BILL ANALYSIS
Appropriations Committee Fiscal Summary
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| |AB 2456 (Wright) |
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|Hearing Date: 8/30/2000 |Amended: 8/14/2000 |
| |& LCR 18048 |
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|Consultant: Maureen Brooks |Policy Vote: P. E .& R. 5-0 |
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BILL SUMMARY: AB 2456 allows members of the State
Teachers' Retirement System (STRS) who retire on or after
January 1, 2002, and are at least 60 years of age, to elect
to receive a lump-sum payment and a reduced monthly
allowance. The provisions will sunset January 1, 2011.
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Admin costs $0 $100
$100 STRF
STAFF COMMENTS: SUSPENSE FILE.
There will not be any program costs to this benefit since
the members' monthly allowance will be actuarially reduced
to reflect the lump-sum payment.
The lump-sum payment will not exceed the lesser of the
following amounts:
The actuarial present value of the difference between the
monthly service retirement allowance currently payable
and an amount equal to 2 percent of the member's final
compensation multiplied by the number of years of
credited service and divided by 12,
Fifteen percent of the actuarial present value of the
monthly allowance payable.
The prior version of this bill created what is known as a
"forward DROP" as a supplemental benefit in the Defined
Benefit program. The new provisions of the bill are often
referred to as a "back DROP".
The intent of the DROP program is to provide a member with
the ability to take part of the retirement income as a lump
sum in addition to receiving a monthly allowance.
Proposed author's amendments remove the requirement that a
member have 20 years of creditable service to be eligible
for this benefit.