BILL ANALYSIS
AB 820
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Date of Hearing: April 7, 1999
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Lou Correa, Chair
AB 820 (PER&SS) - As Introduced: February 24, 1999
SUBJECT : Teachers' Retirement.
SUMMARY : Makes several changes to the law governing retirement
benefits for teachers. Specifically, this bill :
1)Authorizes a member of the State Teachers' Retirement System
(CalSTRS) to redeposit a portion of previously refunded
contributions.
2)Authorizes the Teachers' Retirement Board to waive specified
option provisions if the waiver would affect fewer than 100
individuals and would not have a material effect on the fund.
3)Requires that payments from the Supplemental Benefit
Maintenance Account (SBMA) to benefit recipients be made on a
monthly basis (rather than quarterly), effective August 1,
2000, unless the member elects to have the payments
distributed on a quarterly basis.
EXISTING LAW
1)Provides that if a member terminates CalSTRS covered service,
elects a refund of accumulated retirement contributions and
then 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. Redepositing allows a member
to receive the service credit represented by the refunded
contributions. All previously refunded contributions must be
repaid and, if the member fails to redeposit the full amount
previously withdrawn, CalSTRS refunds the partial amount and
no service credit is awarded.
2)Provides that a member may elect one of six options at
retirement to provide survivor benefits to his or her
designated beneficiary(s). Once retired, a member can change
an option election only if the beneficiary divorces the member
or, in some cases, predeceases the member or if someone other
than a spouse was named as beneficiary and the member wants to
AB 820
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name his or her current spouse as the beneficiary. Changes in
options and beneficiaries may also be subject to waiting
periods and reductions in allowances.
3)Provides quarterly supplemental payments from the SBMA to
those CalSTRS members and beneficiaries whose purchasing power
has dropped below 75% of the original allowance.
FISCAL EFFECT : According to CalSTRS, there would be a minor
loss of interest to the SBMA if the supplemental payments are
paid monthly instead of quarterly. Additionally, CalSTRS states
that they would incur minor and absorbable one-time costs
associated with implementation of the bill's provisions.
AB 820
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COMMENTS :
1)By allowing members to elect to redeposit a portion of
contributions previously refunded, this bill expands the
population that would be able to take advantage of this
benefit. Often the cost of having to redeposit all previously
refunded contributions is prohibitive. This change would
allow someone to redeposit a portion of those contributions
and receive pro rata service credit.
2)By giving the Teachers' Retirement Board the authority to
waive any of the requirements contained in provisions of the
law governing options, this bill eliminates the need in future
years to make additional legislative changes simply to address
a unique situation affecting only a few CalSTRS members.
3)By requiring that SBMA payments be made monthly rather than
quarterly (unless the members requests that the payments be
made quarterly), this bill eliminates the fluctuations in
monthly income that currently exist for these benefit
recipients. This bill does not provide for any more money to
be received on an annual basis but it does establish an even
distribution of those funds throughout the year.
REGISTERED SUPPORT / OPPOSITION :
Support
California Retired Teachers Association (co-sponsor)
California Teachers Association (co-sponsor)
Opposition
None on file.
Analysis Prepared by : Karon Green / P.E., R. & S.S. /
(916)319-3957