BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1353


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          Date of Hearing:   June 22, 2016


           ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT, AND SOCIAL  
                                      SECURITY


                                  Rob Bonta, Chair


          SB  
          1353 (Pan) - As Amended June 8, 2016


          SENATE VOTE:  25-10


          SUBJECT:  State Teachers' Retirement System: funding


          SUMMARY:  Clarifies that the state contribution that the  
          Teachers' Retirement Board (TRB) has the authority to adjust  
          beginning in Fiscal year 2017-18 that is required by the full  
          funding plan for the California State Teachers' Retirement  
          System (CalSTRS) will be applied to retire the unfunded  
          liability associated with the 1990 benefit structure.  This is  
          consistent with the plan as it was to be enacted in AB 1469.



          EXISTING LAW, as enacted by AB 1469 (Bonta), Chapter 47,  
          Statutes of 2014, establishes a plan to address the CalSTRS  
          Defined Benefit Program's (DB) unfunded liability by increasing  
          contribution rates, beginning July 1, 2014, of teachers,  
          employers, and the state.


          FISCAL EFFECT:  Unknown.









                                                                    SB 1353


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          COMMENTS:  The provisions of the 2014 full funding plan for  
          CalSTRS increase the state contribution rate through the 2016-17  
          school year and then require the TRB to adjust the state  
          contribution rate to eliminate any remaining unfunded actuarial  
          obligation (UAO) applicable to the 1990 benefit structure.  The  
          statute, however, prohibits these provisions from being  
          construed to be applicable to any UAO resulting from any benefit  
          increase or change in member or employer contribution rate that  
          occurs after July 1, 1990.  





          When the Full Funding Plan was being developed in 2014, the  
          intent was always to utilize these increased state contributions  
          to reduce the UAO resulting from the benefits and contribution  
          rates in effect as of July 1, 1990.  It is, therefore, necessary  
          to amend the provisions to clarify that the state contributions  
          will be allocated to reduce the UAO resulting from the benefits  
          and contribution rates in effect as of July 1, 1990.





          According to the author, "This technical change is needed to  
          avoid confusion in the future about how to adjust the state's  
          contribution rate to CalSTRS."





          REGISTERED SUPPORT / OPPOSITION:











                                                                    SB 1353


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          Support


          California State Teachers' Retirement System (Sponsor)




          Opposition


          None on file




          Analysis Prepared by:Karon Green / P.E.,R., & S.S. / (916)  
          319-3957