BILL ANALYSIS
SB 1027
Date of Hearing: August 27, 1997
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
SB 1027 (Schiff) - As Amended: July 7, 1997
Policy Committee: Public Employees Vote: 7-1
Urgency: No State Mandated Local Program: NoReimbursable:
SUMMARY
This bill , under the State Teachers' Retirement System (STRS):
1. Authorizes members who are not yet retired to repurchase and
redeposit service credits that were paid to a former spouse
pursuant to a marriage dissolution or legal separation.
2. Enacts provisions for an active member to elect to purchase
service credit for out-of-state service provided s/he does not
have credit or is ineligible to receive credit for the same
service in the Cash Balance Plan or another public retirement
system, excluding social security. Any member who so elects
must contribute the actuarial cost of the service.
3. Limits the amount of out-of-state service for which a member
may purchase credit from exceeding the number of years of
service credited to the member by the out-of-state retirement
system or 10 years, whichever is less.
4. Specifies means by which out-of-state service credit may be
purchased, procedures for election, and terms of payment.
FISCAL EFFECT
1. Minor, if any, costs to STRS to process requests for redeposit
of nonmember spouse contributions.
2. No costs associated with the out-of-state service provisions
since the member who elects to purchase credit for out-of-state
service must pay both the employer and employee contribution
for this service. However, there would be unknown future
General Fund costs to maintain the purchasing power of the
increased retirement benefit.
BACKGROUND
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1. Under current law, when STRS members divorce, they may be
required to share the funds in their STRS accounts with their
former spouses pursuant to court determination, thereby
reducing the amount of service credit attributable to those
members as well as their future retirement benefit. The
non-member spouses may retain the court-awarded service credits
for future retirement benefit payments or convert them to cash.
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By allowing these STRS members to repurchase and redeposit the
refunded service credits (i.e., paying the contribution
allocated to the former spouses), this bill enacts provisions
which are similar to those that already exist for the Public
Employees' Retirement System.
2. By authorizing the purchase of out-of-state service credit,
this bill provides a retirement benefit for school employees
which reflects their entire career of service rather than just
that portion served in this state.
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