BILL ANALYSIS
AB 2554
Page 1
Date of Hearing: April 14, 2004
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 2554 (Pavley) - As Amended: March 24, 2004
Policy Committee:
P.E.R.&S.S.Vote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill revises provisions of law governing exemptions to the
CalSTRS earnings limitation. Specifically, this bill:
1)Extends from January 1, 2005 until January 1, 2008, the sunset
date on the existing exemptions from the earnings limitation
for retired members who return to provide direct classroom
instruction to pupils enrolled in grades K-12 or participate
in certain teacher preparation programs.
2)Extends from January 1, 2000 to January 1, 2004 the date a
member must retire by to qualify for the earnings exemption.
3)Extends the exemption to include special education and English
language learner programs.
4)Clarifies that the emergency appointment authority of school
districts to exempt new hires to a vacant administrative
position from the earnings limit is limited to a two-year
appointment.
FISCAL EFFECT
CalSTRS indicates this bill will have no actuarial impact on the
Teachers Retirement Fund (TRF) because the system valuation
assumes that members do not work beyond the earnings limit.
Extending the earnings limitation, therefore, could result in
the TRF forgoing an unanticipated actuarial gain, to the extent
that members would have earned compensation subject to the
limitation in the absence of this bill. Because the provisions
of this bill would apply to very few retired members, that
AB 2554
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foregone gain probably would not be significant.
COMMENTS
1)Background . Under current law, CalSTRS members who are retired
and accept temporary part-time or full-time employment
performing creditable service in the California public school
system are subject to a post retirement earnings limitation,
unless they are otherwise exempt. (Retired members may accept
employment outside of the California public school system with
no limitation on their retirement benefits.) Retired members
can earn up to $25,740 for the 2003-2004 school year without a
reduction in their retirement allowance. This amount is
increased as of July 1 by the average earnable salary of
active members. School districts must report all earnings paid
to retired beneficiaries, and CalSTRS monitors this
information to determine if a member's earnings come close to
or exceed the approved limit. If a retiree exceeds the limit,
their monthly retirement allowance is reduced
dollar-for-dollar by the amount of earnings received in excess
of the limit.
Currently, retired CalSTRS members are exempt from the
earnings limitation if they retired from service on or before
January 1, 2000, and are employed to teach in grades K-12 or
participate in teacher preparation programs. This exemption
currently sunsets July 1, 2005. Members are also exempt from
the earnings limitation if they wait at least 12 consecutive
months after retiring before returning to CalSTRS covered
employment.
2)Purpose . This bill removes a financial disincentive for
retired teachers to return to teaching in special education
and English language learner programs, and extends the
existing earnings limitations in law.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081