BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 2554
Nell Soto, Chair Hearing date: June 21, 2004
AB 2554 (Pavley) as amended June 15, 2004 FISCAL: YES
STRS: POST-RETIREMENT EARNINGS LIMITATIONS EXTENSIONS
HISTORY :
Sponsor: Los Angeles Unified School District
Prior legislation: AB 141 (Knox)
Chapter 22 of 2000
AB 1733 (Wildman)
Chapter 896 of 2000
AB 1736 (Ducheny)
Chapter 351 of 2000
SB 1666 (Alarcon)
Chapter 70 of 2000
AB 2765 (Assembly PER&SS Committee)
Chapter 965 of 1998
ASSEMBLY VOTES :
PER & SS 9-0 3/31/04
Appropriations 16-5 5/19/04
Assembly Floor 78-1 5/25/04
SUMMARY :
Would modify the existing STRS exemptions to the
post-retirement earnings limitation for certain teaching
positions.
BACKGROUND AND ANALYSIS :
1) Existing STRS law :
a) reduces the STRS monthly service retirement allowance
of a retired member if the STRS member's post-retirement
compensation from working in STRS-covered employment
exceeds a certain dollar amount, except in specified
circumstances,
David Felderstein
Date: June 16, 2004 Page 1
b) exempts from that earnings limitation, until January 1,
2008, service performed in an emergency situation in
certain vacant administrative positions for up to 1/2 of
the full-time equivalent for that position,
David Felderstein
Date: June 16, 2004 Page 2
c) exempts from the earnings limitation, until July 1,
2005, any of a list of certain types of teaching service
performed by STRS members who retired before January 1,
2000, and
d) exempts from the earnings limitation direct remedial
instruction performed by retired STRS members who retired
for service on or before July 1, 2000.
2) This bill :
a) limits the period of the exemption for administrative
positions to not more than 2 years after the date the
retired STRS member is appointed or assigned to that
position,
b) extends the sunset on the exemptions until January 1,
2008, would expand it to apply to service performed by
members who retired for service on or before July 1, 2004,
c) expands the list of types of STRS-covered service
subject to the exemption to include instruction and
services provided to pupils in special education programs
and English language learner programs, and
d) expands that exemption for direct remedial instruction
positions to apply to those services performed by members
who retired for service on or before July 1, 2004.
FISCAL EFFECT :
According to the Assembly Appropriations Committee analysis:
"STRS 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 foregone
gain probably would not be significant."
David Felderstein
Date: June 16, 2004 Page 3
COMMENTS :
1) Arguments in support
According to the sponsor, this bill would amend current law
to exempt special education and English Language Learner
(ELL) teachers, who are retirees, from the STRS
post-retirement earnings limit. There are currently seven
exemptions to the STRS post-retirement earnings limit.
David Felderstein
Date: June 16, 2004 Page 4
Given the present shortage of "highly qualified" teachers and
the requirement of the federal No Child Left Behind Act,
districts are concerned about the possibility of a number of
certified employees retiring en masse, leaving a void of
"highly qualified" teachers and with no way to staff vacant
positions. This bill is an important tool that districts
will be able to use when recruiting former educators and
staff to meet the ongoing demand for experienced,
knowledgeable teachers.
Removing the earnings limit will allow greater flexibility
when utilizing retired certificated employees to fill
vacancies, especially in specialty credential areas such as
special education and English language learner programs that
are not included in the exemptions list. In addition, this
proposal makes various technical and clarifying changes to
provide consistency amongst the various statutes that provide
exemptions to the compensation limits.
2) SUPPORT :
California Federation of Teachers (CFT)
State Teachers Retirement System (STRS)
California Teachers Association (CTA)
California Language Teachers Association (CLTA)
California Retired Teachers Association
3) OPPOSITION :
None to date
David Felderstein
Date: June 16, 2004 Page 5
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David Felderstein
Date: June 16, 2004 Page 6