BILL ANALYSIS �
AB 2606
Page 1
Date of Hearing: April 26, 2012
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Warren T. Furutani, Chair
AB 2606 (Mendoza) - As Amended: April 17, 2012
SUBJECT : Public employees' retirement: postretirement death
benefit.
SUMMARY : Increases, over a period of four years, the
postretirement death benefit paid to the beneficiary of a school
member of the California Public Employees' Retirement System
(CalPERS) from $2,000 to $6,000. Specifically, this bill :
1)Increases the postretirement death benefit for school members
as follows:
a) $4,000, or $5,000 if specified by the employer in its
contract, for deaths occurring from January 1, 2013, to
December 31, 2013;
b) $4,500, or $5,000 if specified by the employer in its
contract, for deaths occurring from January 1, 2014, to
December 31, 2014;
c) $5,000 for deaths occurring from January 1, 2015, to
December 31, 2015;
d) $5,500 for deaths occurring from January 1, 2016, to
December 31, 2016; and,
e) $6,000 for deaths occurring from January 1, 2017, to
March 31, 2017.
f) For deaths occurring on or after April 1, 2017, the
amount will be adjusted annually by CalPERS in the same
manner as retiree cost-of-living adjustment (COLA)
payments.
EXISTING LAW :
The California Public Employees' Retirement Law provides varying
levels of death benefits according to membership category and
status, each providing a "lump-sum" of money to survivors at the
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time of the member's death. 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.
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 burial benefit, while members of LRS receive
$600.
The California State Teachers' Retirement System currently
provides a lump sum death payment for survivors of retired
members of $6,163. The amount of the death payment may be
adjusted by the Teachers' Retirement Board following each
actuarial valuation based on changes to the All Urban California
Consumer Price Index.
CalPERS benefits paid to retired school members can change from
year to year based on whether an annual COLA is paid. The COLA
allowance paid each May is limited to the lesser of two
compounded numbers - the rate of inflation as measured by the
All Urban Consumer Price Index, U.S. City (Annual) Average, from
the member's retirement date, or 2% of the member's initial
retirement allowance, compounded annually.
To determine the applicable COLA percentage to apply against the
base, CalPERS compares the actual rate of inflation to the 2%
adjustment each year, compounds each number, and then keeps a
running total each year. It is the lesser of the two figures
that is applied to the member's initial retirement allowance, or
"base allowance." According to CalPERS, under AB 2606, the
retired school member lump-sum death benefit would be adjusted
annually using a "base allowance" amount of $6,000 and a
"retirement date" of March 31, 2017.
FISCAL EFFECT : Unknown.
COMMENTS : According to the 2010 funeral price survey by the
National Funeral Directors Association, the average funeral cost
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for an adult funeral is $7,775.00. This is based on the most
commonly selected items for a traditional funeral including a
casket and vault. However, it does not include cemetery costs.
Therefore, even when combined with the Social Security lump-sum
death benefit of $255, the current CalPERS school retiree
lump-sum death benefit does not appear sufficient to pay for a
basic funeral and burial.
According to the author, "AB 2606 is introduced to level the
playing field for retired classified employees who worked at
public schools. Currently, when a retired teacher dies, their
named beneficiary receives a $6,000 death benefit to cover the
funeral and related costs. When a classified employee passes
away, their named beneficiary receives $2,000 for the same
purposes."
AB 617 (Davis) from last year would have increased the
postretirement death benefit paid to the beneficiary of a school
member of CalPERS from $2,000 to $6,163. This bill was not
heard in the Assembly PER&SS Committee at the request of the
author.
SB 1209 (Romero) of 2010 would have increased the postretirement
death benefit paid to the beneficiary of a CalPERS school member
from $2,000 to $5,000 incrementally over a period of three years
with cost of living adjustments (COLA) annually thereafter.
This bill failed passage in the Senate Public Employment and
Retirement Committee.
AB 1477 (Krekorian) of 2009, would have increased the
postretirement death benefit paid to the beneficiary of a
CalPERS school member from $2,000 to $6,163. This bill was held
in the Assembly Appropriations Committee.
AB 844 (Negrete McLeod) of 2005 would have increased the
postretirement death benefit for state members of CalPERS who
retired on or before July 1, 2006 from $2,000 to $5,000. This
bill was held in the Assembly Appropriations Committee.
AB 2688 (Alquist) of 2002, would have increased the various
death benefits paid to all members and retirees in the
retirement systems administered by CalPERS to $7,500. This bill
was held in the Assembly Appropriations Committee.
AB 1162 (Alquist) of 2001, would have increased from $2,000 to
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$5,000 the lump sum death benefit available to retired CalPERS
state and school members who retired on or before July 3, 2002,
and whose death occurred on or after January 1, 2001.
AB 50 (Migden), Chapter 947, Statutes of 2000, raised the death
benefit for retired school members from $600 to $2,000.
AB 1829 (Correa) of 2000, would have increased the death benefit
for both state and school members who retired prior to July 3,
2001 to $5,000. This bill was held in the Assembly
Appropriations Committee.
AB 1640 (Migden), Chapter 296, Statutes of 1998, authorized
school employers and contracting agencies the option to amend
their contract to provide a $2,000, $3,000, $4,000, or $5,000
lump sum retired member death benefit.
REGISTERED SUPPORT / OPPOSITION :
Support
California Federation of Teachers (Sponsor)
American Federation of State, County and Municipal Employees
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957