BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                          AB2700  (Lempert)
          
          Hearing Date:8/7/2000           Amended:6/20/2000      
          Consultant: Maureen Brooks          Policy Vote:P. E. & R.   
          5-0                      
          ____________________________________________________________ 
          ___
          BILL SUMMARY:   AB 2700 makes all compensation received by  
          a member of the State Teachers' Retirement System (STRS)  
          creditable beginning July 1, 2002, and establishes the  
          Defined Benefit Supplement Program in which contributions  
          for service performed by a member in excess of one year of  
          service credit per school year shall be placed.

                              Fiscal Impact (in thousands)
           
          Major Provisions            2000-01             2001-02              
           2002-03            Fund  
          Employer contribution       --------------------- $175 million  
          annually--                 Local

          Increase in benefits           ---------------------$11 million  
          annually-----              STRF

          GF contribution                  ----------------------$15 million  
          annually*--                General

          *Beginning FY 2003-04
          
          STAFF COMMENTS: This bill meets the criteria to be placed  
          on the Suspense file.   Employer costs begin 2002-03, and  
          the increase in the contribution from the General Fund will  
          begin 2003-04.
          
          Under existing law, "creditable service" excludes service  
          performed in excess of the full-time equivalent and money  
          paid for overtime and summer school service.  Under AB  
          2700, all compensation will be creditable and all  
          contributions for service in excess of one year of service  
          credit shall be placed into the Defined Benefit Supplement  
          Program.  The member will be able to access the balance in  
          the supplemental account upon retirement or separation.

          There will be an increase in the General Fund contribution  










          to the Defined Benefit Program of approximately $15 million  
          annually beginning in 2003-04 due to the increase in the  
          amount of creditable compensation.  The General Fund  
          contribution, based on the amount of creditable service, is  
          equal to 3.102% for the Defined Benefit Plan and 2.5% for  
          the Purchasing Power.