BILL ANALYSIS
AB 1852
Page 1
ASSEMBLY THIRD READING
AB 1852 (Mullin)
As Amended May 20, 2004
Majority vote
PUBLIC EMPLOYEES 9-0 APPROPRIATIONS 16-5
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|Ayes:|Negrete McLeod, Levine, |Ayes:|Chu, Berg, Calderon, |
| |Campbell, Chan, Correa, | |Corbett, Correa, |
| |Kehoe, Laird, Maldonado, | |Firebaugh, Goldberg, |
| |Nakanishi | |Leno, Nation, Negrete |
| | | |McLeod, Oropeza, Pavley, |
| | | |Ridley-Thomas, Wesson, |
| | | |Wiggins, Yee |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Runner, Bates, Daucher, |
| | | |Haynes, Keene |
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SUMMARY : Authorizes a member of the State Teachers' Retirement
System (CalSTRS) to earn a longevity bonus and purchase prior
military service under certain conditions. Specifically, this
bill :
1)Allows a member of the Defined Benefit Program of the State
Teachers' Retirement Plan (Defined Benefit Program) to receive
credit for a 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)Authorizes a member of the Defined Benefit Program who retires
with 30 or more years of service, in lieu of an increase to
his or her monthly retirement allowance, to receive a lump-sum
payment upon retirement equal to the actuarial present value
of the increase to the monthly retirement allowance.
3)Makes related technical changes.
EXISTING LAW :
1)Authorizes a member of the Defined Benefit Program to receive
AB 1852
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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.
2)Authorizes specified members of the Defined Benefit Program
who retire prior to January 1, 2011, to receive a specified
lump-sum payment upon retirement and an actuarially reduced
monthly allowance.
3)Provides a member of the Defined Benefit Program with a
specified increase to his or her monthly allowance, if the
member retires with 30 or more years of service.
FISCAL EFFECT : Actuarial estimates from CalSTRS are not
available at this time, however, potentially significant
employer costs [in excess of $1 million based on AB 979
(Cedillo) of (2002)] for military service costs to cover
employee contributions. Also, significant employer costs for
aggregating non-consecutive years for final compensation
purposes. Administrative costs would also be substantial.
COMMENTS : According to the sponsor, the California Teachers'
Association, this bill contains the following elements:
1)Educators called to active military service since September
11, 2001, would not lose CalSTRS service credit while they are
away from school defending their country.
2)Allows members of the Defined Benefit Program to receive the
actuarial estimate of their longevity incentive ($200, $300 or
$400 per month for teaching to 30, 31, or 32 years,
respectively) in a lump sum at the time of retirement, instead
of the monthly payments for life.
Existing law provides that to get service credit, you can either
work the time, or buy a limited amount of "air time." Those in
the National Guard called to active duty do not get service
credit in CalSTRS while they are away from school. This bill
helps the families of teachers who are called to active duty and
would have a lower pension due to the time they are not
teaching. CalSTRS fiduciaries report that the fund is able to
absorb the modest cost of this bill, which represents just a few
minutes of daily fluctuations on its $115 billion portfolio.
AB 1852
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Analysis Prepared by : Clem Meredith / P.E., R. & S.S. / (916)
319-3957
FN: 0005700