BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1819
Gloria Negrete McLeod, Chair Hearing date: June 25, 2012
AB 1819 (Ammiano) as amended 5/02/12 FISCAL: YES
CALSTRS & CALPERS: MANDATORY MEMBERSHIP FOR CHARTER SCHOOL
EMPLOYEES
HISTORY :
Sponsor: California Federation of Teachers
Other legislation: AB 816 (Assembly PER&SS Committee),
Chapter 1025, Statutes of 2000
ASSEMBLY VOTES :
PER & SS 4-2 4/26/12
Appropriations 12-5 5/25/12
Assembly Floor 47-295/29/12
SUMMARY :
AB 1819 requires public charter schools to cover their
employees under the California State Teachers' Retirement
System (CalSTRS) or the California Public Employees'
Retirement System (CalPERS) as applicable.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) allows a charter school, as an option, to cover its
employees under CalSTRS and CalPERS. If a charter
school chooses to make CalSTRS and/or CalPERS available,
all employees of the charter school who qualify for
membership in the system are entitled to coverage.
b) requires a charter school to indicate the manner by
which staff members will be covered by CalSTRS, CalPERS
or Social Security in its charter. In addition, all
provisions of existing law apply in the same manner that
they do to other public schools in the district that
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granted the charter.
c) requires a charter school that offers CalSTRS,
CalPERS or both, to inform all applicants of what
coverage they would have and that accepting employment
in the charter school may exclude them from further
coverage in their current retirement system.
d) requires a charter school to provide Social Security
coverage for employees if it does not provide
CalSTRS/CalPERS coverage.
1)This bill :
a) requires public charter schools to cover their
employees under CalSTRS or CalPERS as applicable.
b) is not applicable to charter schools and their
employees to the extent that coverage in CalSTRS and
CalPERS would cause adverse tax consequences to the
retirement systems or their members under the Internal
Revenue Code.
FISCAL :
According to the Assembly Appropriations committee, "This
bill will result in more teachers and classified employees
becoming members of and/or accruing additional time with
CalSTRS and CalPERS respectively. Both the employee and
employer will contribute to the retirement systems. As a
result of the increased CalSTRS membership, there is a direct
financial impact to the state for increased CalSTRS
contributions, estimated at approximately $5 million."
The author states that it believes the fiscal impact will be
minor and absorbable because more than 90 percent of charter
schools already choose to participate in CalSTRS leaving
approximately 81 charter schools not selecting coverage.
Those schools must currently make employer contributions of
7.5 percent to their employees 403b or 401k plans. The
employer contribution under CalSTRS would be 8.25 percent, a
difference of 0.75 percent on payroll for employees of
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approximately 81 charter schools.
CalSTRS states that any increase in benefits for additional
charter school employees would be offset by increased
contributions and that any administrative costs would be
minor and absorbable.
COMMENTS :
1)Arguments in Support
The author states, "AB 1819 seeks to ensure that employees of
charter schools in California have adequate access to public
retirement benefits."
The sponsor states, "Charter schools are funded by public
dollars and serve public school children; therefore, charter
school employees should have a defined benefit plan for their
service to our children and communities."
2)Arguments in Opposition
The California Charter Schools Association Advocates argues
that "AB 1819 would impose new costs on charter schools that
already strive to maintain financial stability in the face of
daunting challenges."
CalPERS opposes the bill unless 1) it is amended to clarify
that county offices of education must notify the retirement
board if they seek to enroll a charter school employee in
CalPERS; and 2) provides explicit language that CalPERS has
sole discretion in determining whether a charter school poses
a threat to CalPERS' tax status and thus, may not participate
in the retirement system.
3)SUPPORT :
California Federation of Teachers (CFT)
California Labor Federation (CLF)
California School Employees Association (CSEA)
United Teachers Los Angeles (UTLA)
4)OPPOSITION :
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California Charter Schools Association Advocates
California Public Employees' Retirement System (CalPERS),
Oppose, Unless Amended
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