BILL ANALYSIS
Appropriations Committee Fiscal Summary
AB2700 (Lempert)
Hearing Date:8/23/2000 Amended:6/20/2000
& as proposed to be amended
Consultant: Maureen Brooks Policy Vote:P. E. & R.
5-0
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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: 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.