BILL NUMBER: AB 429	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY   MAY 20, 1999
	AMENDED IN ASSEMBLY   APRIL 29, 1999

INTRODUCED BY   Assembly Member Correa

                        FEBRUARY 12, 1999

   An act to add Section 22404 to the Education Code, relating to the
State Teachers' Retirement System.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 429, as amended, Correa.  State Teachers' Retirement System:
gain-sharing revenue.
   Under the Teachers' Retirement Law, interest earned on assets of
the retirement fund that is not credited to accounts maintained
pursuant to the Defined Benefit Program, as defined, and other income
with respect to the program, is allocated to provide benefits under
the program.  Existing law requires that an actuarial valuation of
the assets and liabilities of the State Teachers' Retirement Plan be
performed at least once every 6 years  and that the Teachers'
Retirement Board report annually to the Legislature and Director of
Finance regarding the return on investments of the system  .

   This bill would provide that gain-sharing revenue, defined as the
annual  actuarial value of  investment  return
  returns  , interest, and other income with
respect to the Defined Benefit Program that exceeds the expected
return for that period provided in the most recent actuarial
valuation of assets, shall be allocated first to eliminate unfunded
accrued actuarial liabilities, as specified; then to  specified
 reserves; and then to provide increased benefits or credits
against contributions for active and retired members pursuant to
future legislation, as specified.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 22404 is added to the Education Code, to read:

   22404.  (a) As used in this section:
   (1) "Expected earnings" means the aggregate amount of the return
on investments, interest, and other earnings with respect to the
Defined Benefit Program that would have been received by the
retirement fund during any fiscal year if the fund's assets had
increased by the actuarially assumed interest rate used in the most
recent actuarial valuation of the assets and liabilities of the plan
performed pursuant to Section 22311.
   (2) "Gain-sharing revenue" means the amount by which the 
actual   actuarial value of the  return on
investments, interest, and other earnings with respect to the Defined
Benefit Program received by the retirement fund for any fiscal
 year, as reported to the Director of Finance pursuant to
Section 22218.5  year, as reported by the actuary 
, exceeds the expected earnings for the same period.
   (b) Notwithstanding any other provision of law, the board shall
allocate gain-sharing revenue as follows in the following order of
priority:
   (1) The amount necessary to eliminate any unfunded actuarial
accrued liability associated with benefits in effect on or before
July 1,  1980   1990  , shall be allocated
to the appropriate accounts.
   (2) An amount determined by the board, based on a recommendation
from the actuary, that adequately protects the fund in the event
future earnings fall below expected earnings shall be allocated to
reserves under this part.
   (3)  An amount determined by the board, based on a
recommendation from the actuary, that would provide additional
revenue for allocation pursuant to paragraph (4) in fiscal years in
which no additional gain-sharing revenue is generated.
   (4) Any remaining gain-sharing revenue shall be allocated to
active member funds and retired member funds in the Defined Benefit
Program to provide improvements in benefits or credits for
contributions, or both, pursuant to any subsequently enacted
legislation that expressly refers to this section or otherwise
specifies that gain-sharing revenue shall be the source of funding
for those benefits or contributions.  For purposes of this paragraph,
gain-sharing revenues shall be allocated proportionately to active
member funds and to retired member funds based on the percentage of
the actuarial accrued liability of the retirement fund with respect
to the Defined Benefit Program that is attributable (A) to actuarial
liabilities for future benefits payable to currently active and
inactive members, or (B) to actuarial liabilities for benefits
payable to currently retired members and their beneficiaries,
respectively.