BILL NUMBER: AB 820 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JANUARY 3, 2000
INTRODUCED BY Committee on Public Employees, Retirement and Social
Security (Correa (Chair), Firebaugh, Honda, Knox, and Pescetti)
FEBRUARY 24, 1999
An act to amend Sections 23200, 24411, 24412, 24415, and
24417 Section 23200 of, and to add
Sections 24315 and 24418 Section 24315 to, the
Education Code, relating to teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 820, as amended, Committee on Public Employees, Retirement and
Social Security. Teachers' retirement.
Existing law establishes the State Teachers' Retirement System to
provide retirement benefits to participating teachers.
Under existing law, if a member whose accumulated retirement
contributions have been refunded, again becomes a member, the person
may elect to redeposit those contributions with regular interest from
the date of refund to the date of payment.
This bill would authorize the member to redeposit a portion of the
refunded contribution, as specified.
Existing law provides that a member may elect an option for
modified retirement allowance.
This bill would authorize the State Teachers' Retirement Board to
waive those provisions if it determines that the waiver would affect
fewer than 100 individuals and would not have a material effect on
the fund.
Existing law generally provides for payment of certain benefits on
a quarterly basis.
This bill would provide for the payment of those benefits on a
monthly basis unless the member elects otherwise.
This bill would delete a provision relating to the use of revenues
from school lands.
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 23200 of the Education Code is amended to read:
23200. (a) If a person, whose accumulated retirement
contributions have been refunded, again becomes a member of the
Defined Benefit Program, the person may elect to redeposit those
contributions with regular interest from the date of refund to the
date of payment. If the member elects to redeposit, the member shall
repay all accumulated retirement contributions that were previously
refunded under this part.
(b) For time prior to July 1, 1944, regular interest shall be at
21/2 percent compounded annually.
(c) If a nonmember spouse, as defined in Section 22651, withdraws
accumulated contributions in accordance with Section 22661, the
member may redeposit a sum equal to those contributions pursuant to
subdivision (a), providing he or she is not receiving an allowance
under Chapter 26 (commencing with Section 24100) or Chapter 27
(commencing with Section 24201).
(d) A member may elect to redeposit a portion of all accumulated
retirement contributions that were previously refunded, and, subject
to requirements imposed by the board, shall receive pro rata credit
for that contribution.
SEC. 2. Section 24315 is added to the Education Code, to read:
24315. Notwithstanding any other provisions of this chapter, the
board may waive the provisions of this chapter if the board
determines that the waiver would affect fewer than 100 individuals
and would not have a material effect on the fund. For that purpose,
a material effect is a cost in excess of one thousandth of one
percent (.0001) of the State Teachers' Retirement Fund assets.
SEC. 3. Section 24411 of the Education Code is amended to read:
24411. (a) (1) Annual cost-of-living adjustments for retired
members, disabled members, and beneficiaries in excess of the
2-percent adjustment authorized by Section 22140 may be included as a
General Fund appropriation in the annual Budget Act. In the annual
budget submitted to the Legislature, the Governor shall include a
budget item equal to 5 percent of the average annualized statewide
increase in payroll for certificated personnel over the three
previous school years among school districts, county offices of
education, and community college districts.
(2) The amount submitted in the annual Budget Act pursuant to this
section shall be considered as part of the overall budget
allocations to the public schools and community colleges.
(b) The annual appropriation shall be made to the system on July
1, and shall be placed in a segregated account called the Retirees'
Purchasing Power Protection Account. The proceeds of that account
are continuously appropriated and shall be distributed in monthly
payments commencing on August 1 to retired members, disabled members,
and beneficiaries as follows:
(1) The proceeds shall be allocated among those retired members,
disabled members, and beneficiaries whose allowances, after applying
the 2-percent adjustment authorized by Section 22140, have the lowest
purchasing power percentage, based on the amount that would be paid
had the original allowance been increased by the increases in the
index then being used by the Department of Finance to measure changes
in the cost of living, increasing those allowances to a common
minimum purchasing power level. In any year in which the purchasing
power of the allowances of all retired members, disabled members, and
beneficiaries equals not less than 75 percent and additional funds
remain from the allocation authorized by this section, those funds
shall be allocated by the board to general accounts to reduce the
unfunded actuarial liability of the fund.
(2) The board may deduct from the annual appropriation an amount
necessary for administrative expenses to implement this section.
(c) The board shall inform each recipient of benefits under
subdivision (b) that the increases are not cumulative, are not part
of the base allowance, and shall be available only as appropriated
annually in the Budget Act.
(d) The adjustments authorized by this section shall not be
included in the base allowance for purposes of calculating the
2-percent adjustment authorized by Section 22140.
(e) It is the ultimate intent and purpose of the Legislature in
amending this section by Chapters 323 and 780 of the Statutes of
1983, to achieve a common minimum purchasing power level equal to 75
percent of the purchasing power of the original allowance. It is the
present intent of the Legislature that until adequate funds are
available to fulfill the ultimate intent, those persons whose
allowances have been most impacted by inflation shall be accorded
first priority in receiving, pursuant to this section, supplemental
cost-of-living adjustments from the Retirees' Purchasing Power
Protection Account.
(f) This section shall not be operative in any fiscal year during
which, as determined by the board, distributions provided for by
Section 24415 are being made.
SEC. 4. Section 24412 of the Education Code is amended to read:
24412. (a) The annual revenues deposited to the Teachers'
Retirement Fund pursuant to Section 6217.5 of the Public Resources
Code are continuously appropriated without regard to fiscal year for
the purposes of this section and shall be distributed in monthly
supplemental payments commencing on August 1 of each year to retired
members, disabled members, and beneficiaries. The amount available
for distribution in any year shall be the income for that year from
the sale or use of school lands and lieu lands, as estimated by the
State Lands Commission prior to the beginning of the fiscal year,
adjusted by the difference between the estimated and actual income
for the preceding fiscal year. The board shall deduct from the
revenues an amount necessary for administrative expenses to implement
this section.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Section 22140 and the annual supplemental payment as
defined in Section 24411, if any, are below 75 percent of original
purchasing power. The purchasing power calculation for each
individual allowance shall be based on the change in the All Urban
California Consumer Price Index between June of the calendar year of
retirement and June of the fiscal year preceding the fiscal year of
the distribution. The allocation shall provide a pro rata share of
the amount needed to restore the allowance payable, after sequential
application of the current year annual improvement factor and the
supplemental payment under Section 24411, to 75 percent of original
purchasing power.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The board shall inform each recipient of supplemental payments
under this section that the increases are not cumulative and are not
part of the base allowance.
SEC. 5. Section 24415 of the Education Code is amended to read:
24415. (a) The proceeds of the Supplemental Benefit Maintenance
Account shall be distributed in monthly supplemental payments
commencing on August 1, 2000, to retired members, disabled members,
and beneficiaries. The amount available for distribution in any
fiscal year shall not exceed the amount necessary to restore
purchasing power up to 75 percent of the purchasing power of the
initial monthly allowance after the application of all allowance
increases authorized by this part, including those specified in
Section 24412.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412, have the lowest purchasing power
percentage. The purchasing power calculation for each individual
shall be based on the change in the All Urban California Consumer
Price Index between June of the calendar year of retirement and June
of the fiscal year preceding the fiscal year of distribution. In any
year in which the purchasing power of the allowances of all retired
members, disabled members, and beneficiaries equals not less than 75
percent and additional funds remain from the allocation authorized by
this section, those funds shall remain in the Supplemental Benefit
Maintenance Account for allocation in future years.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
not part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The adjustments authorized by this section are vested only up
to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Sections 22140 and 22141.
SEC. 6. Section 24417 of the Education Code is amended to read:
24417. (a) The proceeds of an auxiliary Supplemental Benefit
Maintenance Account shall be distributed in monthly supplemental
payments, commencing when funds in the Supplemental Benefit
Maintenance Account are insufficient to support 75 percent, to
retired members, disabled members, and beneficiaries. The amount
available for distribution in any fiscal year shall not exceed the
amount necessary to restore purchasing power up to 75 percent of the
purchasing power of the initial monthly allowance after the
application of all allowance increases authorized by this part,
including those specified in Section 24412 and Section 24415.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412 and Section 24415, have the
lowest purchasing power percentage. The purchasing power calculation
for each individual shall be based on the change in the All Urban
California Consumer Price Index between June of the calendar year of
benefit effective date and June of the fiscal year preceding the
fiscal year of distribution.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
nor part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account and the auxiliary Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The distributions authorized by this section are vested only
up to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Section 22140 and 22141.
SEC. 7. Section 24418 is added to the Education Code, to read:
24418. The board shall allow retirees to receive the allowances
specified in Sections 24415 and 24417 in quarterly distributions if
the retiree elects to have distribution on a quarterly basis. The
election shall be at a time determined by the board, and may be at a
time of the first receipt of an allowance pursuant to Sections 24415
and 24417.