BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2118
                                                                    Page  1

          Date of Hearing:   May 3, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

                    AB 2118 (Bock) - As Amended: April 10, 2000 

          Policy Committee:                               
          P.E.R.&S.S.Vote:7-0

          Urgency:     No                   State Mandated Local  
          Program:NoReimbursable:           

           SUMMARY  :

          This bill requires the California State Teachers' Retirement  
          System (CalSTRS) to conduct a study to determine the feasibility  
          of merging CalSTRS into the California Public Employees  
          Retirement System (CalPERS).  Specifically, this bill requires  
          that the study address the following issues:
           
          1)The benefit structure that would exist after the merger.

          2)The composition of the board following the merger.

          3)The effect the merger would have on the retirement fund.

          4)The method to be used to administer the merger of the two  
            systems, and

          5)The financing of the teacher benefits.
           
          The bill requires that the study be completed and presented to  
          the Legislature on or before December 31, 2001.

           FISCAL EFFECT  :

          CalSTRS would incur costs in the range of $1 to $2 million to  
          complete the study.

           COMMENTS  :

           Background  .  The author believes that the two retirement systems  
          are administratively duplicative and efficiencies could be  
          achieved through consolidation.  However, the two systems have  








                                                                    AB 2118
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          very different histories and serve different clientele.   
          Although inequities exist between the two programs - in general,  
          CalPERS provides superior benefits - those inequities are the  
          product of past legislation and collective bargaining  
          agreements.  Consolidation conceivably could result in  
          administrative efficiencies but would not generate enough money  
          to erase benefit inequities between the two programs.  


           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081