BILL NUMBER: AB 2201 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Honda
(Coauthor: Assembly Member Kuehl)
FEBRUARY 24, 2000
An act to amend Sections 22134, 22136, 22140, 22141, 22200, 22664,
24201, 24202.5, 24203.5, 24411, 24412, 24415, 24416, and 24417 of,
and to repeal Section 22135 of, the Education Code, relating to state
teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 2201, as introduced, Honda. State teachers' retirement:
benefits: retirement board.
(1) Under the existing State Teachers' Retirement Law, calculation
of service retirement allowances of members, other than classroom
teachers, as defined, is based on the highest average annual
compensation earnable by the member during any 3-year period.
This bill would provide that the calculation of those allowances
shall be based on the highest annual compensation earnable by the
member during any 12-month period and make related changes.
(2) The State Teachers' Retirement Law provides that benefits be
annually increased by a 2% improvement factor and that the factor
shall not be compounded.
This bill would provide that, effective September 1, 2003, the
annual improvement factor shall be compounded.
(3) Under existing law, the State Teachers' Retirement System is
administered by the 12-member Teachers' Retirement Board. Two of the
members of the board must be members or participants who are
classroom teachers in kindergarten or grades 1 through 12, another
member must be a retired member or participant, and another member
must be a community college instructor with specified experience.
All 4 of these members are appointed by the Governor from lists
submitted by specified officials. One member of the board must be an
officer of a life insurance company and one must be an officer of a
bank or savings and loan. These members are appointed by the
Governor, subject to Senate confirmation.
This bill would increase the number of board members to 13 and
require that 4 members be elected by active members and 2 members be
elected by retired members. The bill would delete the requirement
that 2 members must be, respectively, officers of a life insurance
company and a bank or savings and loan and would instead provide that
the Governor appoint 2 persons representing the public, subject to
Senate confirmation. The bill would authorize the Governor to fill
vacancies of the board, as specified; require the board to adopt
regulations regarding the elections, as specified; and authorize the
board to contract with a private firm to conduct the elections in
specified circumstances.
(4) The State Teachers' Retirement Law prescribes a 2% at age 60
formula for calculating retirement allowances for members who retire
for service and for specified nonmember spouses.
This bill would instead prescribe a 2% at age 55 formula for those
members and nonmember spouses and make related changes.
(4) Under the State Teachers' Retirement Law, quarterly
supplemental payments are made to retired members, disabled members,
and beneficiaries from specified accounts to restore up to 75% of the
purchasing power of the initial monthly allowances provided under
the Defined Benefit Program, as specified.
This bill would provide that those supplemental payments shall be
made to restore up to 80% of the purchasing power of those
allowances.
(5) The bill would state that it shall be known and referred to as
the "Teachers' Pension Equity Act" and would make related findings
and declarations of legislative intent. The bill's provisions would
be operative January 1, 2003.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) This act shall be known and may be referred to as
the "Teachers' Pension Equity Act."
(b) The Legislature finds that superior investment returns have
resulted in multi-billion dollar surpluses in the Teachers'
Retirement Fund. Those surpluses should be used exclusively for the
benefit of members of the Defined Benefit Program of the State
Teachers' Retirement System, whose contributions made the surplus
possible.
(c) It is the intent of the Legislature to provide public school
and community college educators with pensions that are equal to those
now provided other state and school employees, such as school
secretaries, bus drivers, custodians, and state employees under the
Public Employees' Retirement System. Those pensions shall be funded
exclusively from the Teachers' Retirement Fund and not from the
General Fund.
SEC. 2. Section 22134 of the Education Code is amended to read:
22134. (a) "Final compensation" means the highest
average annual compensation earnable by a member during any
period of three 12 consecutive
school years months while an active
member of the Defined Benefit Program or time during which he or she
was not a member but for which the member has received credit under
the Defined Benefit Program, except time that was so credited for
service performed outside this state prior to July 1, 1944. The last
three 12 consecutive years
months of employment shall be used by the system
in determining final compensation unless designated to the contrary
in writing by the member.
(b) For purposes of this section, periods of service separated by
breaks in service may be aggregated to constitute a period of
three 12 consecutive years
months , if the periods of service are
consecutive except for the breaks.
(c) The determination of final compensation of a member who has
concurrent membership in another retirement system pursuant to
Section 22115.2 shall take into consideration the compensation
earnable while a member of the other system, provided that all of the
following exist:
(1) The member was in state service or in the employment of a
local school district or a county superintendent of schools.
(2) Service under the other system was not performed concurrently
with service under the Defined Benefit Program.
(3) Retirement under the Defined Benefit Program is concurrent
with the member's retirement under the other system.
(d) The compensation earnable for the first position in which
California service was credited shall be used when additional
compensation earnable is required to accumulate three
12 consecutive years
months for the purpose of determining final compensation under
Section 23805.
(e) If a member has received service credit for part-time service
performed prior to July 1, 1956, the member's final compensation
shall be adjusted for that service in excess of one year by the ratio
that part-time service bears to full-time service.
(f) The board may specify a different final compensation with
respect to disability allowances, disability retirement allowances,
family allowances, and children's portions of survivor benefit
allowances payable on and after January 1, 1978. The compensation
earnable for periods of part-time service shall be adjusted by the
ratio that part-time service bears to full-time service.
(g) The amendment of former Section 22127 made by Chapter 782 of
the Statutes of 1982 does not constitute a change in, but is
declaratory of, the existing law.
SEC. 3. Section 22135 of the Education Code is repealed.
22135. (a) Notwithstanding subdivisions (a) and (b) of Section
22134, "final compensation" means the highest annual compensation
earnable by an active member who is a classroom teacher who retires,
becomes disabled, or dies, after June 30, 1990, during any period of
12 consecutive months during his or her membership in the plan's
Defined Benefit Program. The last 12 consecutive months of
employment shall be used by the system in determining final
compensation unless designated to the contrary in writing by the
member.
(b) Section 22134, except subdivision (a) of that section, shall
apply to classroom teachers who retire after June 30, 1990, and any
statutory reference to Section 22134 or "final compensation" with
respect to a classroom teacher who retires, becomes disabled, or
dies, after June 30, 1990, shall be deemed to be a reference to this
section.
(c) As used in this section, "classroom teacher" means any of the
following:
(1) All teachers and substitute teachers in positions requiring
certification qualifications who spend, during the last 10 years of
their employment with the same employer which immediately precedes
their retirement, 60 percent or more of their contract time each year
providing direct instruction. For the purpose of determining
continuity of employment within the meaning of this subdivision, an
authorized leave of absence for sabbatical or illness or other
collectively bargained or employer-approved leaves shall not
constitute a break in service.
(2) Other certificated personnel who spend, during the last 10
years of their employment with the same employer that immediately
precedes their retirement, 60 percent or more of their contract time
each year providing direct services to pupils, including, but not
limited to, librarians, counselors, nurses, speech therapists,
resource specialists, audiologists, audiometrists, hygienists,
optometrists, psychologists, driver safety instructors, and personnel
on special assignment to perform school attendance and adjustment
services.
(d) As used in this section, "classroom teacher" does not include
any of the following:
(1) Certificated employees whose job descriptions require an
administrative credential.
(2) Certificated employees whose job descriptions include
responsibility for supervision of certificated staff.
(3) Certificated employees who serve as advisers, coordinators,
consultants, or developers or planners of curricula, instructional
materials, or programs, who spend, during the last 10 years of their
employment with the same employer that immediately precedes their
retirement, less than 60 percent of their contract time in direct
instruction.
(4) Certificated employees whose job descriptions require
provision of direct instruction or services, but who are functioning
in nonteaching assignments.
(5) Classified employees.
(e) This section shall apply only to teachers employed by an
employer that has, pursuant to Chapter 10.7 (commencing with Section
3540) of Division 4 of Title 1 of the Government Code, entered into a
written agreement with an exclusive representative, that makes this
section applicable to all of its classroom teachers, as defined in
subdivision (c).
(f) The written agreement shall include a mechanism to pay for all
increases in allowances provided for by this section through
employer contributions or employee contributions or both, which shall
be collected and retained by the employer in a trust fund to be used
solely and exclusively to pay the system for all increases in
allowances provided by this section and related administrative costs;
and a mechanism for disposition of the employee's contributions if
employment is terminated before retirement, and for the establishment
of a trust fund board. The trust fund board shall administer the
trust fund and shall be composed of an equal number of members
representing classroom teachers chosen by the bargaining agent and
the employer. If the employer agrees to pay the total cost of
increases in allowances, the establishment of a trust fund and a
trust fund board shall be optional to the employer. The employer,
within 30 days of receiving an invoice from the system, shall
reimburse the retirement fund the amount determined by the Teachers'
Retirement Board to be the actuarial equivalent of the difference
between the allowance the member or beneficiary receives pursuant to
this section and the allowance the member or beneficiary would have
received if the member's final compensation had been computed under
Section 22134 and the proportionate share of the cost to the plan's
Defined Benefit Program, as determined by the Teachers' Retirement
Board, of administering this section. The payment shall include the
cost of all increases in allowances provided for by this section for
all years of service credited to the member as of the benefit
effective date. Interest shall be charged at the regular interest
rate for any payment not received within 30 days of receipt of the
invoice. Payments not received within 30 days after receipt of the
invoice may be collected pursuant to Section 23007.
(g) Upon the execution of the agreement, the employer shall notify
all certificated employees of the agreement and any certificated
employee of the employer, who is a member of the Public Employees'
Retirement System pursuant to Section 22508, that he or she may,
within 60 days following the date of notification, elect to terminate
his or her membership in the Public Employees' Retirement System and
become a member of this plan's Defined Benefit Program. However,
only service credited under the Defined Benefit Program subsequent to
the date of that election shall be subject to this section.
(h) An employer that agrees to become subject to this section,
shall, on a form and within the timeframes prescribed by the system,
certify the applicability of this section to a member pursuant to the
criteria set forth in this section when a retirement, disability, or
family allowance becomes payable.
(i) For a nonmember spouse, final compensation shall be determined
pursuant to paragraph (2) of subdivision (c) of Section 22664. The
employer, within 30 days of receiving an invoice from the system,
shall reimburse the retirement fund pursuant to subdivision (f).
Interest shall be charged at the regular interest rate for payments
not received within the prescribed timeframe. Payments not received
within 30 days of invoicing may be collected pursuant to Section
23007.
SEC. 4. Section 22136 of the Education Code is amended to read:
22136. (a) "Final compensation" with respect
to a member whose salary while an active member was reduced because
of a reduction in school funds means the highest average
annual compensation earnable by the member during any
three years 12 months while employed to
perform creditable service subject to coverage by the Defined
Benefit Program if the member elects to be subject to this section.
(b) For the purposes of this section, a year shall be considered
to be a period of 12 consecutive months.
SEC. 5. Section 22140 of the Education Code is amended to read:
22140. "Improvement factor" means an increase of 2 percent in
benefits for each year commencing on September 1, following the first
anniversary of the effective date of retirement, or the date on
which the monthly benefits commenced to accrue to any beneficiary
other than a retired member or other periods specifically stated in
this part. The Effective September 1, 2003,
the factor shall not be compounded
nor but shall it not
be applicable to annuities payable from the accumulated annuity
deposit contributions or the accumulated tax-sheltered annuity
contributions. The Legislature reserves the right to adjust the
amount of the improvement factor up or down as economic conditions
dictate. No adjustments of the improvement factor shall reduce the
monthly retirement allowance or benefit below that which would be
payable to the recipient under this part had this section not been
enacted.
SEC. 6. Section 22141 of the Education Code is amended to read:
22141. Notwithstanding Section 22140, "improvement factor" means
an increase of 2 percent in benefits provided under Sections 24408
and 24409 for each year commencing on September 1, 1981.
The Effective September 1, 2003, the factor
shall not be compounded nor
but shall it not be
applicable to annuities payable from the accumulated annuity deposit
contributions or the accumulated tax-sheltered annuity contributions.
The Legislature reserves the right to adjust the amount of the
improvement factor up or down as the economic conditions dictate. No
adjustments of the improvement factor shall reduce the monthly
retirement allowance or benefit below that which would be payable to
the recipient under this part had this section not been enacted.
SEC. 7. Section 22200 of the Education Code is amended to read:
22200. (a) The plan and the system are administered by the
Teachers' Retirement Board. The members of the board are as follows:
(1) The Superintendent of Public Instruction.
(2) The Controller.
(3) The Treasurer.
(4) The Director of Finance.
(5) One person who, at the time of appointment, is a member of the
governing board of a school district or a community college
district.
(6) Three Four persons who , at
the time of election, are either active members of
the Defined Benefit Program or active participants in the
Cash Balance Benefit Program , as follows:
(A) Two persons who, at the time of appointment, are classroom
teachers in kindergarten or grades 1 through 12.
(B) One person who, at the time of appointment, is a community
college instructor with expertise in the areas of business or
economics or both business and economics and who shall be appointed
by the Governor for a term of four years from a list submitted by the
Board of Governors of the California Community Colleges
. These members shall be elected by the active members and
participants of the system for four-year terms, pursuant to
regulations adopted by the board .
(7) One person who is either a retired member under this
part or a retired participant under Part 14 (commencing with Section
26000) Two persons who are either retired members of
the Defined Benefit Program or retired participants receiving an
annuity under the Cash Balance Benefit Program. These members shall
be elected by the retired members and participants of the system for
four-year terms, pursuant to regulations adopted by the board .
(8) One officer of a life insurance company appointed by
the Governor for a term of four years, subject to confirmation by the
Senate.
(9) One officer of a bank or a savings and loan institution who
has had at least five years of broad professional investment
experience handling various asset classes such as stocks, bonds, and
mortgage investments and who shall be appointed by the Governor for a
term of four years, subject to confirmation by the Senate.
(10) One person Two persons representing the
public, appointed by the Governor for a term of four years, subject
to confirmation by the Senate.
(b) The members of the board described in paragraphs (5)
and (7) and subparagraph (A) of paragraph (6) of subdivision (a)
shall be appointed by the Governor for four-year terms from a list
submitted by the Superintendent of Public Instruction
The Governor may fill any vacancy in the member, school board, or
public seats due to resignation or death .
(c) The members of the board shall annually elect a chairperson
and vice chairperson.
(d) After any elected member of the board has served two
consecutive terms, or eight consecutive years, on the board, that
member may not be elected for an additional term until at least one
year after the expiration of the member's last term.
(e) If a person serving on the board pursuant to paragraph (5) of
subdivision (a) ceases to serve on the governing board of a school
district or a community college district and two or more years remain
in his or her term on the board, that person shall resign or be
removed from the board. If, however, less than two years remain in
his or her term, that person may complete his or her term on the
board or a new member may be immediately appointed by the Governor.
(f) The regulations adopted by the board pursuant to paragraphs
(6) and (7) of subdivision (a) shall authorize candidates for elected
positions on the board to submit candidate's statements expressing
their opinions and ideas, and the regulations shall not restrict the
reasonable content of those statements.
(g) The board may contract with a private firm to conduct the
elections described in paragraphs (6) and (7) of subdivision (a) if
the board determines that the contract would result in a cost savings
to the board and ensure fairness of the election process.
SEC. 8. Section 22664 of the Education Code is amended to read:
22664. The nonmember spouse who is awarded a separate account
shall have the right to a service retirement allowance under this
part.
(a) The nonmember spouse shall be eligible to retire for service
under this part if the following conditions are satisfied:
(1) The member had at least five years of credited service during
the period of marriage, at least one year of which had been performed
subsequent to the most recent refund to the member of accumulated
retirement contributions. The credited service may include service
credited to the account of the member as of the date of the
dissolution or legal separation, previously refunded service,
out-of-state service, and permissive service credit that the member
is eligible to purchase at the time of the dissolution or legal
separation.
(2) The nonmember spouse has at least two and one-half years of
credited service in his or her separate account.
(3) The nonmember spouse has attained the age of 55 years or more.
(b) A service retirement allowance of a nonmember spouse under
this part shall become effective upon any date designated by the
nonmember spouse, provided:
(1) The requirements of subdivision (a) are satisfied.
(2) The nonmember spouse has filed an application for service
retirement on a form provided by the system, that is executed no
earlier than six months before the effective date of the retirement
allowance.
(3) The effective date is no earlier than the first day of the
month in which the application is received at the system's office in
Sacramento and the effective date is after the date the judgment or
court order pursuant to Section 22652 was entered.
(c) (1) Upon service retirement at normal retirement age
under this part, on or after January 1, 2003,
the nonmember spouse shall receive a retirement allowance that shall
consist of an annual allowance payable in monthly installments equal
to 2 percent of final compensation for each year of credited
service.
(2) If the nonmember spouse's retirement is effective at less than
normal retirement age and between early retirement age under this
part and normal retirement age, the retirement allowance shall be
reduced by one-half of 1 percent for each full month, or fraction of
a month, that will elapse until the nonmember spouse would have
reached normal retirement age.
(3) If the nonmember spouse's service retirement is effective at
an age greater than normal retirement age and is effective on or
after January 1, 1999, the percentage of final compensation
for each year of credited service shall be determined
pursuant to set forth opposite the nonmember spouse's
age at retirement in the following table multiplied by
each year of credited service :
Age at Retirement Percentage
55 ............................ 2.00
55 1/4 ........................ 2.016
55 1/2 ........................ 2.032
55 3/4 ........................ 2.048
56 ............................ 2.064
56 1/4 ........................ 2.080
56 1/2 ........................ 2.096
56 3/4 ........................ 2.11
57 ............................ 2.126
57 1/4 ........................ 2.142
57 1/2 ........................ 2.158
57 3/4 ........................ 2.172
58 ............................ 2.188
58 1/4 ........................ 2.204
58 1/2 ........................ 2.220
58 3/4 ........................ 2.236
59 ............................ 2.250
59 1/4 ........................ 2.268
59 1/2 ........................ 2.282
59 3/4 ........................ 2.298
60 ............................ 2.314
60 1/4 ........................ 2.033 2.33
60 1/2 ........................ 2.067
2.346
60 3/4 ........................ 2.10 2.36
61 ............................ 2.133
2.376
61 1/4 ........................ 2.167
2.392
61 1/2 ........................ 2.20
2.406
61 3/4 ........................ 2.233
2.422
62 ............................ 2.267
2.438
62 1/4 ........................ 2.30
2.454
62 1/2 ........................ 2.333 2.47
62 3/4 ........................ 2.367
2.486
63 and over ................... 2.40 2.50
(4)
(2) In computing the retirement allowance of the nonmember
spouse, the age of the nonmember spouse on the last day of the month
in which the retirement allowance begins to accrue shall be used.
(5)
(3) Final compensation, for purposes of calculating the
service retirement allowance of the nonmember spouse under this
subdivision, shall be calculated according to the definition of final
compensation in Section 22134 , 22135, or 22136,
whichever is applicable, and shall be based on the compensation
earnable of the member up to the date the parties separated, as
established in the judgment or court order pursuant to Section 22652.
(4) The nonmember spouse shall not be entitled to use
any other calculation of final compensation.
(d) (1) If the member is or was receiving a disability
allowance under this part with an effective date before or on the
date the parties separated as established in the judgment or court
order pursuant to Section 22652, or at any time applies for and
receives a disability allowance with an effective date that is before
or coincides with the date the parties separated as established in
the judgment or court order pursuant to Section 22652, the nonmember
spouse shall not be eligible to retire until after the disability
allowance of the member terminates.
(2) If the member who is or was receiving a disability
allowance returns to employment to perform creditable service subject
to coverage under the Defined Benefit Program or has his or her
allowance terminated under Section 24015, the nonmember spouse may
not be paid a retirement allowance until at least six months after
termination of the disability allowance and the return of the member
to employment to perform creditable service subject to coverage under
the Defined Benefit Program, or the termination of the disability
allowance and the employment or self-employment of the member in any
capacity, notwithstanding Section 22132. If at the end of the
six-month period, the member has not had a recurrence of the original
disability or has not had his or her earnings fall below the amounts
described in Section 24015, the nonmember spouse may be paid a
retirement allowance if all other eligibility requirements are met.
(1)
(3) The retirement allowance of the nonmember spouse under
this subdivision shall be calculated as follows: the disability
allowance the member was receiving, exclusive of the benefits for
dependent children, shall be divided between the share of the member
and the share of the nonmember spouse. The share of the nonmember
spouse shall be the amount obtained by multiplying the disability
allowance, exclusive of the benefits for dependent children, by the
years of service credited to the separate account of the nonmember
spouse, including service projected to the date of separation, and
dividing by the projected service of the member. The nonmember
spouse's retirement allowance shall be the lesser of the share of the
nonmember spouse under this subdivision or the retirement allowance
under subdivision (c).
(2)
(4) The share of the member shall be the total disability
allowance reduced by the share of the nonmember spouse. The share of
the member shall be considered the disability allowance of the
member for purposes of Section 24213.
(e) The nonmember spouse who receives a retirement allowance is
not a retired member under this part. However, the allowance of the
nonmember spouse shall be increased by application of the improvement
factor and shall be eligible for the application of supplemental
increases and other benefit maintenance provisions under this part,
including, but not limited to, Sections 24411, 24412, and 24415 based
on the same criteria used for the application of these benefit
maintenance increases to the service retirement allowances of
members.
SEC. 9. Section 24201 of the Education Code is amended
to read:
24201. (a) A member may retire for service under this part upon
written application for retirement to the board, under paragraph (1)
or (2) as follows:
(1) The member has attained the age of 55 years or more and has at
least five years of credited service, at least one year of which has
been performed subsequent to the most recent refund of accumulated
retirement contributions. The five years of credited service may
include out-of-state service purchased pursuant to Section 22820.
The number of years of credited service performed in California shall
not be less than the number of years necessary to determine final
compensation pursuant to Section 22134 or 22135, whichever
is applicable to the member .
(2) The member is credited with service that is not used as a
basis for benefits under any other public retirement system,
excluding the federal social security system, if the member has
attained the age of 55 years or older and retires concurrently under
one or more of the retirement systems with which the member has
concurrent membership as defined in Section 22115.2.
(b) Application for retirement under paragraph (2) of subdivision
(a) may be made even if the member has not earned five years of
service.
SEC. 10. Section 24202.5 of the Education Code is amended to read:
24202.5. (a) A member who retires for service on or after January
1, 1999 2003 , shall receive a
retirement allowance consisting of all of the following:
(1) An annual allowance payable in monthly installments, upon
retirement equal to the percentage of the final compensation set
forth opposite the member's age at retirement in the following table
multiplied by each year of credited service:
Age at Retirement Percentage
55 ............................ 2.00
55 1/4 ........................ 2.016
55 1/2 ........................ 2.032
55 3/4 ........................ 2.048
56 ............................ 2.064
56 1/4 ........................ 2.080
56 1/2 ........................ 2.096
56 3/4 ........................ 2.11
57 ............................ 2.126
57 1/4 ........................ 2.142
57 1/2 ........................ 2.158
57 3/4 ........................ 2.172
58 ............................ 2.188
58 1/4 ........................ 2.204
58 1/2 ........................ 2.220
58 3/4 ........................ 2.236
59 ............................ 2.250
59 1/4 ........................ 2.268
59 1/2 ........................ 2.282
59 3/4 ........................ 2.298
60 ............................ 2.00 2.314
60 1/4 ........................ 2.033 2.33
60 1/2 ........................ 2.067
2.346
60 3/4 ........................ 2.10 2.36
61 ............................ 2.133
2.376
61 1/4 ........................ 2.167
2.392
61 1/2 ........................ 2.20
2.406
61 3/4 ........................ 2.233
2.422
62 ............................ 2.267
2.438
62 1/4 ........................ 2.30
2.454
62 1/2 ........................ 2.333 2.47
62 3/4 ........................ 2.367
2.486
63 and over ................... 2.40 2.50
(2) If the member's retirement is effective at less than
normal retirement age and between early retirement age and normal
retirement age, the member's allowance shall be reduced by one-half
of 1 percent for each full month, or fraction of a month that will
elapse until the member will attain normal retirement age.
(3) An annuity that shall be the actuarial equivalent of
the accumulated annuity deposit contributions standing to the credit
of the member's account at the time of retirement.
(b) In computing the amounts described in subdivision (a), the age
of the member on the last day of the month in which the retirement
allowance begins to accrue or the later date as provided in Section
24204 shall be used.
SEC. 11. Section 24203.5 of the Education Code is amended to read:
24203.5. (a) The percentage of final compensation used to compute
the allowance pursuant to Section 24202.5, 24203, or 24205 of a
member retiring on or after January 1, 1999
2003 , who has 30 or more years of credited service, excluding
service credited pursuant to Section 22714, 22715, or 22717, shall be
increased by two-tenths of 1 percentage point, provided that the sum
of the percentage of final compensation used to compute the
allowance in Section 24202.5, 24203, or 24205, including any
adjustments for retiring before the normal retirement age, and the
additional percentage provided by this section does not exceed
2.40 2.50 percent. For purposes of
establishing eligibility for the increased allowance pursuant to this
section only, credited service shall include credited service that a
court has ordered be awarded to a nonmember spouse pursuant to
Section 22652. A nonmember spouse shall also be eligible for the
increased allowance pursuant to this section if the member had 30 or
more years of credited service on the date the parties separated, as
established in the judgment or court order pursuant to Section 22652.
(b) Nonqualified service credit for which contributions pursuant
to Section 22826 were made in a lump sum on or after January 1, 2000,
or for which the first installment was made on or after January 1,
2000, shall not be included in determining the eligibility for an
increased allowance pursuant to this section.
(c) The amendments made to subdivision (a) in the first year of
the 1999-2000 Regular Session are declaratory of existing law.
SEC. 12. Section 24411 of the Education Code is amended to read:
24411. (a) (1) Annual cost-of-living adjustments for retired
members, disabled members, and beneficiaries in excess of the
2-percent adjustment authorized by Section 22140 may be included as a
General Fund appropriation in the annual Budget Act. In the annual
budget submitted to the Legislature, the Governor shall include a
budget item equal to 5 percent of the average annualized statewide
increase in payroll for certificated personnel over the three
previous school years among school districts, county offices of
education, and community college districts.
(2) The amount submitted in the annual Budget Act pursuant to this
section shall be considered as part of the overall budget
allocations to the public schools and community colleges.
(b) The annual appropriation shall be made to the system on July
1, and shall be placed in a segregated account called the Retirees'
Purchasing Power Protection Account. The proceeds of that account
are continuously appropriated and shall be distributed annually in
quarterly payments commencing on September 1 to retired members,
disabled members, and beneficiaries as follows:
(1) The proceeds shall be allocated among those retired members,
disabled members, and beneficiaries whose allowances, after applying
the 2-percent adjustment authorized by Section 22140, have the lowest
purchasing power percentage, based on the amount that would be paid
had the original allowance been increased by the increases in the
index then being used by the Department of Finance to measure changes
in the cost of living, increasing those allowances to a common
minimum purchasing power level. In any year in which the purchasing
power of the allowances of all retired members, disabled members, and
beneficiaries equals not less than 75 80
percent and additional funds remain from the allocation
authorized by this section, those funds shall be allocated by the
board to general accounts to reduce the unfunded actuarial liability
of the fund.
(2) The board may deduct from the annual appropriation an amount
necessary for administrative expenses to implement this section.
(c) The board shall inform each recipient of benefits under
subdivision (b) that the increases are not cumulative, are not part
of the base allowance, and shall be available only as appropriated
annually in the Budget Act.
(d) The adjustments authorized by this section shall not be
included in the base allowance for purposes of calculating the
2-percent adjustment authorized by Section 22140.
(e) It is the ultimate intent and purpose of the
Legislature in amending this section by Chapters 323 and 780 of the
Statutes of 1983, to achieve a common minimum purchasing power level
equal to 75 percent of the purchasing power of the original
allowance. It is the present intent of the Legislature that until
adequate funds are available to fulfill the ultimate intent, those
persons whose allowances have been most impacted by inflation shall
be accorded first priority in receiving, pursuant to this section,
supplemental cost-of-living adjustments from the Retirees' Purchasing
Power Protection Account.
(f) This section shall not be operative in any fiscal
year during which, as determined by the board, distributions provided
for by Section 24415 are being made.
SEC. 13. Section 24412 of the Education Code is amended to read:
24412. (a) The annual revenues deposited to the Teachers'
Retirement Fund pursuant to Section 6217.5 of the Public Resources
Code are continuously appropriated without regard to fiscal year for
the purposes of this section and shall be distributed annually in
quarterly supplemental payments commencing on September 1 of each
year to retired members, disabled members, and beneficiaries. The
amount available for distribution in any year shall be the income for
that year from the sale or use of school lands and lieu lands, as
estimated by the State Lands Commission prior to the beginning of the
fiscal year, adjusted by the difference between the estimated and
actual income for the preceding fiscal year. The board shall deduct
from the revenues an amount necessary for administrative expenses to
implement this section.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Section 22140 and the annual supplemental payment as
defined in Section 24411, if any, are below 75
80 percent of original purchasing power. The purchasing
power calculation for each individual allowance shall be based on the
change in the All Urban California Consumer Price Index between June
of the calendar year of retirement and June of the fiscal year
preceding the fiscal year of the distribution. The allocation shall
provide a pro rata share of the amount needed to restore the
allowance payable, after sequential application of the current year
annual improvement factor and the supplemental payment under Section
24411, to 75 80 percent of original
purchasing power.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) In any year that the net revenues from school lands and lieu
lands is greater than that needed to adjust the allowances of all
retired members, disabled members, and beneficiaries to 75
80 percent of original purchasing power, the net
revenues in excess of that needed for distribution shall be used by
the board to reduce the unfunded actuarial obligation of the fund
, if any .
(e) The board shall inform each recipient of supplemental payments
under this section that the increases are not cumulative and are not
part of the base allowance.
SEC. 14. Section 24415 of the Education Code is amended to read:
24415. (a) The proceeds of the Supplemental Benefit Maintenance
Account shall be distributed annually in quarterly supplemental
payments commencing on September 1, 1990, to retired members,
disabled members, and beneficiaries. The amount available for
distribution in any fiscal year shall not exceed the amount necessary
to restore purchasing power up to 75 80
percent of the purchasing power of the initial monthly
allowance after the application of all allowance increases authorized
by this part, including those specified in Section 24412.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412, have the lowest purchasing power
percentage. The purchasing power calculation for each individual
shall be based on the change in the All Urban California Consumer
Price Index between June of the calendar year of retirement and June
of the fiscal year preceding the fiscal year of distribution. In any
year in which the purchasing power of the allowances of all retired
members, disabled members, and beneficiaries equals not less than
75 80 percent and additional funds
remain from the allocation authorized by this section, those funds
shall remain in the Supplemental Benefit Maintenance Account for
allocation in future years.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
not part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The adjustments authorized by this section are vested only up
to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Sections 22140 and 22141.
SEC. 15. Section 24416 of the Education Code is amended to read:
24416. (a) Beginning in the 1997-98 fiscal year, if the board
determines by June 30 of the then current fiscal year that the
Supplemental Benefit Maintenance Account will not have sufficient
funds to provide purchasing power of up to 75
80 percent for the subsequent fiscal year, the board, for that
year, may do either, or a combination of the following:
(1) Increase the employer contribution rate commencing in the next
fiscal year by an amount that would provide sufficient funds for no
more than the estimated difference between the funds in the
Supplemental Benefit Maintenance Account and the amount needed to pay
the benefit level specified by the board, provided the benefit level
is no more than 75 80 percent.
Notwithstanding any other provision of this part, the increase in the
employer contribution rate shall only become operative if the
increase is approved or authorized in the Budget Act.
(2) Reduce the supplemental benefit payment for the subsequent
fiscal year to the amount which can be funded by the available funds
in the Supplemental Benefit Maintenance Account.
(b) If the board finds that there is no unfunded obligation, as
determined by the board's professional consulting actuary and
affirmed by the Director of Finance, then in addition to the
authority pursuant to subdivision (a), the board may transfer to an
auxiliary Supplemental Benefit Maintenance Account, from any funds
that are in excess of the amount needed to fund fully the benefits
for which the Teachers' Retirement Fund is liable, an amount that
would provide sufficient funds for no more than the estimated
difference between the funds in the Supplemental Benefit Maintenance
Account and the amount needed to pay the benefit level specified by
the board, provided the benefit level is no more than 75
80 percent.
(c) If the board increases the employer contribution rate pursuant
to paragraph (1) of subdivision (a), the increase between the
current fiscal year contribution rate and the contribution rate in
the next fiscal year, shall not exceed one-quarter of 1 percent of
the creditable compensation upon which contributions are based.
SEC. 16. Section 24417 of the Education Code is amended to read:
24417. (a) The proceeds of an auxiliary Supplemental Benefit
Maintenance Account shall be distributed annually in quarterly
supplemental payments, commencing when funds in the Supplemental
Benefit Maintenance Account are insufficient to support 75
80 percent, to retired members, disabled
members, and beneficiaries. The amount available for distribution in
any fiscal year shall not exceed the amount necessary to restore
purchasing power up to 75 80 percent of
the purchasing power of the initial monthly allowance after the
application of all allowance increases authorized by this part,
including those specified in Section 24412 and Section 24415.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412 and Section 24415, have the
lowest purchasing power percentage. The purchasing power calculation
for each individual shall be based on the change in the All Urban
California Consumer Price Index between June of the calendar year of
benefit effective date and June of the fiscal year preceding the
fiscal year of distribution.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
nor part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account and the auxiliary Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The distributions authorized by this section are vested only
up to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Section 22140 and 22141.
SEC. 17. This act shall be operative January 1, 2003.