BILL ANALYSIS                                                                                                                                                                                                    



                                                                    SB 1692
                                                                    Page  1

          Date of Hearing:   August 9, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

                    SB 1692 (Ortiz) - As Amended: August 7, 2000 

          Policy Committee:                               
          P.E.R.&S.S.Vote:7-0 (Consent)

          Urgency:     Yes                  State Mandated Local  
          Program:NoReimbursable:           

           SUMMARY  :

          This bill provides enhanced retirement benefits to members of  
          the State Teachers' Retirement System (CalSTRS) who retired  
          prior to January 1, 1999 but reinstate for at least one  
          additional year of service before retiring again.

           FISCAL EFFECT  :

          According to CalSTRS, this bill would result in a present value  
          cost to the Teachers Retirement Fund (TRF) of approximately $9  
          million, with annual costs in the range of $700,000, assuming  
          about 500 eligible retired teachers are reinstated.
           
          COMMENTS  :

           1)Background.   Current STRS law provides that a member who  
            reinstates from retirement to active teaching before retiring  
            again is entitled to a retirement benefit equal to the sum of  
            (a) the original STRS allowance the member was receiving at  
            the time of reinstatement, plus (b) an allowance for the  
            second period of service, using the age factor and  
            compensation of the member at the time of the second  
            retirement.

            Following enactment of STRS benefit increases in 1998, which  
            took effect January 1, 1999, many CalSTRS members who retired  
            in 1998 protested that that they would have delayed their  
            retirements if they had been apprised of the pending  
            legislation.  The benefits in question were enacted by AB 1150  
            (Prenter), Chapter 966, Statutes of 1998, which increased the  
            maximum age factor from 2% at age 60 to 2.4% at age 63,  and  








                                                                    SB 1692
                                                                    Page  2

            AB 1102 (Knox), Chapter 1006, Statutes of 1998, which provided  
            a "career bonus" of .2% for CalSTRS members with 30 or more  
            years of service credit.

           1)Purpose  .  This bill provides for the recalculation of  
            retirement benefits for STRS members who retired prior to  
            January 1, 1999 but reinstate to active teaching for at least  
            one year.  This would allow STRS members who reinstate to gain  
            full advantage of the STRS benefit increases that became  
            effective on that date.

           1)Prior Legislation Vetoed.   Last year's SB 833 (Ortiz) would  
            have allowed members of CalSTRS who retired in 1998 to have  
            their retirement allowance automatically recalculated to  
            reflect the benefit increases which became effective in 1999,  
            without reinstatement.  Governor Davis vetoed this bill.

           Analysis Prepared by  :    Stephen Shea / APPR. / (916) 319-2081