BILL ANALYSIS
Appropriations Committee Fiscal Summary
SB1692 (Ortiz)
Hearing Date:5/25/2000 Amended:5/3/2000
Consultant: Maureen Brooks Policy Vote:P. E. & R.
4-1
____________________________________________________________
___
BILL SUMMARY: SB 1692, an urgency measure, provides
enhanced benefits to members of the State Teachers'
Retirement System (STRS) who retired before January 1, 1999
and reinstate as active members for at least one year and
subsequently retire again.
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02
2002-03 Fund
Benefit enhancement $400 $700
$800 STRF
STAFF COMMENTS: SUSPENSE FILE. The present value of the
long-term costs is $9 million. This is based on the
assumption that 500 members will return to service and work
for one year.
As an example, a member who retired in 1998 at age 61 with
30 years of service and $4,000 final compensation,
reinstated for one year and retired again would receive an
allowance equal to $2,640 per month under existing law.
This bill will provide a monthly allowance of $2,976 under
those same circumstances.
Members who retired prior to January 1, 1999 and return to
service for the equivalent of one year, as specified, will
have their retirement allowance recalculated to include
benefit increases approved in 1998.
Members of STRS who retire receive an allowance based on
years of credited service, age at retirement and final
compensation. The benefit factor is 2% at age 60 and is
increased up to a maximum of 2.4% at age 63. In addition,
members with 30 or more years of credited service receive a
career bonus of an additional allowance of 2/10 of 1% of
final compensation up to a maximum of 2.4%.
Current law provides that if a retired member of STRS
returns to work and subsequently retires, that member
receives an amount equal to their original allowance plus
any COLA's provided and an amount calculated using current
formulas based on the period of time they returned to work
only. SB 1692 provides that the entire allowance will be
recalculated using the current benefit formulas.
SB 833 (Ortiz) of 1999, vetoed by Governor Davis in part
due to its retroactivity provision, would have provided
members of STRS who retired in 1998 the benefit
enhancements which included increased age factor and a
career bonus.