BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 820
Deborah V. Ortiz, Chair Hearing date: June 26, 2000
AB 820 (PER&SS Com.) as amended 6/13/00 FISCAL: YES
STRS: REDEPOSIT OF A PORTION OF PREVIOUSLY WITHDRAWN
CONTRIBUTIONS: SURVIVOR OPTION WAIVERS
HISTORY :
Sponsor: California Retired Teachers Association (CRTA)
California Teachers Association (CTA)
Prior legislation: none
ASSEMBLY VOTES :
PER & SS 7 - 0 4/07/99
Appropriations 21 - 0 1/19/00
Assembly Floor 74 - 1 1/24/00
SUMMARY :
Would make several changes to the law governing retirement
benefits for teachers, authorizing:
a) a member of the State Teachers' Retirement System
(STRS) to redeposit a portion of previously refunded
contributions,
b) the STRS Board to permit retired STRS members, who did
not choose a survivor option at the time of retirement, to
choose certain survivor benefits after retirement,
c) permits a person to participate in the Cash Balance
Benefit (CBB) Program, even if the person also works for an
employer that does not offer that program, and
d) permits a person who performs trustee service for a
school district or a community college district to elect to
participate in the CBB Program, if the district is a CBB
Program employer.
ANALYSIS :
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1) REDEPOSIT
Existing STRS law provides that if a member terminates
STRS-covered service, elects a refund of
accumulated retirement contributions and then again becomes a
STRS 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fails to redeposit the full amount previously withdrawn, STRS
refunds the partial amount and no service credit is awarded.
This bill would permit a STRS member to redeposit a portion
of previously refunded contributions, and purchase a like
portion of the member's STRS service credit.
2) SURVIVOR OPTIONS
Existing STRS law 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 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.
This bill permits the STRS 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) PARTICIPATION IN THE CASH BALANCE BENEFIT (CBB) PLAN
Existing STRS law provides that the CBB Program provides a
retirement program for persons who perform creditable service
on a part-time basis. If an employer elects to provide the
benefits of the program, and an eligible employee elects to
participate, the employer and employee make contributions to
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the program, which are deposited in the STRS Fund.
Members of the Defined Benefit (DB) Program may participate
in the CBB Program under one of two conditions:
a) for overtime service performed for a different employer
if that employer offers CBB Program and would otherwise
contribute to Social Security or an alternative plan on
behalf of the member for that service, or
b) if employed less than 50% by an employer offering CBB
Program, as long as the member does not perform service for
the same employer under the DB Program.
Members of the DB Program who are employed by more than one
employer at less than 50% of full-time may not participate in
CBB Program unless all employers offer the CBB Program.
This bill would repeal current restrictions on employees
working for different employers from participating in the CBB
Program.
4) TRUSTEE PARTICIPATION IN THE CASH BALANCE PLAN
Existing STRS law provides that a member of a governing body
of an employer is not eligible for membership in the CBB
Program or any other retirement program administered by
CalSTRS, by virtue of holding that position. Prior to 1994,
members of governing bodies of local agencies, including
school districts, could receive retirement benefits from
CalPERS as a result of such service.
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This bill would permit a trustee to elect to participate in
the CBB Program by specified persons performing trustee
service.
FISCAL IMPACT :
According to STRS, this bill would not result in any cost to
the retirement fund. STRS would, however, incur minor and
absorbable one-time administrative costs associated with
implementation of the bill's provisions.
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 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 STRS members.
3) SUPPORT :
State Teachers Retirement System (STRS) (staff
recommendation)
3) OPPOSITION :
None to date.
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