BILL ANALYSIS                                                                                                                                                                                                    




          Appropriations Committee Fiscal Summary

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|                               |AB 821  (Correa)            |
|-------------------------------+----------------------------|
|                               |                            |
|-------------------------------+----------------------------|
|Hearing Date: 9/1/99           |Amended: 6/14/99            |
|-------------------------------+----------------------------|
|Consultant: Maureen Brooks     |Policy Vote: P. E. & R.     |
|                               |3-0                         |
|                               |                            |
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BILL SUMMARY:   AB 821 changes the definition of "final  
compensation" for members of STRS  and school employees of  
CalPERS from the highest average annual compensation  
earnable by a member during any period of 3 consecutive  
school years to any period of 12 consecutive months.

                         Fiscal Impact (in thousands)
  
Major Provisions                1999-2000               2000-01        2001-02   Fund  

1 yr final comp.               ---$361 million first year increase in
                                                 employer  
contribution--------STRF


STAFF COMMENTS:  SUSPENSE FILE.

The present value of the total long-term cost for members  
of STRS is approximately $5 billion, and the present value  
of the benefits for PERS is $832.8 million.   There will be  
no increase in the employer contribution for CalPERS since  
the retirement fund assets of school employers are  
sufficient to fund current school member benefits for the  
next 25 years. However, passage of this bill will reduce  
that time period to 18 years.

Current law allows one year final compensation for STRS  
members who retire, become disabled, or die after June 30,  
1990 provided that, during the last ten years of employment  
with the same employer, at least 60% of their contract time  
was spent in direct classroom instruction.  That statute  










provided that the benefit be subject to collective  
bargaining and that it apply to all teachers in that  
district.

School members affected by this bill are classified,  
non-teaching, employees of school districts and the county  
office of education (clerical, food service, custodial,  
transportation drivers, etc).

State employees under CalPERS receive retirement benefits  
based on one year final compensation.