BILL ANALYSIS
AB 2753
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Date of Hearing: April 21, 2004
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Gloria Negrete McLeod, Chair
AB 2753 (Corbett) - As Amended: April 15, 2004
SUBJECT : State teachers' retirement: early retirement incentive.
SUMMARY : Revises post-retirement provisions of a CalSTRS early
retirement program. Specifically, this bill :
1)Provides that any member granted additional credit for service
or service and age under certain early retirement programs
would forfeit that credit if he or she is re-employed within
one year after retirement by the school district, community
college district, or county office of education from which he
or she retired.
2)Applies a post-retirement income limit to a retired member who
receives certain golden handshake retirement benefits and
performs creditable service within one year after retirement
for any school district, community college district, or county
office of education in the state.
3)Reduces the return to work prohibition from 5 years to 1 year
for those retirees who receive the golden handshake retirement
benefit and become re-employed by the district from which they
have retired.
EXISTING LAW
1)Authorizes a school district, community college district, or
county office of education to grant members of the Defined
Benefit Program of the State Teachers' Retirement Plan 2
additional years of service credit or, prior to January 1,
2005, an additional 2 years of service and 2 years of age, if
certain conditions are satisfied and the member retires for
service within a designated period.
2)Requires any member who is granted additional credit for
service or service and age under those provisions forfeits
that credit if he or she is re-employed within 5 years after
retirement by the district from which he or she retired or
within one year after retirement by any district.
AB 2753
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FISCAL EFFECT : If, as the sponsors contend, more school
districts adopt the golden handshake provisions of AB 1207
(Corbett) Chapter 313, Statutes of 2003, then the costs
associated with that bill will begin to be incurred by school
districts, community college districts, and county offices of
education. Savings under golden handshake programs generally
accrue when vacated positions remain vacant.
COMMENTS :
Chapter 313, Statutes of 2003 (Assembly Bill 1207-Corbett)
reopened and made permanent an existing retirement incentive
program (often referred to as the "Golden Handshake" program)
that provides an additional two years of service credit to
members of the Defined Benefit (DB) Program employed by
participating school districts able to demonstrate cost savings.
It also established a new retirement incentive program through
2004 that allows school districts to add two years of service
credit and two years of age to the age factor calculation in
determining a member's retirement allowance.
Arguments in Support
According to the author, AB 1207, enacted last year, created
retirement incentive programs through the State Teachers'
Retirement System. The two programs were to offer teachers
either a) 2 years of service credit; or b) 2 years of service
credit + 2 years of age credit. These two programs are optional
for districts. To use either option, school districts,
community college districts, or county offices of education are
required to certify that a savings would result from this
program. The 2 years of service option does not sunset, while
the 2+2 sunsets January 1, 2005.
Return-to-work provisions were included in AB 1207. These
provisions prohibited a person who takes either of the
retirement incentives from returning to work with any district
in the state for one year or to return within five years to work
for the district that provided the retirement option.
There was a drafting error in that bill that caused K-12
retirees and retirees of Community Colleges and County Offices
of Education to be treated differently. This bill will fix
that, so that return-to-work provisions treat all participants
the same.
AB 2753
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The bill also will change the return-to-work provisions. These
provisions have actually made the programs less attractive
because in emergencies districts would not be able to employ
experienced teachers knowledgeable of the district, or even
bring them in as substitute teachers when needed. There have in
fact been districts that have opted to not use the AB 1207
retirement option through STRS, and instead have used private
annuity companies for early retirement options because the
private companies do not impose return-to-work restrictions.
This bill would revise the return-to-work provisions to simply
prohibit employees receiving the retirement option from
returning, for one year, to the district from which they
received the retirement incentive. There would no longer be a
prohibition against returning to work in other districts in the
state.
Many teachers prefer to take a retirement option from STRS
rather than from the private annuities. Also, these private
annuities build their profits into the cost they charge to the
school district, so the districts using them are actually paying
into a company's private profit. STRS does not make a profit
off of the districts, and AB 2753 makes it feasible to use STRS.
REGISTERED SUPPORT / OPPOSITION :
Support
California Federation of Teachers
Opposition
None on file
Analysis Prepared by : Clem Meredith / P.E., R. & S.S. / (916)
319-3957