BILL NUMBER: AB 1852 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 20, 2004
AMENDED IN ASSEMBLY MARCH 18, 2004
INTRODUCED BY Assembly Member Mullin
JANUARY 29, 2004
An act to amend Sections 22134, 22134.5, 22851, 24203,
22851 and 24221 of , and to repeal
Section 22136 of, the Education Code, relating to state
teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1852, as amended, 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) Existing law authorizes a member of the Defined
Benefit Program of the State Teachers' Retirement Plan to receive
credit, as specified, for the period of time during which he or she
served in the uniformed services if the member or participant makes
the employee contributions to the retirement fund that he or she
would have otherwise been required to make during that period and
other conditions exist.
Under this bill, a member of the Defined Benefit Program would
receive credit for the period of time during which he or she served
in the uniformed services, up to one year, without paying any
employee contributions , if the period of service occurred
between September 11, 2001 , and July 30, 2005, and other
conditions exist.
(3) 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.
(4)
(2) Existing law authorizes specified
members of the Defined Benefit Program of the State Teachers'
Retirement Plan who retire prior to January 1, 2011, at a
specified age or at a specified age with 30 years of service,
to elect 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
authorize any member who retires prior to that date to make that
election. The bill would also specify the method to be used by the
Teachers' Retirement Board to calculate the member's actuarially
reduced monthly allowance, that results in no net actuarial impact to
the program .
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 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 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 may be
aggregated to constitute a period of three school years 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 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 12 consecutive 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.
SEC. 4.
SECTION 1. Section 22851 of the Education Code is amended to
read:
22851. The right to pension benefits under this part of a member
who returns to employment with the same employer that had employed
the member immediately prior to the eligible period of service in the
uniformed services, and is subject to Chapter 43 (commencing with
Section 4301) of Title 38 of the United States Code shall be
determined under this section.
(a) (1) A member shall be treated as not having incurred a break
in service by reason of that member's eligible period or periods of
service in the uniformed services.
(2) Each eligible period of service served by a member in the
uniformed services shall, upon return to employment, with the same
employer that had employed the member immediately prior to the
eligible period of service in the uniformed services, be deemed to
constitute service with the employer or employers toward plan vesting
and eligibility for membership in the Defined Benefit Program.
(3) A member who returns to employment, with the same employer
that had employed the member immediately prior to the eligible period
of service in the uniformed services is not entitled to any benefits
under this part in respect of with respect
to service in the uniformed services to which the member would
not otherwise have been entitled had the member remained continuously
employed and not undertaken that service in the uniformed services.
(b) For purposes of calculating benefits, a member who returns to
employment with the same employer that had employed the member
immediately prior to the eligible period of service in the uniformed
services shall be entitled to service credit under this part for the
eligible period of service in the uniformed services upon his or her
payment of the member contributions required under Section 22901 that
otherwise would have been due for that period of service had the
member remained continuously employed and not undertaken that
service in the uniformed services. No payment of member
contributions may exceed the amount the member would have been
required to contribute under this part had the member not served in
the uniformed services and had remained continuously employed by the
employer throughout the eligible period of service in the uniformed
services. If a member fails to remit the member contributions that
would have been required under Section 22901 in respect of
with respect to the eligible period of service
in the uniformed services, no service credit shall be provided under
this part for the period to which the unpaid contributions relate.
(c) Any payment of member contributions to the Defined Benefit
Program in this section shall be made by the member during the period
beginning with the date of return to employment and may continue for
three times the period of the member's eligible service in the
uniformed services, not to exceed five years. Any payment of member
contributions to the Defined Benefit Program in this section by a
member who returned to employment prior to January 1, 1997, and
qualifies for benefits in accordance with the Uniformed Services
Employment and Reemployment Rights Act of 1994 (Chapter 43
(commencing with Section 4301) of Title 38 of the United States
Code), shall be made by the member during the period beginning with
the date of notification of eligibility by the employer to the system
and may continue for three times the period of the member's eligible
service in the uniformed services, not to exceed five years. Any
subsequent request to purchase this service shall be subject to the
provisions of Chapter 14 (commencing with Section 22800). If all
contributions due under this part are not paid to the plan with
respect to the Defined Benefit Program within the specified repayment
period and in accordance with subdivision (b) of Section 22851
, the contributions shall be returned to the member at the end
of the repayment period. Interest on member contributions made for
the eligible period of service in the uniformed services may not be
credited under this part until after the contributions due are paid
and then only prospectively to the member's account in accordance
with Section 22216.
(d) (1) Notwithstanding subdivision (b), a member is not required
to pay contributions to receive credit pursuant to this section for
the eligible period of service in the uniformed services if the
service was performed on or after September 11, 2001, and the member
returned to employment prior to July 30, 2005, with the same employer
that had employed the member immediately prior to the eligible
period of service.
(2) The maximum amount of credited service that a member employed
on a full-time basis may receive without payment of contributions
under this subdivision shall be one year. The maximum amount of
credited service that a member employed on less than a full-time
basis may receive without payment of contributions under this
subdivision may not exceed the amount of credited service the member
would have earned during the 12-month period immediately following
his or her entry into the eligible period of service in the uniformed
services.
(3) This subdivision does not modify the employer's obligation to
make contributions on behalf of the member pursuant to Section 22852.
SEC. 5. Section 24203 of the Education Code is amended to read:
24203. (a) A member who has 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. 6.
SEC. 2. Section 24221 of the Education Code is amended to
read:
24221. (a) A member who retires for service prior to January
1, 2011, and who either has reached the age of 60 years and
three months within the month he or she retires or has at least 30
years of credited service 1, 2011, 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, (a) 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
amount by which (A) the monthly allowance
payable to the member pursuant to this chapter , and
exceeds (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)
(c) 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) .
(e)
(d) 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.
(f)
(e) An election pursuant to subdivision (a) may have no net
actuarial impact to the Defined Benefit Program. The board shall
adopt present value factors to establish a corresponding actuarially
reduced monthly allowance, that results in no net actuarial impact to
the Defined Benefit Program. 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.