BILL NUMBER: AB 2700 CHAPTERED
BILL TEXT
CHAPTER 1021
FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2000
APPROVED BY GOVERNOR SEPTEMBER 30, 2000
PASSED THE SENATE AUGUST 31, 2000
PASSED THE ASSEMBLY AUGUST 31, 2000
AMENDED IN SENATE AUGUST 31, 2000
AMENDED IN SENATE JUNE 20, 2000
AMENDED IN ASSEMBLY MAY 26, 2000
INTRODUCED BY Assembly Member Lempert
(Principal coauthor: Assembly Member Knox)
(Coauthor: Assembly Member Thompson)
(Coauthor: Senator Ortiz)
FEBRUARY 25, 2000
An act to amend Sections 22102, 22115, 22161.5, 22170, 22206,
22453, 22651, 22652, 22655, 22656, 22659, 22660, 22661, 22662, 22664,
22703, 22706, 22901.5, 24616, 24617, 25000, 25000.5, 25001, 25002,
25006, 25008, 25009, 25010, 25011, 25012, 25014, 25015, 25016, 25017,
25018, 25019, 25020, 25021, 25023, and 25024 of, to amend and
renumber Section 22302 of, to amend, repeal, and add Sections
22119.2, 22905, 22954, 22955, and 24600 of, to add Sections 22101.5,
22144.5, 22146.7, 22177, 22311.5, 22955.5, and 24305.3 to, and to
repeal and add Sections 22158, 22460, and 22906 of, the Education
Code, relating to retirement, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2700, Lempert. State teachers' retirement: Defined Benefit
Supplement Program.
(1) Existing law establishes the Defined Benefit Program in the
Teachers' Retirement Plan that provides retirement and disability
benefits to members of the program. If Chapter 74 of the Statutes of
2000 becomes effective, it will establish the Defined Benefit
Supplement Program for members of the Defined Benefit Program,
pursuant to which members and employers will receive supplemental
retirement, disability, final, or termination benefits, payable in a
lump-sum or annuity, as specified.
This bill would make technical and conforming changes relating to
the Defined Benefit Supplement Program and would make an
appropriation of $600,000 from the Teachers' Retirement Fund to the
Teachers' Retirement Board for the administrative costs of
implementing the program. These provisions would become operative
only if Chapter 74 of the Statutes of 2000 becomes effective on
January 1, 2001.
(2) Existing law authorizes the Teachers' Retirement Board to
audit the records of any public agency as the board determines
necessary.
This bill would authorize the board to excuse certain adverse
audit findings occurring prior to January 1, 2002, and relating to
changes in the law that will become operative on that date. The bill
would make other technical changes that would become operative on
specified dates subject to certain increases in school funding.
(3) The bill would incorporate additional changes to Sections
22652 and 22662 of the Education Code proposed by AB 820 to take
effect if this bill and that bill are enacted and become effective on
or before January 1, 2001, and this bill is enacted last.
(4) The bill would reappropriate to the board, for specified
administrative costs, unexpended funds previously appropriated to the
board in 1999.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22101.5 is added to the Education Code, to
read:
22101.5. "Accumulated Defined Benefit Supplement account balance"
means credits equal to the sum of member contributions, the member
contributions picked up by an employer, employer contributions,
interest credited pursuant to Section 25005 and additional earnings
credited pursuant to Section 25006.
SEC. 2. Section 22102 of the Education Code is amended to read:
22102. "Accumulated retirement contributions" means the sum of
the member contributions, the member contributions picked up by an
employer pursuant to Sections 22903 and 22904, and credited interest
on those contributions. Accumulated retirement contributions shall
not include accumulated annuity deposit contributions, accumulated
tax-sheltered annuity contributions, accumulated Defined Benefit
Supplement account balance, or additional earnings credit.
SEC. 3. Section 22115 of the Education Code is amended to read:
22115. (a) "Compensation earnable" means the creditable
compensation a person could earn in a school year for creditable
service performed on a full-time basis, excluding service for which
contributions are credited by the system to the Defined Benefit
Supplement Program.
(b) The board may determine compensation earnable for persons
employed on a part-time basis.
(c) When service credit for a school year is less than 1.000,
compensation earnable shall be the product obtained when creditable
compensation paid in that year is divided by the service credit for
that year, except as provided in subdivision (d).
(d) When a member earns creditable compensation at multiple pay
rates during a school year and service credit at the highest pay rate
is at least .900 of a year, compensation earnable shall be
determined as if all service credit for that year had been earned at
the highest pay rate. This subdivision shall be applicable only for
purposes of determining final compensation. When a member earns
creditable compensation at multiple pay rates during a school year
and service credit at the highest pay rate is less than .900 of a
year, compensation earnable shall be determined pursuant to
subdivision (c).
(e) The amendments to this section made during the second year of
the 1999-2000 Regular Session shall become operative on July 1, 2002,
if the revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise the amendments to
this section made during the second year of the 1999-2000 Regular
Session shall become operative on July 1, 2003.
SEC. 4. Section 22119.2 of the Education Code is amended to read:
22119.2. (a) "Creditable compensation" means salary and other
remuneration payable in cash by an employer to a member for
creditable service. Creditable compensation shall include:
(1) Money paid in accordance with a salary schedule based on years
of training and years of experience for creditable service performed
up to and including the full-time equivalent for the position in
which the service is performed.
(2) For members not paid according to a salary schedule, money
paid for creditable service performed up to and including the
full-time equivalent for the position in which the service is
performed.
(3) Money paid for the member's absence from performance of
creditable service as approved by the employer, except as provided in
paragraph (7) of subdivision (b).
(4) Member contributions picked up by an employer pursuant to
Section 22903 or 22904.
(5) Amounts deducted by an employer from the member's salary,
including deductions for participation in a deferred compensation
plan; deductions for the purchase of annuity contracts, tax-deferred
retirement plans, or other insurance programs; and deductions for
participation in a plan that meets the requirements of Section 125,
401(k), or 403(b) of Title 26 of the United States Code.
(6) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) if paid to all employees in a class in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed.
(7) Money paid in accordance with a salary schedule by an employer
to an employee for achieving certification from a national board
awarding certifications, in which eligibility for this certification
is based, in part, on years of training or years of experience in
teaching service, if the compensation is paid by the employer to all
employees who achieved this certification.
(8) Any other payments the board determines to be "creditable
compensation."
(b) "Creditable compensation" does not mean and shall not include:
(1) Money paid for service performed in excess of the full-time
equivalent for the position.
(2) Money paid for overtime or summer school service, or money
paid for the aggregate service performed as a member of the Defined
Benefit Program in excess of one year of service credit for any one
school year.
(3) Money paid for service that is not creditable service pursuant
to Section 22119.5.
(4) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) of subdivision (a) if not paid to all employees
in a class in the same dollar amount, the same percentage of salary,
or the same percentage of the amount being distributed, except as
provided in paragraph (7) of subdivision (a).
(5) Fringe benefits provided by an employer.
(6) Job-related expenses paid or reimbursed by an employer.
(7) Money paid for unused accumulated leave.
(8) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9) Annuity contracts, tax-deferred retirement programs, or other
insurance programs, including, but not limited to, plans that meet
the requirements of Section 125, 401(k), or 403(b) of Title 26 of the
United States Code that are purchased by an employer for the member
and are not deducted from the member's salary.
(10) Any payments determined by the board to have been made by an
employer for the principal purpose of enhancing a member's benefits
under the Defined Benefit Program. An increase in the salary of a
member who is the only employee in a class pursuant to subdivision
(b) of Section 22112.5 that arises out of an employer's restructuring
of compensation during the member's final compensation period shall
be presumed to have been granted for the principal purpose of
enhancing benefits under the Defined Benefit Program and shall not be
creditable compensation. If the board determines sufficient
evidence is provided to the system to rebut this presumption, the
increase in salary shall be deemed creditable compensation.
(11) Any other payments the board determines not to be "creditable
compensation."
(c) Any employer or person who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (b)
shall reimburse the plan for any overpayment of benefits that occurs
because of that inconsistent reporting and may be subject to
prosecution for fraud, theft, or embezzlement in accordance with the
Penal Code. The system may establish procedures to ensure that
compensation reported by an employer is in compliance with this
section.
(d) The definition of "creditable compensation" in this section is
designed in accordance with sound funding principles that support
the integrity of the retirement fund. These principles include, but
are not limited to, consistent treatment of compensation throughout
the career of the individual member, consistent treatment of
compensation for an entire class of employees, the prevention of
adverse selection, and the exclusion of adjustments to, or increases
in, compensation for the principal purpose of enhancing benefits.
(e) This section shall be deemed to have become operative on July
1, 1996.
(f) This section shall become inoperative on July 1, 2002, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become inoperative on July 1, 2003 and as of January 1, 2004, this
section is repealed, unless a later enacted statute, that becomes
operative on or before January 1, 2004, deletes or extends the dates
on which it becomes inoperative and is repealed.
SEC. 5. Section 22119.2 is added to the Education Code, to read:
22119.2. (a) "Creditable compensation" means remuneration that is
payable in cash by an employer to all persons in the same class of
employees and is paid to an employee for performing creditable
service. Creditable compensation shall include:
(1) Salary paid in accordance with a salary schedule or employment
agreement.
(2) Remuneration that is paid in addition to salary, providing it
is payable to all persons who are in the same class of employees in
the same dollar amount, the same percentage of salary, or the same
percentage of the amount being distributed.
(3) Remuneration that is paid for the use of sick leave, vacation,
and other employer-approved leave, except as provided in paragraph
(4) of subdivision (c).
(4) Member contributions that are picked up by an employer
pursuant to Section 22903 or 22904.
(5) Amounts that are deducted from a member's compensation,
including, but not limited to, salary deductions for participation in
a deferred compensation plan; deductions to purchase an annuity
contract, tax- deferred retirement plan, or insurance program; and
contributions to a plan that meets the requirements of Section 125,
401(k), or 403(b) of Title 26 of the United States Code.
(6) Any other payments the board determines to be "creditable
compensation."
(b) Any salary or other remuneration determined by the board to
have been paid for the principal purpose of enhancing a member's
benefits under the plan shall not be credited under the Defined
Benefit Program. Contributions on that compensation shall be
credited to the Defined Benefit Supplement Program. A presumption by
the board that salary or other remuneration was paid for the
principal purpose of enhancing the member's benefits under the plan
may be rebutted by the member or by the employer on behalf of the
member. Upon receipt of sufficient evidence to the contrary, a
presumption by the board that salary or other remuneration was paid
for the principal purpose of enhancing the member's benefits under
the plan may be reversed.
(c) "Creditable compensation" does not mean and shall not include:
(1) Remuneration that is not payable in cash or is not payable to
all persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable
service pursuant to Section 22119.5.
(3) Remuneration that is paid in addition to salary if it is not
payable to all persons in the same class of employees in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed pursuant to paragraph (2) of
subdivision (a).
(4) Remuneration that is paid for unused accumulated leave.
(5) Annuity contracts, tax-deferred retirement plans, or insurance
programs and contributions to plans that meet the requirements of
Section 125, 401(k), or 403(b) of Title 26 of the United States Code
when the cost is covered by an employer and is not deducted from the
member's salary.
(6) Fringe benefits provided by an employer.
(7) Job-related expenses paid or reimbursed by an employer.
(8) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9) Any other payments the board determines not to be "creditable
compensation."
(d) An employer or individual who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (c)
shall reimburse the plan for benefit overpayments that occur because
of that inconsistent reporting and may be subject to prosecution for
fraud, theft, or embezzlement in accordance with the Penal Code. The
system may establish procedures to ensure that compensation reported
by an employer is in compliance with this section.
(e) For purposes of this section, remuneration shall be considered
payable if it would be paid to any person who meets the
qualifications or requirements specified in a collective bargaining
agreement or an employment agreement as a condition of receiving the
remuneration.
(f) This definition of "creditable compensation" reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member's career, consistent treatment of
compensation among an entire class of employees, preventing adverse
selection, and excluding from compensation earnable remuneration that
is paid for the principal purpose of enhancing a member's benefits
under the plan. The board shall determine the appropriate crediting
of contributions between the Defined Benefit Program and the Defined
Benefit Supplement Program according to these principles, to the
extent not otherwise specified pursuant to this part.
(g) The section shall become operative on July 1, 2002, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2003.
SEC. 6. Section 22144.5 is added to the Education Code, to read:
22144.5. "Liability gains and losses" means the difference
between actual noninvestment related experience and the experience
expected based upon a set of noninvestment related actuarial
assumptions during the period between two actuarial valuation dates,
as determined in accordance with assumptions adopted by the board
pursuant to Section 22311.5.
SEC. 7. Section 22146.7 is added to the Education Code, to read:
22146.7. "Minimum interest rate" means the annual interest rate
determined by the board by plan amendment at which interest shall be
credited to Defined Benefit Supplement accounts for a plan year.
SEC. 8. Section 22158 of the Education Code is repealed.
SEC. 9. Section 22158 is added to the Education Code, to read:
22158. (a) "Projected service" means the sum of credited service
plus the credited service that would have been earned for the school
years during which a disability allowance was payable if the member
had performed creditable service during that time.
(b) Projected service for a school year shall be determined on the
basis of the highest credited service earned by the member during
any one of the three school years immediately preceding the member's
death or the date the disability allowance began to accrue.
(c) Projected service shall not include credited service for which
contributions have been credited to the Defined Benefit Supplement
Program.
SEC. 10. Section 22161.5 of the Education Code is amended to
read:
22161.5. "Refund" means the lump-sum return of a member's
accumulated retirement contributions under the Defined Benefit
Program and does not include the balance of credits in the member's
Defined Benefit Supplement account.
SEC. 11. Section 22170 of the Education Code is amended to read:
22170. "Service" means work performed for compensation in a
position subject to coverage under the Defined Benefit Program,
except as otherwise specifically provided in this part, providing the
contributions on compensation for that work are not credited to the
Defined Benefit Supplement Program.
SEC. 12. Section 22177 is added to the Education Code, to read:
22177. (a) "Unfunded actuarial obligation," with respect to the
Defined Benefit Program, means that portion of the actuarial present
value of benefits that is not provided for by future, normal costs or
covered by the actuarial value of assets attributable to the Defined
Benefit Program, based on assumptions adopted by the board pursuant
to Section 22311.5.
(b) "Unfunded actuarial obligation," with respect to the Defined
Benefit Supplement Program, means that portion of the actuarial
present value of benefits that is not provided for by future, normal
costs or covered by the actuarial value of assets attributable to the
Defined Benefit Supplement Program, based on assumptions adopted by
the board pursuant to Section 22311.5.
SEC. 13. Section 22206 of the Education Code is amended to read:
22206. (a) As often as the board determines necessary, it may
audit or cause to be audited the records of any public agency.
(b) The board may excuse any audit finding provided all of the
following conditions are met:
(1) The audit finding relates to a period of time prior to July 1,
2002.
(2) The audit finding identifies an issue that is not in
compliance with the provisions of this part with respect to
creditable service or creditable compensation.
(3) The noncompliance would not have existed if the service and
compensation crediting changes that shall become operative on July 1,
2002, as a result of legislation enacted during the second year of
the 1999-2000 Regular Session, had been operative during the period
of time investigated in the audit.
(4) The audit finding was included in an audit report issued on or
after January 1, 2001.
(5) Excusing the audit finding will not have an adverse effect on
the integrity of the retirement fund.
(c) The board's authority pursuant to subdivision (b) shall extend
to service and compensation issues identified through activities
outside the audit function that address compliance with the
provisions of this part.
SEC. 13.5. Section 22302 of the Education Code, as added by
Chapter 74 of the Statutes of 2000, is amended and renumbered to
read:
22302.5. The board may contract with a qualified third-party
administrator for custodial, record keeping, or other administrative
services necessary to carry into effect the provisions of Chapter 38
(commencing with Section 25000) of this part or Part 14.
SEC. 14. Section 22311.5 is added to the Education Code, to read:
22311.5. The board shall acquire the services of an actuary to do
all of the following:
(a) Make recommendations to the board for the adoption of
actuarial assumptions that, in the aggregate, are reasonably related
to the past experience of the plan and reflect the actuary's informed
estimate of the future experience.
(b) Make an actuarial investigation of the demographic and
economic experience, including the mortality, service, and other
experience, of the plan with respect to members and beneficiaries of
the Defined Benefit Program; members, beneficiaries, and annuity
beneficiaries of the Defined Benefit Supplement Program; and
participants and beneficiaries of the Cash Balance Benefit Program.
(c) Make an annual actuarial review of the goals regarding the
sufficiency of the Gain and Loss Reserves with respect to the Defined
Benefit Supplement Program and the Cash Balance Benefit Program and
make recommendations to the board for maintaining a sufficient Gain
and Loss Reserves for the Defined Benefit Supplement Program and the
Cash Balance Benefit Program.
(d) Recommend to the board the amount, if any, to be transferred
to the separate Gain and Loss Reserves from the investment earnings
of the plan with respect to the Defined Benefit Supplement Program
and the Cash Balance Benefit Program.
(e) At least once every six years with respect to the Defined
Benefit Program and annually with respect to the Defined Benefit
Supplement Program and the Cash Balance Benefit Program, using
actuarial assumptions adopted by the board, perform an actuarial
valuation of each program that identifies the assets and liabilities,
and report the findings to the board. The report of the actuary on
the results of each actuarial valuation shall identify and include
the components of normal cost, if applicable, and adequate
information to determine the effects of changes in actuarial
assumptions. Copies of the report on each actuarial valuation shall
be transmitted to the Governor and the Legislature.
(f) Recommend to the board all rates and factors necessary to
administer the plan, including, but not limited to, mortality tables,
annuity factors, interest rates, and additional earnings credits.
(g) Recommend to the board a strategy for amortizing any unfunded
actuarial obligation.
(h) As requested by the board, perform any other actuarial
services that may be required for administration of the plan.
SEC. 15. Section 22453 of the Education Code is amended to read:
22453. (a) Except as provided in Section 22454, the signature of
the spouse of a member shall be required under the Defined Benefit
Program on any application for, or cancellation of, an unmodified
allowance; the election, change, or cancellation of an option; or any
request for a refund of the member's accumulated retirement
contributions or accumulated annuity deposit contributions ; and
under the Defined Benefit Supplement Program on any application for,
or cancellation of, a retirement benefit, disability benefit, or
termination benefit; and under either the Defined Benefit Program or
the Defined Benefit Supplement Program on any other requests related
to the selection of benefits by a member in which a spousal interest
may be present, unless the member declares, in writing, under penalty
of perjury, that one of the following conditions exists:
(1) The member is not married.
(2) The current spouse has no identifiable community property
interest in the benefit.
(3) The member and spouse have executed a marriage settlement
agreement pursuant to Part 5 (commencing with Section 1500) of
Division 4 of the Family Code that makes the community property law
inapplicable to the marriage.
(4) The spouse is incapable of executing the acknowledgment
because of an incapacitating mental or physical condition.
(5) The member does not know, and has taken all reasonable steps
to determine, the whereabouts of the spouse.
(b) This section shall not be applicable to an application for a
disability allowance under the Defined Benefit Program.
(c) The sole purpose of this section is to provide for spousal
protection in the selection of specified benefits made by a member.
SEC. 16. Section 22460 of the Education Code is repealed.
SEC. 17. Section 22460 is added to the Education Code, to read:
22460. (a) If a member terminates employment with less than five
years of credited service, the employer shall notify the member of
the following:
(1) That unless the member is eligible, or becomes eligible in the
future, for concurrent retirement pursuant to paragraph (2) of
subdivision (a) of Section 24201, the member is eligible only for a
refund of accumulated retirement contributions under the Defined
Benefit Program and the return of the member's accumulated Defined
Benefit Supplement account balance.
(2) The current rate of interest that shall be earned on
accumulated retirement contributions that are not refunded and the
current minimum interest rate that shall be applied to the member's
Defined Benefit Supplement account.
(3) Actions that may be taken by the board if accumulated
retirement contributions are not refunded under the Defined Benefit
Program and the member's Defined Benefit Supplement account balance
is not returned.
(b) Employers shall transmit to a member who terminates employment
with less than five years of credited service the information
specified in subdivision (a) as part of the usual separation
documents.
SEC. 18. Section 22651 of the Education Code is amended to read:
22651. For purposes of this chapter and Section 23300, "nonmember
spouse" means a member's spouse or former spouse who is being or has
been awarded a community property interest in the service credit,
accumulated retirement contributions, accumulated Defined Benefit
Supplement account balance, or benefits of the member under this
part. A nonmember spouse shall not be considered a member based upon
his or her receipt of any of the following being awarded to the
nonmember spouse as a result of legal separation or dissolution of
marriage: a separate account of service credit and accumulated
retirement contributions, a retirement allowance, or an interest in
the member's retirement allowance under the Defined Benefit Program;
or a separate account based on the member's Defined Benefit
Supplement account balance, a retirement benefit, or an interest in
the member's retirement benefit under the Defined Benefit Supplement
Program.
SEC. 19. Section 22652 of the Education Code is amended to read:
22652. (a) Upon the legal separation or dissolution of marriage
of a member, other than a retired member, the court shall include in
the judgment or a court order the date on which the parties
separated.
(b) The court may order in the judgment or court order that the
member's accumulated retirement contributions and service credit
under the Defined Benefit Program or the member's Defined Benefit
Supplement account balance, or both, under this part that are
attributable to periods of service during the marriage be divided
into two separate and distinct accounts in the name of the member and
the nonmember spouse, respectively. Any service credit and
accumulated retirement contributions under the Defined Benefit
Program and any accumulated Defined Benefit Supplement account
balance under this part that are not explicitly awarded by the
judgment or court order shall be deemed the exclusive property of the
member under the Defined Benefit Program or the Defined Benefit
Supplement Program, whichever is applicable.
(c) The determination of the court of community property rights
pursuant to this section shall be consistent with this chapter and
shall address the rights of the nonmember spouse under this part,
including, but not limited to, the following:
(1) The right to a retirement allowance under the Defined Benefit
Program and, if applicable, a retirement benefit under the Defined
Benefit Supplement Program.
(2) The right to a refund of accumulated retirement
contributions and the return of the accumulated Defined Benefit
Supplement account balance that were awarded to the nonmember spouse.
(3) The right to redeposit accumulated retirement contributions
previously refunded to the member which the member is eligible to
redeposit pursuant to Sections 23200
to 23203, inclusive, and shall specify the shares of the
redeposit amount awarded to the member and the nonmember spouse.
(4) The right to purchase additional service credit that the
member is eligible to purchase pursuant to Sections 22800 to 22810,
inclusive, and shall specify the shares of the additional service
credit awarded to the member and the nonmember spouse.
SEC. 19.5. Section 22652 of the Education Code is amended to read:
22652. (a) Upon the legal separation or dissolution of marriage
of a member, other than a retired member, the court shall include in
the judgment or a court order the date on which the parties
separated.
(b) The court may order in the judgment or court order that the
member's accumulated retirement contributions and service credit
under the Defined Benefit Program, or the member's Defined Benefit
Supplement account balance, or both, under this part that are
attributable to periods of service during the marriage be divided
into two separate and distinct accounts in the name of the member and
the nonmember spouse, respectively. Any service credit and
accumulated retirement contributions under the Defined Benefit
Program and any accumulated Defined Benefit Supplement account
balance under this part that are not explicitly awarded by the
judgment or court order shall be deemed the exclusive property of the
member under the Defined Benefit Program or the Defined Benefit
Supplement Program, as applicable.
(c) The determination of the court of community property rights
pursuant to this section shall be consistent with this chapter and
shall address the rights of the nonmember spouse under this part,
including, but not limited to, the following:
(1) The right to a retirement allowance under the Defined Benefit
Program and, if applicable, a retirement benefit under the Defined
Benefit Supplement Program.
(2) The right to a refund of accumulated retirement contributions
under the Defined Benefit Program and the return of the accumulated
Defined Benefit Supplement account balance that were awarded to the
nonmember spouse.
(3) The right to redeposit all or a portion of accumulated
retirement contributions previously refunded to the member which the
member is eligible to redeposit pursuant to Sections 23200 to 23203,
inclusive, and shall specify the shares of the redeposit amount
awarded to the member and the nonmember spouse.
(4) The right to purchase additional service credit that the
member is eligible to purchase pursuant to Sections 22800 to 22810,
inclusive, and shall specify the shares of the additional service
credit awarded to the member and the nonmember spouse.
SEC. 20. Section 22655 of the Education Code is amended to read:
22655. (a) Upon the legal separation or dissolution of marriage
of a retired member, the court may include in the judgment or court
order a determination of the community property rights of the parties
in the retired member's retirement allowance and, if applicable,
retirement benefit under this part consistent with this section.
Upon election under subparagraph (B) of paragraph (3) of subdivision
(a) of Section 2610 of the Family Code, the court order awarding the
nonmember spouse a community property share in the retirement
allowance or retirement benefit, or both, of a retired member shall
be consistent with this section.
(b) If the court does not award the entire retirement allowance or
retirement annuity under this part to the retired member and the
retired member is receiving a retirement allowance that has not been
modified pursuant to Section 24300, or a single life annuity pursuant
to Section 25011 or 25018, the court shall require only that the
system pay the nonmember spouse, by separate warrant, his or her
community property share of the retired member's retirement allowance
or retirement benefit, or both, under this part.
(c) If the court does not award the entire retirement allowance or
retirement benefit under this part to the retired member and the
retired member is receiving an allowance that has been actuarially
modified pursuant to Section 24300, or a joint and survivor
retirement benefit pursuant to Section 25011 or 25018, the court
shall order only one of the following:
(1) The retired member shall maintain the retirement allowance or
retirement benefit, or both, under this part without change.
(2) The retired member shall cancel the option that modified the
retirement allowance under this part pursuant to Section 24305 and
select a new joint and survivor option or a new beneficiary or both,
and the system shall pay the nonmember spouse, by separate warrant,
his or her community property share of the retirement allowance under
this part of the retired member, the option beneficiary, or both.
(3) The retired member shall cancel the joint and survivor annuity
under which the annuity is being paid pursuant to Section 24305.3,
and select a new joint and survivor annuity or a new annuity
beneficiary or both, based on the actuarial equivalent of the member'
s canceled annuity, and the system shall pay the nonmember spouse, by
separate warrant, his or her community property share of the
retirement annuity payable to the retired member, the annuity
beneficiary, or both.
(4) The retired member shall take the action specified in both
paragraphs (2) and (3).
(5) The retired member shall cancel the option that modified the
retirement allowance under this part pursuant to Section 24305 and
select an unmodified retirement allowance and the system shall pay
the nonmember spouse, by separate warrant, his or her community
property share of the retired member's retirement allowance under
this part.
(6) The retired member shall cancel, pursuant to Section 24305.3,
the joint and survivor annuity under which the retirement benefit is
being paid, and select a single life annuity, and the system shall
pay the nonmember spouse, by separate warrant, his or her community
property share of the retirement benefit payable benefit to the
retired member.
(7) The retired member shall take the action specified in both
paragraphs (5) and (6).
(d) If the option beneficiary or annuity beneficiary or both under
this part, other than the nonmember spouse, predeceases the retired
member, the court shall order the retired member to select a new
option beneficiary pursuant to Section 24306, or a new annuity
beneficiary pursuant to Section 24305.3 and shall order the system to
pay the nonmember spouse, by separate warrant, his or her share of
the community property interest in the retirement allowance or
retirement benefit or both under this part of the retired member or
the new option beneficiary or annuity beneficiary or each of them.
(e) The right of the nonmember spouse to receive his or her
community property share of the retired member's retirement allowance
or retirement benefit or both under this section shall terminate
upon the death of the nonmember spouse. However, the nonmember
spouse may designate a beneficiary under the Defined Benefit Program
and a payee under the Defined Benefit Supplement Program to receive
his or her community property share of the retired member's
accumulated retirement contributions and accumulated Defined Benefit
Supplement account balance under this part in the event that there
are remaining accumulated retirement contributions and a balance of
credits in the member's Defined Benefit Supplement account to be paid
upon the death of the nonmember spouse.
SEC. 21. Section 22656 of the Education Code is amended to read:
22656. No judgment or court order issued pursuant to this chapter
is binding on the system with respect to the Defined Benefit Program
or the Defined Benefit Supplement Program until the system has been
joined as a party to the action and has been served with a certified
copy of the judgment or court order.
SEC. 22. Section 22659 of the Education Code is amended to read:
22659. Upon being awarded a separate account or an interest in
the retirement allowance or retirement benefit of a retired member
under this part, a nonmember spouse shall provide the system with
proof of his or her date of birth, social security number, and any
other information requested by the system, in the form and manner
requested by the system.
SEC. 23. Section 22660 of the Education Code is amended to read:
22660. (a) The nonmember spouse who is awarded a separate account
under this part shall have the right to designate, pursuant to
Sections 23300 to 23304, inclusive, a beneficiary or beneficiaries to
receive the accumulated retirement contributions under the Defined
Benefit Program and to designate a payee to receive the accumulated
Defined Benefit Supplement account balance under the Defined Benefit
Supplement Program remaining in the separate account of the nonmember
spouse on his or her date of death, and any accrued allowance or
accrued benefit under the Defined Benefit Supplement that is
attributable to the separate account of the nonmember spouse and
that is unpaid on the date of the death of the nonmember spouse.
(b) This section shall not be construed to provide the nonmember
spouse with any right to elect to modify a retirement allowance under
Section 24300 or to elect a joint and survivor annuity under the
Defined Benefit Supplement Program.
SEC. 24. Section 22661 of the Education Code is amended to read:
22661. (a) The nonmember spouse who is awarded a separate account
under this part shall have the right to a refund of the accumulated
retirement contributions in the account under the Defined Benefit
Program, and a return of the Defined Benefit Supplement account
balance, of the nonmember spouse under this part.
(b) The nonmember spouse shall file an application on a form
provided by the system to obtain a refund or lump-sum payment.
(c) The refund of accumulated retirement contributions and the
return of the accumulated Defined Benefit Supplement account balance
under this part are effective when the system deposits in the United
States mail an initial warrant drawn in favor of the nonmember spouse
and addressed to the latest address for the nonmember spouse on file
with the system. If the nonmember spouse has elected on a form
provided by the system to transfer all or a specified portion of the
accumulated retirement contributions or accumulated Defined Benefit
Supplement account balance that are eligible for direct
trustee-to-trustee transfer to the trustee of a qualified plan under
Section 402 of the Internal Revenue Code of 1986 (26 U.S.C.A. Sec.
402), deposit in the United States mail of a notice that the
requested transfer has been made constitutes a refund of the
nonmember spouse's accumulated retirement contributions or
accumulated Defined Benefit Supplement account balance.
(d) The nonmember spouse is deemed to have permanently waived all
rights and benefits pertaining to the service credit, accumulated
retirement contributions, and accumulated Defined Benefit Supplement
account balance under this part when the refund and lump-sum payment
become effective.
(e) The nonmember spouse may not cancel a refund or lump-sum
payment under this part after it is effective.
(f) The nonmember spouse shall not have a right to elect to
redeposit the refunded accumulated retirement contributions under
this part after the refund is effective, to redeposit under Section
22662 or purchase additional service credit under Section 22663 after
the refund becomes effective, or to redeposit the accumulated
Defined Benefit Supplement account balance after the lump-sum payment
becomes effective.
(g) If the total service credit in the separate account of the
nonmember spouse under the Defined Benefit Program, including
service credit purchased under Sections 22662 and 22663, is less than
two and one-half years, the board shall refund the accumulated
retirement contributions in the account.
SEC. 25. Section 22662 of the Education Code is amended to read:
22662. The nonmember spouse who is awarded a separate account
under the Defined Benefit Program may redeposit accumulated
retirement contributions previously refunded to the member in
accordance with the determination of the court pursuant to Section
22652.
(a) The nonmember spouse may redeposit under the Defined Benefit
Program only those accumulated retirement contributions that were
previously refunded to the member and in which the court has
determined the nonmember spouse has a community property interest.
(b) The nonmember spouse shall inform the system in writing of his
or her intent to redeposit within 180 days after the judgment or
court order that specifies the redeposit rights of the nonmember
spouse is entered. The nonmember spouse's election to redeposit
shall be made on a form provided by the system within 30 days after
the system mails an election form and the billing.
(c) If the nonmember spouse elects to redeposit under the Defined
Benefit Program, he or she shall repay the portion of the member's
refunded accumulated retirement contributions that were awarded to
the nonmember spouse and shall pay regular interest from the date of
the refund to the date payment of the redeposit is completed.
(d) An election to redeposit shall be considered an election to
repay all accumulated retirement contributions previously refunded
under this part in which the nonmember spouse has a community
property interest. All payments shall be received by the system
before the effective date of the nonmember spouse's retirement under
this part. If any payment due because of the election is not
received at the system's office in Sacramento within 120 days of its
due date, the election shall be canceled and any payments made under
the election shall be returned to the nonmember spouse.
(e) The right of the nonmember spouse to redeposit shall be
subject to Section 23203.
(f) The member shall not have a right to redeposit the share of
the nonmember spouse in the previously refunded accumulated
retirement contributions under this part whether or not the nonmember
spouse elects to redeposit. However, any accumulated retirement
contributions previously refunded under this part and not explicitly
awarded to the nonmember spouse under this part by the judgment or
court order shall be deemed the exclusive property of the member.
SEC. 25.5. Section 22662 of the Education Code is amended to read:
22662. The nonmember spouse who is awarded a separate account
under the Defined Benefit Program may redeposit accumulated
retirement contributions previously refunded to the member in
accordance with the determination of the court pursuant to Section
22652.
(a) The nonmember spouse may redeposit under the Defined Benefit
Program only those accumulated retirement contributions that were
previously refunded to the member and in which the court has
determined the nonmember spouse has a community property interest.
(b) The nonmember spouse shall inform the system in writing of his
or her intent to redeposit within 180 days after the judgment or
court order that specifies the redeposit rights of the nonmember
spouse is entered. The nonmember spouses' election to redeposit
shall be made on a form provided by the system within 30 days after
the system mails an election form and the billing.
(c) If the nonmember spouse elects to redeposit under the Defined
Benefit Program, he or she shall repay all or a portion of the
member's refunded accumulated retirement contributions that were
awarded to the nonmember spouse and shall pay regular interest from
the date of the refund to the date payment of the redeposit is
completed.
(d) All payments shall be received by the system before the
effective date of the nonmember spouse's retirement under this part.
If any payment due because of the election is not received at the
system's office in Sacramento within 120 days of its due date, the
election shall be canceled and any payments made under the election
shall be returned to the nonmember spouse.
(e) The right of the nonmember spouse to redeposit shall be
subject to Section 23203.
(f) The member shall not have a right to redeposit the share of
the nonmember spouse in the previously refunded accumulated
retirement contributions under this part whether or not the nonmember
spouse elects to redeposit. However, any accumulated retirement
contributions previously refunded under this part and not explicitly
awarded to the nonmember spouse under this part by the judgment or
court order shall be deemed the exclusive property of the member.
SEC. 26. Section 22664 of the Education Code is amended to read:
22664. The nonmember spouse who is awarded a separate account
shall have the right to a service retirement allowance and, if
applicable, a retirement benefit under this part.
(a) The nonmember spouse shall be eligible to retire for service
under this part if the following conditions are satisfied:
(1) The member had at least five years of credited service during
the period of marriage, at least one year of which had been performed
subsequent to the most recent refund to the member of accumulated
retirement contributions. The credited service may include service
credited to the account of the member as of the date of the
dissolution or legal separation, previously refunded service,
out-of-state service, and permissive service credit that the member
is eligible to purchase at the time of the dissolution or legal
separation.
(2) The nonmember spouse has at least two and one-half years of
credited service in his or her separate account.
(3) The nonmember spouse has attained the age of 55 years or more.
(b) A service retirement allowance of a nonmember spouse under
this part shall become effective upon any date designated by the
nonmember spouse, provided:
(1) The requirements of subdivision (a) are satisfied.
(2) The nonmember spouse has filed an application for service
retirement on a form provided by the system, that is executed no
earlier than six months before the effective date of the retirement
allowance.
(3) The effective date is no earlier than the first day of the
month in which the application is received at the system's office in
Sacramento and the effective date is after the date the judgment or
court order pursuant to Section 22652 was entered.
(c) (1) Upon service retirement at normal retirement age under
this part, the nonmember spouse shall receive a retirement allowance
that shall consist of an annual allowance payable in monthly
installments equal to 2 percent of final compensation for each year
of credited service.
(2) If the nonmember spouse's retirement is effective at less than
normal retirement age and between early retirement age under this
part and normal retirement age, the retirement allowance shall be
reduced by one-half of 1 percent for each full month, or fraction of
a month, that will elapse until the nonmember spouse would have
reached normal retirement age.
(3) If the nonmember spouse's service retirement is effective at
an age greater than normal retirement age and is effective on or
after January 1, 1999, the percentage of final compensation for each
year of credited service shall be determined pursuant to the
following table:
Age at Retirement Percentage
60 1/4 ........................ 2.033
60 1/2 ........................ 2.067
60 3/4 ........................ 2.10
61 ............................ 2.133
61 1/4 ........................ 2.167
61 1/2 ........................ 2.20
61 3/4 ........................ 2.233
62 ............................ 2.267
62 1/4 ........................ 2.30
62 1/2 ........................ 2.333
62 3/4 ........................ 2.367
63 and over ................... 2.40
(4) In computing the retirement allowance of the nonmember spouse,
the age of the nonmember spouse on the last day of the month in
which the retirement allowance begins to accrue shall be used.
(5) Final compensation, for purposes of calculating the service
retirement allowance of the nonmember spouse under this subdivision,
shall be calculated according to the definition of final compensation
in Section 22134, 22135, or 22136, whichever is applicable, and
shall be based on the member's compensation earnable up to the date
the parties separated, as established in the judgment or court order
pursuant to Section 22652. The nonmember spouse shall not be
entitled to use any other calculation of final compensation.
(d) If the member is or was receiving a disability allowance under
this part with an effective date before or on the date the parties
separated as established in the judgment or court order pursuant to
Section 22652, or at any time applies for and receives a disability
allowance with an effective date that is before or coincides with the
date the parties separated as established in the judgment or court
order pursuant to Section 22652, the nonmember spouse shall not be
eligible to retire until after the disability allowance of the member
terminates. If the member who is or was receiving a disability
allowance returns to employment to perform creditable service subject
to coverage under the Defined Benefit Program or has his or her
allowance terminated under Section 24015, the nonmember spouse may
not be paid a retirement allowance until at least six months after
termination of the disability allowance and the return of the member
to employment to perform creditable service subject to coverage under
the Defined Benefit Program, or the termination of the disability
allowance and the employment or self-employment of the member in any
capacity, notwithstanding Section 22132. If at the end of the
six-month period, the member has not had a recurrence of the original
disability or has not had his or her earnings fall below the amounts
described in Section 24015, the nonmember spouse may be paid a
retirement allowance if all other eligibility requirements are met.
(1) The retirement allowance of the nonmember spouse under this
subdivision shall be calculated as follows: the disability allowance
the member was receiving, exclusive of the portion for dependent
children, shall be divided between the share of the member and the
share of the nonmember spouse. The share of the nonmember spouse
shall be the amount obtained by multiplying the disability allowance,
exclusive of the portion for dependent children, by the years of
service credited to the separate account of the nonmember spouse,
including service projected to the date of separation, and dividing
by the projected service of the member. The nonmember spouse's
retirement allowance shall be the lesser of the share of the
nonmember spouse under this subdivision or the retirement allowance
under subdivision (c).
(2) The share of the member shall be the total disability
allowance reduced by the share of the nonmember spouse. The share of
the member shall be considered the disability allowance of the
member for purposes of Section 24213.
(e) The nonmember spouse who receives a retirement allowance is
not a retired member under this part. However, the allowance of the
nonmember spouse shall be increased by application of the improvement
factor and shall be eligible for the application of supplemental
increases and other benefit maintenance provisions under this part,
including, but not limited to, Sections 24411, 24412, and 24415 based
on the same criteria used for the application of these benefit
maintenance increases to the service retirement allowances of
members.
SEC. 27. Section 22703 of the Education Code is amended to read:
22703. (a) Service shall be credited to the Defined Benefit
Program, except as provided in subdivision (b).
(b) A member's creditable service that exceeds 1.000 in a school
year shall not be credited to the Defined Benefit Program.
Commencing July 1, 2002, contributions by the employer that are
deposited in the Teachers' Retirement Fund and the member on
creditable compensation paid to the member for that service,
exclusive of contributions pursuant to Section 22951, shall be
credited to the Defined Benefit Supplement Program.
(c) In lieu of any other benefits provided by this part, any
member who performed service prior to July 1, 1956, shall receive
retirement benefits for that service at least equal to the benefits
that the member would have received for that service under the
provisions of this part as they existed on June 30, 1956. This
subdivision shall not apply to service that is credited in the San
Francisco City and County Employees Retirement System.
(d) The amendments to this section made during the second year of
the 1999-2000 Regular Session shall become operative on July 1, 2002,
if the revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise the amendments to
this section made during the second year of the 1999-2000 Regular
Session shall become operative on July 1, 2003.
SEC. 28. Section 22706 of the Education Code is amended to read:
22706. A member shall not receive credit for service performed
while receiving a retirement or disability allowance under the
Defined Benefit Program or while receiving a retirement or disability
benefit under the Defined Benefit Supplement Program.
SEC. 29. Section 22901.5 of the Education Code, as added by
Chapter 74 of the Statutes of 2000, is amended to read:
22901.5. (a) Notwithstanding Section 22905, 25 percent of the
amount contributed by a member pursuant to Section 22901 (2 percent
of creditable compensation) shall be credited to the member's Defined
Benefit Supplement account pursuant to Section 25004.
(b) Any member contributions for service performed during the
2000-01 school year with a service period ending after December 31,
2000, shall be subject to subdivision (a).
(c) This section shall remain in effect only until January 1,
2011, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2011, deletes or extends
that date.
SEC. 30. Section 22905 of the Education Code is amended to read:
22905. (a) Contributions made by a member and member
contributions made by an employer pursuant to Section 22903 and 22904
shall be credited by the board to the individual account of the
member.
(b) This section shall become inoperative on July 1, 2002, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public
Instruction for the 2001-02 fiscal year is equal to or greater than
3.5 percent. Otherwise this section shall become inoperative on July
1, 2003. As of January 1, 2004, this section is repealed, unless a
later enacted statute, that becomes operative on or before January 1,
2004, deletes or extends the dates on which it becomes inoperative
and is repealed.
SEC. 31. Section 22905 is added to the Education Code, to read:
22905. (a) Member contributions pursuant to Section 22901 and
employer contributions pursuant to Sections 22903 and 22904 shall be
credited to the member's individual account under the Defined Benefit
Program or the Defined Benefit Supplement Program, whichever is
applicable pursuant to the provisions of this part.
(b) Member and employer contributions on a member's compensation
under the following circumstances shall be credited to the member's
Defined Benefit Supplement account:
(1) Compensation for creditable service that exceeds one year in a
school year.
(2) Compensation that is consistent with subdivision (b) of
Section 22119.2.
(3) Compensation that is payable for a specified number of times
as limited by law, a collective bargaining agreement, or an
employment agreement.
(c) A member shall not make voluntary pretax or posttax
contributions under the Defined Benefit Supplement Program, except as
provided in subdivision (d), nor shall a member redeposit amounts
previously distributed based on the balance in the member's Defined
Benefit Supplement account.
(d) Member and employer contributions under the Defined Benefit
Supplement Program shall be credited to the accounts of members as of
June 30 each year following a determination by the system under the
provisions of this part that those contributions should be credited
to the Defined Benefit Supplement Program. Contributions to a member'
s Defined Benefit Supplement account shall be identified separately
from the member's contributions credited under the Defined Benefit
Program.
(e) The provisions of this section shall become operative on July
1, 2002, if the revenue limit cost-of-living adjustment computed by
the Superintendent of Public Instruction for the 2001-02 fiscal year
is equal to or greater than 3.5 percent. Otherwise this section
shall become operative on July 1, 2003.
SEC. 32. Section 22906 of the Education Code is repealed.
SEC. 33. Section 22906 is added to the Education Code, to read:
22906. A member's contributions that were made with respect to
service that was erroneously credited under the Defined Benefit
Program shall be returned to the member if the contributions for that
service cannot be credited under the Defined Benefit Supplement
Program pursuant to this part.
SEC. 34. Section 22954 of the Education Code is amended to read:
22954. (a) Notwithstanding Section 13340 of the Government Code,
commencing July 1, 1999, a continuous appropriation is hereby
annually made from the General Fund to the Controller, pursuant to
this section, for transfer to the Supplemental Benefit Maintenance
Account in the Teachers' Retirement Fund. The total amount of the
appropriation for each year shall be equal to 2.5 percent of the
total of the creditable compensation of the immediately preceding
calendar year upon which members' contributions are based for
purposes of funding the supplemental payments authorized by Section
24415.
(b) The board may deduct from the annual appropriation made
pursuant to this section an amount necessary for the administrative
expenses of Section 24415.
(c) It is the intent of the Legislature in enacting this section
to establish the supplemental payments pursuant to Section 24415 as
vested benefits pursuant to a contractually enforceable promise to
make annual contributions from the General Fund to the Supplemental
Benefit Maintenance Account in the Teachers' Retirement Fund in order
to provide a continuous annual source of revenue for the purposes of
making the supplemental payments under Section 24415.
(d) This section shall become inoperative on July 1, 2003, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become inoperative on July 1, 2004. As of January 1, 2005, this
section is repealed unless a later enacted statute, that becomes
effective on or before January 1, 2005, deleted or extends the date
on which it becomes inoperative and is repealed.
SEC. 35. Section 22954 is added to the Education Code, to read:
22954. (a) Notwithstanding Section 13340 of the Government Code,
commencing July 1, 2003, a continuous appropriation is hereby
annually made from the General Fund to the Controller, pursuant to
this section, for transfer to the Supplemental Benefit Maintenance
Account in the Teachers' Retirement Fund. The total amount of the
appropriation for each year shall be equal to 2.5 percent of the
total of the creditable compensation of the fiscal year ending in the
immediately preceding calendar year upon which members'
contributions are based for purposes of funding the supplemental
payments authorized by Section 24415.
(b) The board may deduct from the annual appropriation made
pursuant to this section an amount necessary for the administrative
expenses of Section 24415.
(c) It is the intent of the Legislature in enacting this section
to establish the supplemental payments pursuant to Section 24415 as
vested benefits pursuant to a contractually enforceable promise to
make annual contributions from the General Fund to the Supplemental
Benefit Maintenance Account in the Teachers' Retirement Fund in order
to provide a continuous annual source of revenue for the purposes of
making the supplemental payments under Section 24415.
(d) This section shall become operative on July 1, 2003, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2004.
SEC. 36. Section 22955 of the Education Code is amended to read:
22955. (a) Notwithstanding Section 13340 of the Government Code,
commencing July 1, 2001, a continuous appropriation is hereby
annually made from the General Fund to the Controller, pursuant to
this section, for transfer to the Teachers' Retirement Fund. The
total amount of the appropriation for each year shall be equal to
1.975 percent of the total of the creditable compensation of the
immediately preceding calendar year upon which members' contributions
are based, to be calculated annually on October 1, and shall be
divided into four equal quarterly payments. For the 2000-01 fiscal
year only, the total amount of the appropriation pursuant to this
subdivision shall be equal to 2.5385 percent of the total of the
creditable compensation of calendar year 1999.
(b) Notwithstanding Section 13340 of the Government Code,
commencing October 1, 1998, a continuous appropriation, in addition
to the appropriation made by subdivision (a), is hereby annually made
from the General Fund to the Controller for transfer to the Teachers'
Retirement Fund. The total amount of the appropriation for each
year shall be equal to 0.524 percent of the total of the creditable
compensation of the immediately preceding calendar year upon which
members' contributions are based, to be calculated annually on
October 1, and shall be divided into four equal quarterly payments.
The percentage shall be adjusted to reflect the contribution required
to fund the normal cost deficit or the unfunded obligation as
determined by the board based upon a recommendation from its actuary.
If a rate increase is required, the adjustment may be for no more
than 0.25 percent per year and in no case may the transfer made
pursuant to this subdivision exceed 1.505 percent of the total of the
creditable compensation of the immediately preceding calendar year
upon which members' contributions are based. At any time when there
is neither an unfunded obligation nor a normal cost deficit, the
percentage shall be reduced to zero.
The funds transferred pursuant to this subdivision shall first be
applied to eliminating on or before June 30, 2027, the unfunded
actuarial liability of the fund identified in the actuarial valuation
as of June 30, 1997.
(c) For the purposes of this section, the term "normal cost
deficit" means the difference between the normal cost rate as
determined in the actuarial valuation required by Section 22311 and
the total of the member contribution rate required under Section
22901 and the employer contribution rate required under Section
22950, and shall exclude (1) the portion for unused sick leave
service credit granted pursuant to Section 22717, and (2) the cost of
benefit increases that occur after July 1, 1990. The contribution
rates prescribed in Section 22901 and Section 22950 on July 1, 1990,
shall be utilized to make the calculations. The normal cost deficit
shall then be multiplied by the total of the creditable compensation
upon which member contributions under this part are based to
determine the dollar amount of the normal cost deficit for the year.
(d) Pursuant to Section 22001 and case law, members are entitled
to a financially sound retirement system. It is the intent of the
Legislature that this section shall provide the retirement fund
stable and full funding over the long term.
(e) This section continues in effect but in a somewhat different
form, fully performs, and does not in any way unreasonably impair,
the contractual obligations determined by the court in California
Teachers' Association v. Cory, 155 Cal.App.3d 494.
(f) Subdivision (b) shall not be construed to be applicable to any
unfunded liability resulting from any benefit increase or change in
contribution rate under this part that occurs after July 1, 1990.
(g) The amendments to this section during the 1991-92 Regular
Session shall be construed and implemented to be in conformity with
the judicial intent expressed by the court in California Teachers'
Association v. Cory, 155 Cal.App.3d 494.
(h) This section shall become inoperative on July 1, 2003, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become inoperative on July 1, 2004. As of January 1, 2005, this
section is repealed unless a later enacted statute, that becomes
effective on or before January 1, 2005, deletes or extends the date
on which it becomes inoperative and is repealed.
SEC. 37. Section 22955 is added to the Education Code, to read:
22955. (a) Notwithstanding Section 13340 of the Government Code,
commencing July 1, 2003, a continuous appropriation is hereby
annually made from the General Fund to the Controller, pursuant to
this section, for transfer to the Teachers' Retirement Fund. The
total amount of the appropriation for each year shall be equal to
2.017 percent of the total of the creditable compensation of the
fiscal year ending in the immediately preceding calendar year upon
which members' contributions are based, to be calculated annually on
October 1, and shall be divided into four equal quarterly payments.
(b) Notwithstanding Section 13340 of the Government Code,
commencing October 1, 2003, a continuous appropriation, in addition
to the appropriation made by subdivision (a), is hereby annually made
from the General Fund to the Controller for transfer to the Teachers'
Retirement Fund. The total amount of the appropriation for each
year shall be equal to 0.524 percent of the total of the creditable
compensation of the fiscal year ending in the immediately preceding
calendar year upon which members' contributions are based, to be
calculated annually on October 1, and shall be divided into four
equal quarterly payments. The percentage shall be adjusted to
reflect the contribution required to fund the normal cost deficit or
the unfunded obligation as determined by the board based upon a
recommendation from its actuary. If a rate increase is required, the
adjustment may be for no more than 0.25 percent per year and in no
case may the transfer made pursuant to this subdivision exceed 1.505
percent of the total of the creditable compensation of the fiscal
year ending in the immediately preceding calendar year upon which
members' contributions are based. At any time when there is neither
an unfunded obligation nor a normal cost deficit, the percentage
shall be reduced to zero. The funds transferred pursuant to this
subdivision shall first be applied to eliminating on or before June
30, 2027, the unfunded actuarial liability of the fund identified in
the actuarial valuation as of June 30, 1997.
(c) For the purposes of this section, the term "normal cost
deficit" means the difference between the normal cost rate as
determined in the actuarial valuation required by Section 22311 and
the total of the member contribution rate required under Section
22901 and the employer contribution rate required under Section
22950, and shall exclude (1) the portion for unused sick leave
service credit granted pursuant to Section 22717, and (2) the cost of
benefit increases that occur after July 1, 1990. The contribution
rates prescribed in Section 22901 and Section 22950 on July 1, 1990,
shall be utilized to make the calculations. The normal cost deficit
shall then be multiplied by the total of the creditable compensation
upon which member contributions under this part are based to
determine the dollar amount of the normal cost deficit for the year.
(d) Pursuant to Section 22001 and case law, members are entitled
to a financially sound retirement system. It is the intent of the
Legislature that this section shall provide the retirement fund
stable and full funding over the long term.
(e) This section continues in effect but in a somewhat different
form, fully performs, and does not in any way unreasonably impair,
the contractual obligations determined by the court in California
Teachers' Association v. Cory, 155 Cal.App.3d 494.
(f) Subdivision (b) shall not be construed to be applicable to any
unfunded liability resulting from any benefit increase or change in
contribution rate under this part that occurs after July 1, 1990.
(g) The provisions of this section shall be construed and
implemented to be in conformity with the judicial intent expressed by
the court in California Teachers' Association v. Cory, 155
Cal.App.3d 494.
(h) This section shall become operative on July 1, 2003, if the
revenue limit cost-of-living adjustment computed by the
Superintendent of Public Instruction for the 2001-02 fiscal year is
equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2004.
SEC. 38. Section 22955.5 is added to the Education Code, to read:
22955.5. For purposes of Sections 22954 and 22955, "creditable
compensation" shall include only creditable compensation for which
member contributions are credited under the Defined Benefit Program.
SEC. 39. Section 24305.3 is added to the Education Code, to read:
24305.3. (a) A member who is receiving a joint and survivor
annuity under the Defined Benefit Supplement Program may change the
annuity or the annuity beneficiary elected pursuant to Section 25011
or 25018 provided all of the following conditions are met:
(1) The annuity beneficiary is the member's spouse or former
spouse.
(2) A final decree of dissolution of marriage is granted, or a
judgment of nullity is entered, or an order of separate maintenance
is made by a court of competent jurisdiction with respect to the
member and the spouse or former spouse on or after the beginning of
the initial plan year designated by the board pursuant to Section
22156.05.
(3) The change is consistent with the final decree of dissolution,
judgment of nullity, or order of separate maintenance.
(b) A member may change the annuity pursuant to subdivision (a)
before or after the first annuity payment is issued.
(c) The member shall notify the system in writing of the change in
the annuity. The notification shall not be earlier than the
effective date of the final decree of dissolution, judgment of
nullity, or order of separate maintenance and shall include a
certified copy of the final decree of dissolution, judgment of
nullity, or order of separate maintenance, and any property
settlement agreement.
(d) A change in the annuity or annuity beneficiary or both shall
become effective on the date the notification of change is received
by the system. The annuity amount payable to the member upon the
change elected by the member shall be determined as of the effective
date of the change and shall be the actuarial equivalent of the lump
sum that would otherwise be payable to the member as of the date of
the change. If the member elects a joint and survivor annuity, the
amount payable under the annuity shall be modified consistent with
the annuity elected by the member.
SEC. 40. Section 24600 of the Education Code, as amended by
Chapter 965 of the Statutes 1998, is amended to read:
24600. (a) A retirement allowance under this part begins to
accrue on the effective date of the member's retirement and ceases on
the earlier of the day of the member's death or the day on which the
retirement allowance is terminated for a reason other than the
member's death.
(b) A retirement allowance payable to an option beneficiary under
this part begins to accrue on the day following the day of the
retired member's death and ceases on the day of the option
beneficiary's death.
(c) A disability allowance under this part begins to accrue on the
effective date of the member's disability allowance and ceases on
the earlier of the day of the member's death or the day on which the
disability allowance is terminated for a reason other than the member'
s death.
(d) A family allowance under this part begins to accrue on the day
following the day of the member's death and ceases on the day of the
event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have attained 60
years of age or on the day following the day of the member's death,
as elected by the surviving spouse, and ceases on the day of the
surviving spouse's death.
(f) A child's portion of an allowance under this part begins to
accrue on the effective date of that allowance and ceases on the
earlier of either the termination of the child's eligibility or the
termination of the allowance.
(1) Until January 1, 2002, a person who on December 31, 1996, is
between 18 and 22 years of age and who is eligible as a full-time
student to receive a child's portion of an allowance shall continue
to be eligible for a child's portion until the person attains 22
years of age or until the first day of the month following the end of
the school quarter or semester that is in progress in the month the
person attains 22 years of age provided prior verification of
full-time student status is received by the board. If verification
is not received by the board prior to the date the person attains 22
years of age, the allowance or the child's portion of the allowance
shall cease on the day the full-time student attains 22 years of age.
(2) Notwithstanding subdivision (e) of Section 22123, until
January 1, 2002, a person who on December 31, 1996, is between 18 and
22 years of age and who is not eligible as a full-time student to
receive a child's portion of an allowance, may return to school on a
full-time basis on or after January 1, 1997, and become eligible for
a child's portion from the date of return to full-time student status
until 22 years of age or until the first day of the month following
the end of the school quarter or semester that is in progress in the
month the person attains 22 years of age provided prior verification
of full-time student status is received by the board. If
verification is not received by the board prior to the date the
person attains 22 years of age, the allowance or the child's portion
of the allowance shall cease on the day the full-time student attains
22 years of age. No benefits shall be payable under this paragraph
for a person who does not return to school as a full-time student
prior to attaining 22 years of age.
(g) Supplemental payments issued under this part pursuant to
Sections 24701, 24702, and 24703 to retired members, disabled
members, and beneficiaries shall begin to accrue pursuant to Sections
24701, 24702, and 24703 and shall cease to accrue as of the
termination dates specified in subdivisions (a) to (f), inclusive, of
this section.
(h) Notwithstanding any other provision of this part or other law,
distributions payable under the plan with respect to the Defined
Benefit Program and the Defined Benefit Supplement Program shall be
made in accordance with applicable provisions of the Internal
Revenue Code of 1986, as amended, and regulations . The required
beginning date of benefit payments that represent the entire interest
of the member in the plan with respect to the Defined Benefit
Program and the Defined Benefit Supplement Program shall be either:
(1) In the case of a refund of contributions, as described in
Chapter 18 (commencing with Section 23100) of this part and
distribution of an amount equal to the balance of credits in a member'
s Defined Benefit Supplement account, as described in Chapter 38
(commencing with Section 25000) of this part, not later than April 1
of the calendar year following the later of both of the following:
(A) The calendar year in which the member attains age 701/2 years.
(B) The calendar year in which the member terminates employment
within the meaning of subdivision (i).
(2) In the case of a retirement allowance, as defined in Section
22166, beginning not later than April 1 of the calendar year
following the later of (A) the calendar year in which the member
attains age 701/2 years; or (B) the calendar year in which the member
terminates employment within the meaning of subdivision (i), to
continue over the life of the member or the lives of the member and
the member's option beneficiary, or over the life expectancy of the
member or the life expectancy of the member and the member's option
beneficiary.
(i) For purposes of subdivision (h), the phrase "terminates
employment" means the later of :
(1) The date the member ceases to perform creditable service
subject to coverage under this plan.
(2) The date the member ceases employment in a position subject to
coverage under another public retirement system in this state if the
compensation earnable while a member of the other system may be
considered in the determination of final compensation pursuant to
Section 22134, 22135, or 22136.
(j) This section shall remain in effect only until January 1,
2002, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2002, deletes or extends
that date.
SEC. 41. Section 24600 of the Education Code, as amended by
Chapter 74 of the Statutes of 2000, is repealed.
SEC. 42. Section 24600 is added to the Education Code, to read:
24600. (a) A retirement allowance under this part begins to
accrue on the effective date of the member's retirement and ceases on
the earlier of the day of the member's death or the day on which the
retirement allowance is terminated for a reason other than the
member's death.
(b) A retirement allowance payable to an option beneficiary under
this part begins to accrue on the day following the day of the
retired member's death and ceases on the day of the option
beneficiary's death.
(c) A disability allowance under this part begins to accrue on the
effective date of the member's disability and ceases on the earlier
of the day of the member's death or the day on which the disability
allowance is terminated for a reason other than the member's death.
(d) A family allowance under this part begins to accrue on the day
following the day of the member's death and ceases on the day of the
event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have attained 60
years of age or on the day following the day of the member's death,
as elected by the surviving spouse, and ceases on the day of the
surviving spouse's death.
(f) A child's portion of an allowance under this part begins to
accrue on the effective date of that allowance and ceases on the
earlier of either the termination of the child's eligibility or the
termination of the allowance. An allowance payable because of a
full-time student shall terminate on the first day of the month
following the end of the school quarter or semester that is in
progress in the month the full-time student attains 22 years of age.
Any adjustment to an allowance because of a full-time student's
periods of nonattendance shall be made as follows: the allowance
shall cease on the first day of the month in which return to
full-time attendance was required and shall begin to accrue again on
the first day of the month in which full-time attendance resumes.
(g) Supplemental payments issued under this part pursuant to
Sections 24701, 24702, and 24703 to retired members, disabled
members, and beneficiaries shall begin to accrue pursuant to Sections
24701, 24702, and 24703 and shall cease to accrue as of the
termination dates specified in subdivisions (a) to (f), inclusive.
(h) Notwithstanding any other provision of this part or other law,
distributions payable under the plan with respect to the Defined
Benefit Program and the Defined Benefit Supplement Program shall be
made in accordance with applicable provisions of the Internal Revenue
Code of 1986, as amended, and related regulations. The required
beginning date of benefit payments that represent the entire interest
of the member in the plan with respect to the Defined Benefit
Program and the Defined Benefit Supplement Program shall be either:
(1) In the case of a refund of contributions, as described in
Chapter 18 (commencing with Section 23100) of this part, and
distribution of an amount equal to the balance of credits in a member'
s Defined Benefit Supplement account, as described in Chapter
38 (commencing with Section 25000)
of this part, not later than April 1 of the calendar year following
the later of (A) the calendar year in which the member attains 701/2
years of age or (B) the calendar year in which the member terminates
employment within the meaning of subdivision (i).
(2) In the case of a retirement allowance, as defined in Section
22166, beginning not later than April 1 of the calendar year
following the later of (A) the calendar year in which the member
attains 701/2 years of age or (B) the calendar year in which the
member terminates employment within the meaning of subdivision (i),
to continue over the life of the member or the lives of the member
and the member's option beneficiary, or over the life expectancy of
the member or the life expectancy of the member and the member's
option beneficiary.
(i) For purposes of subdivision (h), "terminates employment" means
the later of:
(1) The date the member ceases to perform creditable service
subject to coverage under this plan.
(2) The date the member ceases employment in a position subject to
coverage under another public retirement system in this state if the
compensation earnable while a member of the other system may be
considered in the determination of final compensation pursuant to
Section 22134, 22135, or 22136.
(j) This section shall become operative on January 1, 2002.
SEC. 43. Section 24616 of the Education Code is amended to read:
24616. Any overpayment made to or on behalf of any member, former
member, or beneficiary, including but not limited to contributions,
interest, benefits of any kind, federal or state tax, or insurance
premiums, shall be deducted from any subsequent benefit that may be
payable under either the Defined Benefit Program or the Defined
Benefit Supplement Program. These deductions shall be permitted
concurrently with any suit for restitution, and recovery of
overpayment by adjustment shall reduce by the amount of the recovery
the extent of liability for restitution.
SEC. 44. Section 24617 of the Education Code is amended to read:
24617. (a) To recover an amount overpaid under this part, the
corrected monthly allowance payable under the Defined Benefit Program
or benefit payable under the Defined Benefit Supplement Program may
be reduced by no more than 5 percent if the overpayment was due to
error by the system, the county superintendent of schools, a school
district, or a community college district, and by no more than 15
percent if the error was due to inaccurate information or
nonsubmission of information by the recipient of the allowance or
benefit.
(b) This section shall not apply to the collection of overpayments
due to fraud or intentional misrepresentation of facts by the
recipient of the allowance or benefit.
SEC. 45. Section 25000 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25000. The Defined Benefit Supplement Program is hereby
established to provide supplemental benefits for members of the
Defined Benefit Program. The Teachers' Retirement Board shall
administer the Defined Benefit Supplement Program in accordance with
the provisions of this part.
SEC. 46. Section 25000.5 of the Education Code, as added by
Chapter 74 of the Statutes of 2000, is amended to read:
25000.5. The design and administration of the Defined Benefit
Supplement Program shall comply with the applicable provisions of the
Internal Revenue Code and the Revenue and Taxation Code. The board
may amend the plan with respect to the Defined Benefit Supplement
Program to do any of the following:
(a) Comply with applicable federal law and regulations to the
extent permitted by law.
(b) Adopt or amend actuarial assumptions.
(c) Designate the initial plan year.
(d) Declare the annual the minimum interest rate.
(e) Declare an additional earnings credit.
(f) Declare an additional annuity credit.
SEC. 47. Section 25001 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25001. (a) The board shall establish a segregated account within
the retirement fund to be known as the Gain and Loss Reserve, and the
board shall have sole authority over the reserve. The Gain and Loss
Reserve shall be maintained for the Defined Benefit Supplement
Program and may be used to credit interest at the minimum interest
rate for plan years in which the board determines that the obligation
cannot be met from investment earnings. The Gain and Loss Reserve
may also be used to provide additions to the Annuitant Reserve for
monthly annuities payable under the Defined Benefit Supplement
Program.
(b) The board shall establish a goal for the balance of the Gain
and Loss Reserve and periodically shall review the sufficiency of the
reserve based on the recommendations of the actuary.
(c) The board may allocate excess earnings of the plan with
respect to assets attributable to the Defined Benefit Supplement
Program to the Gain and Loss Reserve. In addition, the board may
allocate any liability gains and losses attributable to the Defined
Benefit Supplement Program to the Gain and Loss Reserve. Upon the
recommendation of the actuary, the board shall determine annually the
amount, if any, that is to be allocated to the Gain and Loss Reserve
for that plan year. That determination shall be made upon
recommendation of the actuary after adoption of the actuarial
valuation undertaken following the plan year pursuant to Section
22311.5, but no later than June 30 following the end of the plan
year. In determining whether to allocate excess earnings to the Gain
and Loss Reserve, the board shall consider all of the following:
(1) Whether or not the plan has excess earnings attributable to
the Defined Benefit Supplement Program.
(2) The sufficiency of the Gain and Loss Reserve in light of the
goal established pursuant to subdivision (b).
(3) The amount required for the plan's administrative costs with
respect to the Defined Benefit Supplement Program.
(4) The amount required for crediting members' accounts at the
minimum interest rate.
(d) In determining whether to allocate liability gains and losses
to the Gain and Loss Reserve, the board shall consider the matters
described in paragraphs (2), (3), and (4) of subdivision (c).
SEC. 48. Section 25002 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25002. The board shall establish and maintain a segregated
account within the retirement fund to be known as the Annuitant
Reserve and the board shall have sole authority over the reserve.
The Annuitant Reserve shall be used for the payment of annuities
under the Defined Benefit Supplement Program. The board shall
transfer the balance of credits in a member's accumulated Defined
Benefit Supplement account to the reserve when a benefit is to be
paid as an annuity.
SEC. 49. Section 25006 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25006. (a) The board may declare an additional earnings credit to
be applied to Defined Benefit Supplement accounts for a plan year.
Prior to declaring an additional earnings credit, the board shall
consider all of the following:
(1) Whether the plan's investment earnings with respect to the
Defined Benefit Supplement Program for the plan year exceed the
amount required to meet the liabilities identified in paragraphs (2),
(3), and (4).
(2) The amount required for the plan year to credit interest on
members' nominal accounts at the minimum interest rate.
(3) The amount of the plan's administrative expenses with respect
to the Defined Benefit Supplement Program for the plan year.
(4) The sufficiency of the Gain and Loss Reserve and whether any
additions must be made to that reserve.
(b) For any plan year that the board declares an additional
earnings credit, the board shall specify the amount to be added to
members' accounts as a percentage increase. The additional earnings
credit shall be applied to the balance of credits in each member's
nominal account as of the last day of the plan year and shall be
applied as of the date specified by the board. The additional
earnings credit shall not be added to the balance of credits
transferred from a member's Defined Benefit Supplement account to the
Annuitant Reserve.
(c) The declaration of an additional earnings credit shall be made
as a plan amendment adopted by the board with respect to the Defined
Benefit Supplement Program upon recommendation of the actuary after
adoption of the actuarial valuation undertaken following the plan
year pursuant to Section 22311.5, but no later than June 30 following
the end of the plan year.
SEC. 50. Section 25008 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25008. A member's right to an amount equal to the member's
Defined Benefit Supplement account balance shall be vested at the
time contributions are initially credited to the member's account.
SEC. 51. Section 25009 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25009. (a) A member's retirement benefit under the Defined
Benefit Supplement Program shall be an amount equal to the balance of
credits in the member's Defined Benefit Supplement account on the
date the retirement benefit becomes payable.
(b) A retirement benefit shall be a lump-sum payment, or an
annuity payable in monthly installments, or a combination of both a
lump-sum payment and an annuity, as elected by the member on the
application for a retirement benefit. Any retirement benefit paid as
an annuity under this chapter shall be subject to Section 25011.
(c) Upon distribution of the entire retirement benefit in a
lump-sum payment, no other benefit shall be payable to the member or
the member's beneficiary under the Defined Benefit Supplement
Program.
SEC. 52. Section 25010 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25010. (a) A member who meets the following eligibility
requirements shall receive a retirement benefit under the Defined
Benefit Supplement Program:
(1) The member has terminated all employment to perform creditable
service subject to coverage by the plan. The member's employer, or
employers if the member has multiple employers, shall certify on a
form prescribed by the system that the member's employment has been
terminated.
(2) The member has retired for service under the Defined Benefit
Program pursuant to Chapter 27 (commencing with Section 24201).
(b) A member shall submit an application for a retirement benefit
on a form prescribed by the system.
SEC. 53. Section 25011 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25011. (a) A member may elect to receive the retirement benefit
as an annuity payable in monthly installments, provided the balance
of credits in the member's Defined Benefit Supplement account on the
date the retirement benefit becomes payable equals at least three
thousand five hundred dollars ($3,500) after any lump-sum payments
have been made from the account.
(b) If the member elects to receive the retirement benefit as an
annuity, the member shall elect one of the following forms of
payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the member if the member elected to receive the
retirement benefit in a lump-sum payment. Upon the death of the
member, no other benefit shall be payable to the member's beneficiary
under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form
of payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the retirement
benefit in a lump-sum payment. Upon the death of the member, an
amount equal to the remaining balance, if any, of credits transferred
from the member's Defined Benefit Supplement account to the
Annuitant Reserve shall be returned in a lump-sum payment to the
member's beneficiary.
(3) A 100 percent joint and survivor annuity. This form of
payment is the actuarial equivalent of the lump-sum payment modified
to be payable over the combined lives of the member and the member's
annuity beneficiary. Upon the death of the member, the same monthly
amount that was payable to the member shall be paid monthly to the
member's surviving annuity beneficiary. If the annuity beneficiary
predeceases the member, the annuity payable to the member shall be
the single life annuity with a cash refund feature that would have
been payable had the member selected that annuity at the commencement
of the benefit. That single life annuity shall be payable as of the
day following the date of the annuity beneficiary's death upon
receipt by the system of proof of the annuity beneficiary's death.
(4) A 50 percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
annuity beneficiary. Upon the death of the member, one-half of the
monthly amount that was payable to the member shall be paid monthly
to the member's surviving annuity beneficiary. If the annuity
beneficiary predeceases the member, the annuity payable to the member
shall be the single life annuity with a cash refund feature that
would have been payable had the member selected that annuity at the
commencement of the benefit. That single life annuity shall be
payable as of the day following the date of the annuity beneficiary's
death upon receipt by the system of proof of the annuity beneficiary'
s death.
(5) A period certain annuity. This form of payment is an annuity
equal to the actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account on the date the
retirement benefit becomes payable. The annuity shall be payable
over a specified number of years, from a minimum of three years to a
maximum of 10 years. However, the annuity period shall not exceed
the life expectancy of the member, or the life expectancy of the
member and the member's annuity beneficiary. If the member's death
occurs prior to the end of the period certain, the remaining balance
of payments shall be paid to the member's annuity beneficiary
pursuant to Section 25022.
(c) The actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account shall reflect increases
in annuity payments to be made in the future pursuant to Section
24402.
SEC. 54. Section 25012 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25012. An annuity payable under the Defined Benefit Supplement
Program shall be determined as a value actuarially equivalent to the
balance of credits in the member's Defined Benefit Supplement account
on the date the benefit becomes payable and after any lump-sum
payment. If a single life annuity is elected, the annuity shall be
calculated using the age of the member on the date the benefit
becomes payable. A member may elect a single life annuity only if
the member did not elect to receive a modified allowance pursuant to
Section 24300. If a joint and survivor annuity is elected, the
annuity shall be calculated using the age of the member and the age
of the member's beneficiary on the date the benefit becomes payable.
A member may elect a joint and survivor annuity only if the member
elected to receive a modified allowance pursuant to Section 24300.
SEC. 55. Section 25014 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25014. (a) If a member reinstates from service retirement under
this part, payment of a retirement annuity based on the balance of
credits that was transferred from the member's Defined Benefit
Supplement account to the Annuitant Reserve shall terminate. The
member's Defined Benefit Supplement account shall be credited with
the actuarial equivalent of the member's annuity as of the date the
annuity is terminated and the Annuitant Reserve shall be reduced by
the amount credited to the member's account.
(b) If the member subsequently retires again, an annuity based on
the remaining balance of credits in the member's Defined Benefit
Supplement account at the time of the subsequent retirement shall
become payable pursuant to Section 24202.5 and the balance of credits
in the member's Defined Benefit Supplement account shall be
transferred to the Annuitant Reserve.
SEC. 56. Section 25015 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25015. (a) If a member elects to receive a benefit payable under
the Defined Benefit Supplement Program as a joint and survivor
annuity, the designation of the beneficiary made pursuant to Section
24300 shall apply to the benefit payable under this chapter. The
annuity beneficiary designation shall not be changed after the date
the benefit becomes payable to the member, except as provided in
Chapter 12 (commencing with Section 22650).
(b) If the member designates multiple annuity beneficiaries in
the designation of beneficiary made pursuant to Section 24300, the
percentage of the annuity payable to each annuity beneficiary upon
the death of the member specified in that designation shall apply to
the benefit payable under this chapter. The annuity amount payable
to the member during his or her lifetime shall be modified to be
payable over the combined lives of the member and the annuity
beneficiary or beneficiaries.
(c) If the member predeceases an annuity beneficiary, the annuity
beneficiary may designate a payee to receive an amount that may be
payable in a lump-sum pursuant to Section 25023 upon the death of the
annuity beneficiary.
SEC. 57. Section 25016 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25016. (a) A member's disability benefit under the Defined
Benefit Supplement Program shall be an amount equal to the balance of
credits in the member's Defined Benefit Supplement account on the
date the disability benefit becomes payable.
(b) A disability benefit shall be a lump-sum payment, or an
annuity payable in monthly installments, or a combination of both a
lump-sum payment and an annuity, as elected by the member on the
application for a disability benefit. Any retirement benefit paid as
an annuity under this chapter shall be subject to Section 25018.
(c) Upon distribution of the entire disability benefit in a
lump-sum payment, no other benefit shall be payable to the member or
the member's beneficiary under the Defined Benefit Supplement
Program.
SEC. 58. Section 25017 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25017. (a) A member who meets the following eligibility
requirements shall receive a disability benefit under the Defined
Benefit Supplement Program:
(1) The member has terminated all employment to perform creditable
service subject to coverage by the plan. The member's employer, or
employers if the member has multiple employers, shall certify on a
form prescribed by the system that the member's employment has been
terminated.
(2) The member has been approved to receive a disability allowance
pursuant to Chapter 25 (commencing with Section 24001) or a
disability retirement allowance pursuant to Chapter 26 (commencing
with Section 24100) under the Defined Benefit Program.
(b) The member, or the member's employer or conservator on behalf
of the member, shall submit an application for a disability benefit
on a form prescribed by the system.
SEC. 59. Section 25018 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25018. (a) A member may elect to receive the disability benefit
as an annuity, payable in monthly installments, provided the balance
of credits in the member's Defined Benefit Supplement account on the
date the disability benefit becomes payable equals at least three
thousand five hundred dollars ($3,500) after any lump-sum payment has
been made from this account.
(b) If the member elects to receive the disability benefit as an
annuity, the member shall elect one of the following forms of
payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the member if the member elected to receive the
disability benefit in a lump-sum payment. Upon the death of the
member, no other benefit shall be payable to the member's beneficiary
under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form
of payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the disability
benefit in a lump-sum payment. Upon the death of the member, an
amount equal to the remaining balance of credits, if any, transferred
from the member's Defined Benefit Supplement account to the
Annuitant Reserve shall be returned in a lump-sum payment to the
member's beneficiary.
(3) A 100 percent joint and survivor annuity. This form of
payment is the actuarial equivalent of the lump-sum payment modified
to be payable over the combined lives of the member and the member's
annuity beneficiary. Upon the death of the member, the same monthly
amount that was payable to the member shall be paid monthly to the
member's surviving annuity beneficiary. If the annuity beneficiary
predeceases the member, the annuity payable to the member shall be
the single life annuity with a cash refund feature that would have
been payable had the member selected that annuity at the commencement
of the benefit. That single life annuity shall be payable as of the
day following the date of the annuity beneficiary's death upon
receipt by the system of proof of the annuity beneficiary's death.
(4) A 50 percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
annuity beneficiary. Upon the death of the member, one-half of the
monthly amount that was payable to the member shall be paid monthly
to the member's surviving annuity beneficiary. If the annuity
beneficiary predeceases the member, the annuity payable to the member
shall be the single life annuity with a cash refund feature that
would have been payable had the member selected that annuity at the
commencement of the benefit. That single life annuity shall be
payable as of the day following the date of the annuity beneficiary's
death upon receipt by the system of proof of the annuity beneficiary'
s death.
(5) A period certain annuity. This form of payment is an annuity
equal to the actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account on the date the
disability benefit becomes payable. The annuity shall be payable
over a specified number of years, from a minimum of three years to a
maximum of 10 years. However, the annuity period shall not exceed
the life expectancy of the member, or the life expectancy of the
member and the member's annuity beneficiary. If the member's death
occurs prior to the end of the period certain, the remaining balance
of payments shall be paid to the member's annuity beneficiary
pursuant to Section 25022.
(c) The actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account shall reflect increases
in annuity payments to be made in the future pursuant to Section
24402, unless the member elected a period certain annuity.
SEC. 60. Section 25019 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25019. (a) If a member's disability allowance or disability
retirement allowance under this part is terminated, payment of a
disability annuity based on the balance of credits transferred from
the member's Defined Benefit Supplement account to the Annuitant
Reserve also shall terminate. The member's Defined Benefit
Supplement account shall be credited with the actuarial equivalent of
the member's annuity as of the date the annuity is terminated and
the Annuitant Reserve shall be reduced by the amount credited to the
member's account.
(b) If a disability allowance or a service or disability
retirement allowance subsequently becomes payable again, an annuity
based on the remaining balance of credits in the member's Defined
Benefit Supplement account at the time of the subsequent disability
or service or disability retirement becomes payable and the balance
of credits in the member's Defined Benefit Supplement account shall
be transferred to the Annuitant Reserve.
SEC. 61. Section 25020 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25020. (a) A final benefit under the Defined Benefit Supplement
Program shall become payable when the system receives proof of the
member's death.
(b) If the member's death occurs before an annuity under the
Defined Benefit Supplement Program becomes payable, the final benefit
shall be an amount equal to the balance of credits in the member's
Defined Benefit Supplement account on the date of the member's death.
(c) Upon distribution of a final benefit in a lump-sum payment, no
other benefit shall be payable under the Defined Benefit Supplement
Program to the member's beneficiary.
SEC. 62. Section 25021 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25021. (a) A beneficiary, other than an entity, may elect to
receive the final benefit payable under the Defined Benefit
Supplement Program as an annuity payable in monthly installments
provided the balance of credits in the member's Defined Benefit
Supplement account equals at least three thousand five hundred
dollars ($3,500).
(b) A beneficiary who elects to receive an annuity shall elect one
of the following forms of payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the beneficiary if the beneficiary elected to receive
the final benefit in a lump-sum payment. The annuity shall cease to
be payable upon the death of the beneficiary, and no other benefit
shall be payable under the Defined Benefit Supplement
Program because of the death of the
member and the member's beneficiary.
(2) A period certain annuity. This form of payment is an annuity
equal to the actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account on the date of the member'
s death. The annuity shall be payable over a specified number of
years, from a minimum of three years to a maximum of 10 years, but
not to exceed the life expectancy of the beneficiary. The
beneficiary may designate a payee to receive the remaining balance of
payments if the beneficiary's death occurs prior to the end of the
period certain.
(c) The actuarial equivalent of the balance of credits in the
member's Defined Benefit Supplement account shall reflect increases
in annuity payments to be made in the future pursuant to Section
24402, unless the member elected a period certain annuity.
SEC. 63. Section 25023 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25023. (a) Upon the death of an annuity beneficiary who was
receiving an annuity under a joint and survivor annuity elected by
the member no further payment shall be made.
(b) Upon the death of a beneficiary who was receiving a single
life annuity without a cash refund feature, no further payment shall
be made.
(c) Upon the death of a beneficiary who was receiving a period
certain annuity, the actuarial equivalent of the remaining balance of
payments shall be paid in a lump sum to the payee designated by the
beneficiary pursuant to subdivision (c) of Section 25015.
SEC. 64. Section 25024 of the Education Code, as added by Chapter
74 of the Statutes of 2000, is amended to read:
25024. (a) Upon the termination of all employment to perform
creditable service subject to coverage under the plan for a reason
other than retirement, disability, or death, a member shall be
eligible for a termination benefit under the Defined Benefit
Supplement Program. The member's employer, or employers if the
member has multiple employers, shall certify on a form prescribed by
the system that the member's employment has been terminated.
(b) A member shall submit an application for a termination benefit
on a form prescribed by the system. If a member submits an
application for a refund of contributions under the Defined Benefit
Program, pursuant to Section 23103, that application shall also be
deemed an application for a termination benefit.
(c) The termination benefit shall be a lump-sum payment that is
equal to the balance of credits in the member's Defined Benefit
Supplement account.
(d) Upon distribution of the termination benefit, no further
benefit shall be payable to the member or the member's beneficiary
under the Defined Benefit Supplement Program.
(e) A partial distribution of the balance of credits in a member's
Defined Benefit Supplement account shall not be made, except as
provided in Section 25009, 25015, 25016, or 25022.
SEC. 65. Section 19.5 of this bill incorporates amendments to
Section 22652 of the Education Code proposed by both this bill and AB
820. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2001, (2) each bill
amends Section 22652 of the Education Code, and (3) this bill is
enacted after AB 820, in which case Section 19 of this bill shall not
become operative.
SEC. 66. Section 25.5 of this bill incorporates amendments to
Section 22662 of the Education Code proposed by both this bill and AB
820. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2001, (2) each bill
amends Section 22662 of the Education Code, and (3) this bill is
enacted after AB 820, in which case Section 25 of this bill shall not
become operative.
SEC. 67. The sum of $600,000 is hereby appropriated from the
Teachers' Retirement Fund to the Teachers' Retirement Board for the
administrative costs of implementing the provisions of Chapter 74 of
the Statutes of 2000, as amended by this act.
SEC. 68. The unexpended balance of funds appropriated to the
Teachers' Retirement Board in Chapter 632 of the Statutes of 1999 for
the payment of administrative costs of implementing the provisions
of that act, is hereby reappropriated to the board for the payment of
administrative costs of implementing the provisions of legislation
enacted during the second year of the 1999-2000 Session of the
Legislature affecting the State Teachers' Retirement System.
SEC. 69. The provisions of this act, other than Sections 3, 4, 8,
13, 27, 30, 31, 34, 35, 36, 37, and 68, shall become operative only
if Chapter 74 of the Statutes of 2000 becomes effective on or before
January 1, 2001.
SEC. 70. The Teachers' Retirement Board shall promptly notify the
Secretary of State if and when the condition specified in Sections 3,
4, 5, 27, 30, and 31 of this act has been satisfied to cause those
sections to become operative on July 1, 2002.
SEC. 71. The Teachers' Retirement Board shall promptly notify the
Secretary of State if and when the condition specified in Sections
34, 35, 36, and 37 of this act has been satisfied to cause those
sections to become operative on July 1, 2003.