BILL ANALYSIS
SENATE RULES COMMITTEE SB 1027
Office of Senate Floor Analyses
1020 N Street, Suite 524
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THIRD READING
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Bill No: SB 1027
Author: Schiff (D)
Amended: 5/14/97
Vote: 21
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SENATE PUBLIC EMP. & RET. COMMITTEE : 4-0, 3/31/97
AYES: Schiff, Burton, Hurtt, Karnette
NOT VOTING: Haynes
SENATE APPROPRIATIONS COMMITTEE : 12-0, 5/22/97
AYES: Johnston, Alpert, Burton, Calderon, Johnson,
Karnette, Kelley, Lee, Leslie, McPherson, Mountjoy,
Vasconcellos
NOT VOTING: Dills
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SUBJECT : School employees' retirement
SOURCE : STRS Board of Administration
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DIGEST : This bill authorizes a State Teachers'
Retirement System (STRS) member to re-deposit contributions
withdrawn by non-member spouses, as specified. Authorizes
purchases of additional service credit for out-of-state
public school employment without any date restriction.
ANALYSIS :
1.SB 1190 (Lockyer), Chapter 542 of 1988, allowed the
court, upon the legal separation or divorce of a STRS
member, to order in the judgment that the accumulated
retirement contributions and service credit attributable
to periods of service during the marriage be divided into
two separate and distinct accounts in the name of the
member and the non-member spouse, respectively.
The non-member spouse who is awarded a separate account
has a right to a service retirement allowance, under
specified conditions, or may apply for a refund of the
accumulated retirement contributions in his or her
separate account. If a refund is requested and received,
the non-member spouse permanently waives all rights and
benefits pertaining to the service credit represented by
the accumulated retirement contributions.
Existing STRS law does not permit a STRS member to
re-deposit the accumulated retirement contributions
refunded to a former spouse after the account has been
segregated.
This bill would permit a STRS member who is not yet
retired for service or disability to re-deposit the total
amount of the accumulated retirement contributions
refunded to the former spouse pursuant to a court order
in a legal separation or divorce.
Consistent with existing STRS law, the amount required to
be redeposited would include regular interest from the
date of refund, and may be paid in a lump sum, or in
monthly installments for a period not to exceed 60
months.
Similar provisions already exist for PERS members.
2.Existing law authorizes credit for service prior to July
1, 1944 in other states.
This bill also permits STRS members with out-of-state
teaching service to buy additional STRS service, entirely
at the member's expense, up to the lesser of the
out-of-state service or 10 years.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Major Provisions 1997-98 1998-99
1999-2000 Fund
Member's buyback Unknown foregone unanticipated
STRS Special
of ex-spouse service actuarial gain
Prior service purchase Unknown future increase for
purchasing General
power protection
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 member's retirement
benefit. The increased future cost to maintain the
purchasing power of that increased retirement benefit would
be paid from the General Fund.
SUPPORT : (Verified 5/23/97)
STRS Board of Administration (source)
California Retired Teachers Association
TSM:ctl 5/27/97 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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