BILL ANALYSIS
AB 1933
Page 1
ASSEMBLY THIRD READING
AB 1933 (Strom Martin)
As Amended May 26, 2000
Majority vote
PUBLIC EMPLOYEES 6-0 APPROPRIATIONS 14-7
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|Ayes:|Correa, Pescetti, Dutra, |Ayes:|Migden, Alquist, Aroner, |
| |Firebaugh, Honda, Knox | |Cedillo, Corbett, Davis, |
| | | |Kuehl, Papan, Romero, |
| | | |Shelley, Thomson, Wesson, |
| | | |Wiggins, Wright |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Campbell, Ackerman, |
| | | |Ashburn, Brewer, |
| | | |Maldonado, Runner, Zettel |
| | | | |
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SUMMARY : Establishes a "Rule of 85" retirement option, improves
the current career bonus incentive for members of the State
Teachers' Retirement System (CalSTRS), and requires the
Teachers' Retirement Board (TRB) to conduct a study on the
feasibility of moving to a service based retirement formula.
Specifically, this bill :
1)Enacts the "Career Teacher Incentive Act of 2000."
2)Requires TRB to conduct a study on the feasibility of basing
pensions on years of service and final compensation with no
age factor, except for a minimum retirement age, and to report
its findings to the Legislature on or before July 1, 2001.
3)Increases the career bonus for CalSTRS members retiring on or
after January 1, 2001, by applying it to members with 29 years
of credited service and increasing the bonus after 30 and 31
years of credited service. At 29 years of service credit the
career bonus would be .1%; at 30 years of service credit the
career bonus would be .3%; and, at 31 years the bonus would be
.4%.
4)Increases from 2.4% to 2.5% the maximum age factor a person
can receive when combining their actual age factor with the
career bonus.
AB 1933
Page 2
5)Permits CalSTRS members who retire on or after January 1,
2001, and who are at least 55 years of age to retire using a
2.4% age-factor if the sum of the member's age plus years of
credited service equals or exceeds 85 (Rule of 85) if this
provision has been agreed to through collective bargaining.
6)Specifies that the Rule of 85 benefit is available to all
CalSTRS members employed by a school district, community
college district, or county superintendent of schools who have
agreed to be subject to this section through a written
memorandum of understanding entered into by the employer and
employees.
7)Allows members who qualify for the Rule of 85 benefit to also
receive the career bonus, if eligible.
EXISTING LAW provides that the retirement allowances for CalSTRS
members shall be calculated based upon an age factor (plus a
career bonus of .2% if the member has 30 or more years of
service) multiplied by the years of service multiplied by the
member's final compensation. Additionally, current law allows
CalSTRS members to retire prior to age 60 but the member's age
factor is reduced accordingly. Current law also specifies that
the maximum age factor a CalSTRS member may currently receive is
2.4%.
FISCAL EFFECT :
1)According to CalSTRS, providing the Rule of 85 benefit could
result in present value costs to the Teachers' Retirement Fund
(TRF) of up to $4 billion and annual costs of $248 million
depending on the number of employers that agree to offer this
benefit through collective bargaining.
2)CalSTRS indicates the present value costs to TRF of the
enhanced career bonus would be about $4 billion, with a
first-year cost of $248 million.
3)CalSTRS would incur minor, absorbable cost to conduct the
study required by this bill.
COMMENTS : Supporters of this bill contend that, "It would
benefit career educators who started teaching soon after college
but are too young under current law to receive a livable
AB 1933
Page 3
pension". Additionally, supporters state that, "AB 1933 would
acknowledge and encourage years of teaching. It de-emphasizes
retirement age as a component in computing retirement."
Supporters of this bill also believe that, "The current CalSTRS
retirement program acts as a financial disincentive associated
with teaching - for persons considering entering and/or staying
in the teaching profession. Providing a comfortable retirement
will be a significant factor in the state's ability to attract
the estimated 300,000 new teachers needed over the next decade."
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0005035