BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1733
Deborah V. Ortiz, Chair Hearing date: June 26, 2000
AB 1733 (Wildman) as amended 5/26/00 FISCAL: YES
STRS: ELIMINATION OR INCREASE IN THE POST-RETIREMENT
EARNINGS LIMITATION PROPOSED
HISTORY :
Sponsor: California Teachers Association (CTA)
Prior legislation: see below
ASSEMBLY VOTES :
PER & SS 7 - 0 4/12/00
Appropriations 21 - 0 5/24/00
Assembly Floor 73 - 4 5/31/00
SUMMARY :
Would:
a) eliminate the current post-retirement earnings
limitation for members of the State Teachers' Retirement
System (STRS) who first return to work in STRS-covered
employment more than one year after the date they retired,
and
b) increases the current $19,050 (indexed) earnings limit
to $36,000 (indexed) per year for those who return to work
in STRS-covered employment within one year after
retirement.
ANALYSIS :
1) Existing STRS law :
a) allows retired members of STRS to earn up to $19,050 in
f.y.1999-2000 ($19,650 in f.y. 2000-2001) for public school
employment, adjusted annually to reflect changes in the
Consumer Price Index; any earnings in excess of this amount
result in a dollar-for-dollar reduction in the member's
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Date: 6/12/00 Page 1
retirement allowance,
b) 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
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),
and
c) provides that an additional exemption exists for a STRS
member who retired from 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).
2) This bill would:
a) eliminate the current post-retirement earnings
limitation for retired members who first return to work in
STRS-covered employment more than one year after the date
they retired, and
b) increases the current $19,050 earnings limit to $36,000
per year for those who return to work in STRS-covered
employment within one year after retirement.
FISCAL EFFECT :
STRS indicates that the STRS Fund would lose $1.2 million in
revenues annually in benefit deductions from retirees who
presently exceed the earnings limitation. Additionally, the
cost of funding the STRS defined benefit program would
increase by an unknown amount to the extent that the
elimination or reduction of the earnings limitation for
retired members returning to work induces members to retire
earlier than they would otherwise.
COMMENTS :
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1) Legislative History of the Retiree Earnings Limitation
Exemptions in Existing STRS Law
Existing STRS law provides an exemption to the retirement
limit for members hired pursuant to the Class
Size Reduction Program:
a) AB 18 (Mazzoni), Chapter 1 of 1997, exempted from the
earnings limit members who retired on or before July 1,
1996 and were rehired pursuant to the Class Size Reduction
Program in Grades K-3,
b) AB 2765 (Assembly P.E.R.&S.S. Committee), Chapter 965
of 1998, extended this earnings limitation exemption to
members who retired on or before July 1, 1998,
c) SB 12 (O'Connell), Chapter 334 of 1998, expanded the
earnings limitation exemption to members hired pursuant to
the Class Size Reduction Program in Grade 9, and
d) AB 335 (Mazzoni), Chapter 40 of 1999, extended the
earnings exemption to all future expansions of the Class
Size Reduction Program, making further legislation for this
purpose unnecessary.
2) Related Legislation In The Current Session
Three bills now pending before the Legislature would provide
additional exemptions to the STRS earnings limitation:
a) AB 1736 (Ducheny) that would exempt teachers providing
remedial instruction to pupils in grades K-12,
b) AB 141 (Knox) would exempt members filling
administrative positions on an emergency basis, and
c) SB 1666 (Alarcon) would exempt members who retired
prior to January 1, 2000 and return to provide direct
classroom instruction or to support specified programs. SB
1666 is part of the governor's education package.
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3) 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."
Supporters believe that by eliminating the post-retirement
earnings limitation for members returning to work after a
one-year waiting period, experienced and credentialed retired
teachers will be encouraged to return to the
classroom.
4) SUPPORT :
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
State Teachers' Retirement System
Los Angeles Community College District
California Association of School Business Officials
(CASBO)
Delta Kappa Gamma Society
County Superintendents of Schools
Riverside County Schools Advocacy Association (RCSAA)
5) OPPOSITION :
None to date.
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Date: 6/12/00 Page 4