BILL ANALYSIS                                                                                                                                                                                                    

                                                          AB 1102  
                                                         Page 1

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.                


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  
                                                         Page 2

2)  Exempted from this extension school safety members who were  
employed after July 1, 1980, and who retire prior to January 1,  

3) Required school employers to make an additional contribution  
   for this    

  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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