BILL ANALYSIS
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THIRD READING
Bill No: AB 816
Author: Assembly Pub. Employ., Retire. & Social Security
Committee
Amended: 8/21/00 in Senate
Vote: 21
SENATE PUBLIC EMP. & RET. COMMITTEE : 5-0, 6/26/00
AYES: Ortiz, Haynes, Karnette, Lewis, Soto
SENATE APPROPRIATIONS COMMITTEE : 10-0, 8/7/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, Vasconcellos
ASSEMBLY FLOOR : 76-0, 1/26/00 - See last page for vote
SUBJECT : State Teachers' Retirement System
SOURCE : State Teachers' Retirement System
DIGEST : This constitutes the State Teachers' Retirement
System annual omnibus bill making various changes in the
retirement law which they administer.
ANALYSIS :
Overview of Changes in the Teachers' Retirement System
(STRS) Law
Specific changes in the STRS law:
1. Clarifying the standard for full-time community
CONTINUED
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college instructors employed in adult education
programs.
2. Conforming current law to existing practice with
respect to the definition of an inactive member in a
year-round school.
3. Correcting reference to nonexistent code section in
code section defining "present value."
4. Correcting oversights in the 1999 Housekeeping Bill
(SB 1074).
5. Adding reference to the Internal Revenue Code
regarding membership in the Defined Benefit Program.
6. Clarifying continued coverage under the Public
Employees' Retirement System (PERS) for Charter
Schools.
7. Clarifying that an option beneficiary may select a
death beneficiary.
8. Clarifying that the career bonus is applied when a
retired member reinstates.
9. Clarifying 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. Clarifying that 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.
12. Clarifying that the minimum guarantee allowed under
Chapter 632 (SB 713 - Burton), Statutes of 1999 is
subject to the two percent cost of living adjustment
(COLA) and purchasing power protection.
13. Double-joined with AB 1509 and shall become operative
only if both bills are enacted and become effective on
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or before January 1, 2001, as specified.
Prior Legislation
AB 1166 (House), Chapter 678, Statutes of 1998, modified
and clarified minimum standards for determining full-time
for purposes of crediting service for STRS members.
SB 713 (Burton), Chapter 632, Statutes of 1999, 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.
SB 1075 (Senate Public Employees and Retirement Committee),
Chapter 939, Statutes of 1999, made technical clarifying
amendments to the STRS law necessary for continued
effective administration of the system.
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. This bill 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.
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
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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.
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.
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 current law.
Finally, the bill clarifies the length of the time a member
can participate in the Reduced Workload Program.
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.
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.
Permit an Option Beneficiary May Select a Death Beneficiary
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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.
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 disability retirement, and earns total service
credit equal to or greater than 30 years, the member's
allowance reflects the career bonus.
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 STRS 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.
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.
Technical Clean-Up to Conform the Minimum Guarantee with
Existing Law
SB 713 (Burton), Chapter 632, Statutes of 1999 (established
Section 24410.5, which provides for a minimum guarantee
allowance for career members. The allowance was developed
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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 added Section
24410.7 was not enacted, and this amendment deletes the
reference.
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 EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
One-time cost of $75,000 to permit option beneficiaries to
select death beneficiary.
SUPPORT : (Verified 8/21/00)
State Teachers' Retirement System
California Teachers Association
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Baldwin, Bates, Battin,
Baugh, Bock, Brewer, Briggs, Calderon, Campbell,
Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox,
Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,
Florez, Frusetta, Gallegos, Granlund, Havice, Hertzberg,
House, Jackson, Kaloogian, Keeley, Knox, Kuehl, Leach,
Lempert, Leonard, Longville, Lowenthal, Machado, Maddox,
Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano,
Olberg, Oller, Robert Pacheco, Rod Pacheco, Papan,
Pescetti, Reyes, Romero, Runner, Scott, Shelley, Soto,
Steinberg, Strickland, Strom-Martin, Thompson, Thomson,
Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins,
Wildman, Wright, Zettel, Villaraigosa
DLW:cm 8/21/00 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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