BILL ANALYSIS
AB 2700
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Date of Hearing: April 12, 2000
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Lou Correa, Chair
AB 2700 (Lempert) - As Introduced: February 25, 2000
SUBJECT : State teachers' retirement.
SUMMARY : Makes all compensation received by a member of the
State Teachers' Retirement System (CalSTRS) creditable and
requires the Teachers' Retirement Board (TRB) to develop and
administer a supplemental benefit program in which contributions
for service performed by a members in excess of one year of
service credit per school year shall be placed. Specifically,
this bill :
1)Revises and recasts the definition of creditable compensation
to include all money paid by an employer to a CalSTRS member
for creditable service including overtime, summer school and
intersession.
2)Specifically excludes compensation that is not payable in cash
from the definition of creditable compensation.
3)Requires the TRB to develop and administer the California
State Teachers' Retirement System Additional Compensation
Allowance Program as a supplemental benefit program for
members of the CalSTRS defined benefit program who perform
service in excess of one year of service credit per school
year.
4)Specifies that for each CalSTRS member with earnings for
creditable service in excess of full-time, member and employer
contributions totaling 16% of those earnings shall be credited
to the member's supplemental program account.
5)Prohibits CalSTRS members from making additional contributions
to their accounts.
6)Creates within the State Treasury a special fund known as the
California State Teachers' Retirement System Additional
Compensation Allowance Program Fund, a continuously
appropriated fund, to carry out the provisions of this bill.
AB 2700
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EXISTING LAW specifies that CalSTRS calculate a member's
retirement benefit under the defined benefit program using (1)
the member's credited service, (2) a factor based on the
member's age at retirement, and (3) the member's final
compensation. The member's service credit is determined
annually according to the creditable service performed by the
member.
Existing law defines creditable service as specified service
performed for an employer in a position requiring a credential,
certificate or permit under the Education Code, or under
standards adopted by the Board of Governors of the California
Community Colleges or under the provisions of an approved
charter for a charter school eligible to receive state
apportionment.
Existing law also defines creditable compensation as money paid
by an employer to a member for creditable service. Current law
also specifically excludes several types of payments from being
considered as creditable compensation such as:
Money paid for creditable service in excess of the full-time
equivalent for the position;
Money paid for overtime, overload, summer school and
intersession;
Stipends paid to department chairs when release time is not
granted by the employer; and,
Bonus payments, such as pay-for-performance.
FISCAL EFFECT : Unknown
COMMENTS : According to CalSTRS, "In the early 1970's when the
current retirement plan was designed, K-12 education generally
was provided for nine months a year, and community college
instruction used full-time faculty to a greater degree. The
current method of determining what compensation is creditable
reflects the means by which education was provided at that time.
As a result, summer school and intersession service is not
creditable, and the plan assumes that members largely work only
one job, and on a full-time basis.
Since then, a number of changes have occurred in the provision
of education, including more year-around schools, summer school
and the shift in community colleges to more part-time based
instruction. In addition, administrators are increasingly being
AB 2700
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compensated based in part on their performance. This bill would
make all compensation for creditable service creditable for
purposes of determining a CalSTRS retirement benefit in order to
reflect the changes in education. By changing the current
definition of creditable compensation, it would allow activities
that currently are not creditable to be counted towards
determining a member's retirement."
CalSTRS also points out that the current process of excluding
certain types of service and compensation from what is
creditable for retirement increases the complexity of
administering the defined benefit program. CalSTRS indicates
that they spend considerable resources to monitor employer
compliance with creditable service and compensation
requirements. This bill would substantially reduce this
administrative workload.
Supporters contend that this bill will increase equity among
CalSTRS members by crediting all service performed and will
simplify reporting for employers as well as streamline CalSTRS'
administration of the defined benefit program.
AB 2700
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REGISTERED SUPPORT / OPPOSITION :
Support
California State Teachers' Retirement System (Co-Sponsor)
California Teachers Association (Co-Sponsor)
Association of California School Administrators
Small School Districts' Association
Opposition
None on file.
Analysis Prepared by : Karon Green / P.E., R. & S.S. /
(916)319-3957