BILL ANALYSIS �
AB 2606
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Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2606 (Mendoza) - As Amended: April 17, 2012
Policy Committee: PERSSVote:4-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases, over a period of four years, the post
retirement death benefit paid to the beneficiary of a school
member of the California Public Employees' Retirement System
(CalPERS) from $2,000 to $6,000.
FISCAL EFFECT
CalPERS estimates that the increased death benefit would raise
its unfunded liability by over $400 million. Amortizing the
cost of this liability over a 20-year period would result in
contribution increases by local school districts of about $40-50
million per year.
COMMENTS
1)Purpose . According to the author, AB 2606 levels the playing
field for retired classified employees who worked at public
schools. The author states when a retired teacher dies, the
named beneficiary receives a $6,000 death benefit to cover the
funeral and related costs, but when a classified employee
passes away, the named beneficiary receives $2,000. The author
notes the 2010 funeral price survey by the National Funeral
Directors Association places the average funeral cost for an
adult at $7,775, excluding cemetery costs. The sponsor, the
California Federation of Teachers argues 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.
2)Background. The purpose of a death benefit is to pay a
portion of the funeral and burial or cremation expenses.
AB 2606
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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 the Judges Retirement System have no retiree burial
benefit, while members of Legislators' Retirement System
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 California
consumer price index.
3)Previous legislation. There has been a host of bills on this
subject. The most recent are:
a) AB 617 (Davis), 2010, increased the post retirement
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 PERSS Committee at the request of the author.
b) SB 1209 (Romero), 2010, increased the post retirement
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.
c) AB 1477 (Krekorian), 2009, increased the post retirement
death benefit paid to the beneficiary of a CalPERS school
member from $2,000 to $6,163. This bill was held in this
committee.
d) AB 844 (Negrete McLeod), 2005, increased the post
retirement 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 this committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 2606
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