BILL ANALYSIS                                                                                                                                                                                                    







Date of Hearing: July 15, 1997

              ASSEMBLY COMMITTEE ON HIGHER EDUCATION
                        Ted Lempert, Chair

                    SB 227 (Solis) - As Amended:  July 3, 1997

  SENATE VOTE  : 37-0

  SUBJECT  :  Community colleges; officers and employees; retirement  
system.

  SUMMARY  :  Authorizes specified members of the State Teachers'  
Retirement System (STRS) and the Public Employees Retirement  
System (CalPERS) to move from one system to another, and  
establishes standards for those moves.  Authorizes a "loan" or  
temporary assignment of a staff person from a community college  
district or organization to the Chancellor's Office, and vice  
versa.  Specifically,  this bill : 

1) Authorizes STRS members employed by community college districts  
   who are subsequently hired by the Board of Governors of the  
   California Community College (Board) to elect to remain in the  
   STRS system, if the STRS system is notified in writing within  
   60 days of hire.  The bill would apply to changes in employment  
   on or after January 1, 1998.

2)  Authorizes a CalPERS member employed by the Board who is  
subsequently employed by a community college district to elect to  
have his or her community college service credited to the CalPers  
account.  Would require specified notification of CalPERS and  
STRS.  Would apply to changes in employment on or after January 1,  
1998.

3)  Authorizes a CalPERS member who changed employment and became  
a member of the CalPERS system on or after July 1, 1991, but  
before January 1, 1998, to elect to return to STRS coverage on or  
before March 1, 1998.  Requires CalPERS to transfer the actuarial  
present value of the assets of the person who so returns to the  
STRS system.  Provides that CalPERS is not required to identify  
and notify members who may be eligible for this option.

4)  Authorizes the board to enter into an agreement with a  
community college district or publicly funded organization within  
the Community Colleges for the loan or temporary assignment to the  
board of an employee of a district, or to a district of an  
employee of the board.  The temporary assignment is not to exceed  
two years, with a possible two year extension when compelling need  
is found.  The loan or temporary assignment requires the consent  
of the employee.

  EXISTING LAW  : 

1) Does not allow a STRS member performing creditable service in a  
   community college or school district, who later accepts a  









   position for any state agency, to continue membership in STRS  
   for service performed with the state agency.  Likewise,  
   existing CalPERS law does not allow a CalPERS member employed  
   by the Board of Governors of the Community Colleges, who later  
   accepts a position with a community college, from continuing  
   membership in CalPERS for service performed with the community  
   college district.

























































                                                          SB 227  
                                                         Page 3


2)  Provides that any person who first enters state employment  
after 7/1/91 shall be a member of the CalPERS Second Tier of  
benefits.

3)  Permits the temporary loan of employees under an  
interjurisdictional exchange.  This program has limitations that  
apparently do not permit the flexibility sought by the Board of  
Governors in retaining qualified and experienced individuals.
  FISCAL EFFECT  :  Unknown.  

  COMMENTS  :  

1)  This bill is sponsored by the California Community College's  
Chancellor's Office, because of its difficulty in recruiting  
individuals with direct experience in the community colleges to  
advise the Chancellor.  This is because the current Second Tier  
CalPERS package is perceived as inferior to the STRS package  
available to a community college employee, particularly one in  
mid-career.  Specifically, CalPERS Tier 2 provides a retirement  
formula significantly lower than the formula provided for service  
credit under STRS (Tier 2 = 1.25% at age 65; STRS = 2% at age 60),  
and requires a 10 year vesting period.  Further, CalPERS requires  
federal Social Security membership, which is not required of STRS  
members.

2)  By authorizing current Tier 2 CalPERS members (1.25% at age  
65) to return to coverage under the STRS system (2% at age 60)  
with only a transfer of the assets from CalPERS to STRS, the bill  
appears to create an unfunded liability for the STRS. Staff  
recommends that a provision be added to clarify that employees who  
elect to transfer to STRS are required to pay, prior to  
retirement, all contributions with respect to service in the  
CalPERS system at the contribution rate for additional service  
credit in effect at the time of the transfer to STRS.    
Additionally, although the bill implies with the use of the word  
"return" on page 6, line 4 that the CalPERS members were  
previously members of STRS, staff recommends that if it is the  
intent of the author to limit the bill in this way that the  
restriction be clearly set forth. 

3)  Similar legislation, AB 2916 (O'Connell) of the 1993-94  
Regular Session would have provided a similar election process for  
STRS members.  That bill was vetoed by the Governor.    

  REGISTERED SUPPORT / OPPOSITION  :

None on file.

  Analysis prepared by :  Rae Belisle / ahed / (916) 445-7632