BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2260|
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CONSENT
Bill No: AB 2260
Author: Assembly Public Emp., Ret. and Social Security
Committee
Amended: 6/21/10 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 5-0, 06/14/10
AYES: Correa, Ashburn, Corbett, Ducheny, Liu
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/13/10 - See last page for vote
SUBJECT : State teachers retirement: administration:
benefits
SOURCE : Author
DIGEST : This bill makes several technical, clarifying
and non-controversial changes to various sections of the
Education Code administered by the California State
Teachers Retirement System to improve and continue
effective administration of the System.
ANALYSIS :
Existing State Law
1.Establishes the California State Teachers' Retirement
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System (CalSTRS) which administers, through its Board,
the State Teachers' Retirement Law, and prescribes a
comprehensive system of rights and retirement benefits
for its member, including disability, retirement, death
benefits and service credit.
2.Defines creditable compensation for purposes of
calculating retirement benefits and the reporting
requirements of such compensation by employees to
CalSTRS.
A. Requires employers to reimburse the plan for
overpayments in benefits that occur because of
inconsistent reporting, and makes employers liable
for fraud, theft or embezzlement in accordance with
the Penal Code if the employer knowingly or willfully
reports compensation inconsistent with
statutorily-permitted creditable compensation.
3.Establishes post-employment restrictions on specified
CalSTRS employees or Board members with regard to
influencing legislative or administrative action of the
Board.
4.Permits the Board to designate, by resolution, one or
more of the contracted field counseling offices as an
official recipient of member benefit applications and
other documents from members, spouses and beneficiaries.
5.Establishes the Teachers' Retirement Program Development
Fund (TRPDF) within the State Treasury to be
continuously appropriated and to pay any costs related
to the development of programs authorized by statute
that enhance the financial security of members or
beneficiaries of CalSTRS.
6.Provides the Board with authority to appropriate funds
from the retirement fund for construction, remodeling,
improvements, maintenance and repair of buildings, and
provides that the land, building and improvements on the
land constitute an investment of the system.
7.Grants the Governing board of a school district or
community college district authority to allow a member
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to participate in the Reduced Workload Program (RWP) in
which a member works part-time, but receives Defined
Benefit (DB) program credit as if he or she was working
full-time. Under this program, both the employer and
members make a contribution based on the creditable
compensation the member would have received had he or
she worked full-time.
8.Allows a member to purchase up to four months of service
credit for specified service, and for employer-approved
leaves from under the Family Medial Leave Act (FMLA).
9.Establishes eight percent of a member's creditable
compensation as the member's contribution rate to the
retirement system's DB program.
10.Requires a quarterly transfer of funds from the General
Fund to the Teachers' Retirement Fund (TRF) equal to a
percentage of the total creditable compensation reported
by CalSTRS for the prior fiscal year.
11.Provides either a $5,000 or $20,000 death benefit, as
specified, to a beneficiary upon receipt of proof of
death of a member who had performed at least one year of
credited service. These benefits are subject to annual
increases based on the state consumer price index.
12.Provides a disability allowance to a member if the
member has at least five years of credited service and
files for benefits on a form provided by CalSTRS.
13.Prohibits, effective July 1, 2010, retirees from working
in any CalSTRS-related service, with exceptions, for the
first six calendar months after they retire, but allows
them to return to work under the existing earnings limit
after the break in service.
14.Provides a member the opportunity, prior to retirement,
to elect an actuarially modified retirement allowance
option payable throughout the life of the member and the
member's option beneficiary or beneficiaries.
15.Provides that warrants less than $2,000 paid by CalSTRS
in a month in which a retired or disabled member dies
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may not be invalidated by CalSTRS unless requested by
the retired or disabled member's beneficiary.
16.Grants a nonmember spouse the right to a refund of the
accumulated retirement contributions in his or her
separate account as granted under a community property
settlement. Nonmember spouses may also choose to
rollover the accumulated retirement contributions to a
qualified plan under Section 402 of the Internal Revenue
Code of 1986.
Existing Federal Law
1.Requires that a tax-qualified retirement program be a
definite written program that is established and
maintained by an employer to provide for the payment of
definitely determinable benefits to its employees over a
period of years, usually for life, after retirement.
2.Requires that distributions from the pension trust must
be in accordance with the plan and that a qualified
retirement plan must be administered in accordance with
its term.
This bill, regarding State law:
1.Clarifies, for purposes of disability benefits, the date
of disability as determined by CalSTRS.
2.Removes requirements of employers or individuals
reimbursing the plan for benefit overpayments that occur
because of inconsistent reporting and instead requires
that the system calculate the actuarial present value of
expected payments from the member, former member, or
beneficiary, and the employer paying the difference
between the amount of the overpayment and that
calculation.
3.Clarifies that CalSTRS executive-level staff are
restricted from performing post-employment activities
that influence the legislative or administrative action
of the Board.
4.Modifies the existing process of receiving forms and
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documents by including benefits counselors as designated
officials who can receive documents from a member,
spouse, or beneficiary.
5.Permits the Board to direct the State Controller to
transfer the resources in the TRPDF to a designated
fund, as specified, so all program expenditures are paid
from a single fund, and to facilitate efficient
administration of new programs.
6.Resolves inconsistencies between the Education Code and
generally accepted accounting practices for recording
CalSTRS' headquarters as a capital asset.
7.Strengthens the provision of the RWP to ensure continued
compliance with federal laws and maintain CalSTRS'
status as a tax-qualified pension system.
8.Conforms the Education Code to provisions of the FMLA
and Government Code relating to the ability of CalSTRS
members to buy service credit for family and medical
leave for a maximum of 12 workweeks.
9.Clarifies that CalSTRS shall credit all of the member's
contributions that are reported by the employer at the
end of 2010 to the DB program, if the employer report
does not separate pre- and post-December 31, 2010
earnings.
10.Clarifies that dates for quarterly transfer form the
General Fund to the TRF consistent with the quarterly
dates specified in the Education Code.
11.Makes technical, non-controversial changes to clarify
and conform language that applies to death benefit
payments by making the language consistent across code
sections.
12.Clarifies that disability allowance applications
submitted by a member, member's guardian or conservator,
or a member's employer must be properly executed and
filed on a CalSTRS form.
13.Clarifies that the post-retirement earnings limit for
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retirees below the normal retirement age applies to work
performed within the California public school system.
14.Removes references to two state academic interventions
programs that are no longer funded and adds a reference
to the existing Local Educational Agency Intervention
program.
15.Clarifies a member's right to elect a retirement option
and designate an option beneficiary on a CalSTRS form at
the time of the member's retirement; clarifies that the
member may revoke or change the option prior to the
effective date of retirement, and clarifies that the
revocation is subject to community property rights.
16.Allows CalSTRS to efficiently administer the benefits of
deceased retiree overpayments to the decedent's family
member without requiring a separate revocation request
from the family member or beneficiary.
This bill, regarding federal law:
1.Brings the Teachers' Retirement Law into compliance with
federal law that requires members to be paid a
definitely determinable benefit.
2.Clarifies that a non-participant partner is not eligible
for direct trustee-to-trustee transfers (as allowed by
federal law) of any court-awarded, separate account
under the Cash Balance Benefit Program.
(NOTE: SEE SENATE PUBLIC EMPLOYMENT AND RETIREMENT
COMMITTEE ANALYSIS FOR AN IN-DEPTH EXPLANATION OF THE
CHANGES MADE BY THIS BILL)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to CalSTRS, minor and absorbable costs.
SUPPORT : (Verified 6/30/10)
California State Teachers' Retirement System (source)
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,
Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Smyth, Solorio, Audra Strickland,
Swanson, Torlakson, Torres, Torrico, Tran, Villines,
Yamada, John A. Perez
NO VOTE RECORDED: Caballero, Norby, Skinner, Vacancy
CPM:cm 6/30/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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