BILL ANALYSIS
Appropriations Committee Fiscal Summary
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| |AB 1733 (Wildman) |
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|Hearing Date: 8/29/2000 |Amended: 8/25/2000 |
| |& LCR 19189 |
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|Consultant: Maureen Brooks |Policy Vote: P. E. & R. |
| |5-0 |
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BILL SUMMARY: AB 1733 eliminates the postretirement
earnings limitation for retired members of CalSTRS who
return to work more than one year after retirement and
increases the current $19,650 limit to $22,000 for other
retired members. The bill will sunset January 1, 2008.
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Earnings limit $1.2 million annuallySTRF
Admin costs -----------minor, absorbable-----------STRF
STAFF COMMENTS: SUSPENSE FILE. Costs result because
allowances which are now being withheld as a reduction in
benefits when members exceed the earnings limitation will,
under this bill, be paid to the members.
Existing law places a limit of $19,650 (indexed annually to
increases in the CPI) that retired teachers who return to
work can earn before having their benefit reduced. The
reduction in benefits is equal to the amount of earnings in
excess of the limit. Teachers who retired on or before July
1, 1998, who choose to reenter the teaching profession
under the Class-Size Reduction Program are exempt from the
postretirement earnings limitations. Current law also
provides an exemption for retired members who are employed
on an emergency basis to fill an administrative position
that is vacated due to circumstances beyond the control of
the employer.
AB 1733 will provide an exemption from the limit for
teachers who return to work after being retired for at
least one year, and increases the limit of $19,050 to
$22,000 for other retirees.
Under federal law, retirement benefits can not be paid to
persons who are currently working for the system without
having taxes due on the earnings. However, the rule does
not apply to a person who has a significant change in
employment status. Therefore, having an earnings limit
results in most members only returning to work on a
part-time status which meets the exemption under federal
law. AB 1733 provides that members who retire for at least
one year before returning to work will have a sufficient
change in employment status to satisfy the federal rule.
Author's amendments are technical.