BILL ANALYSIS
AB 2753
Page 1
ASSEMBLY THIRD READING
AB 2753 (Corbett)
As Amended May 10, 2004
Majority vote
PUBLIC EMPLOYEES 8-1 APPROPRIATIONS 16-4
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|Ayes:|Negrete McLeod, Levine, |Ayes:|Chu, Berg, Calderon, |
| |Chan, Correa, Kehoe, | |Corbett, Correa, |
| |Laird, Maldonado, | |Firebaugh, Goldberg, |
| |Nakanishi | |Leno, Nation, Negrete |
| | | |McLeod, Oropeza, Pavley, |
| | | |Ridley-Thomas, Wesson, |
| | | |Wiggins, Yee |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Campbell |Nays:|Runner, Daucher, Haynes, |
| | | |Keene |
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SUMMARY : Revises post-retirement provisions of a California
State Teachers' Retirement System (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 (COE) 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 COE in
the state.
3)Reduces the return to work prohibition from five years to one
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
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county office of education to grant members of the Defined
Benefit Program of the State Teachers' Retirement Plan two
additional years of service credit or, prior to January 1,
2005, an additional two years of service and two 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 five years
after retirement by the district from which he or she retired
or within one year after retirement by any district.
FISCAL EFFECT : If, as the sponsor, the California Federation of
Teachers, contends, 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 COEs. Savings under golden handshake programs generally
accrue when vacated positions remain vacant.
COMMENTS : AB 1207 reopens and makes 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 establishes 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.
According to the author, AB 1207, enacted last year, creates
retirement incentive programs through CalSTRS. The two programs
were to offer teachers either: a) two years of service credit;
or, b) two years of service credit plus two 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 two years of service option
does not sunset, while the two plus two sunsets January 1, 2005.
Return-to-work provisions were included in AB 1207. These
provisions prohibit a person who takes either of the retirement
incentives from returning to work with any district in the state
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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 AB 1207 that caused K-12 retirees
and retirees of community colleges and COEs to be treated
differently. AB 2753 will fix that, so that return-to-work
provisions treat all participants the same.
AB 2753 will also 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 CalSTRS, and instead have used private
annuity companies for early retirement options because the
private companies do not impose return-to-work restrictions.
AB 2753 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 CalSTRS
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. CalSTRS does not make a profit
off of the districts, and this bill makes it feasible to use
CalSTRS.
Analysis Prepared by : Clem Meredith / P.E., R. & S.S. / (916)
319-3957
FN: 0005245