BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2663|
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THIRD READING
Bill No: AB 2663
Author: Assembly Public Employees, Retirement and Social
Security Committee
Amended: 6/20/12 in Senate
Vote: 21
SENATE PUBLIC EMPLOYMENT & RETIRE. COMM. : 4-0, 6/25/12
AYES: Negrete McLeod, Walters, Padilla, Vargas
NO VOTE RECORDED: Gaines
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/6/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 75-0, 5/17/12(Consent) - See last page for
vote
SUBJECT : Teachers Retirement Law
SOURCE : California State Teachers Retirement System
DIGEST : This bill makes various technical, conforming,
and compliance amendments necessary for continued effective
administration of the California State Teachers' Retirement
System (CalSTRS).
ANALYSIS :
Existing law:
CONTINUED
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1. Creditable compensation . Provides that salary or other
remuneration that the board determines is paid for the
principal purpose of enhancing a member's benefit shall
not be applied to the Defined Benefit Program (DB) but
shall instead be credited to the Defined Benefit
Supplement Program (DBS). The terminology salary or
other remuneration is a more expansive term than
creditable compensation and creates confusion as to
whether non creditable compensation can be credited to
the DBS. Only creditable compensation can be applied to
the DB or DBS programs.
2. Investments & Payroll Report . Requires the board to
report annually to the fiscal committees of the
Legislature and to the Department of Finance regarding
return on investments and the payroll subject to the
system.
3. Subpoena Power . Provides CalSTRS authority to subpoena
documents from employers to verify creditable
compensation.
4. Earnings Limitation Notice . Requires employers to
provide notice of earnings limitations to retired
members who return to work without reinstating in order
not to incur a reduction to their retirement allowance.
5. CalSTRS Annual Report. Requires the board to file an
annual report with the Governor and the Legislature by
March 1st of each year and specifies what subject matter
shall be included in the report.
6. Investment Contracts Report . Requires the board to
submit to the Governor, Legislature, and the Joint
Legislative Budget Committee a report on the nature,
duration, and cost of investment contract services used
by the board.
7. Reporting Requirements by Employers . Provides that
county superintendents and other employing agencies
shall furnish any information concerning any member or
beneficiary the board may require.
8. Sick Leave Credit - Last Employer Definition . Provides
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that a member shall receive service credit for
accumulated and unused sick leave to which the member is
entitled on his or her final day of employment with the
member's last employer.
9. Sick Leave Credit - Last Employer Cost Allocation .
Provides that the board shall bill employers for service
credit granted for unused excess sick leave and shall
deem excess sick leave from prior employers to be
granted by the last employer if the member was permitted
to use the excess sick leave accumulated from prior
employers at the last employer.
10. Liens for Employer Nonpayment . Allows CalSTRS to direct
the State Controller to withhold funds from any county
superintendent who fails to make payment of any
assessment of the board as specified.
11. Survivor Benefit Allowance . Provides members who joined
CalSTRS on or after October 15, 1992, disability
benefits under Coverage B for as long as the member is
disabled, in contrast to members who joined CalSTRS
prior to that date who receive disability benefits only
until age 60.
12. Workers Compensation Offset . Allows the board to reduce
a member's disability allowance under Coverage B to
offset moneys received by the member for workers
compensation benefits. The offset is limited to the
amount the member receives from one of three possible
workers compensation benefits: temporary disability,
permanent disability, or vocational rehabilitation.
13. Limitations on Post-Retirement Compensation . Allows the
board to reduce a retired member's service retirement
allowance as specified to meet federal prohibitions
against pension distributions prior to age 60 or prior
to separation from employment. Existing law also allows
the board to reduce a retired member's service
retirement allowance to offset income received by the
member for post-retirement employment as specified.
Currently, the two offsets are applied independently and
can result in a combined reduction that is greater than
the member's retirement allowance for the year in which
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the excess compensation was earned.
14. Same as #13 above . Discusses affected parallel
sections.
15. Purchasing Power Report . Requires the board to submit a
report to the Governor and the Legislature by June 1st
of each year regarding the effect of inflation on the
purchasing power of benefits provided by the Defined
Benefit Program.
16. Benefit Payment Information . Provides that for members
who receive their benefit allowance via electronic
funds, CalSTRS need only mail payment information if
there is a net change in the benefit. Because an annual
enhancement or an adjustment to an income tax
withholding tax table by the Internal Revenue Service
(IRS) or the Franchise Tax Board (FTB) can affect the
net amount, CalSTRS must mail payment information
regarding those minor changes even if members have
indicated that they do not wish to receive such notices.
17. Disability Benefit Annuity . Allows a member to elect to
receive a disability allowance as an annuity as
specified.
18. 403bCompare Web site . Establishes the 403bCompare.com
website and requires 403b vendors who desire to offer
403b products to members to register and make data
available on the website as specified unless their
products were offered to members prior to the website's
implementation.
19. Same as #13 above . Discusses affected parallel
sections.
20. State School Lands Revenue . Provides that revenue
generated from the use of State School Lands (land
granted to California by the federal government to
support schools) and Lieu Lands (properties purchased
with the proceeds from the sale of school lands) during
the prior year is transferred to CalSTRS each year for
the purpose of providing annual supplemental payments in
quarterly installments.
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21. Chaptering Out Language . Current law provides that if
two bills are chaptered in the same legislative session
and make changes to the same sections that are in
conflict, the amendments from the bill chaptered last
will prevail.
This bill makes several technical, clarifying and
non-controversial changes to various sections of the
Education Code administered by CalSTRS to improve and
continue effective administration of the System.
Specifically, this bill:
1. Creditable compensation . Makes this subdivision
consistent with other, relevant sections by replacing
the broader terminology salary or other remuneration
with the term creditable compensation, clarifying that
only creditable compensation can be applied to the DBS
programs.
2. Investments & Payroll Report . Eliminates the
requirement that the board report annually to the fiscal
committees of the Legislature and to the Department of
Finance regarding return on investments and the payroll
subject to the system and consolidates the report
subject matter with the CalSTRS annual report provided
for in Section 22324 as amended by this bill.
3. Subpoena Power . Grants CalSTRS additional subpoena
authority to compel witnesses to attend and testify
before the board.
4. Earnings Limitation Notice . Requires employers, when
providing notice of earnings limitations to retired
workers, to reference in the notice the specific
earnings limitations that authorized the return to work.
5. CalSTRS Annual Report . Adds specified subject matter to
the annual report the board must file with the Governor
and the Legislature by March 1st of each year and thus,
consolidates other reports the board is required to
submit to the Legislature and Governor into the annual
report.
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6. Investment Contracts Report . Eliminates the report on
the nature, duration, and cost of investment contract
services used by the board and consolidates the report
subject matter with the CalSTRS annual report.
7. Reporting Requirements by Employers . Allows CalSTRS to
determine the form, including electronic, that county
superintendents and other employing agencies shall use
to furnish any information concerning any member or
beneficiary the board may require.
8. Sick Leave Credit - Last Employer Definition . Clarifies
that a member shall receive service credit for
accumulated and unused sick leave to which the member is
entitled on his or her final day of employment from all
CalSTRS covered employers during the member's last
school year of employment not just the last employer.
Requires that CalSTRS accept from each employer from
which the member is entitled to have his or her unused
sick leave credited for service, certification that the
sick leave has not been transferred to another employer.
9. Sick Leave Credit - Last Employer Cost Allocation .
Provides that, if the member was employed by more than
one employer in his or her last year of employment and
is entitled to service credit from more than one of
those employers, the board shall allocate the cost for
the service credit granted to the employer for the
period in which the member was eligible to use the
excess sick leave.
10. Liens for Employer Nonpayment . Clarifies that CalSTRS
may direct the State Controller to withhold funds from,
in addition to the county superintendent, the district
superintendent, chancellor of a community college
district, or other employing agency that reports
directly to the board and who fails to make payment of
any assessment of the board as specified.
11. Survivor Benefit Allowance . Eliminates obsolete,
inapplicable boilerplate language from the provision
that provides Coverage B disability benefits. The
language provides a survivor benefit if a member dies
within four months of the termination of his or her
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disability benefit. This condition will never happen
because Coverage B provides disability retirement as
long as the member is disabled with no limit on age as
exists under Coverage A, from which the language was
likely copied.
12. Workers Compensation Offset . Clarifies that a reduction
to a member's disability allowance to offset moneys
received by the member from workers compensation shall
apply against all classes of workers compensation
received, i.e. temporary disability, permanent
disability, and vocational rehabilitation.
13. Limitations on Post-Retirement Compensation . Clarifies
that the maximum amount that a member's retirement
allowance can be reduced for the combined offsets
related to complying with federal early distribution
prohibitions and the state post-retirement earnings
limitations cannot be greater than the member's
retirement allowance for the year in which the excess
compensation was earned.
14. Same as #13 above . Reciprocal changes made to affected
parallel sections.
15. Purchasing Power Report . Eliminates a required report
regarding the effect of inflation on the purchasing
power of benefits provided by the Defined Benefit
Program and consolidates the report subject matter with
the CalSTRS annual report.
16. Benefit Payment Information . Allows CalSTRS to not send
payment information regarding net changes in the benefit
amount if a member does not want to receive that payment
information.
17. Disability Benefit Annuity . Makes a technical change to
reference the correct subsection that allows a member to
elect to receive a disability allowance as an annuity.
18. 403bCompare Web site . Clarifies that the
403bCompare.com website was implemented on November 30,
2004, and that as of that date 403b vendors who desire
to offer 403b products to members must register and make
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data available on the website as specified.
19. Same as #13 above . Reciprocal changes made to affected
parallel sections.
20. State School Lands Revenue . Corrects an incorrect
reference to the Teachers' Retirement Law in the Public
Resources Code that provides that revenue generated from
the use of State School Lands (land granted to
California by the federal government to support schools)
and Lieu Lands (properties purchased with the proceeds
from the sale of school lands) during the prior year is
transferred to CalSTRS each year for the purpose of
providing annual supplemental payments in quarterly
installments.
21. Chaptering Out Language . Contains language that
specifically provides that any other bill that changes
sections that are also changed in this bill and that is
chaptered in the 2012 calendar year and that takes
effect on or before January 1, 2013, shall supersede the
changes made by this bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs of $85,000 potentially offset by future
savings (Special)
CalSTRS indicates one-time IT costs to make changes to
the member database, and the "myCalSTRS" Web site.
Savings will result from consolidation of numerous
reports and from the reduction in the number of mailings
to members.
SUPPORT : (Verified 8/8/12)
California State Teachers' Retirement System (source)
ARGUMENTS IN SUPPORT : According to CalSTRS the changes
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proposed in this bill are noncontroversial and make
necessary technical and conforming changes for the
continued administration of CalSTRS.
ASSEMBLY FLOOR : 75-0, 5/17/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Ma, Mansoor, Mendoza, Miller,
Mitchell, Monning, Morrell, Nestande, Nielsen, Norby,
Olsen, Pan, V. Manuel P�rez, Portantino, Silva, Smyth,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, John A. P�rez
NO VOTE RECORDED: Fletcher, Bonnie Lowenthal, Perea,
Skinner, Yamada
DLW:RJG:d 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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