BILL NUMBER: AB 2700 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 26, 2000
INTRODUCED BY Assembly Member Lempert
(Principal coauthor: Assembly Member Knox)
(Coauthor: Assembly Member Thompson)
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
An act to amend Sections 22008, 22102, 22105, 22107,
22108, 22115, 22132, 22140, 22161.5, 22170, 22304, 22309, 22453,
22651, 22652, 22655, 22656, 22658, 22659, 22660, 22661, 22662, 22664,
22665, 22703, 22706, 23100, 24202.5, 24206, 24400, 24402, 24411,
24412, 24415, 24417, and 24600 of, to amend and renumber Sections
25000, 25100, 25110, 25115, 25120, and 25125 of, to amend, repeal,
and add Sections 22119.2 and 22905 to, to add Sections 22102.5,
22104.7, 22104.9, 22105.5, 22127.2, 22133.5, 22139.5, 22146.7,
22156.05, 22166.5, 22176, 22302, 22311.5, 22311.7, 22955.5, 24300.5,
and 24305.3 to, to add Chapter 38 (commencing with Section 25000) to
Part 13 of Division 1 of Title 1 of, to repeal Section 26402 of, and
to repeal and add Sections 22158, 22162, 22311, 22460, 22906, 23300,
and 23881 to, the Education Code, relating to retirement, and
making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2700, as amended, Lempert. State teachers' retirement :
Defined Benefit Supplement Program .
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.
This bill would establish the Defined Benefit Supplement Program,
as specified, for members of the Defined Benefit Program, pursuant to
which members and employers would commencing on July 1, 2002, make
specified contributions to the Teachers' Retirement Fund based on the
member's overtime, extra-curricular, and other service, as
specified, thereby making an appropriation, and members would receive
retirement, disability, final, or termination benefits, payable in a
lump-sum or annuity, as specified. The bill would make related
technical and conforming changes.
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
SECTION 1. Section 22008 of the Education Code is amended to read:
22008. For the purposes of payments into or out of the retirement
fund for adjustments of errors or omissions with respect to the
Defined Benefit Program or the Defined Benefit Supplement
Program , the period of limitation of actions shall be applied,
except as provided in Sections 23302 and 24613, as follows:
(a) No action may be commenced by or against the board, the
system, or the plan more than three years after all obligations to or
on behalf of the member, former member, or beneficiary have been
discharged.
(b) If the system makes an error that results in incorrect payment
to a member, former member, or beneficiary, the system's right to
commence recovery shall expire three years from the date the
incorrect payment was made.
(c) If an incorrect payment is made due to lack of information or
inaccurate information regarding the eligibility of a member, former
member, or beneficiary to receive benefits under the plan, the period
of limitation shall commence with the discovery of the incorrect
payment.
(d) Notwithstanding any other provision of this section, if an
incorrect payment has been made on the basis of fraud or intentional
misrepresentation by a member, beneficiary, or other party in
relation to or on behalf of a member or beneficiary, the three-year
period of limitation shall not be deemed to commence or to have
commenced until the system discovers the incorrect payment.
(e) The collection of overpayments under subdivisions (b), (c),
and (d) shall be made pursuant to Section 24617.
SEC. 2. Section 22102 of the Education Code is amended to read:
22102. "Accumulated retirement contributions" means the sum of
all the member contributions
and all , the member contributions paid
picked up by the an
employer pursuant to Sections 22903 and 22904 with
, and credited interest and does
on those contributions. Accumulated retirement
contributions shall not include accumulated annuity deposit
contributions and , accumulated
tax-sheltered annuity contributions , accumulated Defined
Benefit Supplement contributions, or additional earnings credit
.
SEC. 3. Section 22102.5 is added to the Education Code, to read:
22102.5. "Accumulated Defined Benefit Supplement contributions"
means the sum of member contributions, the member contributions
picked up by an employer, employer contributions, and interest
credited on those contributions pursuant to Section 25008, that are
credited by the system to the member's Defined Benefit Supplement
account.
SEC. 4. Section 22104.7 is added to the Education Code, to read:
22104.7. "Additional earnings credit" means an amount derived
from investment income for the plan year as determined by the board
and added to members' Defined Benefit Supplement accounts in addition
to the amount credited at the minimum interest rate for that plan
year.
SEC. 5. Section 22104.9 is added to the Education Code, to read:
22104.9. "Annuitant Reserve" means a segregated account within
the retirement fund established and maintained for expenditure on
annuities payable under the Defined Benefit Supplement Program.
SEC. 6. Section 22105 of the Education Code is amended to read:
22105. "Annuity" (a) "Annuity," with
respect to the Defined Benefit Program, means payments for life
derived from the "accumulated annuity deposit contributions" of a
member.
(b) "Annuity," with respect to the Defined Benefit Supplement
Program, means an alternative payment arrangement wherein a benefit
based on the balance in a member's Defined Benefit Supplement account
is paid monthly rather than in a lump-sum.
SEC. 7. Section 22105.5 is added to the Education Code, to read:
22105.5. "Annuity beneficiary" means the person or persons
designated by a member pursuant to Section 25011 or 25018 to receive
an annuity under the Defined Benefit Supplement Program upon the
member's death.
SEC. 8. Section 22107 of the Education Code is amended to read:
22107. "Beneficiary" (a) "Beneficiary,"
with respect to the Defined Benefit Program, means any person
or entity receiving or entitled to receive an allowance and
or lump-sum payment pursuant to this
part under the Defined Benefit Program because
of the disability or death of a member.
(b) "Beneficiary," with respect to the Defined Benefit Supplement
Program, means any person or entity receiving or entitled to receive
a final benefit under the Defined Benefit Supplement Program upon the
death of a member.
SEC. 9. Section 22108 of the Education Code is amended to read:
22108. (a) "Benefit" or "benefits"
"benefits," with respect to the Defined Benefit Program,
means any monthly payment due a retired member, disabled member, or
beneficiary, and includes lump-sum payments due on account of death.
(b) "Benefit" and "benefits," with respect to the Defined Benefit
Supplement Program, means a distribution of funds that represent the
balance in a member's accumulated Defined Benefit Supplement account.
SEC. 10. Section 22115 of the Education Code is amended to read:
22115. (a) "Compensation earnable" means the annual
creditable compensation that a person
would could earn in a school year
if he or she were employed for creditable
service performed on a full-time basis and if that
person worked full time in that position , excluding
service for which contributions are credited by the system to the
Defined Benefit Supplement Program .
(b) The board may determine compensation earnable for persons
employed on a part-time basis.
(c) For purposes of determining final compensation for
persons employed on a part-time basis, compensation earnable shall be
determined by dividing the creditable compensation earned by the
service credit. When service credit for a school year
is less than 1.000, compensation earnable shall be the product
obtained when creditable compensation paid in that year is divided by
the service credit for that year, except as provided in subdivision
(d).
(d) When a member earns creditable compensation at multiple pay
rates during a school year and service credit at the highest pay rate
is at least .900 of a year, compensation earnable shall be
determined as if all service credit for that year had been earned at
the highest pay rate. This subdivision shall be applicable only for
purposes of determining final compensation. When a member earns
creditable compensation at multiple pay rates during a school year
and service credit at the highest pay rate is less than .900 of a
year, compensation earnable shall be determined pursuant to
subdivision (c).
(e) The amendments to this section made during the second year of
the 1999-2000 Regular Session shall become operative on July 1,
2002.
SEC. 11. Section 22119.2 of the Education Code is amended to read:
22119.2. (a) "Creditable compensation" means salary and other
remuneration payable in cash 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, except as provided in
paragraph (7) 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 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 based, in part, on years of training or years of experience in
teaching service, if the compensation is paid by the employer to all
employees who achieved this 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) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) of subdivision (a) if not paid 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) Fringe benefits provided by an employer.
(6) Job-related expenses paid or reimbursed by an employer.
(7) Money paid for unused accumulated leave.
(8) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9) 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) 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.
(11) 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.
(f) This section shall become inoperative on July 1, 2002, and, as
of January 1, 2003, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2003, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 12. Section 22119.2 is added to the Education Code, to read:
22119.2. (a) "Creditable compensation" means remuneration that is
payable in cash by an employer to all persons in the same class of
employees for performing creditable service. Creditable compensation
shall include:
(1) Salary paid in accordance with a salary schedule or employment
agreement.
(2) Remuneration that is paid in addition to salary, providing it
is payable to all persons who are in the same class of employees in
the same dollar amount, the same percentage of salary, or the same
percentage of the amount being distributed.
(3) Remuneration that is paid for the use of sick leave, vacation,
and other employer-approved leave, except as provided in paragraph
(5) of subdivision (b).
(4) Member contributions that are picked up by an employer
pursuant to Section 22903 or 22904.
(5) Amounts that are deducted from a member's compensation,
including, but not limited to, salary deductions for participation in
a deferred compensation plan; deductions to purchase an annuity
contract, tax- deferred retirement plan, or insurance program; and
contributions to a plan that meets the requirements of Section 125,
401(k), or 403(b) of Title 26 of the United States Code.
(6) Any other payments the board determines to be "creditable
compensation."
(b) Any salary or other remuneration determined by the board to
have been paid for the principal purpose of enhancing a member's
benefits under the plan shall not be credited under the Defined
Benefit Program. Contributions on that compensation shall be
credited to the Defined Benefit Supplement Program. 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.
(c) "Creditable compensation" does not mean and shall not include:
(1) Remuneration that is not payable in cash or is not payable to
all persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable
service pursuant to Section 22119.5.
(3) Remuneration that is paid in addition to salary if it is not
payable to all persons in the same class of employees in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed pursuant to paragraph (2) of
subdivision (a).
(4) Remuneration that is paid for unused accumulated leave.
(5) Annuity contracts, tax-deferred retirement plans, or insurance
programs and contributions to plans that meet the requirements of
Section 125, 401(k), or 403(b) of Title 26 of the United States Code
when the cost is covered by an employer and is not deducted from the
member's salary.
(6) Fringe benefits provided by an employer.
(7) Job-related expenses paid or reimbursed by an employer.
(8) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(9) Any other payments the board determines not to be "creditable
compensation."
(d) An employer or individual who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (c)
shall reimburse the plan for benefit overpayments that occur 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.
(e) This definition of "creditable compensation" reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member's career, consistent treatment of
compensation among an entire class of employees, preventing adverse
selection, and excluding from compensation earnable remuneration that
is paid for the principal purpose of enhancing a member's benefits
under the plan.
(f) The section shall become operative July 1, 2002.
SEC. 13. Section 22127.2 is added to the Education Code, to read:
22127.2. "Disability benefit" means the amount payable under the
Defined Benefit Supplement Program based on the balance in a member's
Defined Benefit Supplement account to either a disabled member
pursuant to Section 24005 or to a member who retired for disability
pursuant to Section 24105.
SEC. 14. Section 22132 of the Education Code is amended to read:
22132. "Employed" or "employment" means employment to perform
creditable service subject to coverage by the State Teachers'
Retirement Defined Benefit Program under the Defined
Benefit Program or the Defined Benefit Supplement Program ,
except as otherwise specifically provided under this part.
SEC. 15. Section 22133.5 is added to the Education Code, to read:
22133.5. "Final benefit" means the amount payable under the
Defined Benefit Supplement Program upon the death of the member to a
beneficiary.
SEC. 16. Section 22139.5 is added to the Education Code, to read:
22139.5. "Gain and Loss Reserve" means a segregated account
within the retirement fund that is established and maintained to do
either of the following:
(a) Credit interest to members' Defined Benefit Supplement
accounts at the minimum interest rate for plan years in which the
board determines that the obligation cannot be met from the plan's
investment earnings with respect to the Defined Benefit Supplement
Program.
(b) Provide additions to the Annuitant Reserve to meet the plan's
obligation for annuities payable under the Defined Benefit Supplement
Program.
SEC. 17. Section 22140 of the Education Code is amended to read:
22140. (a) "Improvement factor"
factor," with respect to the Defined Benefit Program, means an
increase of 2 percent in benefits for
monthly allowances. The improvement factor shall be added to a
monthly allowance each year commencing on
September 1, commencing on September 1 following the first
anniversary of the effective date of retirement, or the date on
which the monthly benefits allowance
commenced to accrue to any beneficiary other than a retired
member , or other periods specifically stated in
this part.
(b) "Improvement factor," with respect to the Defined Benefit
Supplement Program, means an increase of 2 percent in monthly
annuities. The improvement factor shall be added to a monthly annuity
each year on September 1, commencing on the September 1 following
the first anniversary of the date the annuity first became payable.
(c) The improvement factor shall not be
compounded nor shall it 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 annuity below that which would be
payable to the recipient under this part had this section not been
enacted.
SEC. 18. Section 22146.7 is added to the Education Code, to read:
22146.7. "Minimum interest rate" means the annual interest rate
determined by the board at which interest will be credited to Defined
Benefit Supplement accounts for a plan year.
SEC. 19. Section 22156.05 is added to the Education Code, to read:
22156.05. "Plan year" means the period of time beginning on July
1 of one calendar year and ending on June 30 of the following
calendar year. For purposes of the Defined Benefit Supplement
Program, the board shall designate by plan amendment the initial plan
year.
SEC. 20. Section 22158 of the Education Code is repealed.
22158. "Projected service" means the credited service plus the
service which would have been earned had the member continued to earn
credited service to the earlier of normal retirement age or the date
the disability allowance is terminated at the same rate as the
highest of any one of the three school years immediately preceding
death or the date the disability allowance began to accrue.
SEC. 21. Section 22158 is added to the Education Code, to read:
22158. (a) "Projected service" means the sum of credited service
plus the credited service that would have been earned for the school
years during which a disability allowance was payable if the member
had performed creditable service during that time.
(b) Projected service for a school year shall be determined on the
basis of the highest credited service earned by the member during
any one of the three school years immediately preceding the member's
death or the date the disability allowance began to accrue.
(c) Projected service shall not include credited service for which
contributions have been credited to the Defined Benefit Supplement
Program.
SEC. 22. Section 22161.5 of the Education Code is amended to read:
22161.5. "Refund" means a the
lump-sum return of the a member's
accumulated retirement contributions under the Defined Benefit
Program and does not include accumulated contributions credited to
the Defined Benefit Supplement Program .
SEC. 23. Section 22162 of the Education Code is repealed.
22162. "Regular interest", with respect to the Defined Benefit
Program, is interest that is compounded annually based upon the
annual equivalent of the prior year's average yield to maturity on
the investment grade fixed-income securities with respect to the
Defined Benefit Program. The regular interest rate shall be adopted
annually by the board as a plan amendment.
SEC. 24. Section 22162 is added to the Education Code, to read:
22162. "Regular interest" means interest that is compounded
annually based on the annual equivalent of the prior year's average
yield to maturity on the investment-grade fixed income securities
attributable to the Defined Benefit Program, but not on assets
attributable to the Defined Benefit Supplement Program. The regular
interest rate shall be adopted annually by the board as a plan
amendment with respect to the Defined Benefit Program.
SEC. 25. Section 22166.5 is added to the Education Code, to read:
22166.5. "Retirement benefit" means the amount payable under the
Defined Benefit Supplement Program based on the balance in the member'
s Defined Benefit Supplement account to a member who has retired for
service under the Defined Benefit Program.
SEC. 26. Section 22170 of the Education Code is amended to read:
22170. "Service" means service work
performed for compensation in a position subject to coverage under
the Defined Benefit Program, except as otherwise specifically
provided in this part , providing the contributions on
compensation for that work are not credited to the Defined Benefit
Supplement Program .
SEC. 27. Section 22176 is added to the Education Code, to read:
22176. "Termination benefit" means the balance in the member's
Defined Benefit Supplement account that is payable to the member in a
lump-sum when the member has terminated all employment to perform
creditable service subject to coverage by the plan.
SEC. 28. Section 22302 is added to the Education Code, to read:
22302. The board may contract with a qualified third-party
administrator for custodial, record keeping, or other administrative
services necessary to carry into effect the provisions of Chapter 38
(commencing with Section 25000) of this part or Part 14.
SEC. 29. Section
22304 of the Education Code is amended to read:
22304. (a) The costs of administration of the plan shall be paid
from the retirement fund and those costs may not exceed the amount
made available by law during any fiscal period.
(b) The administrative costs of the plan shall be divided
proportionately in accordance with the assets of the Defined Benefit
Program , the Defined Benefit Supplement Program, and the
Cash Balance Benefit Program.
SEC. 30. Section 22309 of the Education Code is amended to read:
22309. (a) The board shall issue to each active and inactive
member, no less frequently than annually after the close
of the school year, a statement of his or her
the member's individual account
Defined Benefit Program and Defined Benefit Supplement accounts
, provided the employer or member has informed the system of the
member's current mailing address.
(b) The board shall periodically make a good faith effort to
locate inactive members to provide these members with information
concerning any benefit for which they may be eligible.
SEC. 31. Section 22311 of the Education Code is repealed.
22311. (a) The board shall keep in convenient form any data
necessary for the actuarial valuation of the plan.
(b) The board shall make an actuarial investigation into the
mortality, service, and other experience of members and beneficiaries
of the Defined Benefit Program as well as an actuarial review of the
goals regarding the sufficiency of the Gain and Loss Reserve with
respect to the Cash Balance Benefit Program. This investigation and
review shall include an actuarial valuation of the assets and
liabilities of the plan, and shall be performed at least once every
six years. The actuary shall perform the actuarial valuation using
actuarial assumptions adopted by the board and that are, in the
aggregate, reasonably related to the past experience of the plan and
the best estimate by the actuary of the future experience of the
plan. The report of the actuary of the results of the actuarial
valuation shall identify and include the components of normal cost
and adequate information to determine the effects of changes in
actuarial assumptions. Copies of the report on the actuarial
valuation shall be transmitted to the Governor and to the
Legislature. Upon the basis of any or all of the actuarial
investigation and valuation, the board shall adopt for the plan any
rates of return on investments, rates of contribution to the
retirement fund, mortality, service, and other tables it deems
necessary.
SEC. 32. Section 22311 is added to the Education Code, to read:
22311. The board shall maintain all data necessary to perform an
actuarial investigation of the demographic and economic experience of
the plan and for the actuarial valuation of the assets and
liabilities of the plan.
SEC. 33. Section 22311.5 is added to the Education Code, to read:
22311.5. The board shall acquire the services of an actuary to do
all of the following:
(a) Make recommendations to the board for the adoption of
actuarial assumptions that, in the aggregate, are reasonably related
to the past experience of the plan and reflect the actuary's informed
estimate of the future experience.
(b) Make an actuarial investigation of the demographic and
economic experience, including the mortality, service, and other
experience, of the plan with respect to members and beneficiaries of
the Defined Benefit Program, the Defined Benefit Supplement Program,
and the Cash Balance Benefit Program.
(c) Make an actuarial review of the goals regarding the
sufficiency of the Gain and Loss Reserves with respect to the Defined
Benefit Supplement Program and the Cash Balance Benefit Program and
recommend to the board the goal for maintaining sufficient Gain and
Loss Reserves for the Defined Benefit Supplement Program and the Cash
Balance Benefit Program.
(d) Recommend to the board the amount, if any, to be transferred
to the separate Gain and Loss Reserves from the investment earnings
of the plan with respect to the Defined Benefit Supplement Program
and the Cash Balance Benefit Program.
(e) At least once every six years, using actuarial assumptions
adopted by the board, perform an actuarial valuation of the plan that
identifies the assets and liabilities of the plan, and report the
findings to the board. The report of the actuary on the results of
the actuarial valuation shall identify and include the components of
normal cost and adequate information to determine the effects of
changes in actuarial assumptions. Copies of the report on the
actuarial valuation shall be transmitted to the Governor and to the
Legislature.
(f) Recommend to the board all rates and factors necessary to
administer the plan, including, but not limited to, mortality tables,
annuity factors, interest rates, and additional earnings credits.
(g) Recommend to the board a strategy for amortizing any unfunded
actuarial obligation.
(h) As requested by the board, perform any other actuarial
services that may be required for administration of the plan.
SEC. 34. Section 22311.7 is added to the Education Code, to read:
22311.7. Upon the basis of the actuarial investigation and
actuarial valuation pursuant to Section 22311.5, or any part thereof,
the board shall adopt actuarial assumptions, rates, factors, and
tables as the board determines are necessary for administration of
the plan and its programs.
SEC. 35. Section 22453 of the Education Code is amended to read:
22453. (a) Except as provided in Section 22454, the signature of
the spouse of a member shall be required on any application for, or
cancellation of, an unmodified allowance, the election, change, or
cancellation of an option, request for a refund of the member's
accumulated retirement contributions , accumulated Defined
Benefit Supplement contributions, or accumulated annuity
deposit contributions, or other requests related to the selection of
benefits by a member in which a spousal interest may be present,
unless the member declares, in writing, under penalty of perjury,
that one of the following conditions exists:
(1) The member does not know, and has taken all reasonable steps
to determine, the whereabouts of the spouse.
(2) The spouse is incapable of executing the acknowledgment
because of an incapacitating mental or physical condition.
(3) The member and spouse have executed a marriage settlement
agreement pursuant to Part 5 (commencing with Section 1500) of
Division 4 of the Family Code that makes the community property law
inapplicable to the marriage.
(4) The member is not married.
(5) The current spouse has no identifiable community property
interest in the benefit.
(b) This section is not applicable to an application for a
disability allowance.
(c) The sole purpose of this section is to provide for spousal
protection in the selection of specified benefits made by a member.
SEC. 36. Section 22460 of the Education Code is repealed.
22460. Employers shall notify all members who terminate
employment with less than five years' credited California service
that the only benefit for which they are eligible at any time is the
refund of accumulated contributions, the rate of interest that will
be earned, and actions that may be taken by the board if the
contributions are not withdrawn. Employers shall transmit the
information to the member as part of the usual separation documents.
SEC. 37. Section 22460 is added to the Education Code, to read:
22460. (a) If a member terminates employment with less than five
years of credited service, the employer shall notify the member of
the following:
(1) That unless the member is eligible, or becomes eligible in the
future, for concurrent retirement pursuant to paragraph (2) of
subdivision (a) of Section 24201, the member is eligible only for a
refund of accumulated retirement contributions and the return of the
balance in the member's Defined Benefit Supplement account.
(2) The current rate of interest that shall be earned on
accumulated retirement contributions that are not refunded and the
current minimum interest rate that shall be applied to the balance in
the member's Defined Benefit Supplement account.
(3) Actions that may be taken by the board if accumulated
retirement contributions are not refunded and the balance in the
member's Defined Benefit Supplement account is not returned.
(b) Employers shall transmit to a member who terminates employment
with less than five years of credited service the information
specified in subdivision (a) as part of the usual separation
documents.
SEC. 38. Section 22651 of the Education Code is amended to read:
22651. For purposes of this chapter and Section 23300, "nonmember
spouse" means the a member's spouse or
former spouse who is being or has been awarded a community property
interest in the service credit and ,
accumulated retirement contributions , accumulated Defined
Benefit Supplement contributions, or the
benefits of a the member under this
part. A nonmember spouse who is awarded a separate account of
service credit and accumulated retirement contributions , or who
is awarded a separate account of accumulated Defined Benefit
Supplement contributions, or who receives a retirement
allowance or retirement annuity under this part, or who is
awarded an interest in a member's retirement allowance or
retirement annuity under this part is not a member.
SEC. 39. Section 22652 of the Education Code is amended to read:
22652. (a) Upon the legal separation or dissolution of marriage
of a member, other than a retired member, the court shall
include in the judgment or a court order the date on which the
parties separated.
(b) The court may order in the judgment or court order that the
accumulated retirement contributions and service credit or
accumulated Defined Benefit Supplement contributions under this
part that are attributable to periods of service during the marriage
be divided into two separate and distinct accounts in the name of the
member and the nonmember spouse, respectively. Any service credit
or accumulated retirement contributions or accumulated Defined
Benefit Supplement contributions under this part that are not
explicitly awarded by the judgment or court order shall be deemed the
exclusive property of the member in under
the Defined Benefit Program or the Defined Benefit
Supplement Program .
(c) The determination of the court of community property rights
pursuant to this section shall be consistent with this chapter and
shall address the rights of the nonmember spouse under this part
, including, but not limited to, the following:
(1) The right to a retirement allowance under this part
and, if applicable, a retirement annuity .
(2) The right to a refund of accumulated retirement contributions
under this part and the lump-sum payment of
accumulated Defined Benefit Supplement contributions awarded to the
nonmember spouse .
(3) The right to redeposit accumulated retirement contributions
which are previously refunded to the member
which the member is eligible for to
redeposit under this part by the member under
pursuant to Sections 23200 to 23203, inclusive, and
shall specify the shares of the redeposit amount awarded
to the member and the nonmember spouse of the eligible
redeposit amount .
(4) The right to purchase additional service credit under
this part which that the member is eligible
for to purchase by the member
under pursuant to Sections 22800 to 22810,
inclusive, and shall specify the shares of the
additional service credit awarded to the member and the
nonmember spouse of the service credit eligible for purchase
.
SEC. 40. Section 22655 of the Education Code is amended to read:
22655. (a) Upon the legal separation or dissolution of marriage
of a retired member, the court may include in the judgment or court
order a determination of the community property rights of the parties
in the retired member's retirement allowance and, if
applicable, retirement annuity under this part of the
retired member consistent with this section. Upon
election under subparagraph (B) of paragraph (3) of subdivision (a)
of Section 2610 of the Family Code, the court order awarding the
nonmember spouse a community property share in the benefits of a
retired member shall be consistent with this section.
(b) If the court does not award the entire retirement allowance
or retirement annuity under this part to the retired
member and the retired member is receiving a retirement allowance
that has not been modified pursuant to Section 24300, or a
single life annuity pursuant to Section 25011 or 25018, the
court shall require only that the system pay the nonmember spouse, by
separate warrant from the plan , his or her
community property share of the retired member's
retirement allowance or retirement annuity, or both, under
this part of the retired member .
(c) If the court does not award the entire retirement allowance
or retirement annuity under this part to the retired
member and the retired member is receiving an allowance
which that has been actuarially modified
pursuant to Section 24300, or a joint and survivor annuity
pursuant to Section 25011 or 25018, the court shall order only
one of the following:
(1) The retired member shall maintain the retirement allowance
or retirement annuity, or both, under this part without
change.
(2) The retired member shall cancel the option under
which that modified the retirement allowance
is modified under this part pursuant to Section
24305 and select a new joint and survivor option or a new beneficiary
or both, and the system shall pay the nonmember spouse, by separate
warrant from the plan , his or her community
property share of the retirement allowance under this part of the
retired member, the option beneficiary, or both.
(3) The retired member shall cancel the joint and survivor
annuity under which the annuity is being paid pursuant to Section
24305.5, and select a new joint and survivor annuity or a new annuity
beneficiary or both, and the system shall pay the nonmember spouse,
by separate warrant, his or her community property share of the
retirement annuity payable to the retired member, the annuity
beneficiary, or both.
(4) The retired member shall take the action specified in both
paragraphs (2) and (3).
(5) The retired member shall cancel the option
under which that modified the retirement
allowance is modified under this part pursuant to
Section 24305 and select an unmodified retirement allowance and the
system shall pay the nonmember spouse, by separate warrant
from the plan , his or her community property share of the
retired member's retirement allowance of the
retired member under this part .
(6) The retired member shall cancel the joint and survivor annuity
under which the annuity is being paid pursuant to Section 24305.5,
and select a single life annuity, and the system shall pay the
nonmember spouse, by separate warrant, his or her community property
share of the retirement annuity payable to the retired member.
(7) The retired member shall take the action specified in both
paragraphs (5) and (6).
(d) If the option beneficiary or annuity beneficiary or both
under this part, other than the nonmember spouse, predeceases
the retired member, the court shall order the retired member to
select a new option beneficiary under this part
pursuant to Section 24306 , or a new annuity beneficiary
pursuant to Section 24306.5 and shall order the system to pay
the nonmember spouse, by separate warrant from the plan
, his or her share of the community property interest in
the retirement allowance or retirement annuity or both
under this part of the retired member or the new option beneficiary
, or both annuity
beneficiary or each of them .
(e) The right of the nonmember spouse to receive his or her
community property share of the retired member's
retirement allowance under this part of the retired member
or retirement annuity or both under this section
shall terminate upon the death of the nonmember spouse. However,
the nonmember spouse may designate a beneficiary under the
Defined Benefit Program and a payee under the Defined Benefit
Supplement Program to receive his or her community property
share of the retired member's accumulated retirement contributions
and accumulated Defined Benefit Supplement contributions
under this part in the event that there are remaining
accumulated retirement contributions become payable
and accumulated Defined Benefit Supplement
contributions to be paid upon the death of the nonmember spouse
.
SEC. 41. Section 22656 of the Education Code is amended to read:
22656. No judgment or court order issued pursuant to this chapter
is binding on the plan system with
respect to the Defined Benefit Program and the Defined Benefit
Supplement Program until the plan
system has been joined as a party to the action and has been
served with a certified copy of the judgment or court order.
SEC. 42. Section 22658 of the Education Code is amended to read:
22658. (a) A separate account awarded to a nonmember spouse
pursuant to Section 22652 shall be administered independently of the
member's account.
(b) Accumulated Defined Benefit Supplement contributions,
accumulated retirement contributions, service credit, and final
compensation attributable to a separate account of a nonmember
spouse under this part shall not be combined in any way or for any
purpose with the accumulated Defined Benefit Supplement
contributions, accumulated retirement contributions, service
credit, and final compensation of any other separate account of the
nonmember spouse.
(c) Accumulated Defined Benefit Supplement contributions,
accumulated retirement contributions, service credit, and final
compensation attributable to the separate account of a nonmember
spouse shall not be combined in any way or for any purpose with the
accumulated Defined Benefit Supplement contributions,
accumulated retirement contributions, service credit, and final
compensation of an account that exists under this part because the
nonmember spouse is employed or has been employed to perform
creditable service subject to coverage under the Defined Benefit
Program.
SEC. 43. Section 22659 of the Education Code is amended to read:
22659. Upon being awarded a separate account or an interest in
the retirement allowance or retirement annuity of a
retired member under this part, a nonmember spouse shall provide the
system with proof of his or her date of birth, social security
number, and any other information requested by the system, in the
form and manner requested by the system.
SEC. 44. Section 22660 of the Education Code is amended to read:
22660. (a) The nonmember spouse who is awarded a separate account
under this part shall have the right to designate, pursuant to
Sections 23300 to 23304, inclusive, a beneficiary or beneficiaries to
receive the accumulated retirement contributions under the
Defined Benefit Program and to designate a payee to receive the
accumulated Defined Benefit Supplement contributions under the
Defined Benefit Supplement Program remaining in the separate
account of the nonmember spouse on his or her date of death, and any
accrued allowance or accrued annuity under this part
attributable to the separate account of the nonmember spouse
which is unpaid on the date of the death of the nonmember
spouse under this part .
(b) This section shall not be construed to provide the nonmember
spouse with any right to elect to modify a retirement allowance under
Section 24300 or to elect a joint and survivor annuity under
the Defined Benefit Supplement Program .
SEC. 45. Section 22661 of the Education Code is amended to read:
22661. (a) The nonmember spouse who is awarded a separate account
under this part shall have the right to a refund of the accumulated
retirement contributions and a lump-sum payment of accumulated
Defined Benefit Supplement contributions in the
account accounts of the nonmember spouse under
this part.
(b) The nonmember spouse shall file an application on a form
provided by the system to obtain the a
refund or lump-sum payment .
(c) The refund and lump-sum payment under this part
is are effective when the system
deposits in the United States mail an initial warrant drawn in favor
of the nonmember spouse and addressed to the latest address for the
nonmember spouse on file in the system. If the nonmember spouse has
elected on a form provided by the system to transfer all or a
specified portion of the accumulated retirement
contributions or accumulated Defined Benefit Supplement
contributions that are eligible for direct trustee-to-trustee
transfer to the trustee of a qualified plan under Section 402 of the
Internal Revenue Code of 1986 (26 U.S.C.A. Sec. 402), deposit in the
United States mail of a notice that the requested transfer has been
made constitutes a return of the nonmember spouse's accumulated
retirement contributions or accumulated Defined Benefit
Supplement contributions .
(d) The nonmember spouse is deemed to have permanently waived all
rights and benefits pertaining to the service credit under
this part and represented by the , accumulated
retirement contributions , and accumulated Defined Benefit
Supplement contributions under this part when the refund
becomes and lump-sum payment become
effective.
(e) The nonmember spouse may not cancel a refund or lump-sum
payment under this part after the refund is
they are effective.
(f) The nonmember spouse shall have no right to elect to redeposit
the refunded accumulated retirement contributions under this part
after the refund is effective and shall have no right
, to redeposit under Section 22662 or purchase
additional service credit under Section 22663 after the refund
becomes effective , or to redeposit the accumulated Defined
Benefit Supplement contributions after the lump-sum payment becomes
effective .
(g) If the total service credit in the separate account of the
nonmember spouse under this part, including service credit purchased
under Sections 22662 and 22663, is less than two and one-half years,
the board shall refund the accumulated retirement contributions in
the account.
SEC. 46. Section 22662 of the Education Code is amended to read:
22662. The nonmember spouse who is awarded a separate account
under this part may redeposit accumulated retirement contributions
previously refunded to the member in accordance with the
determination of the court pursuant to Section 22652.
(a) The nonmember spouse may redeposit under this part only those
accumulated retirement contributions that were previously refunded to
the member and in which the court has determined the nonmember
spouse has a community property interest.
(b) The nonmember spouse shall inform the system in writing of his
or her intent to redeposit within 180 days after the judgment or
court order addressing the redeposit rights of the nonmember spouse
is entered. The nonmember spouse shall elect
spouses' election to redeposit shall be made on a
form provided by the system within 30 days after the system mails an
election form and the billing.
(c) If the nonmember spouse elects to redeposit under this part,
he or she shall repay the portion of the member's refunded
accumulated retirement contributions that were awarded to the
nonmember spouse and shall pay regular interest from the date
of the refund to the date of payment.
(d) An election to redeposit shall be considered an election to
repay all accumulated retirement contributions previously refunded
under this part in which the nonmember spouse has a community
property interest. All payments shall be received by the system
before the effective date of the nonmember spouse's
retirement of the nonmember spouse under this
part. If any payment due because of the election is not received at
the system's office in Sacramento within 120 days of its due date,
the election shall be canceled and any payments made under the
election shall be returned to the nonmember spouse.
(e) The right of the nonmember spouse to redeposit shall be
subject to Section 23203.
(f) The member shall not have a right to redeposit the share of
the nonmember spouse in the previously refunded accumulated
retirement contributions under this part whether or not the nonmember
spouse elects to redeposit. However, any accumulated retirement
contributions previously refunded under this part and not explicitly
awarded to the nonmember spouse under this part by the judgment or
court order shall be deemed the exclusive
property of the member.
SEC. 47. 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 and, if
applicable, a retirement annuity 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, 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 the
following table:
Age at Retirement Percentage
60 1/4 ........................ 2.033
60 1/2 ........................ 2.067
60 3/4 ........................ 2.10
61 ............................ 2.133
61 1/4 ........................ 2.167
61 1/2 ........................ 2.20
61 3/4 ........................ 2.233
62 ............................ 2.267
62 1/4 ........................ 2.30
62 1/2 ........................ 2.333
62 3/4 ........................ 2.367
63 and over ................... 2.40
(4) 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) 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. The nonmember spouse shall not be
entitled to use any other calculation of final compensation.
(d) 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. 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) 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
portion 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 portion 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) 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. 48. Section 22665 of the Education Code is amended to read:
22665. The system shall include the service credit awarded to a
nonmember spouse in the judgment or court order to determine the
eligibility of a member for a retirement or disability allowance
under this part. That portion of awarded service credit based on
previously refunded accumulated retirement contributions
or on permissive service credit may not be used by the member for
eligibility requirements until the member has redeposited or
purchased his or her portion of the service credit. The member's
service retirement allowance shall be calculated based on the service
credit in the member's account on the effective date of service
retirement.
SEC. 49. Section 22703 of the Education Code is amended to read:
22703. (a) Service shall be computed by school years and
not by calendar years, portions of years served being accumulated
and counted as service. All of the creditable service performed
during any one school year subject to coverage under the Defined
Benefit Program shall not count for more than one year.
(b) Service shall be credited to the Defined
Benefit Program, except as provided in subdivision (b).
(b) A member's creditable service that exceeds 1.000 in a school
year shall not be credited to the Defined Benefit Program.
Commencing July 1, 2002, contributions by the employer and the member
on creditable compensation paid to the member for that service,
exclusive of contributions pursuant to Section 22951, shall be
credited to the Defined Benefit Supplement Program.
(c) In lieu of any other benefits provided by this part, any
member who performed service prior to July 1, 1956, shall receive
retirement benefits for that service at least equal to the benefits
which he or she that the member would
have received for that service under the provisions of this part as
they existed on June 30, 1956. This paragraph does
subdivision shall not apply to service
which that is credited in the San Francisco City
and County Employees Retirement System.
SEC. 50. Section 22706 of the Education Code is amended to read:
22706. A member shall not receive credit for service performed
while receiving a retirement or disability allowance from
under the Defined Benefit Program or while
receiving a retirement or disability annuity under the Defined
Benefit Supplement Program .
SEC. 51. Section 22905 of the Education Code is amended to read:
22905. (a) Contributions made by a member and member
contributions made by an employer pursuant to Section 22903 and 22904
shall be credited by the board to the individual account of the
member.
(b) This section shall become inoperative on July 1, 2002, and, as
of January 1, 2003, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2003, deletes or extends
the dates on which it becomes inoperative and is repealed.
SEC. 52. Section 22905 is added to the Education Code, to read:
22905. (a) Member contributions pursuant to Section 22901 and
employer contributions pursuant to Sections 22903 and 22904 shall be
credited to the member's individual account under the Defined Benefit
Program or the Defined Benefit Supplement Program, whichever is
applicable pursuant to the provisions of this part.
(b) Member and employer contributions on a member's compensation
under the following circumstances shall be credited to the member's
Defined Benefit Supplement account:
(1) Compensation for creditable service that exceeds one year in a
school year.
(2) Compensation for extra-curricular school-related activities
performed in addition to the creditable service required by the
member's employer.
(3) Compensation that is consistent with subdivision (b) of
Section 22119.2.
(4) Compensation that is a one-time payment pursuant to law, a
collective bargaining agreement or employment agreement including,
but not limited to, payments based on national board certification.
(c) A member shall not make voluntary pretax or posttax
contributions under the Defined Benefit Supplement Program, except as
provided in subdivision (d), nor shall a member redeposit amounts
previously distributed based on the balance in the member's Defined
Benefit Supplement account.
(d) Member and employer contributions under the Defined Benefit
Supplement Program shall be credited to the accounts of members as of
June 30 each year following a determination by the system under the
provisions of this part that those contributions should be credited
to the Defined Benefit Supplement Program. Contributions to a member'
s Defined Benefit Supplement account shall be identified separately
from the member's contributions credited under the Defined Benefit
Program.
(e) The provisions of this section shall become operative on July
1, 2002.
SEC. 53. Section 22906 of the Education Code is repealed.
22906. If at the time of retirement, disability, or death, there
are contributions remaining to the credit of the member that were
made with respect to time on the basis of which a benefit will not be
payable under this part, the board shall refund the contributions as
it may allocate to the time.
SEC. 54. Section 22906 is added to the Education Code, to read:
22906. A member's accumulated retirement contributions that were
made with respect to service that was erroneously credited under the
Defined Benefit Program shall be returned to the member if the
contributions for that service cannot be credited under the Defined
Benefit Supplement Program pursuant to this part.
SEC. 55. Section 22955.5 is added to the Education Code, to read:
22955.5. For purposes of Sections 22954 and 22955, "creditable
compensation" shall include only creditable compensation for which
member contributions are credited under the Defined Benefit Program.
SEC. 56. Section 23100 of the Education Code is amended to read:
23100. (a) Upon the termination of a member's employment by any
cause other than death , disability, or retirement there
shall be paid to the member, pursuant to this part, both
each of the following:
(1) The member's accumulated retirement contributions
made after June 30, 1935.
(2) The member's accumulated annuity deposit
contributions.
(3) The member's accumulated Defined Benefit Supplement
contributions.
(b) Accumulated contributions shall include credited
interest through the date of payment.
SEC. 57. Section 23300 of the Education Code is repealed.
23300. (a) A member of the Defined Benefit Program may at any
time designate a beneficiary, or change the designation of a
beneficiary, to receive benefits payable under this part, except that
no beneficiary designation may be made in derogation of the
community property share of any nonmember spouse under this part when
any such benefit is derived, in whole or in part, from community
property contributions or service credited during the period of
marriage, unless the nonmember spouse has previously obtained an
alternative order for distribution pursuant to Section 2610 of the
Family Code. A designation of beneficiary shall be in writing on a
form prescribed by the system, executed by the member, witnessed by
two witnesses, neither of whom may be beneficiaries. To be valid the
instrument shall be received in the office of the system in
Sacramento before the member's death.
(b) Except as otherwise stated in this section, the designation of
beneficiary, other than an option beneficiary, may be revoked by the
member making the designation, and a different beneficiary
designated in the same manner as provided in this section.
SEC. 58. Section 23300 is added to the Education Code, to read:
23300. (a) A member of the Defined Benefit Program may designate
a beneficiary to receive benefits payable under this part upon the
member's death. A beneficiary designation may not be made in
derogation of a nonmember spouse's community property interest with
respect to service or contributions credited under this part unless
the nonmember spouse has previously obtained an alternative order
pursuant to Section 2610 of the Family Code.
(b) A member shall make separate designations for benefits payable
under the Defined Benefit Program and the Defined Benefit Supplement
Program. Each designation shall be in writing on a form prescribed
by the system, executed by the member, and witnessed by two witnesses
who are not designated as beneficiary for benefits payable under
either the Defined Benefit Program or the Defined Benefit Supplement
Program. A member may designate the same beneficiary for benefits
payable under the Defined Benefit Program and the Defined Benefit
Supplement Program, or may designate a different beneficiary for
each.
(c) A beneficiary designation shall not be valid unless it is
received in the office of the system in Sacramento prior to the
member's death.
(d) A member may change or revoke a beneficiary designation at any
time by making a new designation pursuant to this section.
(e) This section shall not be applicable to the designation of an
option beneficiary or an annuity beneficiary under this part.
SEC. 59. Section 23881 of the Education Code is repealed.
23881. (a) Upon receipt of proof of death of a retired member who
retired under this part after June 30, 1972, and of the retired
member's option beneficiary, if the total retirement allowance paid
or payable is less than the amount of the member's accumulated
retirement contributions at the time of retirement, the remaining
balance of accumulated retirement contributions shall be paid to the
beneficiary, if no option was elected, or to the estate of the option
beneficiary, if an option was elected.
(b) Payments provided under this section shall include credited
interest on the unpaid balance calculated from the date the last
allowance payment was made to the date the balance is paid.
SEC. 60. Section 23881 is added to the Education Code, to read:
23881. (a) If upon receipt of proof of death of a retired member
who was receiving an unmodified allowance and who retired under this
part after June 30, 1972, there is a remaining balance of the member'
s accumulated retirement contributions, the balance shall be paid to
the member's beneficiary.
(b) If upon receipt of proof of death of a retired member's option
beneficiary after the beneficiary begins to receive an allowance,
the remaining balance of a member's accumulated retirement
contributions, if any, shall be paid to the beneficiary designated by
the option beneficiary to receive that payment.
(c) The remaining balance of a retired member's accumulated
retirement contributions shall be the difference between the balance
of the accumulated retirement contributions on the effective date of
the member's retirement and the total retirement allowance paid or
payable to the retired member on the date of the member's death. If
the retired member predeceased the option beneficiary, the remaining
balance of the retired member's accumulated retirement contributions
shall be the difference between the balance of the accumulated
retirement contributions on the effective date of the member's
retirement and the total retirement allowance paid or payable to the
retired member and the option beneficiary on the date of the option
beneficiary's death.
(d) Payments pursuant to this section shall include interest on
the remaining balance of accumulated retirement contributions
calculated from the date the last allowance payment was made to the
date the remaining balance of accumulated retirement contributions is
paid.
SEC. 61. 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, 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 credit credited
service:
Age at Retirement Percentage
60 ............................ 2.00
60 1/4 ........................ 2.033
60 1/2 ........................ 2.067
60 3/4 ........................ 2.10
61 ............................ 2.133
61 1/4 ........................ 2.167
61 1/2 ........................ 2.20
61 3/4 ........................ 2.233
62 ............................ 2.267
62 1/4 ........................ 2.30
62 1/2 ........................ 2.333
62 3/4 ........................ 2.367
63 and over ................... 2.40
(2) If
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)
(2) An annuity that shall be the actuarial equivalent of the
accumulated member's annuity deposit
contributions standing to the credit of the member's account
and credited interest thereon at the time of
retirement.
(3) An annuity based on the balance in the member's Defined
Benefit Supplement account.
(b) In computing the amounts described in paragraph (1) of
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. 62. Section 24206 of the Education Code is amended to read:
24206. The minimum unmodified allowance for service
retirement under the Defined Benefit Program , exclusive of
annuities payable from accumulated annuity deposit
contributions payable for service retirement under this part
and exclusive of accumulated Defined Benefit
Supplement contributions , shall not be less than ten dollars
($10) per month multiplied by the member's years of
credited service. This guaranteed amount shall be reduced by the
amount of an unmodified allowance payable from a local system based
on service credited under this part the
Defined Benefit Program . If the retirement is effective at
less than age 60 years this 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 would have reached age 60 years.
SEC. 63. Section 24300.5 is added to the Education Code, to read:
24300.5. An option beneficiary who is receiving an allowance
pursuant to the option elected by the member may designate a
beneficiary to receive any remaining balance of the retired member's
accumulated retirement contributions payable pursuant to Section
23881 upon the death of the option beneficiary.
SEC. 64. Section 24305.3 is added to the Education Code, to read:
24305.3. (a) A member who is receiving a joint and survivor
annuity under the Defined Benefit Supplement Program may change the
annuity or the annuity beneficiary elected pursuant to Section 25011
or 25018 provided all of the following conditions are met:
(1) The annuity beneficiary is the member's spouse or former
spouse.
(2) A final decree of dissolution of marriage is granted, or a
judgment of nullity is entered, or an order of separate maintenance
is made by a court of competent jurisdiction with respect to the
member and the spouse or former spouse on or after July 1, 2002.
(3) The change is consistent with the final decree of dissolution,
judgment of nullity, or order of separate maintenance.
(b) A member may change the annuity pursuant to subdivision (a)
before or after the first annuity payment is issued.
(c) The member shall notify the system in writing of the change in
the annuity. The notification shall not be earlier that the
effective date of the final decree of dissolution, judgment of
nullity, or order of separate maintenance and shall include a
certified copy of the final decree of dissolution, judgment of
nullity, or order of separate maintenance, and any property
settlement agreement.
(d) A change in the annuity or annuity beneficiary or both shall
become effective on the date the notification of change is received
by the system. The annuity amount payable to the member upon the
change elected by the member shall be determined as of the effective
date of the change and shall be the actuarial equivalent of the
lump-sum that would otherwise be payable to the member as of the date
of the change. If the member elects a joint and survivor annuity,
the amount payable under the annuity shall be modified consistent
with the annuity elected by the member.
SEC. 65. Section 24400 of the Education Code is amended to read:
24400. The Legislature recognizes that inflation erodes the
purchasing power of benefits paid under the plan under
pursuant to this part. It is the intent of the
Legislature to understand the degree of erosion of these benefits.
The board shall report to the Governor and Legislature no later than
April 1 of each year on the extent to which inflation has eroded the
purchasing power of benefits provided under the Defined Benefit
Program and Defined Benefit Supplement Program . The
board shall indicate the amount of supplementary increases in
retirement allowances and retirement annuities required to
preserve the purchasing power of benefits provided by
under the
Defined Benefit Program and Defined Benefit Supplement
Program . The board shall also determine and report on the
increases.
SEC. 66. Section 24402 of the Education Code is amended to read:
24402. (a) Service retirement allowances, retirement
annuities, disability allowances, disability retirement
allowances, disability annuities, family allowances, and
survivor benefit allowances payable pursuant to this part shall be
increased by application of the benefit improvement factor.
(b) Allowances payable to beneficiaries on account of options
elected under Section 24300, 24301, or 24307 and annuities
payable to annuity beneficiaries shall be increased by
application of the improvement factor. This factor shall be
applicable on the same date when it would have been applied to the
allowance of the deceased person.
(c) The benefit improvement factor shall not be applied to an
annuity that is the actuarial equivalent of the accumulated annuity
deposit contributions standing to the credit of the member's account
on the effective date of a service or disability retirement.
SEC. 67. 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 under the Defined Benefit
Program and annuity beneficiaries under the Defined Benefit
Supplement Program as follows:
(1) The proceeds shall be allocated among those retired members,
disabled members, and beneficiaries under the Defined Benefit
Program and annuity beneficiaries under the Defined Benefit
Supplement Program whose allowances or annuities ,
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 or annuity 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 and annuities 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 under the Defined Benefit Program and
annuities under the Defined Benefit Supplement Program equals
not less than 75 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 or annuity , 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 or annuity 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 or
annuity . It is the present intent of the Legislature that
until adequate funds are available to fulfill the ultimate intent,
those persons whose allowances or annuities 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. 68. 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
under the Defined Benefit Program and annuity beneficiaries under the
Defined Benefit Supplement Program . 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 under the Defined Benefit Program and annuity
beneficiaries under the Defined Benefit Supplement Program whose
annuities , 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 percent of
original purchasing power. The purchasing power calculation for each
individual allowance and annuity 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 or annuity payable, after sequential application
of the current year annual improvement factor and the supplemental
payment under Section 24411, to 75 percent of original purchasing
power.
(c) The allowance or annuity 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 under the
Defined Benefit Program and annuities payable under the Defined
Benefit Supplement Program to 75 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.
(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 or annuity .
SEC. 69. 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, annuity beneficiaries, and
beneficiaries. The amount available for distribution in any fiscal
year shall not exceed the amount necessary to restore purchasing
power up to 75 percent of the purchasing power of the initial monthly
allowance or annuity after the application of all
allowance and annuity 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, annuity beneficiaries,
and beneficiaries whose allowances or annuities ,
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 and
annuities of all retired members, disabled members,
annuity beneficiaries, and beneficiaries equals not less than
75 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 or annuity 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 or annuity , 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 or annuity for purposes of calculating the annual
improvement defined by Sections 22140 and 22141.
SEC. 70. 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 percent,
to retired members, disabled members, annuity beneficiaries,
and beneficiaries. The amount available for distribution in
any fiscal year shall not exceed the amount necessary to restore
purchasing power up to 75 percent of the purchasing power of the
initial monthly allowance or annuity after the application
of all allowance and annuity 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, annuity beneficiaries,
and beneficiaries whose allowances or annuities ,
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 or annuity 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 or annuity , 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 or annuity for purposes of calculating the
annual improvement defined by Section 22140 and 22141.
SEC. 71. Section 24600 of the Education Code is amended to read:
24600. (a) A retirement allowance under this part begins to
accrue on the effective date of the member's retirement and ceases on
the earlier of the day of the member's death or the day on which the
retirement allowance terminated for a reason other than the member's
death.
(b) A retirement allowance payable to an option beneficiary under
this part begins to accrue on the day following the day of the
retired member's death and ceases on the day of the option
beneficiary's death.
(c) A disability allowance under this part begins to accrue on the
effective date of the member's disability and ceases on the earlier
of the day of the member's death or the day on which the disability
allowance terminated for a reason other than the member's death.
(d) A family allowance under this part begins to accrue on the day
following the day of the member's death and ceases on the day of the
event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have attained 60
years of age or on the day following the day of the member's death,
as elected by the surviving spouse, and ceases on the day of the
surviving spouse's death.
(f) A child's portion of an allowance under this part begins to
accrue on the effective date of that allowance and ceases on the
earlier of either the termination of the child's eligibility or the
termination of the allowance. An allowance payable because of a
full-time student shall terminate on the first day of the month
following the end of the school quarter or semester that is in
progress in the month the full-time student attains 22 years of age.
Any adjustment to an allowance because of a full-time student's
periods of nonattendance shall be made as follows: the allowance
shall cease on the first day of the month in which return to
full-time attendance was required and shall begin to accrue again on
the first day of the month in which full-time attendance resumes.
(g) Supplemental payments issued under this part pursuant to
Sections 24701, 24702, and 24703 to retired members, disabled
members, and beneficiaries shall begin to accrue pursuant to Sections
24701, 24702, and 24703 and shall cease to accrue as of the
termination dates specified in subdivisions (a) to (f), inclusive.
(h) Notwithstanding any other provision of this part or other law,
distributions from payable under the
plan with respect to the Defined Benefit Program and the Defined
Benefit Supplement Program shall be made in accordance with
Section 401(a)(9) applicable provisions
of the Internal Revenue Code of 1986, as amended, including
the incidental death benefit requirements of Section 401(a)(9)(G)
and the related regulations
thereunder, and the . The required
beginning date of benefit payments that represent the entire interest
of the member in the plan with respect to the Defined Benefit
Program and the Defined Benefit Supplement Program shall
be as follows either :
(1) In the case of a refund of contributions, as described in
Chapter 12 (commencing with Section 23100) of this part, and
distribution of the balance in a member's Defined Benefit Supplement
account, as described in Chapter 38 (commencing with Section 25000)
of this part, not later than April 1 of the calendar year
following the later of (A) the calendar year in which the member
attains 70 1/2 years of age or (B) the calendar year in which the
member terminates employment within the meaning of subdivision (i).
(2) In the case of a retirement allowance, as defined in Section
22150, beginning not later than April 1 of the calendar year
following the later of (A) the calendar year in which the member
attains 70 1/2 years of age or (B) the calendar year in which the
member terminates employment within the meaning of subdivision (i),
to continue over the life of the member or the lives of the member
and the member's option beneficiary, or over the life expectancy of
the member or the life expectancy of the member and the member's
option beneficiary.
(i) For purposes of subdivision (h), "terminates employment" means
the later of the termination of employment subject to
coverage by the Defined Benefit Program or the termination of
employment in a position requiring or permitting membership in
another public retirement system in this state the compensation from
which may be included in final compensation under Section 22127.
(j) This section shall become operative on January 1, 2002
:
(1) The date the member ceases to perform creditable service
subject to coverage under this plan.
(2) The date the member ceases employment in a position subject to
coverage under another public retirement system in this state if the
compensation earnable while a member of the other system may be
considered in the determination of final compensation pursuant to
Section 22134 .
SEC. 72. Section 25000 of the Education Code is amended and
renumbered to read:
25000.
25900. (a) The State Teachers' Retirement System shall
develop a program to provide health care benefits for members,
beneficiaries, children, and dependent parents.
(b) All costs incurred by the system pursuant to this part shall
be paid by allocations from the Teachers' Retirement Fund as
appropriated for that purpose.
(c) The health care benefits program developed by the system
pursuant to this part shall not be implemented by the system unless
specifically authorized by a statute enacted by the Legislature.
SEC. 73. Section 25100 of the Education Code is amended and
renumbered to read:
25100.
25901. Unless the context otherwise requires, the
definitions set forth in this chapter govern the construction of this
part.
SEC. 74. Section 25110 of the Education Code is amended and
renumbered to read:
25110.
25910. "Beneficiary" or "beneficiaries" means any person or
entity receiving or entitled to receive an allowance and payment
pursuant to Part 13 (commencing with Section 22000) or 14 (commencing
with Section 26000) because of the disability or death of a member.
SEC. 75. Section 25115 of the Education Code is amended and
renumbered to read:
25115.
25915. (a) "Dependent child" or "dependent children" means
a member's unmarried offspring or stepchild who is not older than 22
years of age and who is financially dependent upon the member on the
date the member becomes eligible for benefits pursuant to this part.
(b) "Offspring" shall include the member's child who is born
within the 10-month period commencing on the date the member becomes
eligible for benefits pursuant to this part.
(c) "Offspring" shall include a child adopted by the member.
(d) "Dependent child" shall not include the member's offspring or
stepchild who is adopted by a person other than the member's spouse.
(e) "Financially dependent," for purposes of this section, means
that at least one-half of the child's support was being provided by
the member on the date the member became eligible for benefits
pursuant to this part. The system may require that income tax
records or other data be submitted to substantiate the child's
financial dependence. In the absence of substantiating
documentation, the system may determine that the child was not
dependent on the date the member became eligible for benefits
pursuant to this part.
SEC. 76. Section 25120 of the Education Code is amended and
renumbered to read:
25120.
25920. "Dependent parent" or "dependent parents" means a
natural parent or parents of a member, or a parent or parents who
adopted the member prior to the earlier of the occurrence of the
member's marriage or his or her attaining 18 years of age, and who
was receiving one-half or more of his or her support from the member
at the time the member became eligible for benefits pursuant to this
part.
SEC. 77. Section 25125 of the Education Code is amended and
renumbered to read:
25125.
25925. "Member" means a current or retired employee of an
employer, as defined in Section 22131.
SEC. 78. Chapter 38 (commencing with Section 25000) is added to
Part 13 of Division 1 of Title 1 of the Education Code, to read:
CHAPTER 38. DEFINED BENEFIT SUPPLEMENT PROGRAM
Article 1. General Provisions
25000. The Defined Benefit Supplement Program is hereby
established to provide supplemental benefits for members of the
Defined Benefit Program. The Teachers' Retirement Board shall
administer the Defined Benefit Supplement Program in accordance with
the provisions of this chapter.
Article 2. Program Accounts
25001. (a) The board shall establish a segregated account within
the retirement fund to be known as the Gain and Loss Reserve, and the
board shall have sole authority over the reserve. The Gain and Loss
Reserve shall be maintained for the Defined Benefit Supplement
Program and may be used to credit interest at the minimum interest
rate for plan years in which the board determines that the obligation
cannot be met from investment earnings. The Gain and Loss Reserve
may also be used to provide additions to the Annuitant Reserve for
monthly annuities payable under the Defined Benefit Supplement
Program.
(b) The board shall establish a goal for the balance of the Gain
and Loss Reserve and periodically shall review the sufficiency of the
reserve based on the recommendation of the actuary.
(c) The board may allocate excess earnings of the plan with
respect to assets attributable to the Defined Benefit Supplement
Program to the Gain and Loss Reserve. Upon the recommendation of the
actuary, the board shall determine annually the amount, if any, that
is to be allocated to the Gain and Loss Reserve for that plan year.
In determining whether to allocate excess earnings to the Gain and
Loss Reserve, the board shall consider all of the following:
(1) Whether or not the plan has excess earnings attributable to
the Defined Benefit Supplement Program.
(2) The sufficiency of the Gain and Loss Reserve in light of the
goal established pursuant to subdivision (b).
(3) The amount required for the plan's administrative costs with
respect to the Defined Benefit Supplement Program.
(4) The amount required for crediting members' accounts at the
minimum interest rate.
25002. The board shall establish and maintain a segregated
account within the retirement fund to be known as the Annuitant
Reserve and the board shall have sole authority over the reserve. The
Annuitant Reserve shall be used for the payment of annuities under
the Defined Benefit Supplement Program. The board shall transfer the
balance in a member's accumulated Defined Benefit Supplement account
to the reserve when a benefit is to be paid as an annuity.
25003. The board may transfer amounts between the Gain and Loss
Reserve and the Annuitant Reserve upon the recommendation of the
actuary.
25004. Member accounts under the Defined Benefit Supplement
Program shall be nominal accounts. Member contributions and employer
contributions on behalf of the member shall be credited to the member'
s Defined Benefit Supplement account, together with interest credited
at the minimum interest rate and additional earnings credit thereon.
The balance in a member's account shall determine the amount to
which the member is entitled under the Defined Benefit Supplement
Program upon termination of employment subject to coverage by the
plan. The member shall not have a right or claim to any specific
assets of the account, program, plan, or retirement fund.
25005. (a) Prior to July 1 of the initial plan year, and prior to
the beginning of each plan year thereafter, the board shall adopt a
plan amendment with respect to the Defined Benefit Supplement Program
to declare the rate at which interest shall be credited to Defined
Benefit Supplement accounts for the following plan year.
(b) The minimum interest rate declared annually by the board shall
be in accordance with applicable federal laws and related
regulations.
(c) Interest shall be added to Defined Benefit Supplement accounts
and shall be computed at the minimum interest rate on the balance in
a member's account and shall be compounded daily.
(d) Credited interest shall not be applied to accumulated Defined
Benefit Supplement contributions that have been transferred to the
Annuitant Reserve.
25006. (a) The board may declare an additional earnings credit to
be applied to Defined Benefit Supplement accounts for a plan year.
Prior to declaring an additional earnings credit, the board shall
consider all of the following:
(1) Whether the plan's investment earnings with respect to the
Defined Benefit Supplement Program for the plan year exceed the
amount required to meet the
liabilities identified in paragraphs (2), (3), and (4).
(2) The amount required for the plan year to credit interest on
members' nominal accounts at the minimum interest rate.
(3) The amount of the plan's administrative expenses with respect
to the Defined Benefit Supplement Program for the plan year.
(4) The sufficiency of the Gain and Loss Reserve and whether any
additions must be made to that reserve.
(b) For any plan year that the board declares an additional
earnings credit, the board shall specify the amount to be added to
members' accounts as a percentage increase. The additional earnings
credit shall be applied to the balance of credits in each member's
nominal account as of the last day of the plan year and shall be
applied as of the date specified by the board. The additional
earnings credit shall not be added to accumulated Defined Benefit
Supplement contributions that have been transferred to the Annuitant
Reserve.
(c) The declaration of an additional earnings credit shall be made
as a plan amendment adopted by the board with respect to the Defined
Benefit Supplement Program.
25007. When the board declares an additional earnings credit for
a plan year, the board also may declare an additional annuity credit,
for members and beneficiaries who are receiving an annuity, based on
the balance transferred from the member's Defined Benefit Supplement
account to the Annuitant Reserve. The additional annuity credit, if
declared by the board, shall be paid in a lump-sum. In addition to
the considerations specified in Section 24242, prior to declaring an
additional earnings credit, the board shall consider both of the
following:
(a) The amount required for the plan year to apply the additional
earnings credit to the Defined Benefit Supplement accounts of members
who are not receiving an annuity under the Defined Benefit
Supplement Program for the plan year.
(b) Any other obligations incurred by the plan with respect to the
Defined Benefit Supplement Program.
25008. (a) A member's right to the balance in the member's
Defined Benefit Supplement account shall be vested at the time
contributions are initially credited to the member's account.
(b) A partial distribution of the balance in a member's Defined
Benefit Supplement account shall not be made, except as provided in
Section 25015 or 25022.
Article 3. Retirement Benefits
25009. (a) A member's retirement benefit under the Defined
Benefit Supplement Program shall be an amount equal to the balance in
the member's Defined Benefit Supplement account on the date the
retirement benefit becomes payable.
(b) A retirement benefit shall be a lump-sum payment, or an
annuity payable in monthly installments, or a combination of both a
lump-sum payment and an annuity, as elected by the member on the
application for a retirement benefit.
(c) Upon distribution of the entire retirement benefit in a
lump-sum payment, no other benefit shall be payable to the member or
the member's beneficiary under the Defined Benefit Supplement
Program.
25010. (a) A member who meets the following eligibility
requirements may receive a retirement benefit under the Defined
Benefit Supplement Program:
(1) The member has terminated all employment to perform creditable
service subject to coverage by the plan. The member's employer, or
employers if the member has multiple employers, shall certify on a
form prescribed by the system that the member's employment has been
terminated.
(2) The member has retired for service under the Defined Benefit
Program pursuant to Chapter 27 (commencing with Section 24201).
(b) A member shall submit an application for a retirement benefit
on a form prescribed by the system.
25011. (a) A member may elect to receive the retirement benefit
as an annuity payable in monthly installments, provided the balance
in the member's Defined Benefit Supplement account on the date the
retirement benefit becomes payable is at least equal to three
thousand five hundred dollars ($3,500).
(b) If the member elects to receive the retirement benefit as an
annuity, the member shall elect one of the following forms of
payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the member if the member elected to receive the
retirement benefit in a lump-sum payment. Upon the death of the
member, no other benefit shall be payable to the member's beneficiary
under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form
of payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the retirement
benefit in a lump-sum payment. Upon the death of the member, the
remaining balance, if any, of the amount transferred from the member'
s Defined Benefit Supplement account to the Annuitant Reserve shall
be returned in a lump-sum payment to the member's beneficiary.
(3) A 100-percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
beneficiary. Upon the death of the member, the same monthly amount
that was payable to the member shall be paid monthly to the member's
surviving beneficiary. If the beneficiary predeceases the member,
the annuity shall be payable to the member without modification as of
the day following the date of the beneficiary's death upon receipt
by the system of proof of the beneficiary's death.
(4) A 50-percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
beneficiary. Upon the death of the member, one-half of the monthly
amount that was payable to the member shall be paid monthly to the
member's surviving beneficiary. If the beneficiary predeceases the
member, the annuity shall be payable to the member without
modification as of the day following the date of the beneficiary's
death upon receipt by the system of proof of the beneficiary's death.
(5) A period certain annuity. This form of payment is an annuity
equal to the balance in the member's Defined Benefit Supplement
account on the date the retirement benefit becomes payable. The
annuity shall be payable over a specified number of years, from a
minimum of three years to a maximum of 10 years, until the annuity
amount paid equals the amount that was in the member's Defined
Benefit Supplement account. However, the annuity period shall not
exceed the life expectancy of the member, or the life expectancy of
the member and the member's annuity beneficiary. If the member
elects a single life annuity and the member's death occurs prior to
the end of the period certain, the remaining balance of payments
shall be paid to the member's beneficiary pursuant to Section 23300.
If the member elects a joint and survivor annuity and the member's
death occurs prior to the end of the period certain, the remaining
balance of payments shall be paid to the member's annuity beneficiary
pursuant to Section 25025.
25012. An annuity payable under the Defined Benefit Supplement
Program shall be determined as a value actuarially equivalent to the
balance in the member's Defined Benefit Supplement account on the
date the benefit becomes payable and after any lump-sum payment. If
a single life annuity is elected, the annuity shall be calculated
using the age of the member on the date the benefit becomes payable.
If a joint and survivor annuity is elected, the annuity shall be
calculated using the age of the member and the age of the member's
beneficiary on the date the benefit becomes payable.
25013. Upon election by the member to receive a benefit payable
under the Defined Benefit Supplement Program in the form of an
annuity, the balance in the member's Defined Benefit Supplement
account shall be transferred to the Annuitant Reserve.
25014. (a) If a member reinstates from service retirement under
this part, payment of an annuity based on the balance that was
transferred from the member's accumulated Defined Benefit Supplement
account to the Annuitant Reserve shall terminate. The member's
Defined Benefit Supplement account shall be credited with the
actuarial equivalent of the member's annuity as of the date the
annuity is terminated and the Annuitant Reserve shall be reduced by
the amount credited to the member's account.
(b) The actuarial equivalent of the annuity on the date the
annuity is terminated shall be calculated using the actuarial
assumptions that were in effect on the date the annuity became
payable. In determining the actuarial equivalent, the age of the
member on the date the benefit became payable shall be used if the
member was receiving a single life annuity. If the member was
receiving a joint and survivor annuity, the age of the member and the
age of the member's beneficiary on the date the benefit became
payable shall be used to determine the actuarial equivalent.
(c) If the member subsequently retires again, an annuity based on
the remaining balance in the member's Defined Benefit Supplement
account at the time of the subsequent retirement shall become payable
pursuant to Section 24202.5 and the balance shall be transferred to
the Annuitant Reserve.
25015. (a) If a member elects to receive a benefit payable under
the Defined Benefit Supplement Program as a joint and survivor
annuity, the member shall designate an annuity beneficiary on the
benefit application. The annuity beneficiary designation shall not
be changed after the date the benefit becomes payable to the member,
except as provided in Chapter 12 (commencing with Section 22650).
(b) A member who elects to receive a joint and survivor annuity
may designate more than one annuity beneficiary. If the member
designates multiple annuity beneficiaries, the member shall specify
the percentage of the annuity payable to each annuity beneficiary
upon the death of the member. The annuity amount payable to the
member during his or her lifetime shall be modified to be payable
over the combined lives of the member and the annuity beneficiaries.
(c) If the member predeceases an annuity beneficiary, the annuity
beneficiary may designate a payee to receive an amount that may be
payable in a lump-sum pursuant to subdivision (c) of Section 25023
upon the death of the annuity beneficiary.
Article 5. Disability Benefits
25016. (a) A member's disability benefit under the Defined
Benefit Supplement Program shall be an amount equal to the balance in
the member's Defined Benefit Supplement account on the date the
member's disability benefit becomes payable.
(b) A disability benefit shall be a lump-sum payment, or an
annuity payable in monthly installments, or a combination of both a
lump-sum payment and an annuity, as elected by the member on the
application for a disability benefit.
(c) Upon distribution of a disability benefit in a lump-sum
payment, no other benefit shall be payable to the member or the
member's beneficiary under the Defined Benefit Supplement Program.
25017. (a) A member who meets the following eligibility
requirements may receive a disability benefit under the Defined
Benefit Supplement Program:
(1) The member has terminated all creditable service subject to
coverage by the plan. The member's employer, or employers if the
member has multiple employers, shall certify on a form prescribed by
the system that the member has terminated all creditable service.
(2) The member has been approved to receive a disability allowance
pursuant to Section 24006 or a disability retirement allowance
pursuant to Section 24106 under the Defined Benefit Program.
(b) The member, or the member's employer or conservator on behalf
of the member, shall submit an application for a disability benefit
on a form prescribed by the system.
25018. (a) A member may elect to receive the disability benefit
as an annuity provided the balance in the member's Defined Benefit
Supplement account on the date the disability benefit becomes payable
equals at least three thousand five hundred dollars ($3,500).
(b) If the member elects to receive the disability benefit as an
annuity, the member shall elect one of the following forms of
payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the member if the member elected to receive the
retirement benefit in a lump-sum payment. Upon the death of the
member, no other benefit shall be payable to the member's beneficiary
under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form
of payment is the actuarial equivalent of the amount that would be
payable to the member if the member elected to receive the disability
retirement benefit in a lump-sum payment. Upon the death of the
member, the remaining balance, if any, of the amount transferred from
the member's Defined Benefit Supplement account to the Annuitant
Reserve shall be returned in a lump-sum payment to the member's
beneficiary.
(3) A 100-percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
beneficiary. Upon the death of the member, the same monthly amount
that was payable to the member shall be paid monthly to the member's
surviving beneficiary. If the beneficiary predeceases the member,
the annuity shall be payable to the member without modification as of
the day following the date of the beneficiary's death upon receipt
by the system of proof of the beneficiary's death.
(4) A 50-percent joint and survivor annuity. This form of payment
is the actuarial equivalent of the lump-sum payment modified to be
payable over the combined lives of the member and the member's
beneficiary. Upon the death of the member, one-half of the monthly
amount that was payable to the member shall be paid monthly to the
member's surviving beneficiary. If the beneficiary predeceases the
member, the annuity shall be payable to the member without
modification as of the day following the date of the beneficiary's
death upon receipt by the system of proof of the beneficiary's death.
(5) A period certain annuity. This form of payment is an annuity
equal to the balance in the member's Defined Benefit Supplement
account on the date the disability benefit becomes payable. The
annuity shall be payable over a specified number of years, from a
minimum of three years to a maximum of 10 years until the annuity
amount paid equals the amount that was in the member's Defined
Benefit Supplement account. However, the annuity period shall not
exceed the life expectancy of the member, or the life expectancy of
the member and the member's annuity beneficiary. If the member
elects a single life annuity and the member's death occurs prior to
the end of the period certain, the remaining balance of payments
shall be paid to the member's beneficiary pursuant to Section 23300.
If the member elects a joint and survivor annuity and the member's
death occurs prior to the end of the period certain, the remaining
balance of payments shall be paid to the member's annuity beneficiary
pursuant to Section 25025.
25019. (a) If a member's disability allowance or disability
retirement allowance under this part is terminated, payment of a
disability annuity based on the balance transferred from the member's
Defined Benefit Supplement account to the Annuitant Reserve also
shall be terminated. The member's Defined Benefit Supplement account
shall be credited with the actuarial equivalent of the member's
annuity as of the date the annuity is terminated and the Annuitant
Reserve shall be reduced by the amount credited to the member's
account.
(b) The actuarial equivalent of the annuity on the date the
annuity is terminated shall be calculated using the actuarial
assumptions that were in effect on the date when the disability
annuity became payable. In determining the actuarial equivalent, the
age of the member on the date the disability annuity became payable
shall be used if the member was receiving a single life annuity. If
the member was receiving a joint and survivor annuity, the age of the
member and the age of the member's beneficiary on the date the
disability annuity became payable shall be used to determine the
actuarial equivalent.
(c) If a disability annuity subsequently becomes payable pursuant
to Section 25024, the annuity shall be based on the remaining balance
in the member's Defined Benefit Supplement account at the time the
subsequent disability annuity becomes payable. At that time, the
balance in the member's Defined Benefit Supplement account shall be
transferred to the Annuitant Reserve.
Article 6. Final Benefits
25020. (a) A final benefit under the Defined Benefit Supplement
Program shall become payable to the member's beneficiary when the
system receives proof of the member's death.
(b) If the member's death occurs before an annuity under the
Defined Benefit Supplement Program becomes payable, the final benefit
shall be an amount equal to the balance in the member's Defined
Benefit Supplement account on the date of the member's death.
(c) Upon distribution of a final benefit in a lump-sum payment, no
other benefit shall be payable under the Defined Benefit Supplement
Program to the member's beneficiary.
25021. (a) A beneficiary may elect to receive the final benefit
payable under the Defined Benefit Supplement Program as an annuity
provided the balance in the member's Defined Benefit Supplement
account equals at least three thousand five hundred dollars ($3,500).
(b) A beneficiary who elects to receive an annuity shall elect one
of the following forms of payment:
(1) A single life annuity without a cash refund feature. This
form of payment is the actuarial equivalent of the amount that would
be payable to the beneficiary if the beneficiary elected to receive
the final benefit in a lump-sum payment. The annuity shall cease to
be payable upon the death of the beneficiary, and no other benefit
will be payable under the Defined Benefit Supplement Program.
(2) A period certain annuity. This form of payment is an annuity
equal to the balance in the member's Defined Benefit Supplement
account on the date of the member's death. The annuity shall be
payable over a specified number of years, from a minimum of three
years to a maximum of 10 years but not to exceed the life expectancy
of the beneficiary, until the annuity paid equals the amount that was
in the member's Defined Benefit Supplement account. The beneficiary
may designate a payee to receive the remaining balance of payments
if the beneficiary's death occurs prior to the end of the period
certain.
25022. (a) If the death of a member occurs while the member is
receiving an annuity under the Defined Benefit Supplement Program,
the final benefit shall be payable in accordance with the terms of
the annuity elected by the member.
(b) If the member was receiving a single life annuity without a
cash refund feature, a final benefit shall not be payable.
(c) If the member was receiving a single life annuity with a cash
refund feature, the final benefit shall be payable in a lump-sum to
the member's beneficiary.
(d) If the member was receiving a joint and survivor annuity, the
annuity shall continue to be paid to the surviving designated annuity
beneficiary. If the designated annuity beneficiary predeceases the
member, a final benefit shall not be payable.
(e) If the member was receiving a period certain annuity, the
remaining balance of payments shall be paid to the annuity
beneficiary designated by the member.
25023. (a) Upon the death of an annuity beneficiary who was
receiving an annuity under a joint and survivor annuity elected by
the member no further payment shall be made.
(b) If the annuity beneficiary was receiving an annuity under a
joint and survivor option, no further payment shall be made.
(c) Upon the death of a beneficiary who was receiving a single
life annuity without a cash refund feature, no further payment shall
be made.
(d) Upon the death of a beneficiary who was receiving a period
certain annuity, the remaining balance of payments shall be paid in a
lump-sum to the payee designated by the beneficiary pursuant to
subdivision (c) of Section 25015.
Article 7. Termination Benefits
25024. (a) Upon the termination of all employment to perform
creditable service subject to coverage under the plan for a reason
other than retirement, disability, or death, a member shall be
eligible for a termination benefit under the Defined Benefit
Supplement Program. The member's employer, or employers if the
member has multiple employers, shall certify on a form prescribed by
the system that the member's employment has been terminated.
(b) A member shall submit an application for a termination benefit
on a form prescribed by the system.
(c) The termination benefit shall be a lump-sum payment that is
equal to the balance in the member's Defined Benefit Supplement
account.
(d) Upon distribution of the termination benefit, no further
benefit shall be payable to the member or the member's beneficiary
under the Defined Benefit Supplement Program.
25025. A termination benefit under the Defined Benefit Supplement
Program shall be payable after one calendar year has elapsed
following the date the member terminated employment as specified in
Section 25024. If the member performs creditable service within one
year of the prior termination of employment, the termination benefit
shall not be payable.
25026. The member may cancel an application for a termination
benefit at any time prior to distribution of the benefit.
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 for creditable
service.
(2) For members not paid according to a salary schedule, money
paid for creditable service.
(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 (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 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 by an employer to an employee for achieving
certification from a national board that awards certification for
professional teaching achievement based, in part, on an individual's
years of training or years of experience, if the compensation is
payable by the employer to all persons in the same class of employees
who 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 that is not creditable service
pursuant to Section 22119.5.
(2) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) of subdivision (a) if not 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).
(3) Fringe benefits provided by an employer.
(4) Job-related expenses paid or reimbursed by an employer.
(5) Money paid for unused accumulated leave.
(6) Severance pay or compensatory damages or money paid to a
member in excess of salary as a compromise settlement.
(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.
(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. 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.
(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.
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.