BILL ANALYSIS
AB 1102
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CONCURRENCE IN SENATE AMENDMENTS
AB 1102 (Knox)
As Amended August 27, 1998
Majority vote
ASSEMBLY: 58-19 (January 29, 1998)SENATE: 23-7(August 28, 1998)
Original Committee Reference: P.E.,R. & S.S.
SUMMARY : Provides that school employees covered by Public
Employees' Retirement System (CalPERS) and by State Teachers'
Retirement System (STRS) may receive service credit for unused
sick leave for those who retire on or after January 1, 1999, and
provides additional new benefits for STRS members that will be
funded as specified in AB 2804 (Committee on PER&SS).
The Senate amendments :
1) Add provisions to the bill that provide STRS members who have
30 years of service with an additional 0.2% benefit factor and cap
the maximum factor allowable at 2.4%.
2) Vest the funding stream from the General Fund to the
Supplemental Benefit Maintenance Account which is used to provide
funding to maintain purchasing power for retired teachers at 75%
of the value of the original allowance.
3) Specify that the provisions in the bill related to STRS would
only become operative if AB 2804 (Committee on PER&SS) and AB 1150
(Prenter) are also enacted and become operative.
EXISTING LAW provides state, school, and school safety members may
receive service credit for unused sick leave unless the school
members were hired on or after July 1, 1980.
Current law also provides that teachers who retire at age 60 or
older receive a benefit factor of 2%. There is currently no
increase in the factor related to the number of years of service
credit a teacher has.
Also under current law, the General Fund transfers an amount equal
to 2.5% of prior year payroll to the Supplemental Benefit
Maintenance Account to fund a supplemental benefit that maintains
the purchasing power of STRS benefit allowances at 75% of the
value of the original allowance. This is not a guaranteed funding
stream and can be reduced by the state.
AS PASSED BY THE ASSEMBLY , this bill:
1) Extended to school and miscellaneous members hired on or after
July 1, 1980 who retire after January 1, 1999, a service credit
for unused sick leave which currently applies to school and
miscellaneous members hired prior to July 1, 1980.
AB 1102
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2) Exempted from this extension school safety members who were
employed after July 1, 1980, and who retire prior to January 1,
1999.
3) Required school employers to make an additional contribution
for this
benefit.
FISCAL EFFECT : This bill specifies that the benefits provided in
this bill related to STRS members be funded in accordance with the
provisions of AB 2804 which provides a cost savings to the General
Fund of approximately $577 million in FY 98/99, $158 million in FY
99/00, and a savings of $213 million in 2000/01.
According to CalPERS, the annual cost to school employers to
provide the unused sick leave credit to classified employees would
be $9.128 million.
COMMENTS : This measure would correct an inequity in STRS and PERS
whereby school employees who were hired after July 1, 1980, are
not eligible to use sick leave at the time of retirement toward
service credit.
Additionally, this bill, along with AB 1150 (Prenter) and SB 1528
(Schiff), represent the benefit portion of an agreement reached
with the administration that will provide benefit increases to
California's teachers. AB 2804 (Committee on PER&SS) contains the
funding component of the package.
According to STRS, the benefits provided to teachers in California
lag behind those of other public retirement systems. Proponents
contend that these benefits must be improved in order to attract
and retain qualified teachers in California. Additionally,
supporters state that this bill, and the other bills in the
package, represent a fair compromise on the use of the Elder Full
Funding money and will encourage teachers nearing retirement age
to postpone retirement and stay in the classroom a little longer.
Analysis prepared by : Karon Green / aper&ss / (916) 319-3957
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