BILL NUMBER: AB 1852 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 23, 2004
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 Section 24221 Sections
22714, 22714.5, 24216, 24221, and 84040.5 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 school district, community
college district, or county office of education to grant members of
the Defined Benefit Program of the State Teachers' Retirement Plan 2
additional years of service credit or, prior to January 1, 2005, an
additional 2 years of service and 2 years of age, if certain
conditions are satisfied and the member retires for service within a
designated period. Any member granted additional credit for service
or service and age under those provisions forfeits that credit if he
or she is reemployed within 5 years after retirement by the district
from which he or she retired or within two years after retirement by
any other district.
This bill would instead provide that any member granted additional
credit for service or service and age under those provisions would
not forfeit that credit if he or she is reemployed at any time after
retirement by any other district.
(2) The Teachers' Retirement Law prescribes limits on the amount
of postretirement income that may be earned in specified types of
employment by a retired member of the Defined Benefit Program without
a reduction in the member's retirement benefits. Specifically, that
limit applies to a retired member who receives 2 additional years of
service credit at retirement and performs creditable service within
one year after retirement for the school district from which he or
she retired.
Under this bill, that limit would apply to a retired member who
receives those additional years of service credit at retirement and
performs creditable service within one year after retirement for any
school district, community college district, or county office of
education in the state.
(3) 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.
(2)
(4) This bill would incorporate additional changes in Section
24216 of the Education Code proposed by AB 2554 to become operative
only if this and AB 2554 are both enacted on or before January 1,
2005, each bill amends Section 24216 of the Education Code, and this
bill is enacted last.
(5) The bill would appropriate $53,000 from the Teachers'
Retirement Fund to the Teachers' Retirement Board to implement
the bill's provisions a specified provision
.
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 22714 of the Education Code is amended to
read:
22714. (a) Whenever the governing board of a school district or a
community college district or a county office of education, by
formal action, determines pursuant to Section 44929 or 87488 that
because of impending curtailment of or changes in the manner of
performing services, the best interests of the district or county
office of education would be served by encouraging certificated
employees or academic employees to retire for service and that the
retirement will result in a net savings to the district or county
office of education, an additional two years of service credit shall
be granted under this part to a member of the Defined Benefit Program
if all of the following conditions exist:
(1) The member is credited with five or more years of service
credit and retires for service under Chapter 27 (commencing with
Section 24201) during a period of not more than 120 days or less than
60 days, commencing no sooner than the effective date of the formal
action of the employer that shall specify the period.
(2) The employer transfers to the retirement fund an amount
determined by the Teachers' Retirement Board to equal the actuarial
equivalent of the difference between the allowance the member
receives after receipt of service credit pursuant to this section and
the amount the member would have received without the service credit
and an amount determined by the Teachers' Retirement Board to equal
the actuarial equivalent of the difference between the purchasing
power protection supplemental payment the member receives after
receipt of service credit pursuant to this section and the amount the
member would have received without the service credit. The payment
for purchasing power shall be deposited in the Supplemental Benefit
Maintenance Account established by Section 22400 and shall be subject
to Section 24415. The transfer to the retirement fund shall be made
in a manner and a time period, not to exceed eight years, that is
acceptable to the Teachers' Retirement Board. The employer shall
transfer the required amount for all eligible employees who retire
pursuant to this section.
(3) The employer transmits to the retirement fund the
administrative costs incurred by the system in implementing this
section, as determined by the Teachers' Retirement Board.
(4) The employer has considered the availability of teachers or
academic employees to fill the positions that would be vacated
pursuant to this section.
(b) (1) The school district shall demonstrate and certify to the
county superintendent that the formal action taken would result in a
net savings to the district.
(2) The county superintendent shall certify to the Teachers'
Retirement Board that the result specified in paragraph (1) can be
demonstrated. The certification shall include, but not be limited
to, the information specified in subdivision (b)
(c) of Section 14502 14502.1
.
(3) The school district shall reimburse the county superintendent
for all costs to the county superintendent that result from the
certification.
(c) (1) The county office of education shall demonstrate and
certify to the Superintendent of Public Instruction that the formal
action taken would result in a net savings to the county office of
education.
(2) The Superintendent of Public Instruction shall certify to the
Teachers' Retirement Board that the result specified in paragraph (1)
can be demonstrated. The certification shall include, but not be
limited to, the information specified in subdivision (b)
(c) of Section 14502
14502.1 .
(3) The Superintendent of Public Instruction may request
reimbursement from the county office of education for all
administrative costs that result from the certification.
(d) (1) The community college district shall demonstrate and
certify to the chancellor's office that the formal action taken would
result in a net savings to the district.
(2) The chancellor shall certify to the Teachers' Retirement Board
that the result specified in paragraph (1) can be demonstrated. The
certification shall include, but not be limited to, the information
specified in subdivision (c) of Section 84040.5.
(3) The chancellor may request reimbursement from the community
college district for all administrative costs that result from the
certification.
(e) The opportunity to be granted service credit pursuant to this
section shall be available to all members employed by the school
district, community college district, or county office of education
who meet the conditions set forth in this section.
(f) The amount of service credit shall be two years.
(g) Any member of the Defined Benefit Program who retires under
this part for service under Chapter 27 (commencing with Section
24201) with service credit granted under this section and who
subsequently reinstates shall forfeit the service credit granted
under this section.
(h) Any member of the Defined Benefit Program who retires
under this part for service under Chapter 27 (commencing with
Section 24201) with service credit granted under this section and who
takes any job with any school district in the state less than one
year after receiving the credit shall forfeit the ongoing benefit he
or she receives from the additional service credit granted under this
section.
(i) Any member of the Defined Benefit Program who
retires under this part for service under Chapter 27 (commencing with
Section 24201) with service credit granted under this section and
who takes any job with the school district , community college
district, or county office of education that granted the member
the service credit less than five years after receiving the credit
shall forfeit the ongoing benefit he or she receives from the
additional age and service credit granted under
this section.
(j)
(i) This section does not apply to any member otherwise
eligible if the member receives any unemployment insurance payments
arising out of employment with an employer subject to this part
during a period extending one year beyond the effective date of the
formal action, or if the member is not otherwise eligible to retire
for service.
SEC. 2. Section 22714.5 of the Education Code is amended to read:
22714.5. (a) Notwithstanding Sections 22714, 44929, and 87488, an
additional two years of service and an additional two years of age
shall be credited under this part to a member of the Defined Benefit
Program if the following conditions exist:
(1) The member is credited with five or more years of service
credit and retires for service under the provisions of Chapter 27
(commencing with Section 24201) within the period designated in the
memorandum of understanding or formal action described in paragraph
(6).
(2) The employer determines that the best interests of the
school district , community college district, or county
office of education would be served by encouraging certificated
or academic employees to retire for service and that the retirement
will result in a net savings to the district or county office of
education.
(3) The employer transfers to the retirement fund an amount
determined by the Teachers' Retirement Board to equal the actuarial
equivalent of the difference between the allowance the member
receives after receipt of service and age credit pursuant to this
section and the amount the member would have received without the
service and age credit and an amount determined by the Teachers'
Retirement Board to equal the actuarial equivalent of the difference
between the purchasing power protection supplemental payment the
member receives after receipt of service and age credit pursuant to
this section and the amount the member would have received without
the service and age credit. The payment for purchasing power shall be
deposited in the Supplemental Benefit Maintenance Account
established by Section 22400 and shall be subject to Section 24415.
The transfer to the retirement fund shall be made in a manner and
time period, not to exceed eight years, that is acceptable to the
Teachers' Retirement Board.
(4) (A) A school district shall demonstrate and certify to the
county superintendent that the formal action taken would result in a
net savings to the district.
(B) The county superintendent shall certify to the Teachers'
Retirement Board that the result specified in subparagraph (A) can be
demonstrated. The certification shall include, but not be limited
to, the information specified in subdivision (b)
(c) of Section 14502 14502.1
.
(C) The school district shall reimburse that county superintendent
for all costs to the county superintendent that result from the
certification.
(5) (A) The county office of education shall demonstrate and
certify to the Superintendent of Public Instruction that the formal
action taken would result in a net savings to the county office of
education.
(B) The Superintendent of Public Instruction shall certify to the
Teachers' Retirement Board that the result specified in subparagraph
(A) can be demonstrated. The certification shall include, but not be
limited to, the information specified in subdivision (b)
(c) of Section 14502
14502.1 .
(C) The Superintendent of Public Instruction may request
reimbursement from the county office of education for all
administrative costs that result from the certification.
(6) (A) A community college district shall demonstrate and certify
to the chancellor's office that the formal action taken would result
in a net savings to the district.
(B) The chancellor shall certify to the Teachers' Retirement Board
that the result specified in subparagraph (A) can be demonstrated.
The certification shall include, but not be limited to, the
information specified in subdivision (c) of Section 84040.5.
(C) The chancellor may request reimbursement from the community
college district for all administrative costs that result from the
certification.
(7) This section has been made applicable to the employer and the
member pursuant to a memorandum of understanding between the employer
and the representative employee organization or, for members who are
not represented by a representative employee organization, this
section has been made applicable to all of the members employed by
the school district, community college district, or county office of
education, pursuant to a formal action of the governing board. The
employer shall transfer the required amount for all eligible
employees who retire pursuant to this section.
(8) The employer transmits to the retirement fund the
administrative costs incurred by the system in implementing this
section, as determined by the Teachers' Retirement Board.
(b) The amount of additional service credit and additional age
shall each be two years regardless of credited service or age. A
member of the Defined Benefit Program who is credited with additional
age and service under this section may not be credited with
additional service under Section 22714.
(c) Any member of the Defined Benefit Program who is credited with
additional age and service under this section and who subsequently
reinstates from retirement shall forfeit the additional age and
service credit granted under this section.
(d) Any member of the Defined Benefit Program who retires
under this part for service under Chapter 27 (commencing with
Section 24201) with age and service credit granted under this section
and who takes any job with any school district in the state less
than one year after receiving the credit shall forfeit the ongoing
benefit he or she receives from the additional age and service credit
granted under this section.
(e) Any member of the Defined Benefit Program who
retires under this part for service under Chapter 27 (commencing with
Section 24201) with age and service credit granted under this
section and who takes any job with the school district ,
community college district, or county office of education that
granted the member the age and service credit less than five years
after receiving the credit shall forfeit the ongoing benefit he or
she receives from the additional age and service credit granted under
this section.
(f)
(e) This section is not applicable to any member otherwise
eligible if the member receives any unemployment insurance payments
arising out of employment with an employer subject to this part
during a period extending one year beyond the effective date of the
memorandum of understanding or formal action, or if the member is not
otherwise eligible to retire for service without the additional age
or service credit available under this section.
(g)
(f) This section shall become operative on January 1, 2004,
or 120 days after Assembly Bill No. 1207 of the 2003-04 Regular
Session is chaptered, whichever is later, and remain in effect only
until January 1, 2005, and as of that date is repealed, unless a
later enacted statute, that is enacted before January 1, 2005,
deletes or extends that date.
SEC. 3. Section 24216 of the Education Code is amended to read:
24216. (a) (1) A member retired for service under this part who
is appointed as a trustee or administrator by the Superintendent of
Public Instruction pursuant to Section 41320.1, or a member retired
for service who is assigned by a county superintendent of schools
pursuant to Article 2 (commencing with Section 42120) of Chapter 6 of
Part 24, shall be exempt from subdivisions (d) and (f) of Section
24214 for a maximum period of two years.
(2) The period of exemption shall commence on the date the member
retired for service is appointed or assigned and shall end no more
than two calendar years from that date, after which the limitation
specified in subdivisions (d) and (f) of Section 24214 shall apply.
(3) An exemption under this subdivision shall be granted by the
system providing that the Superintendent of Public Instruction or the
county superintendent of schools submits documentation required by
the system to substantiate the eligibility of the member retired for
service for an exemption under this subdivision.
(b) (1) A member retired for service under this part who is
employed by an employer to perform creditable service in an emergency
situation to fill a vacant administrative position requiring highly
specialized skills shall be exempt from the provisions of
subdivisions (d) and (f) of Section 24214 for creditable service
performed up to one-half of the full-time equivalent for that
position, if the vacancy occurred due to circumstances beyond the
control of the employer. The limitation specified in subdivisions
(d) and (f) of Section 24214 shall apply to creditable service
performed beyond the specified exemption.
(2) An exemption under this subdivision shall be granted by the
system subject to the following conditions:
(A) The recruitment process to fill the vacancy on a permanent
basis is expected to extend over several months.
(B) The employment is reported in a public meeting of the
governing body of the employer.
(C) The employer submits documentation required by the system to
substantiate the eligibility of the member retired for service for an
exemption under this subdivision.
(c) This section does not apply to any person who has received
additional service credit pursuant to Section 22715 or 22716.
(d) A person who has received additional service credit pursuant
to Section 22714 or 22714.5 shall be ineligible for one year from the
effective date of retirement for the exemption provided in this
section for service performed in the district from which he
or she retired any school district, community college
district, or county office of education in the state .
(e) This section shall become operative on January 1, 2001, and
shall remain in effect only until January 1, 2008, and as of that
date is repealed, unless a later enacted statute, which is enacted
before January 1, 2008, deletes or extends that date.
SEC. 3.5. Section 24216 of the Education Code is amended to read:
24216. (a) (1) A member retired for service under this part who
is appointed as a trustee or administrator by the Superintendent of
Public Instruction pursuant to Section 41320.1, or a member retired
for service who is assigned by a county superintendent of schools
pursuant to Article 2 (commencing with Section 42120)
42122) of Chapter 6 of Part 24, shall be exempt
from subdivisions (d) and (f) of Section 24214 for a maximum period
of two years.
(2) The period of exemption shall commence on the date the member
retired for service is appointed or assigned and shall end no more
than two calendar years from that date, after which the limitation
specified in subdivisions (d) and (f) of Section 24214 shall apply.
(3) An exemption under this subdivision shall be granted by the
system providing that the Superintendent of Public Instruction or the
county superintendent of schools submits documentation required by
the system to substantiate the eligibility of the member retired for
service for an exemption under this subdivision.
(b) (1) A member retired for service under this part who is
employed by an employer to perform creditable service in an emergency
situation to fill a vacant administrative position requiring highly
specialized skills shall be exempt from the provisions of
subdivisions (d) and (f) of Section 24214 for creditable service
performed up to one-half of the full-time equivalent for that
position, if the vacancy occurred due to circumstances beyond the
control of the employer. The limitation specified in
subdivisions (d) and (f) of Section 24214 shall apply to creditable
service performed beyond the specified exemption.
(2) The period of exemption shall commence on the date the
member retired for service is appointed or assigned and shall end no
more than two calendar years from that date, after which the
limitation specified in subdivisions (d) and (f) of Section 24214
shall apply.
(3) An exemption under this subdivision shall be granted by
the system subject to the following conditions:
(A) The recruitment process to fill the vacancy on a permanent
basis is expected to extend over several months.
(B) The employment is reported in a public meeting of the
governing body of the employer.
(C) The employer submits documentation required by the system to
substantiate the eligibility of the member retired for service for an
exemption under this subdivision.
(c) This section does not apply to any person who has received
additional service credit pursuant to Section 22715 or 22716.
(d) A person who has received additional service credit pursuant
to Section 22714 or 22714.5 shall be ineligible for one year from the
effective date of retirement for the exemption provided in this
section for service performed in the district from which he
or she retired any school district, community college
district, or county office of education in the state .
(e) This section shall become operative on January 1,
2001, and shall remain in effect only until January 1,
2008, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2008, deletes or extends
that date.
SEC. 4. 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. 2.
SEC. 5. Section 84040.5 of the Education Code is amended to read:
84040.5. (a) The board of governors, in cooperation with, and
upon approval by, the Department of Finance, shall prescribe the
statements and other information to be included in the audit reports
filed with the state and shall develop audit procedures for carrying
out the purposes of this section. The Department of Finance may make
audits, surveys, and reports which, in the judgment of the
department will serve the best interest of the state.
(b) A review of existing audit procedures, statements, and other
information required to be included in the audit reports shall be
conducted periodically by the board of governors, in cooperation with
the Department of Finance. Standards shall be updated periodically.
(c) For the audit of community colleges electing to take formal
action pursuant to Sections 22714 , and
22714.5, 87488, and 87488.1, the audit
standards shall require such any
information as is prescribed by the chancellor, including, but not
limited to, the following:
(1) The number and type of positions being vacated.
(2) The age and service credit of the retirees receiving the
additional service credit provided by Sections 22714 and 87488.
(3) A comparison of the salary and benefits of each retiree
receiving the additional service credit with the salary and benefits
of the replacement employee, if any.
(4) The resulting retirement costs, including interest, if any,
and postretirement healthcare benefits costs, incurred by the
employer.
(d) The chancellor shall annually prepare a cost analysis, based
upon the information included in the audit reports for the prior
fiscal year, to determine the net savings or costs resulting from
formal actions taken by community college districts pursuant to
Sections 22714 and , 22714.5, 87488,
and 87488.1, and shall report the results of the cost
analysis to the Governor and the Legislature by April 1 of each year.
(e) All costs incurred by the board of governors to implement
subdivision (c) shall be absorbed by the board of governors.
(f) At the request of the Department of Finance, each community
college district that elects to take formal action pursuant to
Sections 22714 , 22714.5, 87488, and 87488
87488.1 shall reimburse the Department of
Finance for any related administrative costs incurred by the
Department of Finance.
SEC. 6. Section 3.5 of this bill incorporates amendments to
Section 24216 of the Education Code proposed by both this bill and AB
2554. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2005, (2) each bill
amends Section 24216 of the Education Code, and (3) this bill is
enacted after AB 2554, in which case Section 3 of this bill shall not
become operative.
SEC. 7. 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
Section 4 of this act.