BILL ANALYSIS Ó
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2015 - 2016 Regular
Bill No: SB 1352 Hearing Date: 4/11/16
-----------------------------------------------------------------
|Author: |Committee on Public Employment and Retirement |
|-----------+-----------------------------------------------------|
|Version: |2/19/16 As introduced |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Urgency: |No |Fiscal: |Yes |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|Glenn Miles |
| | |
-----------------------------------------------------------------
Subject: State teachers' retirement
SOURCE: California State Teachers' Retirement System
DIGEST: This bill makes various technical, conforming, or
non-controversial changes to the Education Code related to the
California State Teachers' Retirement System (CalSTRS) to
improve the administration of the State Teachers' Retirement
Plan, which includes the Defined Benefit Program (DB), the
Defined Benefit Supplement Program (DBS), and the Cash Balance
Benefit Program (CB).
ANALYSIS:
Existing law:
1)Establishes CalSTRS to provide retirement benefits for school
employees, as defined, through the DB, the DBS, and the CB.
2)Requires school employers, as specified, to enroll their
employees into mandatory membership into the DB depending on
the type of employer (pre K-12 or community college district)
and whether that employer offers the CB or if they are a
DB-only employer.
3)Establishes the CB to provide an alternative retirement
program for employees, primarily part-time or temporary
employees as defined, who are not mandated into the DB. The
CB is optional for employers to offer and is a hybrid
SB 1352 (Committee on Public Employment and Retirement) Page 2
of ?
retirement plan that has attributes of both a defined benefit
and defined contribution plan, including employee and employer
contributions and annuities.
4)Contains two Education Code sections with identical section
numbers for the definition of "accumulated Defined Benefit
Supplemental account balance". The duplicate code sections
occurred when two simultaneous bills were chaptered in 2000
and the first was erroneously not "chaptered out" by the
second.
This bill repeals the first code section and amends the second
section to clarify that the accumulated Defined Benefit
Supplemental account balance is an amount of credits, as
specified. Sections affected: 22101.5 (added by Chapter 74,
Statutes of 2000), 22101.5(added by Chapter 1021,
Statutes of 2000)
5)Provides a disability allowance program for CalSTRS members
who joined the system prior to October 16, 1992, and who did
not elect to participate in the disability retirement program
(members after that date participate in the disability
retirement program). The disability allowance provides 50
percent of the member's highest average annual compensation
until the member reaches the age to qualify for a service
retirement. Upon reaching retirement age, the member then
receives the lower of either the disability allowance or the
service retirement benefit. The service retirement benefit is
based on an age factor, a projected service factor, and a
projected final compensation factor determined as if the
member had not become disabled.
Existing law also provides supplemental benefit payments to
protect the purchasing power of the member's base allowance.
This bill clarifies which base allowance to use when
determining supplemental benefit payments for a member
potentially subject to a disability allowance/service
retirement conversion. Sections affected: 22106.1, 24410
6)Defines "credited interest".
This bill corrects typographical errors in the section
defining "credited interest". Section affected: 22120
SB 1352 (Committee on Public Employment and Retirement) Page 3
of ?
7)Prescribes conditions under which persons in positions
otherwise excluded from membership in the DB may elect to
become a member, including the following: transferring from a
position that is covered under CalSTRS to one covered under
CalPERS; and, working in part-time or substitute position
otherwise excluded from the DB but performing creditable
service. Persons electing membership must do so on a form
determined by CalSTRS.
This bill clarifies that the form electing membership in
CalSTRS must be received at CalSTRS headquarters office within
30 days after the date of the member's signature on the form.
It also clarifies that membership in the DB will become
effective beginning the first day of the pay period following
the election. Sections affected: 22508, 22508.5, 22509, and
22515
8)States how service shall be credited to the DB; limits a
member's creditable service to 1 credit per school year; and
provides that contributions in excess of the amount required
for 1 credit, except certain excluded excess contributions,
shall be credited the DBS.
This bill adds conforming statutory references to exclude
additional contributions made as part of the full-funding plan
for CalSTRS by Chapter 47, Statutes of 2014, from excess
contributions that are credited to the DBS. Section affected:
22703
9)Authorizes service credit for a member's unused sick leave
upon service retirement and prescribes the calculation used to
determine the conversion of sick leave to service credit for
members employed by a school employer.
This bill clarifies that when the member is employed by the
State instead of a school employer the conversion of sick
leave to service credit will be .004 years of service credit
for each day of unused sick leave, which is consistent with
the time base used to calculate service credit reported by the
State. Section affected: 22717
10)Requires, under the federal Uniformed Services Employment and
Reemployment Rights Act of 1994 (USERRA), that qualified
SB 1352 (Committee on Public Employment and Retirement) Page 4
of ?
pension funds treat returning military service members as if
they had no break in service. Existing state statutes
governing the DB and CB conform to USERRA.
This bill makes changes to statutory provisions administering
the DBS plan to conform to USERRA. Sections affected: 24005,
24105, 24201.5, and 24204.
11)Provides that a disability allowance, a disability retirement
benefit, or a service retirement benefit related to a
disability becomes effective under specified conditions,
including that the effective date of the benefit be later than
the last day of the member's creditable service.
This bill clarifies that the effective date of the disability
related benefit be later than the last day of creditable
compensation earned. This distinction conforms to the
statutory intent of requiring a member to exhaust the member's
leave before initiating a disability benefit. Sections
affected: 24005, 24105, 24201.5, and 24204
12)Authorizes a member who is awaiting the determination of an
application for a disability allowance or disability
retirement benefit to apply for a service retirement from the
DB, if eligible. Upon approval or denial of the pending
disability application, the member's retirement allowance is
adjusted appropriately. The member is not permitted to opt
for a lump sum payment of the DB service retirement during the
pendency of the disability application determination.
However, a member may take a lump sum from the member's DBS
account.
This bill clarifies that a member who applies for a service
retirement from the DB pending a disability determination and
who opts to take a lump sum distribution from the member's DBS
account is not eligible for a disability benefit or disability
annuity from the DBS. Section affected: 24201.5
13)Provides to eligible members who receive a service retirement
certain enhancement factors to use in calculating the member's
retirement allowance, including the following: one year final
compensation; a career factor; and a longevity bonus. In
determining whether the member has enough service credits to
qualify for the enhancement factors, existing law credits the
SB 1352 (Committee on Public Employment and Retirement) Page 5
of ?
member with two-tenths of service credit for each year of
unused sick-leave.
This bill clarifies that the credit for unused sick-leave to
determine a member's eligibility for the enhancement factors
also applies when the member "re-retires" after having
previously received a disability allowance, a disability
retirement benefit, or a disability-related service
retirement. Sections affected: 24209, 24209.3, 24211, 24212,
and 24213
14)Authorizes a member to change or cancel the member's option
benefit and beneficiary election up to 30 days after the
effective date of the member's initial benefit payment. The
member must make the change or cancelation on a
CalSTRS-provided form and ensure that CalSTRS receives the
form within 30 days of the date of the member's signature on
the form.
This bill clarifies that the requirement that a member make a
change or cancelation of an option benefit or beneficiary
election on a CalSTRS-provided form within 30 days of the date
of the member's signature on the form also applies to changes
or cancelations made due to a dissolution of the member's
marriage. Section affected: 24322
15)Requires interest to continue to accrue on any amount that is
retained in the fund but otherwise payable to a member or
beneficiary who cannot be located after a good faith attempt.
However, no interest accrues on amounts that are made by
warrant drawn and subsequently canceled by the State
Controller after one year of being unclaimed. Payments revert
to the fund and are available to pay the fund's liabilities
but should a member or beneficiary later appear with a legal
claim, the member or beneficiary shall receive payment.
This bill clarifies that, in addition to payments made by
warrant and canceled by the State Controller, payments
rejected via electronic funds transfer shall also not accrue
interest when they revert to the fund. Section affected:
24606
16)Requires the board to acquire the services of an actuary to
provide information, as specified, including an actuarial
SB 1352 (Committee on Public Employment and Retirement) Page 6
of ?
evaluation of the DB at least every six years and of the CB
and DBS plans annually.
This bill makes a technical change fixing an erroneous code
reference and clarifies various provisions to recognize that
the board does not formerly "adopt" actuarial valuations but
bases its decisions on the actuarial valuations provided by
the actuary. Sections affected: 25001, 25006, and 26202
17)Provides that members of the CB plan (e.g., part-time
employees who didn't qualify for the DB plan) who have
separated from employment, attained normal retirement age, and
have received an annuity from the CB plan for at least a year
may, may terminate their annuity and begin making
contributions and receiving employer contributions to the CB
plan upon returning to employment performing creditable
service and notifying CalSTRS, as specified.
This bill would eliminate the requirement that an annuitant in
the CB plan who wants to terminate the annuity and begin
making contributions again while performing post-retirement
creditable service must have been receiving the annuity for at
least a year and must have attained normal retirement age.
This technical change aligns the CB plan with similar changes
previously made to the DB plan. Sections affected: 26808,
26810
Background
CalSTRS sponsors an annual housekeeping bill to make various
technical and conforming changes to the Education Code to enable
CalTRS to more effectively administer the Teachers' Retirement
Plan.
Related/Prior Legislation
AB 991 (Assembly Public Employees, Retirement, and Social
Security Committee, Chapter 123, Statutes of 2015), the annual
housekeeping bill, made various technical and conforming changes
to the Education Code to enable CalSTRS to more effectively
SB 1352 (Committee on Public Employment and Retirement) Page 7
of ?
administer the Teachers' Retirement Plan.
SB 1220 (Torres, Chapter 755, Statutes of 2014), the annual
housekeeping bill, made various technical and conforming changes
to the Education Code to enable CalSTRS to more effectively
administer the Teachers' Retirement Plan.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
California State Teachers' Retirement System (source)
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the sponsor, this bill
will help ensure continued effective and efficient plan
administration for CalSTRS' internal and external customers.