SB 1435 Senate Bill

BILL NUMBER: SB 1435	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   AUGUST 7, 2000

INTRODUCED BY   Senator Johnston

                        FEBRUARY 7, 2000

   An act to amend Section  25000 of   22950 of,
to amend and renumber Section 25000 of, to add Section 25923 to
 , and to add Chapter 3 (commencing with Section  25300)
  25930) and Chapter 4 (commencing with Section 25940)
 to Part 13.5 of Division 1 of Title 1 of, the Education Code,
relating to teachers' health benefits  , and making an
appropriation therefor  .



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1435, as amended, Johnston.  Teachers' health benefits:
Medicare premiums.
   Existing law requires the State Teachers' Retirement System to
develop a health care benefits program for members of the Defined
Benefit Program and related persons, subject to appropriation of
funds and further legislative authorization, as specified.
   This bill would  recast that provision to  delete that
requirement and  to instead  provide that development of any
health care benefits programs shall be subject to appropriation of
funds and further legislative authorization, as specified.  
   Under existing law, specified monthly allowances are paid to
retired members of the Defined Benefit Program of the Teachers'
Retirement Plan.
   This bill would increase those monthly allowances by the amount of
the monthly premium for Medicare Part A, as specified. 

   The bill would also establish the Teachers' Health Benefits Fund,
a continuously appropriated special trust fund in the State Treasury,
and provide that moneys from that fund shall be used to pay the
premiums associated with Medicare Part A for members of the Defined
Benefit Program who retired prior to January 1, 2001, and meet
specified criteria.  The bill would authorize the Teachers'
Retirement Board to additionally pay from the fund those premiums for
certain members who retire on or after January 1, 2001, subject to
certain findings by the board based on an actuarial valuation of the
payment program, as specified.  The bill would provide that a certain
portion of the employer contributions to the Teachers' Retirement
Fund shall instead be deposited into the Teachers' Health Benefits
Fund for purposes of the payment program and would appropriate
$500,000 from that fund to the board for administration of the bill's
provisions. 
   Vote:  majority.  Appropriation:   no   yes
 .  Fiscal committee:  yes. State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.   Section 22950 of the Education Code is amended to
read: 
   22950.   (a)  Employers shall contribute monthly to the
 Teachers' Retirement Fund   system  8
percent of the creditable compensation upon which members'
contributions under this part are based.  
   (b) From the contributions required under subdivision (a), there
shall be deposited in the Teachers' Retirement Fund an amount,
determined by the board, that is not less than the amount, determined
in a actuarial valuation of the Defined Benefit Program pursuant to
Section 22311.5, necessary to finance the liabilities associated with
the benefits of the Defined Benefit Program over the funding period
adopted by the board, after taking into account the contributions
made pursuant to Sections 22901, 22951, and 22955.
   (c) The amount of contributions required under subdivision (a)
that is not deposited in the Teachers' Retirement Fund pursuant to
subdivision (b) shall be deposited directly into the Teachers' Health
Benefits Fund, as established in Section 25930, and shall not be
deposited into or transferred from the Teachers' Retirement Fund.
  
  SEC. 2.   Section 25000 of the Education Code is amended 
and renumbered  to read:  
   25000.  
   25900.   (a) All costs incurred by the system to develop
health care benefit programs pursuant to this part shall be paid by
allocations from the Teachers' Retirement Fund as appropriated for
that purpose.
   (b) Any health care benefits program developed by the system
pursuant to this part shall not be implemented by the system unless
specifically authorized by a statute enacted by the Legislature.

  SEC. 2.  Chapter 3 (commencing with Section 25300)  
  SEC. 3.  Section 25923 is added to the Education Code, to read:
   25923.  "Fund" means the Teachers' Health Benefits Fund.
  SEC. 4.  Chapter 3 (commencing with Section 25930) is added to Part
13.5 of Division 1 of Title 1 of the Education Code, to read:

      CHAPTER 3.  ESTABLISHMENT AND CONTROL OF FUND

   25930.  There is in the State Treasury a special trust fund to be
known as the Teachers' Health Benefits Fund.  There shall be
deposited in the fund the employer contributions required under
subdivision (c) of Section 22950, income on investments, other
interest income, income from fees and penalties, premiums paid by
members, donations, legacies, bequests made to the fund and accepted
by the board, and any other amounts provided by this part.
Notwithstanding Section 11340 of the Government Code, the proceeds of
the fund are hereby continuously appropriated without regard to
fiscal year for purposes of this part.  The design and administration
of the fund and any program financed from the fund shall comply with
Section 115 of Title 26 of the United States Code.
   25931.  The board shall have exclusive control of the
administration of the fund.  No transfers or disbursements of any
amount from the fund shall be made except upon the authorization of
the board for the purpose of carrying into effect the provisions of
this part.  Except as otherwise limited by the California
Constitution and by law, the board may, in its discretion, invest the
assets of the fund through the purchase, holding, or sale of any
investment, financial instrument, or financial transaction, when the
investment, financial instrument, or financial transaction is prudent
in the informed opinion of the board.
   25932.  Return on investments shall be collected by the State
Treasurer and, together with any other moneys received for the fund,
shall be immediately deposited to the credit of the fund and reported
immediately to the system.  Money in whatever form received directly
by the system for the fund shall be deposited immediately in the
State Treasury to the credit of the fund.
   25933.  (a) For purposes of this section, "plan" means any health
benefits program that is financed from the proceeds of the fund.
   (b) The board shall maintain all data necessary to perform an
actuarial investigation of the demographic and economic experience of
the plan and for the actuarial valuation of the assets and
liabilities of the plan.
   (c) The board shall retain the services of an actuary to do all of
the following:
   (1) 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.
   (2) Make an actuarial investigation of the demographic and
economic experience, including the mortality, service, and other
experience, of the plan with respect to members or any other persons
eligible to receive benefits from the plan.
   (3) At least biennially, using actuarial assumptions adopted by
the board, perform an actuarial valuation of the plan that identifies
the assets and liabilities of the plan, and report the findings to
the board.  The report of the actuary on the results of the actuarial
valuation shall identify and include the components of normal cost
and adequate information to determine the effects of changes in
actuarial assumptions.  Copies of the report on the actuarial
valuation shall be transmitted to the Governor and to the
Legislature.
   (4) Recommend to the board all rates and factors necessary to
administer the plan, including, but not limited to, mortality tables
and interest rates.
   (5) Recommend to the board a strategy for amortizing any unfunded
actuarial obligation.
  SEC. 5.  Chapter 4 (commencing with Section 25940) is added to Part
13.5 of Division 1 of Title 1 of the Education Code, to read:

      CHAPTER 4.  MEDICARE BENEFITS PROGRAM

   25940.  (a) Effective July 1, 2001, the system shall pay to the
federal Health Care Financing Administration the premiums associated
with Medicare Part A for retired members described in this section.
   (b) This section shall apply only to a retired member of the
Defined Benefit Program who:  (1) retired prior to January 1, 2001,
(2) is not eligible for Medicare Part A without payment of a premium,
(3) is at least 65 years of age, and (4) enrolled in Medicare Parts
A and B at the age of 65 years or as of July 1, 2001, whichever is
later.
   (c) The board may extend eligibility for the payments described in
this section to members of the Defined Benefit Program who meet the
requirements of subdivision (d) and who retire on or after January 1,
2001, within a calendar year specified by the board, if the board
finds that the cost of the payments for members retiring during the
specified calendar year may be paid within the anticipated resources
available in the fund, as determined by the actuarial valuation of
the plan established by this chapter, conducted pursuant to Section
25933.  Any extension of eligibility to members who retire on or
after January 1, 2001, shall be provided equally to any member who
meets the requirements of subdivision (d) and retires during the
calendar year specified by the board.
   (d) Eligibility for the payments described in this section
pursuant to subdivision (c) shall be limited to members of the
Defined Benefit Program who retire from a school district that
either:  (1) completed a division pursuant to Section 22156 of the
Government Code prior to January 1, 2001; or (2) completed or is
conducting a division pursuant to that section or after January 1,
2001, and, if the member was less than 58 years of age at the time of
the division, the member elected to be covered by Medicare.
   (e) The amount paid to the federal Health Care Financing
Administration pursuant to this section shall include any penalties
applicable to enrollment in Medicare Part A or Part B by members who
enroll after the age of 65 years.  Notwithstanding any other
provision of this section, this subdivision shall apply only to
members who are over the age of 65 years on July 1, 2001.
  SEC. 6.  There is hereby appropriated from the Teachers' Health
Benefits Fund to the Teachers' Retirement Board the sum of five
hundred thousand dollars ($500,000) for administration of the
provisions of this act.   is added to Part 13.5 of
Division 1 of Title 1 of the Education Code, to read:

      CHAPTER 3.  MEDICARE PREMIUMS

   25300.  (a) The allowance payable to a retired member of the
Defined Benefit Program pursuant to Part 13 (commencing with Section
22000) shall be increased by the amount of the member's premium for
Medicare Part A.  This amount shall be adjusted annually by the
Teachers' Retirement Board to reflect changes imposed in the premium
by the federal Health Care Financing Administration.
   (b) This section shall only apply to a member who is at least 65
years of age, enrolled in Medicare Part B, and not eligible for
Medicare Part A without payment of a premium.
   (c) The amount described in subdivision (a) shall be deducted from
the monthly disbursement to the member and submitted to the federal
Health Care Financing Administration to pay the member's premium for
Medicare Part A, unless the member elects, on a form prescribed by
the system and duly executed and filed with the system, to have the
amount paid directly to the member.
   (d) The increased allowance authorized by this section is not
vested and shall not be included in the base allowance for purposes
of calculating the annual improvement defined by Sections 22140 and
22141 or for purposes of calculating supplemental payments pursuant
to Sections 24412, 24415, and 24417.