BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 1692
Deborah V. Ortiz, Chair Hearing date: May 8, 2000
SB 1692 (Ortiz) as amended 5/3/00 FISCAL: YES
STRS: BENEFIT ENHANCEMENTS FOR THOSE WHO RETIRED BEFORE
JANUARY 1, 1999
HISTORY :
Sponsor: California Retired Teachers Association (CRTA)
California Teachers Association (CTA)
California Federation of Teachers (CFT)
Faculty Attempting to Improve Retirement (FAIR)
Prior legislation: see below
SUMMARY :
Would provide, to certain members who retired before January
1, 1999, the STRS benefit enhancements currently available
only to those who retired after January 1, 1999, if the STRS
member who retired before 1/1/99 reinstates to active service
for at least one year , and subsequently retires with more
than 30 years of service or over age 60. URGENCY BILL.
BACKGROUND :
1) AB 1150 (Prenter), Chapter 966 of 1998 , increased the
maximum benefit factor of 2% @ age 60 to 2.4% @ age 63 for
members who retire after January 1, 1999.
2) AB 1102 (Knox), Chapter 1006 of 1998 :
a) extended eligibility to receive credit at retirement
for unused sick leave to those who became STRS members
after July 1, 1980, and who retire on or after January 1,
1999, and
b) provided a "career bonus" enhancement of .2% for
members with 30 or more years of credited service who
retire after January 1, 1999.
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Date: 5/3/00 Page 1
ANALYSIS :
1) Existing STRS law provides that a member who has
reinstated from retirement to active teaching may, after one
year, subsequently retire a second time. Upon the subsequent
retirement, the member would receive the sum of:
a) the original STRS allowance the member was receiving at
the time of reinstatement,
plus
b) the allowance for the second period of service, using
the age factor at the time of the second retirement, and
the compensation received during the second period of
service.
2) This bill provides that a retired STRS member:
a) who reinstates to active teaching for at least one
year,
b) who subsequently retires after reinstatement:
- with a total of at least 30 years STRS service credit
shall receive a STRS benefit that is recalculated
entirely to include the "career bonus" enhancements
(enacted in Chapter 1006 of 1998), and/or
David Felderstein SB 1692
Date: 5/3/00 Page 2
- over age 60 shall receive a STRS benefit that is
recalculated entirely to include the augmented "age
factor" (enacted in Chapter 966 of 1998), subtracting
from their actual age the amount of time they were
retired and receiving STRS benefits before reinstatement,
and
c) shall receive a maximum factor of 2.4% per year of
STRS-covered service as a result of this bill (i.e. a STRS
member who retires at age 61 ["age factor" = 2.2%] who
also has 30 years of service or more ["career bonus" =
.2%], totaling a maximum of 2.4%).
FISCAL EFFECT :
Unknown at this time.
However, there could be savings to the STRS Fund because
members would be required to reinstate from STRS retirement
and reenter active membership for at least one year to
qualify for the enhancements provided in this bill .
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Date: 5/3/00 Page 3
COMMENTS :
1) This bill contains findings and declarations, stating the
purpose is "?Providing an incentive for currently retired
members of the State Teachers Retirement System to reinstate
would further state policy of encouraging teacher recruitment
and help remedy current teachers shortages."
2) The benefit enhancements enacted in Chapters 966 and 1006
of 1998 were provided to STRS members retiring after January
1, 1999.
Following the enactment of these bills, STRS members who
retired in 1998 objected to the fact that the enhanced
benefits applied only to future retirees, claiming that:
a) they were not apprised of the pending legislation,
b) they would have delayed their retirement if they had
been aware of the pending legislation, and
c) their retirement allowances were much less than they
would have been had they delayed their retirements.
These members believe a major inequity was created by
excluding recently retired members.
3) SUPPORT :
Association of Retired Teachers (ART)
Delta Kappa Gamma Society
4) OPPOSITION :
None to date.
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Date: 5/3/00 Page 4