BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2232
                                                                  Page  1

          Date of Hearing:   May 5, 2004

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

             AB 2232 (Assembly PERSS Committee) - As Amended:  April 15,  
                                        2004 

          Policy Committee:                              PERSSVote:7-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          The bill revises the formula for converting unused sick leave to  
          service credit for members of the CalSTRS Defined Benefit (DB)  
          Program. Specifically, this bill requires, beginning in 2006,  
          that the formula divide the number of unused sick leave days by  
          the appropriate minimum full-time equivalent (FTE) for each  
          class of employees, even if the FTE is less than 175 days.  

          Current law requires that the number of days be divided by a  
          minimum of 175 days, which disadvantages part-time employees  
          whose FTE may be as low as 87.5 days.

           FISCAL EFFECT  

          CalSTRS estimates the total present value cost over 30 years of  
          basing the determination of service credit for accumulated  
          unused sick leave on the member's appropriate FTE would be  
          approximately $52 million dollars, requiring an initial employer  
          contribution increase of $3 million in 2005-06, increasing by  
          4.25 percent annually thereafter. 

           COMMENTS  

           1)Background  .  Part-time employees who are members of the  
            CalSTRS DB Program accrue service credit based on the ratio of  
            earned compensation to the compensation earnable, which is the  
            compensation that would be earned if the member worked in that  
            position on a full-time basis.

            The current calculation to convert unused sick leave to  
            service credit is inconsistent with the method for calculating  








                                                                  AB 2232
                                                                  Page  2

            service credit for actual service performed. A part-time  
            instructor employed in a community college receives service  
            credit for actual service performed based on an FTE of as  
            little as 525 hours (the equivalent of 87.5 days). The same  
            part-time instructor receives service credit for unused sick  
            leave based on an FTE of 1,050 hours (the equivalent of 175  
            days). 

           2)Purpose  . The sponsor, the Faculty Association of California  
            Community Colleges, believes that changing the formula for  
            converting unused sick leave to service credit to conform to  
            the formula for calculating actual service will correct an  
            inequity in the current design of the DB Program.


           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081