BILL NUMBER: SB 1435 CHAPTERED
BILL TEXT
CHAPTER 1032
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 ASSEMBLY AUGUST 30, 2000
AMENDED IN ASSEMBLY AUGUST 7, 2000
INTRODUCED BY Senator Johnston
(Principal coauthor: Assembly Member Honda)
(Coauthor: Assembly Member Lempert)
FEBRUARY 7, 2000
An act to amend Section 22950 of, to amend and renumber Section
25000 of, to add Section 25923 to, and to add Chapter 3 (commencing
with Section 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, 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.
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.
Appropriation: yes.
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 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:
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. 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 on 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. The board
may require a member on whose behalf a penalty would be paid pursuant
to this subdivision to authorize the system to deduct the Part B
premium from the member's retirement allowance as a condition of
having the system pay the Part A premium pursuant to this section.
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.