BILL NUMBER: AB 1852 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 17, 2004
AMENDED IN SENATE AUGUST 4, 2004
AMENDED IN SENATE JUNE 22, 2004
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 22851, 24221, and 28001
Section 24221 of the Education Code, relating to
state teachers' retirement, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1852, as amended, Mullin. State teachers' retirement.
(1) Existing law authorizes a member of the Defined Benefit
Program or a participant of the Cash Balance 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 or participant 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.
(2)
(1) Existing law authorizes 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.
This bill would 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.
(3)
(2) The bill would appropriate $53,000 from the Teachers'
Retirement Fund to the Teachers' Retirement Board to implement the
bill's provisions.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
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 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 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. 2.
SECTION 1. Section 24221 of the Education Code is amended to
read:
24221. (a) A member who retires for service prior to January 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 unmodified 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)
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 amount by which (A) the
monthly unmodified allowance payable to the member pursuant to this
chapter 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
unmodified allowance payable to the member under this chapter.
(c) Notwithstanding any other provision of this part, a member who
makes the election described in subdivision (a) shall receive a
monthly unmodified allowance, pursuant to this chapter, that shall be
actuarially reduced to reflect the lump-sum amount paid under
subdivision (b). The actuarial reduced unmodified allowance may be
modified pursuant to Section 24300.
(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 retirement 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) 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.
SEC. 3. Section 28001 of the Education Code is amended to read:
28001. (a) The participant who returns to employment with the
same employer that had employed the participant immediately prior to
the eligible period of service in the uniformed services, in
accordance with the requirements of Chapter 43 (commencing with
Section 4301) of Title 38 of the United States Code, shall be treated
as not having incurred a break in the performance of creditable
service by reason of that participant's period or periods of service
in the uniformed services. The length of each period of service in
the uniformed services shall not exceed five years unless otherwise
permitted pursuant to Section 28004. Each period of service in the
uniformed services by the participant shall, upon that participant's
return to employment with the same employer or employers that had
employed the participant immediately prior to the eligible period of
service in the uniformed services, constitute employment toward the
performance of creditable service provided that participant elects to
remit the employee contributions that would have been made during
the period of service in the uniformed services. The remittance of
employee contributions shall be calculated pursuant to Sections 26501
and 28003. That remittance may not exceed the amount the
participant would have been required to contribute during that period
of performance of creditable service had the participant remained
continuously employed by the last employer and not served in the
uniformed services throughout that period.
(b) Notwithstanding Section 26506, remittance of employee
contributions in accordance with subdivision (a) shall be made by the
employer pursuant to Section 26502 upon the employer's receipt of
written consent of the participant specifying a schedule of
repayments. That remittance shall commence during the period
beginning with the date of return to employment and may continue for
three times the period of the participant's eligible period of
service in the uniformed services, not to exceed five years. The
plan's receipt of the remittance payments to the plan with respect to
the Cash Balance Benefit Program shall be credited pursuant to
Chapter 7 (commencing with Section 26600) of this part. Interest on
the payments of remitted employee contributions made for the period
of service in the uniformed services shall not be credited to the
participant's account until after those payments are received and
only prospectively to the participant's account in accordance with
Section 26604. Upon receipt of the remittance payments to the plan,
the payments shall be subject to the same terms and conditions under
the program as if the payments had been employee contributions made
by the participant had the participant not served for a period in the
uniformed services. The current year contributions and
contributions made for purposes of purchasing service may not exceed
the maximum exclusion allowance as set forth in the Internal Revenue
Code.
(c) A participant shall not be required to make the contributions
to his or her employee account pursuant to subdivision (a) for the
12-month period immediately following his or her entry into the
eligible period of service in the uniformed services, if that service
was performed on or after September 11, 2001, and the participant
returned to employment prior to July 30, 2005, with the same employer
that had employed the participant immediately prior to the eligible
period of service. However, upon receipt of the employer
contributions made pursuant to Section 28002, a credit shall be made
to the participant's account in the amount of the employee
contributions the participant would have otherwise made to his or her
employee account pursuant to subdivision (a) for the eligible period
of service in the uniformed services. This subdivision does not
modify the employer's obligation to make contributions on behalf of
the participant pursuant to Section 28002.
SEC. 4.
SEC. 2. The sum of fifty-three thousand dollars ($53,000) is
hereby appropriated from the Teachers' Retirement Fund to the
Teachers' Retirement Board to implement the provisions of this act.