BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 816
Deborah V. Ortiz, Chair Hearing date: June 26, 2000
AB 816 (Asm. PER&SS Com.) as amended 5/31/00FISCAL: YES
STRS: ANNUAL TECHNICAL "HOUSE-KEEPING" BILL
HISTORY :
Sponsor: State Teachers' Retirement System (STRS) Board of
Administration
Prior legislation: annual bill
ASSEMBLY VOTES :
PER & SS 6 - 0 1/12/00
Appropriations 21 - 0 1/19/00
Assembly Floor 76 - 0 1/26/00
SUMMARY :
Would make several minor and technical changes to the State
Teachers' Retirement System Law
ANALYSIS :
1) This bill would:
a) clarify the definition of "full-time" with regard to STRS
members employed in adult education programs, and
b) delete a reference to a code section that is not in
current law.
2) ATTACHED is a section-by-section analysis of this bill ,
prepared by STRS.
FISCAL EFFECT : None.
COMMENTS :
1) This bill is sponsored by STRS and is their annual technical
housekeeping bill. The changes made by this bill are all minor
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and technical in nature and non-controversial.
2: SUPPORT:
California Teachers Association (CTA)
3) OPPOSITION :
NONE
CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM
BILL ANALYSIS
_________________________________________________________________
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Assembly Bill 816 Assembly PERSS Committee (As Amended
5/31/2000)
Position: Sponsor
Proponents : None Known
Opponents : None Known
SUMMARY
AB 816 is the annual STRS technical housekeeping bill which
makes various technical and conforming changes to the Teachers'
Retirement Law (TRL) to facilitate efficient administration of
the system. The specific changes:
1) Clarify the standard for full-time community college
instructors employed in adult education programs.
2) Conform current law to existing practice with respect to
the definition of an inactive member in a year-around school.
3) Correct reference to a nonexistent code section in code
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section defining "present value."
4) Correct oversights in the 1999 Housekeeping Bill (SB
1074).
5) Add reference to the Internal Revenue Code regarding
membership in the Defined Benefit Program (DB)
6) Clarify continued coverage under PERS for Charter
Schools.
7) Clarify that an option beneficiary may select a death
beneficiary.
8) Clarify how the career bonus is applied when a retired
member reinstates.
9) Clarify that an option beneficiary for a member who dies
will receive a benefit based on the assumption that the member
retired for service on the date of his or her death.
10) Clarify the duties of a charter school to inform its
employees of all retirement options available and of the
consequences of future employment if an employee's current
retirement system is not provided by the charter school.
11) Clarify that the minimum guarantee allowed under Chapter
632 (SB 713 - Burton) is subject to the 2 percent COLA and
purchasing power protection.
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HISTORY
Chapter 678, Statutes of 1998 (AB 1166 - House ) modified and
clarified minimum standards for determining full-time for
purposes of crediting service for STRS members.
Chapter 632, Statutes of 1999 (SB 713-Burton ) added Section
24410.5 to the Education Code, which provides for a minimum
guaranteed income for teachers who have a career of at least 20
years and have retired on or before January 1, 2000.
Chapter 939, Statutes of 1999 (SB 1074-PERS ) made technical
clarifying amendments to the Teachers' Retirement Law necessary
for continued effective administration of the system.
DISCUSSION
1. Clarification of Standards
Different types of instructors are subject to different minimum
standards in determining what constitutes full-time membership
for purposes of determining credited service. The minimum
standard for part-time instructors is 525 hours per year, while
the minimum standard for adult
education instructors is 875 hours. Current law is unclear
regarding the appropriate standard for a part-time adult
education instructor. AB 816 clarifies that the adult education
standard for community college instructors is 875 hours,
regardless of whether the member is a full-time or part-time
instructor. This is consistent with current practice.
Education Code section affected by amendments: 22138.5.
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2. Conform Existing Law to Year-Around Schools
The current definition of an inactive member does not take into
account the schedule for year-around schools, which results in
some members being classified erroneously as inactive. For
example, a member of the DB Program who works for a year-around
school and whose track terminates on April 30, 1999, but attains
age 60 on September 15, 1999 and retires on that date would be
considered inactive. The bill conforms to current practice by
replacing the reference to the end of traditional school year
(June 30) with a generic reference to the school year prior to
or during which the member retires.
Education Code section affected by amendments: 22146.
3. Correct Reference to Non-Existent Code Section
The current definition of present value refers to Section 22723,
which is a non-existent code section. This amendment changes
the reference to Section 22718, regarding the authorization for
billing employers for sick leave credit.
Education Code section affected by amendments: 22156.1.
4. Correction of Oversights in 1999 Housekeeping Bill
Current law defines reinstatement as a change in status of a
disabled or retired member, but omitted one of the relevant
sections concerning disability. In addition, a reference to
"service" in Section 24201 regarding qualifications for service
retirement does not clarify credit as "service credit." These
were oversights from last year's housekeeping bill. These
changes reflect current practice and clarify the intent of
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current law. Finally, the bill clarifies the length of the time
a member can participate in the Reduced Workload Program.
Education Code sections affected by amendments: 22163, 24201,
22713, 23001, 23008 and 44922.
5. Add Reference to the Internal Revenue Code
This bill refers to Internal Revenue Code Section 401(a)(9)(G)
to clarify that membership in the Defined Benefit Program is in
accordance with the Internal Revenue Code for the benefit of
STRS members and staff.
Education Code section affected by amendments: 22500.
6. Clarification of Continued Coverage under PERS for Charter
Schools
Current law permits employees who change from STRS-covered
service in a school to PERS-covered service or vise versa to
retain membership in the original retirement system. Not all
charter schools offer service under PERS. The bill clarifies
that a member of PERS who works for a charter school may elect
to continue coverage in PERS if the charter school offers
coverage in PERS.
Education Code section affected by amendments: 22508.
7. Permit an Option Beneficiary May Select a Death Beneficiary
The bill permits an option beneficiary to designate a death
beneficiary who can receive the accrued monthly allowance upon
the option beneficiary's death. This could save a significant
amount of work for what is often a very small amount of money.
Education Code section affected by amendments: 23300.
8. Application of Career Bonus to Service Credit Earned by
Reinstatement
Under current law, a member who retires with 30 years receives a
career bonus of 0.2 percent per year of service. This bill
clarifies that if a member reinstates after a service or
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disability retirement, and earns total service credit equal to
or greater than 30 years, the member's allowance reflects the
career bonus.
Education Code section affected by amendments: 2420 and 24211.
9. Clarification of Benefit for Option Beneficiary
Current law regarding the pre-retirement election of an option
states that if a member dies and elected an option beneficiary
prior to his or her death, the option beneficiary will receive
the option benefit based on the assumption that the member
retired for service on the date of death. The Teachers'
Retirement Law has subsequently been amended to permit members
to retire under different circumstances and have their service
retirement benefit calculated using different methods. This
bill updates the authority to reflect these subsequent
amendments.
Education Code Sections affected: 24307.
10. Retirement System Options for Employees of Charter Schools
The bill requires charter schools to inform prospective
employees about the retirement system options they offer and
that employment in a charter school could exclude the applicant
from further coverage in PERS or STRS, depending on the
retirement options authorized by their charter.
Education Code Section affected by amendments: 47611.
11. Technical Clean-Up to Conform the Minimum Guarantee with
Existing Law
Chapter 632, Statutes of 1999 (SB 713 - Burton) established
Section 24410.5, which provides for a minimum guarantee
allowance for career members. The allowance was developed to be
subject to the annual 2 percent COLA, but not all the necessary
language was included in the original legislation. The bill
clarifies the COLA provision and the interaction of purchasing
power protection to the minimum guarantee. In addition, Section
24410.5 refers to Section 24410.7, which was proposed to be
added in other legislation. The legislation that would have
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added Section 24410.7 was not enacted, and this amendment
deletes the reference.
Education Code Sections affected by amendments: 22141, 24410.5,
24415 and 24417.
This bill also includes supercession language, which states that
if other legislation is passed during the current legislative
session that amends sections that also are included in this
bill, the other legislation prevails.
FISCAL IMPACT
Benefit program - None.
Administrative - One-time cost of $75,000 to permit option
beneficiaries to select death beneficiary.
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