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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