BILL ANALYSIS
AB 2201
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Date of Hearing: April 12, 2000
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Lou Correa, Chair
AB 2201 (Honda) - As Introduced: February 24, 2000
SUBJECT : State teachers' retirement: benefits: retirement
board.
SUMMARY : Enacts the Teachers' Pension Equity Act to provide
public school and community college educators with pensions that
are equal to those now provided other state and school
employees. Specifically, this bill :
1)Bases retirement allowances for members of the State Teachers'
Retirement System (CalSTRS) on the highest annual compensation
earnable by a member during any 12-month period.
2)Requires that effective September 1, 2003, the annual 2% Cost
of Living Adjustment (COLA) be compounded.
3)Makes a variety of changes to the composition and method of
selection to the Teachers' Retirement Board (board),
including:
a) Increasing the number of board members from 12 to 13;
b) Requiring that six of the board members be elected to
four-year terms, four by active members of CalSTRS and two
by retired members of CalSTRS;
c) Removing the life insurance company officer and bank or
savings and loan officer positions and, in their places,
requires the Governor to appoint, subject to Senate
confirmation, two public members to serve four year terms;
d) Allows the Governor to fill any vacancy that occurs on
the board due to resignation or death;
e) Specifies that elected members of the board who have
served two consecutive terms, or eight consecutive years,
must sit out at least one year before being elected to an
additional term.
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f) Requires the school district or community college
district member to vacate their respective seats if they
cease to serve on the governing board of the school
district or community college district and two or more
years remain in his or her term on the board.
g) Requires the board to adopt regulations to conduct the
board member elections and specifies that those regulations
must allow candidates for those positions to submit
candidate's statements expressing their opinions and ideas.
h) Allows the board to contract with a private firm to
conduct the elections.
4)Provides a 2% at age 55 service retirement allowance to a
CalSTRS member retiring on or after January 1, 2003.
5)Increases the current cap on the age factor with the career
bonus from 2.4% to 2.5%.
6)Increases the current purchasing power protection level from
75% to 80%.
7)Specifies that this act shall become operative January 1,
2003.
EXISTING LAW provides the following:
1)Final Compensation - A CalSTRS member's final compensation
generally is the highest average annual compensation earnable
by a member for service performed during any consecutive
three-year period.
2)COLAs - Benefits paid by CalSTRS are increased annually by a
simple 2% improvement factor. The COLA is applied September 1
of each year following the first anniversary of the effective
date of the member's initial benefit. Additionally, the
purchasing power of members' allowances is currently
maintained at 75% of its original value.
3)Board Membership - CalSTRS is administered by a 12-member
board. The Governor appoints eight members to serve four-year
terms and four members serve in an ex-officio capacity by
virtue of their office. None of the board members are
currently elected.
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4)Service Retirement Formula - The retirement allowances of
CalSTRS members are calculated based upon a 2% at age 60
retirement benefit formula. The 2% factor is reduced for
members retiring prior to age 60. A career bonus is provided
to a member who retires with 30 or more years of service and
the age factor increases for members who work after age 60.
The maximum a member can receive under both the career bonus
and increased age factor is 2.4% at age 63.
FISCAL EFFECT : Unknown
COMMENTS : Supporters state that "This bill is intended to
provide educators in CalSTRS with the same retirement benefits
as are provided under law to members of CalPERS, including
school classified employees. We know of no policy rationale why
the career teacher should have dramatically lower retirement
benefits than the DMV clerk or school bus driver."
AB 821 (PER&SS) of 1999 would provide one-year final
compensation to CalSTRS members. This bill is currently in the
Senate Appropriations Committee.
AB 2839 (PER&SS) of 2000 would provide a 2% at age 55 service
retirement formula for CalSTRS members. This bill is currently
with the Assembly PER&SS Committee.
SB 1693 (Ortiz) of 2000 would increase purchasing power
protection for CalSTRS members from 75% to 80%. This bill is
currently with the Senate PE&R Committee.
AB 311 (Honda) of 1999 would have increased the number members
of the CalSTRS board from 12 to 15 and required that three of
those members be elected. The Governor vetoed this bill.
AB 684 (Honda) of 1999 would have compounded the current simple
2% COLA. This bill failed passage in the Assembly.
REGISTERED SUPPORT / OPPOSITION :
Support
California Teachers Association (Sponsor)
AARP State Legislative Committee
Association of California School Administrators
AB 2201
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California Federation of Teachers
Opposition
None on file.
Analysis Prepared by : Karon Green / P.E., R. & S.S. /
(916)319-3957