BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1220 (Torres) - CalSTRS Annual Legislation
Amended: April 10, 2014 Policy Vote: PE&R 4-0
Urgency: No Mandate: No
Hearing Date: May 5, 2014 Consultant: Maureen Ortiz
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 1220 makes numerous technical, clarifying and
non-controversial changes to the Teachers' Retirement Law (TRL).
Fiscal Impact:
One-time costs of approximately $55,000 to $63,000 to
CalSTRS (Special Fund).
CalSTRS indicates one-time costs for implementing changes to the
CalSTRS member database system resulting from the following
components: 1) break in service provision: $15,000, 2) cash
balance termination requirements: $5,000 to $8,000, and 3)
option change for same-sex spouse: $35,000 to $40,000.
Background: The enactment of the Public Employees' Pension
Reform Act (PEPRA) of 2013 resulted in the creation of two
distinct groups of employees: 1) those first hired to perform
CalSTRS creditable activities prior to January 1, 2013 and who
are subject to a 2% at age 60 retirement formula; and 2) those
first hired to perform CalSTRS creditable activities on or after
January 1, 2013 and who are subject to the new higher formula of
2% at age 62.
Proposed Law: SB 1220 makes various technical, conforming, or
minor changes to the Teachers' Retirement Law to facilitate
efficient administration of the State Teachers' Retirement Plan
which includes the Defined Benefit (DB) Program, the Defined
Benefit Supplement (DBS) program and the Cash Balance (CB)
Benefit Program.
SB 1220 makes the following specific changes to the Teachers'
Retirement Law:
SB 1220 (Torres)
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a) Clarifies the definition of creditable service as it
relates to state apportionment to apply only to charter
schools.
b) Clarifies the definitions of "school year" and "academic
year" so that it will also apply to members who work in
school districts with nontraditional school years which
could be construed to have qualified as a break in service
under PEPRA.
c) Adds a definition for the term "base allowance" and
replaces "initial monthly" and "original" with "base
allowance" to reduce inconsistent use of terms that refer
to a monthly allowance under the DB Program prior to an
annual benefit adjustment and after modification for an
option.
d) Defines "credit service" for 2% at 62 members so that
service for which compensation is in excess of the limit
and no contributions are paid is deemed to be credit
service.
e) Clarifies instances where a JPA may be considered
employers in the Teachers' Retirement Law.
f) Clarifies "compensation earnable" to make the period of
time used for the calculation consistent.
g) Clarifies the definition of CalSTRS members subject to
PEPRA by specifying that this definition excludes
individuals who are employed to perform creditable service
within six months of performing service in a concurrent
retirement system even if they do not become members of the
DB Program within those six months.
h) Makes numerous other technical and clarifying changes,
clarifies several applicable definitions with the TRL,
deletes obsolete code references, and makes conforming
changes relating to the administration of the state
Teachers Retirement Law resulting from enactment of PEPRA.
Staff Comments: SB 1220 is sponsored by CalSTRS to make various
technical, conforming or minor amendments necessary for
continued effective administration of the California State
Teachers' Retirement System.
SB 1220 (Torres)
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