BILL NUMBER: AB 2700 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Lempert
(Principal coauthor: Assembly Member Knox)
FEBRUARY 25, 2000
An act to amend Section 22119.2 of, and to add Chapter 36.5
(commencing with Section 24960) to Part 13 of, the Education Code,
relating to retirement, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2700, as introduced, Lempert. State teachers' retirement.
Existing law defines creditable compensation for purposes of the
Defined Benefit Program established by the State Teachers' Retirement
Law. That definition excludes money paid for service performed in
excess of the full-time equivalent for the position and money paid
for overtime or summer school service and aggregate service performed
as a member in excess of one year of service credit for any one
school year.
This bill would direct the Teachers' Retirement Board to develop
and administer the California State Teachers' Retirement System
Additional Compensation Allowance Program, a supplemental benefits
program, for members of the Defined Benefit Program. This bill would
create a special fund known as the California State Teachers'
Retirement System Additional Compensation Allowance Program Fund, a
continuously appropriated fund, in which each member of the Defined
Benefit Program would have an individual account to which, on January
1, 2003, and annually thereafter, each member would be credited an
amount equal to 16% of the members' compensation for creditable
service during the prior school year.
The bill would also revise and recast the definition of creditable
compensation. The bill would delete the provisions described above
that specifically exclude money paid for service in excess of the
full-time equivalent for a position, for overtime and summer school
service, and for aggregate service in excess of one year of service
credit for any one school year. The bill would also specifically
exclude from that definition compensation that is not payable in
cash.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22119.2 of the Education Code is amended to
read:
22119.2. (a) "Creditable compensation" means salary and other
remuneration payable in cash and paid by an employer to a
member for creditable service. Creditable compensation shall
include:
(1) Money paid in accordance with a salary schedule based
on years of training and years of experience for
creditable service performed up to and including the
full-time equivalent for the position in which the service is
performed .
(2) For members not paid according to a salary schedule, money
paid for creditable service performed up to and including the
full-time equivalent for the position in which the service is
performed .
(3) Money paid for the member's absence from performance of
creditable service as approved by the employer if the member is
taking a leave of absence during that time which has been granted by
the employer , except as provided in paragraph (7)
(5) of subdivision (b).
(4) Member contributions picked up by an employer pursuant to
Section 22903 or 22904.
(5) Amounts deducted by an employer from the member's salary,
including deductions for participation in a deferred compensation
plan; deductions for the purchase of annuity contracts, tax-deferred
retirement plans, or other insurance programs; and deductions for
participation in a plan that meets the requirements of Section 125,
401(k), or 403(b) of Title 26 of the United States Code.
(6) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) if paid payable to
all employees in a class in the same dollar amount, the same
percentage of salary, or the same percentage of the amount being
distributed.
(7) Money paid in accordance with a salary schedule
by an employer to an employee for achieving certification
from a national board awarding certifications, in which
eligibility for this certification is that awards
certification for professional teaching achievement based, in
part, on an individual's years of training or years of
experience in teaching service , if the
compensation is paid payable by the
employer to all persons in the same class of employees who
achieved this are awarded the same
certification.
(8) Any other payments the board determines to be "creditable
compensation."
(b) "Creditable compensation" does not mean and shall not include:
(1) Money paid for service performed in excess of the
full-time equivalent for the position.
(2) Money paid for overtime or summer school service, or money
paid for the aggregate service performed as a member of the Defined
Benefit Program in excess of one year of service credit for any one
school year.
(3) Money paid for service that is not creditable
service pursuant to Section 22119.5.
(4)
(2) Money paid by an employer in addition to salary paid
under paragraph (1) or (2) of subdivision (a) if not paid
payable to all employees in a class in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed, except as provided in paragraph (7)
of subdivision (a).
(5)
(3) Fringe benefits provided by an employer.
(6)
(4) Job-related expenses paid or reimbursed by an employer.
(7)
(5) Money paid for unused accumulated leave.
(8)
(6) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9)
(7) Annuity contracts, tax-deferred retirement programs, or
other insurance programs, including, but not limited to, plans that
meet the requirements of Section 125, 401(k), or 403(b) of Title 26
of the United States Code that are purchased by an employer for the
member and are not deducted from the member's salary.
(10)
(8) Compensation that is not payable in cash.
(9) Any payments determined by the board to have been made
by an employer for the principal purpose of enhancing a member's
benefits under the Defined Benefit Program. An increase in
the salary of a member who is the only employee in a class pursuant
to subdivision (b) of Section 22112.5 that arises out of an employer'
s restructuring of compensation during the member's final
compensation period shall be presumed to have been granted for the
principal purpose of enhancing benefits under the Defined Benefit
Program and shall not be creditable compensation. If the board
determines sufficient evidence is provided to the system to rebut
this presumption, the increase in salary shall be deemed creditable
compensation. A presumption by the board that salary
or other remuneration was paid for the principal purpose of enhancing
the member's benefits under the plan may be rebutted by the member,
or by the employer on behalf of the member. Upon receipt of
sufficient evidence to the contrary, a presumption by the board that
salary or other remuneration was paid for the principal purpose of
enhancing the member's benefits under the plan may be reversed.
(11)
(10) Any other payments the board determines not to be
"creditable compensation."
(c) Any employer or person who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (b)
shall reimburse the plan for any overpayment of benefits that occurs
because of that inconsistent reporting and may be subject to
prosecution for fraud, theft, or embezzlement in accordance with the
Penal Code. The system may establish procedures to ensure that
compensation reported by an employer is in compliance with this
section.
(d) The definition of "creditable compensation" in this section is
designed in accordance with sound funding principles that support
the integrity of the retirement fund. These principles include, but
are not limited to, consistent treatment of compensation throughout
the career of the individual member, consistent treatment of
compensation for an entire class of employees, the prevention of
adverse selection, and the exclusion of adjustments to, or increases
in, compensation for the principal purpose of enhancing benefits.
(e) This section shall be deemed to have become operative on July
1, 1996.
SEC. 2. Chapter 36.5 (commencing with Section 24960) is added to
Part 13 of the Education Code, to read:
CHAPTER 36.5. ADDITIONAL COMPENSATION ALLOWANCE PROGRAM
24960. The board shall develop and administer the California
State Teachers' Retirement System Additional Compensation Allowance
Program as a qualified money purchase plan under Section 401(a) of
Title 26 of the Internal Revenue Code for members of the Defined
Benefit Program. The design and administration of the program shall
conform to the applicable provisions of the Internal Revenue Code of
1986 and the Revenue and Taxation Code.
24960.1. The program developed pursuant to this chapter shall
supplement the benefits otherwise provided under this part.
24960.2. Each active member of the Defined Benefit Program shall
have created in his or her name an individual account in the fund, to
which contributions made pursuant to this section, and investment
earnings from those contributions, will be credited. On January 1,
2003 and annually each January 1 thereafter, each member of the
Defined Benefit Program shall be credited an amount equal to 16
percent of the member's compensation for creditable service during
the prior school year that was not subject to coverage pursuant to
Section 22703. A member may not make any additional contributions to
his or her account.
24960.3. The board shall determine how funds contributed to the
program developed pursuant to this chapter, including earnings from
investing those contributions, shall be administered and invested.
24960.4. The board shall invest all account balances in a pool of
investments determined by the board to be suitable for the program.
24960.5. There is in the State Treasury a special trust fund to
be known as the California State Teachers' Retirement System
Additional Compensation Allowance Program Fund. Notwithstanding
Section 13340 of the Government Code the fund is continuously
appropriated to the board, without regard to fiscal year, to carry
out the provisions of this chapter. As used in this chapter, "fund"
means the California State Teachers' Retirement System Additional
Compensation Allowance Program Fund.