BILL NUMBER: AB 1852 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Mullin
JANUARY 29, 2004
An act to amend Sections 22134, 22134.5, 24203, and 24221 of, and
to repeal Section 22136 of, the Education Code, relating to state
teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1852, as introduced, Mullin. State teachers' retirement.
(1) Under existing law, retirement benefits of a member of the
Defined Benefit Program of the State Teachers' Retirement Plan are
calculated, in part, based upon the member's final compensation.
Final compensation, for members with fewer than 25 years of service
who are not classroom teachers, is defined for this purpose as the
highest average annual compensation earnable by the member during a
period of 3 consecutive school years.
This bill would authorize any periods of service to be aggregated
to constitute a period of 3 school years for that purpose. The bill
would also make related technical changes.
(2) Under existing law, a member of the Defined Benefit Program of
the State Teachers' Retirement Plan who is 50 years of age may
retire and receive specified benefits if he or she has 30 years of
credited service.
This bill would instead permit a member who is 50 years of age to
retire and receive specified benefits if he or she has 25 years of
credited service.
(3) Existing law authorizes specified members of the Defined
Benefit Program of the State Teachers' Retirement Plan who retire
prior to January 1, 2011, to receive a specified lump-sum payment
upon retirement and an actuarially reduced monthly allowance.
Existing law also provides a member of the program with a specified
increase to his or her monthly allowance if the member retires with
30 or more years of service.
This bill would authorize a member who retires with 30 or more
years of service, in lieu of that increase to his or her monthly
allowance, to receive a lump-sum payment upon retirement equal to the
actuarial present value of that increase.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22134 of the Education Code is amended to read:
22134. (a) "Final compensation" means the highest average annual
compensation earnable by a member during any period of three
consecutive school years while an active member of the
Defined Benefit Program or time during which he or she was not a
member but for which the member has received credit under the Defined
Benefit Program, except time that was so credited for service
performed outside this state prior to July 1, 1944. The last three
consecutive school years of employment
shall be used by the system in determining final compensation unless
designated to the contrary in writing by the member.
(b) For purposes of this section, any periods of
service separated by breaks in service may be
aggregated to constitute a period of three consecutive
school years , if the periods of service
are consecutive except for the breaks of employment
.
(c) The determination of final compensation of a member who has
concurrent membership in another retirement system pursuant to
Section 22115.2 shall take into consideration the compensation
earnable while a member of the other system, provided that all of the
following exist:
(1) The member was in state service or in the employment of a
local school district or a county superintendent of schools.
(2) Service under the other system was not performed concurrently
with service under the Defined Benefit Program.
(3) Retirement under the Defined Benefit Program is concurrent
with the member's retirement under the other system.
(d) The compensation earnable for the first position in which
California service was credited shall be used when additional
compensation earnable is required to accumulate three
consecutive school years for the purpose of
determining final compensation under Section 23805.
(e) If a member has received service credit for part-time service
performed prior to July 1, 1956, the member's final compensation
shall be adjusted for that service in excess of one year by the ratio
that part-time service bears to full-time service.
(f) The board may specify a different final compensation with
respect to disability allowances, disability retirement allowances,
family allowances, and children's portions of survivor benefit
allowances payable on and after January 1, 1978. The compensation
earnable for periods of part-time service shall be adjusted by the
ratio that part-time service bears to full-time service.
(g) The amendment of former Section 22127 made by Chapter 782 of
the Statutes of 1982 does not constitute a change in, but is
declaratory of, the existing law.
SEC. 2. Section 22134.5 of the Education Code is amended to read:
22134.5. (a) Notwithstanding Section 22134, "final compensation"
means the highest average annual compensation earnable by a member
during any period of 12 consecutive months while an active member of
the Defined Benefit Program or time during which he or she was not a
member but for which the member has received credit under the Defined
Benefit Program, except time that was so credited for service
performed outside this state prior to July 1, 1944. The last
consecutive 12-month period of employment shall be used by the system
in determining final compensation unless designated to the contrary
in writing by the member.
(b) For purposes of this section, periods of service separated by
breaks in service may be aggregated to constitute a period of 12
consecutive months, if the periods of service are consecutive except
for the breaks.
(c) The determination of final compensation of a member who has
concurrent membership in another retirement system pursuant to
Section 22115.2 shall take into consideration the compensation
earnable while a member of the other system, provided that all of the
following exist:
(1) The member was in state service or in the employment of a
local school district or a county superintendent of schools.
(2) Service under the other system was not performed concurrently
with service under the Defined Benefit Program.
(3) Retirement under the Defined Benefit Program is concurrent
with the member's retirement under the other system.
(d) The compensation earnable for the first position in which
California service was credited shall be used when additional
compensation earnable is required to accumulate three
12 consecutive years
months for the purpose of determining final compensation under
Section 23805.
(e) If a member has received service credit for part-time service
performed prior to July 1, 1956, the member's final compensation
shall be adjusted for that service in excess of one year by the ratio
that part-time service bears to full-time service.
(f) The board may specify a different final compensation with
respect to disability allowances, disability retirement allowances,
family allowances, and children's portions of survivor benefit
allowances payable on and after January 1, 1978. The compensation
earnable for periods of part-time service shall be adjusted by the
ratio that part-time service bears to full-time service.
(g) This section shall only apply to a member who has 25 or more
years of credited service, excluding service credited pursuant to
Section 22714, 22714.5, 22715, 22717, or 22826, but including any
credited service that a court has ordered be awarded to a nonmember
spouse pursuant to Section 22652. This section also shall apply to a
nonmember spouse, if the member had at least 25 years of credited
service, excluding service credited pursuant to Section 22714,
22714.5, 22715, 22717, or 22826, on the date the parties separated,
as established in the judgment or court order pursuant to Section
22652.
SEC. 3. Section 22136 of the Education Code is repealed.
22136. (a) "Final compensation" with respect to a member whose
salary while an active member was reduced because of a reduction in
school funds means the highest average annual compensation earnable
by the member during any three years while employed to perform
creditable service subject to coverage by the Defined Benefit Program
if the member elects to be subject to this section.
(b) For the purposes of this section, a year shall be considered
to be a period of 12 consecutive months.
SEC. 4. Section 24203 of the Education Code is amended to read:
24203. (a) A member who has 30 25
years of credited service under this part may retire at age 50 years
or older and receive an annual allowance equal to 2 percent of final
compensation for each year of credited service. If the member has
attained age 50 years, but has not attained early retirement age, the
allowance shall be reduced by one-quarter of 1 percent for each full
month or fraction of a month that will elapse until the member will
attain early retirement age and one-half of 1 percent for each full
month, or fraction of a month between early retirement age and normal
retirement age.
(b) In computing the amounts described in subdivision (a), the age
of the member on the last day of the month in which the retirement
allowance begins to accrue or any later date provided in Section
24204 shall be used.
SEC. 5. Section 24221 of the Education Code is amended to read:
24221. (a) A member who retires for service on or after
January 1, 2004, and prior to January 1, 2011, and who
has reached either has reached the age
of 60 years and three months within the month he or she retires or
the age of 60 years if he or she has at least 30
years of credited service may elect, on a form prescribed by the
system, to receive a lump-sum payment and an actuarially reduced
monthly allowance pursuant to this section in lieu of the monthly
allowance that would otherwise be payable to the member pursuant to
this chapter. The election under this section shall be made at the
time the member files his or her application for service retirement
allowance as provided in Section 24204.
(b) A member who makes the election described in subdivision (a)
and who has reached the age of 60 years and three months within
the month he or she retires or the age of 60 years if he or she has
at least 30 years of credited service shall receive a one-time,
lump-sum payment in an amount that equals or does not exceed the
lesser of the following amounts:
(1) The actuarial present value of the difference between (A) the
monthly allowance payable to the member pursuant to this chapter, and
(B) an amount equal to 2 percent of the member's final compensation
multiplied by the number of years of credited service and divided by
12.
(2) Fifteen percent of the actuarial present value of the monthly
allowance payable to the member under this chapter.
(c) A member who makes the election described in subdivision
(a) and who has at least 30 years of credited service shall receive a
one-time, lump-sum payment in an amount that equals or does not
exceed the greater of the following amounts:
(1) If the member has reached the age of 60 years, the amount that
the member would otherwise be entitled to receive under subdivision
(b).
(2) The actuarial present value of the increase in the allowance
payable to the member pursuant to Section 24203.6, after any
modification pursuant to Sections 24300 and 24307.
(d) Notwithstanding any other provision of this part, a
member who makes the election described in subdivision (a) shall
receive a monthly allowance, pursuant to this chapter, that shall be
actuarially reduced to reflect the lump-sum amount paid under
subdivision (b) or subdivision (c) .
(d)
(e) A member may not apply a lump-sum payment made pursuant
to this section for the purposes of redepositing previously refunded
retirement contributions pursuant to Chapter 19 (commencing with
Section 23200) or purchasing service credit pursuant to Chapter 14
(commencing with Section 22800), Chapter 14.2 (commencing with
Section 22820) or Chapter 14.5 (commencing with Section 22850). The
Legislature hereby finds and declares that if a member who elects to
receive a partial lump-sum payment also elects to redeposit
previously refunded contributions or purchase service credit as a
result of the receipt of the lump-sum payment, the Defined Benefit
Program may experience a net actuarial impact.
(e)
(f) The Legislature reserves the right to modify the
provisions of this section to further the objective of permitting
eligible members to receive a lump-sum distribution of a portion of
their benefits, with a corresponding actuarial reduction in their
monthly allowance, so that there is no net actuarial impact to the
Defined Benefit Program.