BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 820|
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THIRD READING
Bill No: AB 820
Author: Assembly Public Employees, Retirement and 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, 8/14/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, Perata
ASSEMBLY FLOOR : 74-1, 1/24/00 - See last page for vote
SUBJECT : Teachers' retirement
SOURCE : California Retired Teachers Association
California Teachers Association
DIGEST : This bill makes several changes to the State
Teachers' Retirement Law, as follows:
1.Allows a member of the State Teachers' Retirement System,
and a nonmember spouse, to make partial redeposits,
effective July 2, 2001, of previously refunded member
contributions.
2.Allows a member to purchase a portion of creditable
service that was previously excluded from coverage.
CONTINUED
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3.Allows a retired member who is receiving an unmodified
allowance to name a spouse as a option beneficiary.
4.Makes several other technical changes.
ANALYSIS :
Redeposit
Existing State Teachers' Retirement System(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fails to redeposit the full amount previously withdrawn,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.
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
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fund.
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 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:
1.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.
2.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.
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This bill would repeal current restrictions on employees
working for different employers from participating in the
CBB Program.
Trustee participation in the CBB 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
STRS, by virtue of holding that position. Prior to 1994,
members of governing bodies of local agencies, including
school districts, could receive retirement benefits from
the Public Employees' Retirement System as a result of such
service.
This bill would permit a trustee to elect to participate in
the CBB Program by specified persons performing trustee
service.
Comments
According to Senate Public Employment and Retirement
Committee:
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.
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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
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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.
SUPPORT : (Verified 8/21/00)
California Retired Teachers Association (co-source)
California Teachers Association (co-source)
State Teachers Retirement System (staff recommendation)
ASSEMBLY FLOOR :
AYES: Aanestad, Ackerman, Alquist, Aroner, Ashburn, Bates,
Battin, Baugh, Bock, Briggs, Calderon, Campbell,
Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox,
Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,
Florez, Gallegos, Granlund, Havice, Hertzberg, Honda,
House, Jackson, Keeley, 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
NOES: Kaloogian
DLW:sl 8/21/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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