BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1353  


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          Date of Hearing:  June 29, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


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


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          |Policy       |Public Employees,              |Vote:|6 - 0        |
          |Committee:   |Retirement/Soc Sec             |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill clarifies that the state contribution that the  
          Teachers' Retirement Board (TRB) has the authority to adjust  
          beginning in 2017-18 for funding the California State Teachers'  
          Retirement System (CalSTRS) will be applied to retire the  
          unfunded liability associated with the 1990 benefit structure.


          FISCAL EFFECT:


          No additional state costs. 









                                                                    SB 1353  


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          COMMENTS:


          Purpose and Background. AB 1469 (Bonta), Chapter 47, Statutes of  
          2014, established a "Full Funding Plan" to address the CalSTRS  
          pension unfunded liability by increasing contribution rates of  
          teachers, employers, and the state. The Full Funding Plan  
          increases the state contribution rate through the 2016-17 school  
          year and then requires the TRB to adjust the state contribution  
          rate to eliminate any remaining unfunded actuarial obligation  
          (UAO) applicable to the 1990 benefit structure.  





          According to the author, SB 1353 is needed to avoid confusion in  
          the future about how to adjust the state's contribution rate to  
          CalSTRS. 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. However, a  
          technical reading of the relevant portions of the Education Code  
          could lead to a different interpretation. The author and the  
          sponsor of the bill, CalSTRS, argue that it is 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. 





          Analysis Prepared by:Luke Reidenbach / APPR. / (916)  
          319-2081











                                                                    SB 1353  


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