BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 1209
Lou Correa, Chair Hearing date: April 19, 2010
SB 1209 (Romero) as amended 4/15/10 FISCAL: YES
INCREASES POSTRETIREMENT DEATH BENEFIT FOR SCHOOL MEMBERS OF
CALPERS FROM $2,000 TO $5,000
HISTORY :
Sponsor: California Federation of Teachers (CFT)
Prior legislation: SB 593 (Romero) 2010
(Died in Senate PE&R Committee)
AB 1477 (Krekorian) 2009
(Died in Assembly Appropriations
Committee)
AB 2688 (Alquist) 2002
(Held in Assembly Appropriations
Committee)
AB 1162 (Alquist) 2001
(Held in Assembly Appropriations Committee)
AB 50 (Migden)
Chapter 947, Statutes of 2000.
AB 1829 (Correa) 2000
(Held in Assembly Appropriations Committee)
AB 1640 (Migden)
Chapter 296, Statutes of 1998
SUMMARY :
This bill would increase the postretirement death benefit
paid to the beneficiary of a school member of the California
Public Employees' Retirement System (CalPERS) from $2,000 to
$5,000 with cost of living adjustments (COLA) annually
thereafter.
Specifically, the current $2,000 death benefit will increase
to $4,000 in 2011, $4,500 in 2012, and $5,000 in 2013.
Thereafter, the death benefit will be subject to annual COLA
adjustments of no more than 2%, calculated and adjusted in
the same manner as the COLA adjustments on school member
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retirement benefits.
The increase will apply only to school member retirees of
CalPERS.
BACKGROUND AND ANALYSIS :
Existing law :
1) provides varying levels of postretirement death benefits
according to membership category and status, each providing a
"lump-sum" of money to beneficiaries at the time of the
retiree's death. School member retirees are entitled to a
benefit of $2,000, paid to whomever the retiree chooses as a
beneficiary.
2) provides an annual COLA to retirement allowances,
calculated and adjusted on April 1st of each year. The
adjustment for school member retirees is up to 2%, compounded
annually, but no more than the annual increase in the
Consumer Price Index (CPI). If the increase in the CPI is
more than 2%, that additional increase can be carried forward
and used to increase the COLA in years in which the increase
in the CPI is less than 2%. For this reason, in practice
CalPERS has tended over the years to pay a level 2% COLA
annually.
This bill would increase the amount of the postretirement
death benefit for school member retirees as follows:
For deaths occurring in 2011: $4,000
For deaths occurring in 2012: $4,500
For deaths occurring in 2013 until March 31, 2014: $5,000
For deaths occurring on and after April 1, 2014, $5,000
increased annually by COLAs of no more than 2% per year
compounded, calculated and adjusted in the same manner as is
currently done for retirement allowance COLAs.
COMMENTS :
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Date: 4/15/10 Page 2
1) The original lump-sum death benefit of $300 for all
retired CalPERS members was enacted in 1945. However, over
the years, the Legislature began to provide different
benefit levels to different categories of members: state,
school, local, Judges' Retirement Systems (JRS and JRS II),
Legislators' Retirement System (LRS), active, and retired.
Postretirement Death Benefits: California Public
Employees' Retirement System
Currently, State and school members have a retiree
death benefit of $2,000. School employers also have the
ability to amend their individual contracts with CalPERS to
provide enhanced retiree death benefits of $3,000, $4,000
or $5,000. Local members have a minimum benefit of $500,
with an option to provide up to $5,000 through contract
amendment. Members of JRS have no retiree death benefit,
while members of LRS receive $600.
According to CalPERS, as of this date no school employers
have ever amended their contracts to provide the higher,
optional death benefit amounts. There is no COLA currently
paid on death benefits.
Benefit Comparison to Other Public Retirement Systems
Some comparable systems offer higher death benefits
than CalPERS: The California State Teachers' Retirement
System (CalSTRS) provides a lump sum death payment for
survivors of retired members of $6,163 with annual COLAs
based on increases in the CPI. The University of
California Retirement Plan (UCRP) provides $7,500.
According to the author, classified school employees
are cafeteria servers, school cooks, janitors, office
secretaries, bus drivers and teacher's aids who provide
vital services in California's public schools. Further,
with traditional funeral and cemetery costs being over
three times greater than the current death benefit amount,
this bill would address an inequity in the postretirement
death benefit among public school employees.
Average Cost of a Traditional Adult Funeral
The following chart displays historical costs of a
traditional adult funeral. Compiled by the National
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Date: 4/15/10 Page 3
Funeral Directors Association (NFDA), this data shows a
rising trend in the costs of a regular adult funeral.
---------------------------------------------------------
According to the NFDA , as of January 27, 2010 the
average cost of a traditional adult funeral includes the
following general items, excluding cemetery, monument or
marker costs, or miscellaneous cash advance charges such as
flowers or obituaries.
----------------------------------------------------------
The California Federation of Teachers states that
although classified school employees are some of the lowest
paid public employees, their survivors pay the same costs
for a traditional adult funeral as other public employees.
The inequity that exists regarding this benefit among
public employees has resulted in some survivors having to
obtain high-interest loans, borrowing from family members,
or drawing on savings to pay funeral and burial expenses.
2) SUPPORT :
California Federation of Teachers (CFT, Sponsor)
California Association of School Business Officials
(CASBO)
California Commission on the Status of Women
California School Employees Association, AFL-CIO
California Teachers Association (CTA)
Service Employees International Union (SEIU)
3) OPPOSITION :
None to date
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Date: 4/15/10 Page 4