BILL ANALYSIS
AB 1733
Page 1
Date of Hearing: April 12, 2000
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Lou Correa, Chair
AB 1733 (Wildman) - As Amended: March 30, 2000
SUBJECT : State Teachers' Retirement System: postretirement
earnings.
SUMMARY : Specifically, this bill eliminates the current
postretirement earnings limitation for members of the State
Teachers' Retirement System (CalSTRS).
EXISTING LAW allows retired members of CalSTRS to earn up to
$19,050 in 1999-2000 for public school employment. The earnings
limitation is adjusted annually to reflect changes in the
Consumer Price Index. Any creditable earnings in excess of this
amount result in a dollar-for-dollar reduction in the member's
retirement allowance.
Existing law also provides an exemption from this limit if the
member retired prior to July 1, 1998, and is employed by a
school district to provide direct classroom instruction in any
statutorily authorized class size reduction program or to
temporarily fill a position vacated by a teacher who transferred
to a classroom in the same district because of the Class Size
Reduction program. This exemption sunsets on July 1, 2002.
An additional exemption exists for a CalSTRS member who retired
for service and who is appointed as a trustee or administrator
or who is employed on an emergency basis to fill an
administrative position. This exemption sunsets on July 1,
2003.
FISCAL EFFECT : Unknown
COMMENTS : Supporters point out that "California has begun to
increasingly rely on emergency credentialed teachers to instruct
our children. Last year, over 22,000 emergency teaching
credential permits were issued; tens of thousands of
California's children are being taught by emergency credentialed
teachers. Many times, these teachers are minimally qualified
and are often inexperienced."
AB 1733
Page 2
Supporters believe that by eliminating the postretirement
earnings limitation, experienced and credentialed retired
teachers will be encouraged to return to the classroom.
CalSTRS has raised concerns that eliminating the earnings
limitation entirely may jeopardized the systems tax qualified
status due to a federal tax law that prohibits tax-qualified
plans, such as the CalSTRS defined benefit plan, from paying
benefits to members who are working under the retirement system.
There are several ways to eliminate this concern including
requiring a one-year waiting period prior to members returning
to work or requiring that the member be at least the normal
retirement age in order to not be subject to the earnings
limitation. The Committee is informed that the author and
sponsor are working closely with CalSTRS to resolve this issue.
There are three other bill this year that would impact the
CalSTRS earnings limitation. The first is AB 1736, Ducheny,
that would exempt teachers providing remedial instruction to
pupils in grades K-12 from the current earnings limitation. The
second is AB 141, Knox, which would expand the current earnings
limitation exemption for members filling administrative
positions on an emergency basis. The third bill, SB 1505,
Alarcon, would exempt CalSTRS members who retired prior to 2000
and who return to provide direct classroom instruction to pupils
in grades K-12 or to provide support to new teachers, as
specified, from the current earnings limitation.
REGISTERED SUPPORT / OPPOSITION :
Support
California Teachers Association (Sponsor)
Association of California School Administrators
California Federation of Teachers
City College of San Francisco Chorale and Orchestra
Fresno Unified School District
Small School Districts' Association
Opposition
None on file.
Analysis Prepared by : Karon Green / P.E., R. & S.S. /
(916)319-3957
AB 1733
Page 3