BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 2753
Nell Soto, Chair Hearing date: June 14, 2004
AB 2753 (Corbett) as amended May 10, 2004 FISCAL: YES
STRS: 2 YEAR AND "2+2" GOLDEN HANDSHAKE OPTIONS:
MODIFICATIONS
HISTORY :
Sponsor: Author
Prior legislation: AB 1207 (Corbett)
Chapter 313, Statutes of 2003
ASSEMBLY VOTES :
PER & SS 8-1 4/21/04
Appropriations 16-4 5/05/04
Assembly Floor 59-20 5/17/04
SUMMARY :
Would revise 2 year "Golden Handshake" and "2+2 Golden
Handshake" post-retirement provisions of the California State
Teachers' Retirement System (STRS) early retirement incentive
programs.
BACKGROUND :
1) "Golden Handshake" provisions of Chapter 313 of 2003
The Committee is advised that Chapter 313 of 2003 reopened
and made permanent a previously existing, but sunsetted, STRS
retirement incentive program (often referred to as the
"Golden Handshake" program) that provides an additional 2
years of STRS service credit to members employed by school
employers that wanted to participate and were able to
demonstrate cost savings.
Chapter 313 of 2003 also established a new retirement
incentive program, available from January 1 to December 31 of
2004, that allows school districts to add 2 years of STRS
service credit and two years to the age factor used to
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Date: May 26, 2004 Page 1
calculation in determining a member's retirement allowance
(referred to as the "2+2 Golden Handshake" program).
According to the author, the two "Golden Handshake" options
in Chapter 313 of 2003 created optional retirement incentive
programs through STRS . To use either option, school
districts, community college districts, or county offices of
education are required to certify that savings would result
from using these "Golden Handshake" programs.
Pursuant to Chapter 313 of 2003, the 2 years of STRS service
"Golden Handshake" option does not sunset, while the "2+2
Golden Handshake" option sunsets January 1, 2005.
2) Return to work provisions of Chapter 313 of 2003
Retired teachers sometimes return to work in teaching after
they retire.
Return to work provisions were included in Chapter 313 of
2003 which prohibit a person who takes either of the "Golden
Handshake" retirement incentives from returning to work with
any district in the state for one year, or returning to work
within five years, for the district from which they retired.
Because of a drafting oversight, Chapter 313 of 2003 caused
K-12 retirees and retirees of community colleges and County
Offices of Education (COEs) to be treated differently. K-12
retirees were restricted in their ability to teach after
retirement by Chapter 313, but retirees of community colleges
and COEs were not so restricted .
ANALYSIS :
1) Existing STRS law :
a) authorizes a school district, community college
district, or county office of education to grant eligible
STRS members 2 additional years of service credit ("Golden
Handshake") or, prior to January 1, 2005, an additional 2
years of service and 2 years of age ("2+2 Golden
Handshake"), if school employers can demonstrate savings
and other conditions are satisfied, and
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Date: May 26, 2004 Page 2
b) requires that any STRS member who retires with a
"Golden Handshake" or "2+2 Golden Handshake" forfeits the
additional service credit if he or she is returns to
STRS-covered teaching within five years after retirement by
the district from which the member retired, or within one
year after retirement by any district.
2) This bill provides:
a) that any STRS member retiring with a "Golden Handshake"
or "2+2 Golden Handshake" 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 they retired ,
b) that STRS members retiring under these early retirement
incentive programs would not be restricted from working for
any school district, community college district or county
office of education other than the employer from which they
retired, and
c) that the post-retirement work restrictions apply
equally to K-12 school districts, community colleges and
County Offices of Education.
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Date: May 26, 2004 Page 3
FISCAL EFFECT :
According to the Assembly Appropriations Committee analysis,
STRS does not anticipate this bill will result in benefit or
administrative costs. Retired members who return to
STRS-covered teaching within one year pursuant to this bill
would continue to be subject to the STRS post-retirement
earnings limitation of $25,740 per year.
COMMENTS :
1) Arguments in Support
The Committee is advised that this bill will change the
return to work provisions. These provisions have actually
made the "Golden Handshake" 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.
According to the sponsor, there have been districts that have
opted to not use the Chapter 313 of 2003 "Golden Handshake"
options 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 just
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.
2) SUPPORT :
California Federation of Teachers (CFT)
California Teachers Association (CTA)
State Teachers' Retirement System (STRS)
Association of California School Administrators (ACSA)
Faculty Association of California Community Colleges
(FACCC)
3) OPPOSITION :
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Date: May 26, 2004 Page 4
None to date
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Date: May 26, 2004 Page 5