uniformed services, not to exceed five years. The
plan’s receipt of the remittance payments to the plan with respect
to the Cash Balance Benefit Program shall be credited pursuant to
Chapter 7 of this part. Contributions, interest, and additional
earnings credits the participant would have earned had the
participant remained continuously employed during the period of
eligible service in the uniformed services shall be credited to
employee and employer accounts retroactively upon receipt of the
employee contributions. Upon receipt of the remittance payments
to the plan, the payments shall be subject to the same terms and
conditions under the program as if the payments had been employee
contributions made by the participant had the participant not served
for a period in the uniformed services. In no event shall the current
year contributions and contributions made for purposes of
purchasing service exceed the maximum exclusion allowance as
set forth in the Internal Revenue Code.

begin delete SEC. 36. end delete

begin insert SEC. 48. end insert   

Section 28002 of the Education Code is amended to
read:

28002.  

(a) Except as provided in subdivision (b), an employer
reemploying a participant with service subject to the requirements
of Chapter 43 (commencing with Section 4301) of Title 38 of the
United States Code, shall be liable to remit the employer
contributions provided that employer employed the participant
immediately prior to the eligible period of service in the uniformed
services. The contribution rate by the employer shall be to the
same extent as that for contributions to the Cash Balance Benefit
Program for other employees during the same period. In addition
to contributions due pursuant to this subdivision, the employer
shall remit an amount that is the equivalent of the full cost of any
interest and additional earnings credits credited pursuant to Section
28001. The employer shall provide information regarding the
reemployment of a participant who is subject to Chapter 43
(commencing with Section 4301) of Title 38 of the United States
Code on a form prescribed by the system within 30 days of the
date of reemployment. Following receipt of that notice, the system
shall calculate in accordance with Section 28003 the total amount
of employer contributions due for the participant for the full period
of service in the uniformed services. Within 60 working days of
notification by the plan of amount due, the employer shall remit
to the plan all employer contributions.

(b) The employer shall not be liable for employer contributions
for the period of service in the uniformed services if the participant
elects not to remit the employee contributions for that period
through the employer as required under Section 28001. In the event
the participant does not remit all of the employee contributions
within the prescribed repayment period, the total amount of the
employer contributions that were remitted for that period shall be
adjusted pursuant to Section 26302.