BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 3076
Nell Soto, Chair Hearing date: June 14, 2004
AB 3076 (ullin) as amended June 1, 2004 FISCAL: YES
STRS: MEMBERSHIP IN THE "DEFINED CONTRIBUTION" PLAN
SPECIFIED
HISTORY :
Sponsor: California State Teachers Retirement System
(STRS)
Prior legislation: None
ASSEMBLY VOTES :
PER & SS 9-0 4/21/04
Appropriations 21-0 5/05/04
Assembly Floor 74-0 5/17/04
SUMMARY :
Would, after July 1, 2005, prohibit part-time community
college faculty from being mandated into the State Teachers
Retirement System (STRS) Defined Benefit program when they
have an occasional full-time assignments.
BACKGROUND :
1) STRS Administers Two Retirement Programs
According to STRS, the system administers two retirement
programs under the State Teachers' Retirement Plan (Plan).
The Defined Benefit (DB) Program is the primary retirement
program for California's full-time public school educators
from kindergarten through community college, which provides a
monthly allowance for the lifetime of STRS retirees and their
eligible survivors.
The STRS Cash Balance (CB) Benefit Program is a qualified
alternative retirement program for part-time public school
educators from kindergarten through community college, which
may be offered by an employer in addition to, or instead of,
David Felderstein
Date: June 2, 2004 Page 1
Social Security. The CB Benefit Program is a "defined
contribution" plan, which provides a return of the employee
and employer contributions plus interest upon retirement -
but does not provide a monthly benefit.
2) Membership in the Defined Benefit Program can be
determined by one period of more than half-time employment
Membership in the DB Program is mandated by law for those
employed full-time in teaching positions; however, all public
school educators (including part-time teachers) have the
option to elect membership in the DB Program.
A part-time employee who typically works less than 60% of a
full-time load may be mandated to participate in the DB
Program if their workload during one pay period exceeds a
certain threshold; this threshold depends upon whether the
employer offers the CB Benefit Program. If the employer
offers the CB Benefit Program, then the threshold is 50% of a
full-time load; if the employer does not offer the CB Benefit
Program, then the threshold is 60% of a full-time load.
These determining criteria differ from those used to
establish participation in the CB Benefit Program;
participation for the CB Benefit Program is limited to those
employees who are hired to a basis of employment of no more
than 50% of a full-time load.
Employees of a community college or an adult education
program who are hired on a part-time basis might periodically
and temporarily exceed the threshold for mandatory membership
in the DB Program, which automatically enrolls the employee
in the Program, even though he or she would prefer to remain
in an alternative retirement program or Social Security .
While the part-time employee might temporarily exceed the
threshold for mandatory DB membership; his or her basis of
employment, as defined by the employer, remains that of a
temporary part-time employee.
"Temporary", as defined by Education Code Section 87482.5,
means any person employed for not more than 60% of a
full-time workload by a community college or adult education
program.
ANALYSIS :
David Felderstein
Date: June 2, 2004 Page 2
1) Existing STRS law :
a) requires any person who performs creditable service on
a part-time basis to become a member of the Defined Benefit
Program of the Teachers' Retirement Plan if the person is
employed to perform 50% or more of the full-time equivalent
for the position, and
b) provides that persons who teach adult or community
college classes for less than 60% of the full-time
assignment are classified as temporary employees.
2) This bill would prohibit part-time community college
faculty from being mandated into the STRS DB program when
they have an occasional full-time assignment .
FISCAL EFFECT :
According to the Assembly Appropriations Committee analysis:
"Negligible net fiscal impact. CalSTRS states that
although the Teachers Retirement Fund (TRF) would lose the
employer contributions of part-time community college
instructors who become mandatory DB members who do not
vest, there would be a corresponding decrease in General
Fund contributions to the DB Program."
David Felderstein
Date: June 2, 2004 Page 3
COMMENTS :
1) Arguments in Support
According to STRS, this bill seeks to change the criteria
that determine when membership in the DB Program becomes
mandatory for employees of community colleges and adult
education programs.
The new criterion for mandatory membership in the DB Program:
a) establishes mandatory membership in the DB Program by
basis of employment, regardless of whether the employer
offers the CB Benefit Program,
b) is consistent with the existing standard for
participation in the CB Benefit Program,
c) is consistent with the existing definition of
"temporary", as established by Education Code Section
87482.5, and
d) simplifies employer administration of the Plan because
community college and adult education employers currently
classify employees and monitor workloads according to basis
of employment.
2) SUPPORT :
California Federation of Teachers (CFT)
Faculty Association of California Community Colleges
(FACCC)
3) OPPOSITION :
None to date
David Felderstein
Date: June 2, 2004 Page 4
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Date: June 2, 2004 Page 5