BILL ANALYSIS                                                                                                                                                                                                    

     Appropriations Committee Fiscal Summary

                              SB 1027 (Schiff)

Hearing Date: 5/22/97         Amended: 5/14/97
                         
Consultant:  Ed Derman        Policy Vote: PE&R  
4-0           
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BILL SUMMARY: SB 1027 permits STRS members whose  
accounts were divided with an ex-spouse to  
redeposit the contributions attributable to the  
ex-spouseos account and increase the memberos  
service credit, if the ex-spouse was refunded the  
money in the ex-spouseos account. It also permits  
STRS members with out-of-state teaching service  
to buy additional STRS service, entirely at the  
memberos expense, up to the lesser of the  
out-of-state service or 10 years.
                         Fiscal Impact (in thousands)
  
Major Provisions           1997-98      1998-99   1999-2000   Fund  

Memberos buyback             Unknown foregone unanticipatedSpecial
 of ex-spouse service                 STRS actuarial gain
                         
Prior service purchase   Unknown future increase for purchasingGeneral
                         power protection   

STAFF COMMENTS:  Under current law, when a STRS  
member divorces, part of the divorce settlement  
can be a division of the STRS account. This  
reduces the amount of service credit attributable  
to the member, thereby reducing the memberos  
future STRS retirement benefit. This bill permits  
the STRS member to buy back the service credit  
(paying the memberos contribution allocated to  
the ex-spouse), if the ex-spouse terminated his  
or her account and no longer is eligible for STRS  
benefits. Similar provisions already exist for  
PERS members. By permitting STRS members to buy  
back this service, the systemos obligation will  
increase because the memberos contributions are  
less than the increase in the value of purchased  
service. When STRS estimates the obligations of  
the system, however, it does not include a  









prediction of future marital divisions.  
Consequently, dividing the accounts due to  
divorce between a member and an ex-spouse results  
in an unanticipated gain to STRS, which would be  
foregone if the member could buy back the service  
allocated to the ex-spouse.

The bill requires the STRS member who is buying  
STRS service for out-of-state work to pay both  
the employer and employee contribution for this  
service. This additional service credit will  
increase the memberos retirement benefit. The  
increased future cost to maintain the purchasing  
power of that increased retirement benefit would  
be paid from the General Fund.