BILL NUMBER: SB 1693 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Ortiz
FEBRUARY 22, 2000
An act to amend Sections 24411, 24412, 24415, 24416, and 24417 of
the Education Code, relating to state teachers' retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 1693, as introduced, Ortiz. State teachers' retirement:
supplemental payments.
Under the State Teachers' Retirement Law, quarterly supplemental
payments are made to retired members, disabled members, and
beneficiaries from specified accounts to restore up to 75% of the
purchasing power of the initial monthly allowances provided under the
Defined Benefit Program, as specified.
This bill would provide that those supplemental payments shall be
made to restore up to 80% of the purchasing power of those
allowances.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 24411 of the Education Code is amended to read:
24411. (a) (1) Annual cost-of-living adjustments for retired
members, disabled members, and beneficiaries in excess of the
2-percent adjustment authorized by Section 22140 may be included as a
General Fund appropriation in the annual Budget Act. In the annual
budget submitted to the Legislature, the Governor shall include a
budget item equal to 5 percent of the average annualized statewide
increase in payroll for certificated personnel over the three
previous school years among school districts, county offices of
education, and community college districts.
(2) The amount submitted in the annual Budget Act pursuant to this
section shall be considered as part of the overall budget
allocations to the public schools and community colleges.
(b) The annual appropriation shall be made to the system on July
1, and shall be placed in a segregated account called the Retirees'
Purchasing Power Protection Account. The proceeds of that account
are continuously appropriated and shall be distributed annually in
quarterly payments commencing on September 1 to retired members,
disabled members, and beneficiaries as follows:
(1) The proceeds shall be allocated among those retired members,
disabled members, and beneficiaries whose allowances, after applying
the 2-percent adjustment authorized by Section 22140, have the lowest
purchasing power percentage, based on the amount that would be paid
had the original allowance been increased by the increases in the
index then being used by the Department of Finance to measure changes
in the cost of living, increasing those allowances to a common
minimum purchasing power level. In any year in which the purchasing
power of the allowances of all retired members, disabled members, and
beneficiaries equals not less than 75 80
percent and additional funds remain from the allocation
authorized by this section, those funds shall be allocated by the
board to general accounts to reduce the unfunded actuarial liability
of the fund , if any .
(2) The board may deduct from the annual appropriation an amount
necessary for administrative expenses to implement this section.
(c) The board shall inform each recipient of benefits under
subdivision (b) that the increases are not cumulative, are not part
of the base allowance, and shall be available only as appropriated
annually in the Budget Act.
(d) The adjustments authorized by this section shall not be
included in the base allowance for purposes of calculating the
2-percent adjustment authorized by Section 22140.
(e) It is the ultimate intent and purpose of the
Legislature in amending this section by Chapters 323 and 780 of the
Statutes of 1983, to achieve a common minimum purchasing power level
equal to 75 percent of the purchasing power of the original
allowance. It is the present intent of the Legislature that until
adequate funds are available to fulfill the ultimate intent, those
persons whose allowances have been most impacted by inflation shall
be accorded first priority in receiving, pursuant to this section,
supplemental cost-of-living adjustments from the Retirees' Purchasing
Power Protection Account.
(f) This section shall not be operative in any fiscal
year during which, as determined by the board, distributions provided
for by Section 24415 are being made.
SEC. 2. Section 24412 of the Education Code is amended to read:
24412. (a) The annual revenues deposited to the Teachers'
Retirement Fund pursuant to Section 6217.5 of the Public Resources
Code are continuously appropriated without regard to fiscal year for
the purposes of this section and shall be distributed annually in
quarterly supplemental payments commencing on September 1 of each
year to retired members, disabled members, and beneficiaries. The
amount available for distribution in any year shall be the income for
that year from the sale or use of school lands and lieu lands, as
estimated by the State Lands Commission prior to the beginning of the
fiscal year, adjusted by the difference between the estimated and
actual income for the preceding fiscal year. The board shall deduct
from the revenues an amount necessary for administrative expenses to
implement this section.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Section 22140 and the annual supplemental payment as
defined in Section 24411, if any, are below 75
80 percent of original purchasing power. The purchasing
power calculation for each individual allowance shall be based on the
change in the All Urban California Consumer Price Index between June
of the calendar year of retirement and June of the fiscal year
preceding the fiscal year of the distribution. The allocation shall
provide a pro rata share of the amount needed to restore the
allowance payable, after sequential application of the current year
annual improvement factor and the supplemental payment under Section
24411, to 75 80 percent of original
purchasing power.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) In any year that the net revenues from school lands and lieu
lands is greater than that needed to adjust the allowances of all
retired members, disabled members, and beneficiaries to 75
80 percent of original purchasing power, the net
revenues in excess of that needed for distribution shall be used by
the board to reduce the unfunded actuarial obligation of the fund
, if any .
(e) The board shall inform each recipient of supplemental payments
under this section that the increases are not cumulative and are not
part of the base allowance.
SEC. 3. Section 24415 of the Education Code is amended to read:
24415. (a) The proceeds of the Supplemental Benefit Maintenance
Account shall be distributed annually in quarterly supplemental
payments commencing on September 1, 1990, to retired members,
disabled members, and beneficiaries. The amount available for
distribution in any fiscal year shall not exceed the amount necessary
to restore purchasing power up to 75 80
percent of the purchasing power of the initial monthly
allowance after the application of all allowance increases authorized
by this part, including those specified in Section 24412.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412, have the lowest purchasing power
percentage. The purchasing power calculation for each individual
shall be based on the change in the All Urban California Consumer
Price Index between June of the calendar year of retirement and June
of the fiscal year preceding the fiscal year of distribution. In any
year in which the purchasing power of the allowances of all retired
members, disabled members, and beneficiaries equals not less than
75 80 percent and additional funds
remain from the allocation authorized by this section, those funds
shall remain in the Supplemental Benefit Maintenance Account for
allocation in future years.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
not part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The adjustments authorized by this section are vested only up
to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Sections 22140 and 22141.
SEC. 4. Section 24416 of the Education Code is amended to read:
24416. (a) Beginning in the 1997-98 fiscal year, if the board
determines by June 30 of the then current fiscal year that the
Supplemental Benefit Maintenance Account will not have sufficient
funds to provide purchasing power of up to 75
80 percent for the subsequent fiscal year, the board, for that
year, may do either, or a combination of the following:
(1) Increase the employer contribution rate commencing in the next
fiscal year by an amount that would provide sufficient funds for no
more than the estimated difference between the funds in the
Supplemental Benefit Maintenance Account and the amount needed to pay
the benefit level specified by the board, provided the benefit level
is no more than 75 80 percent.
Notwithstanding any other provision of this part, the increase in the
employer contribution rate shall only become operative if the
increase is approved or authorized in the Budget Act.
(2) Reduce the supplemental benefit payment for the subsequent
fiscal year to the amount which can be funded by the available funds
in the Supplemental Benefit Maintenance Account.
(b) If the board finds that there is no unfunded obligation, as
determined by the board's professional consulting actuary and
affirmed by the Director of Finance, then in addition to the
authority pursuant to subdivision (a), the board may transfer to an
auxiliary Supplemental Benefit Maintenance Account, from any funds
that are in excess of the amount needed to fund fully the benefits
for which the Teachers' Retirement Fund is liable, an amount that
would provide sufficient funds for no more than the estimated
difference between the funds in the Supplemental Benefit Maintenance
Account and the amount needed to pay the benefit level specified by
the board, provided the benefit level is no more than 75
80 percent.
(c) If the board increases the employer contribution rate pursuant
to paragraph (1) of subdivision (a), the increase between the
current fiscal year contribution rate and the contribution rate in
the next fiscal year, shall not exceed one-quarter of 1 percent of
the creditable compensation upon which contributions are based.
SEC. 5. Section 24417 of the Education Code is amended to read:
24417. (a) The proceeds of an auxiliary Supplemental Benefit
Maintenance Account shall be distributed annually in quarterly
supplemental payments, commencing when funds in the Supplemental
Benefit Maintenance Account are insufficient to support 75
80 percent, to retired members, disabled
members, and beneficiaries. The amount available for distribution in
any fiscal year shall not exceed the amount necessary to restore
purchasing power up to 75 80 percent of
the purchasing power of the initial monthly allowance after the
application of all allowance increases authorized by this part,
including those specified in Section 24412 and Section 24415.
(b) The net revenues to be distributed shall be allocated among
those retired members, disabled members, and beneficiaries whose
allowances, after sequentially applying the annual improvement factor
as defined in Sections 22140 and 22141, and the annual supplemental
payment as defined in Section 24412 and Section 24415, have the
lowest purchasing power percentage. The purchasing power calculation
for each individual shall be based on the change in the All Urban
California Consumer Price Index between June of the calendar year of
benefit effective date and June of the fiscal year preceding the
fiscal year of distribution.
(c) The allowance increase shall not be applicable to annuities
payable from the accumulated annuity deposit contributions or the
accumulated tax-sheltered annuity contributions.
(d) The benefits provided by subdivision (b) are not cumulative,
nor part of the base allowance, and will be payable only to the
extent that funds are available from the Supplemental Benefit
Maintenance Account and the auxiliary Supplemental Benefit
Maintenance Account. The board shall inform each recipient of the
contents of this subdivision.
(e) The distributions authorized by this section are vested only
up to the amount payable as a result of the annual appropriation made
pursuant to Section 22954 and shall not be included in the base
allowance for purposes of calculating the annual improvement defined
by Section 22140 and 22141.