BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           1852 (Mullin)
          
          Hearing Date:  6/28/04          Amended: 6/22/04       
          Consultant:  Maureen Ortiz          Policy Vote: P. E. & R.  
           3-2                     
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          BILL SUMMARY:   AB 1852 eliminates the minimum age  
          requirement for qualified members of CalSTRS to receive an  
          earned longevity bonus as a lump sum payment.  The bill  
          also allows members of STRS to purchase prior military  
          service that occurs between September 11, 2001 and July 30,  
          2005 without paying the employee contribution.   
          Additionally, the bill appropriates $53,000 from the  
          Teachers' Retirement Fund for administrative expenses.
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                          Fiscal Impact (in thousands)

           Major Provisions                    2004-05             2005-06   
                      2006-07            Fund

           Military service credit       ----------approximately $1  
          million-------------          TRF

          Admin costs                $53*                 $0           
                        $0             TRF

          *Appropriated in bill
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          STAFF COMMENTS:  This bill meets the criteria to be placed  
          on the Suspense file.
          
          Current law authorizes members who retire prior to January  
          1, 2011, and who are at least age 60 and have an age  
          factor, including any career bonus, in excess of 2 percent  
          to elect to receive the amount of their monthly benefit  
          that is in excess of 2 percent of final compensation per  
          year of service as a lump sum payment.  There is a  
          corresponding actuarial decrease in the member's monthly  
          benefit payment.  This bill will eliminate the requirement  
          that the member be at least 60 years old.  There will not  
          be any increase in benefit costs since the member's monthly  










          retirement allowance is decreased by the actuarial  
          equivalent of the lump sum payment.
          
          Existing law allows members to purchase service credit up  
          to one year for time spent on military duty.  According to  
          CalSTRS, there are approximately 250 members who have been  
          called to active military duty since 9/11/01 who will be  
          eligible to receive service credit for that period.  AB  
          1852 will provide the member with the service credit  
          without having to pay the employee contribution.  Staff  
          notes that this provision is similar to a provision in SB  
          102 (Burton) that this committee amended out in order to  
          pass the bill off of the Suspense file earlier this year.