BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 429
                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS
          AB 429 (Correa)
          As Amended August 25, 2000
          Majority vote
           
          ASSEMBLY:      (June 1, 1999)   SENATE: 31-6 (August 31, 2000)  
                    (vote not relevant)
           
           Original Committee Reference:    P.E.,R. & S.S.  

           SUMMARY  :  Provides an ad hoc increase to retired members of the  
          State Teachers' Retirement System (CalSTRS) of between 1% and 6%  
          depending on the date the member retired.
           
          The Senate amendments  delete the Assembly version of this bill,  
          and instead:

          1)Provide that the monthly allowance amounts of retired members  
            and nonmember spouses, disabled members, and beneficiaries  
            will be increased, as specified.  The increase will be between  
            1% and 6% depending on the date of retirement with members who  
            retired during 1997 receiving a 1% increase, and incrementally  
            increasing up to 6% for members who retired in 1974 and  
            before.

          2)Specify that the increase will be added to the base salary  
            with is subject to the annual 2% cost-of-living adjustment and  
            quarterly purchasing power protection payments.

           AS PASSED BY THE ASSEMBLY  , this bill authorized the Teachers'  
          Retirement Board to allocate excess investment earnings to  
          provide ad hoc benefits to active and retired members of the  
          CalSTRS defined benefit program, after setting aside funds to  
          provide for the maintenance of a reasonable reserve.

           FISCAL EFFECT  :   According to CalSTRS, the total present value  
          cost is $889 million which will be paid for by surplus funds in  
          the retirement system.  CalSTRS will also incur administrative  
          costs associated with computer system modifications and other  
          procedural changes.

           COMMENTS  :   SB 400 (Ortiz), Chapter 555, Statutes of 1999,  
          provided an identical ad hoc retirement benefit increase to  
          state and school members of the Public Employees Retirement  








                                                                    AB 429
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          System.

          Supporters state that CalSTRS research concluded that the  
          pre-1999 retirement program did not provide an adequate  
          retirement allowance and, therefore, the allowances of current  
          retirees are inadequate.  The ad hoc increase provided by AB 429  
          would help to improve the adequacy of those allowances. 


           Analysis Prepared by  :    Karon Green / P.E., R. & S.S. /  
          (916)319-3957 

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