AB 2663 — Teachers' Retirement Law.

Summary

(1) The Teachers' Retirement Law, which is administered by the Teachers' Retirement Board, prescribes a comprehensive system of rights and benefits for members of the State Teachers' Retirement System (STRS) . That law establishes the Defined Benefit Program, which provides service and disability retirement benefits to members, subject to members and employers making specified contributions to the Teachers' Retirement Fund for that purpose, and also establishes the Defined Benefit Supplement Program to provide supplemental benefits for members of the Defined Benefit Plan. Under that law, any salary or other remuneration determined by the board to have been paid for the principle purpose of enhancing a member's benefits under the plan is not credited under the Defined Benefit Program, but contributions on that compensation are credited to the Defined Benefit Supplement Program. This bill would expand the application of that provision, by replacing the term "salary or other remuneration" with "creditable compensation," as defined. (2) Existing law requires the Teachers' Retirement Board to file an annual report with the Governor and the Legislature by March 1 of each year, accompanied by specified information on the assets of the plan, including a certification letter from the system's consulting actuary concerning the findings of the most recent actuarial valuation, along with summaries of the actuarial cost method, assumptions, and demographic data. Existing law also requires the board to annually report other investment information, including the cost of investment contracts used, to the Governor, the Legislature, the Department of Finance, and the Joint Legislative Budget Committee. This bill would revise, recast, and consolidate these reporting requirements. Among other changes, the bill would require that the certification letter from the system's consulting actuary concerning the most recent actuarial valuation, provided along with the annual report, be accompanied by analysis of funding progress and include actual payroll subject to the system. The bill would require the board, as part of the annual report to the Governor and the Legislature, to also provide a report on the nature and cost of investment contract services used and a report for the prior fiscal year on the percentage of purchasing power protection and any changes adopted by the board, the extent to which inflation has eroded purchasing power of benefits, and other related information. The bill would delete a requirement that the board report to the fiscal committees of the Legislature and to the Director of Finance on the return on investments and actual payroll for the prior fiscal year and would also delete a requirement that the board report to the Governor, the Legislature, and the Joint Legislative Budget Committee on the nature, duration, and cost of investment contract services used. The bill would additionally delete a provision requiring the board report to the Governor and the Legislature no later than June 1 of each year on the extent to which inflation has eroded the purchasing power of benefits provided under the Defined Benefit Program. (3) Existing law allows the Teachers' Retirement Board to perform any acts necessary for the administration of the STRS. Existing law also requires each member or beneficiary of the system to furnish to the board any information affecting his or her status as a member or beneficiary of the Defined Benefit Program as the board requires. Existing law also requires the county superintendent and other employing agencies to furnish any further information concerning any member or beneficiary the board may require. This bill would further require that any information or report required to be submitted to the system by an employer pursuant to specified provisions of law be submitted in a form, including, but not limited to, electronic transmission, as directed by the system. (4) Under the Teachers' Retirement Law, upon retaining the services of a retired member, the school district, community college district, county superintendent of schools, California State University, or other employing agency is required to advise the retired member of certain limits on earnings and to maintain accurate records of the retired member's earnings. This bill would require those employing agencies to also advise a retired member who is receiving a disability retirement or who is subject to postretirement employment within the California public school system, pursuant to specified provisions, of these earning limits, and to maintain accurate earnings' records. (5) The Teachers' Retirement Law grants a member credit, at service retirement, for each day of accumulated and unused leave of absence for illness or injury for which full salary is allowed to which the member was entitled on the member's final day of employment with the employer subject to coverage by the Defined Benefit Program. This bill would instead grant a member credit, at service retirement, for each day of accumulated sick leave days for which full salary is allowed to which the member was entitled on the member's final day of employment with the employer or employers subject to coverage by the Defined Benefit Program during the last school year in which he or she performed creditable service. The bill would require STRS to accept certification from each employer for that period with which the member has accumulated unused sick leave, if this leave has not been transferred to another employer. (6) Under existing law, the Teachers' Retirement Board is required to bill school employers for service credit granted for unused excess sick leave. These provisions require that excess sick leave days granted by an employer other than the member's last employer be deemed to be granted by the last employer and be included in the certification if the member was eligible to use those excess sick leave days while he or she was employed by the last employer. This bill would additionally specify that if, during the last year a member is employed to perform creditable service subject to coverage by the Defined Benefit Program that member is employed by more than one employer, unused excess sick leave days shall be certified and paid for by the employer for the period in which the member was eligible to use those excess sick leave days. (7) Existing law requires the Controller, in cases in which a county superintendent has failed to make payment of assessments by the Teachers' Retirement Board, upon order of the board, to withhold subsequent payments from the State School Fund to the county, or to take other related actions until the contributions are received. This bill would apply this requirement to district superintendents, chancellors of a community college district, or other employing agencies that report directly to the retirement system. (8) Under the Teachers' Retirement Law, a survivor benefit allowance is payable upon the death of a member of the Defined Benefit Program who has one or more years of credited service, upon meeting certain conditions. These conditions include that the member's death occurs during specified periods, including, among others, that death occurs within 4 months after termination of a disability allowance. This bill would delete that condition. (9) Existing law authorizes a retired member of STRS to perform specified activities as an employee in the system, an employee of a 3rd party, or as an independent contractor within the California public school system, but prohibits the member from making contributions to the retirement fund or accruing service credit based on compensation earned from that service. Existing law conditions this authorization on a variety of factors, including that a member not be required to reinstate for performing specified work, and allows a member to earn limited compensation as "creditable service" for those activities without a reduction in his or her retirement allowance. Existing law establishes the Cash Balance Benefit Program, administered by the State Teachers' Retirement Board, as a separate benefit program within the State Teachers' Retirement Plan. This bill would expand the authorization to perform postretirement work to include additional employment activities that within the definition of "creditable service" under the Cash Balance Benefit Program. (10) Existing law requires STRS to reduce the retirement allowance of a retired member who performs postretirement service that exceeds specified limitations for that work by the amount of the excess compensation. Existing law specifies that the amount of the reduction may be equal to the monthly allowance payable, but may not exceed the amount of the annual allowance payable under the retirement system for the fiscal year in which the excess compensation was earned. This bill would further specify that this reduction may not exceed the remaining amount of the annual allowance payable for the fiscal year in which the excess compensation was earned after any reduction is made, as specified. (11) Existing law requires STRS to make an electronic copy of benefit payment information available to any member, nonmember spouse, or beneficiary who receives a monthly benefit payment, and requires STRS to send a copy of this information to those individuals when there is an adjustment in the allowance or change in the amount deducted from the allowance. This bill would require that information to be provided when there is an adjustment in the allowance due to an annual benefit enhancement, as specified, or a change in the amount deducted from the allowance due to an adjustment to an income tax withholding tax table made by the Internal Revenue Service or the Franchise Tax Board, except as specified. (12) Under the Teachers' Retirement Law, if a participant who is retired for service and is receiving an annuity under the Cash Balance Benefit Program is below the normal retirement age and earns compensation for performing certain employment activities, the participant's annuity is required to be reduced by the amount of the compensation. That law prohibits the reduction from exceeding the annual annuity payable for the fiscal year in which the compensation was earned. This bill would instead prohibit the reduction from exceeding the amount of the annuity payable during the first 180 calendar days after a participant is retired for service, if the participant is below the normal retirement age at the time the compensation is earned. (13) Existing law requires all net revenues, moneys, and remittances from the use of school lands and lieu lands to be deposited in the State Treasury to the credit of the Teachers' Retirement Fund and to be expended, as specified. This bill would correct an erroneous cross-reference in that provision. (14) The bill would also provide that if any other provision of any act that is enacted by the Legislature during the 2012 calendar year amends, amends and renumbers, adds, repeals and adds, or repeals a section contained in this act, that provision would prevail over this act, regardless of when that other act is chaptered. (15) The bill would also make certain technical, nonsubstantive changes to the provisions above.

Bill Text

• Chaptered 09/30/12 - Chaptered Current pdf September 30, 2012
• Enrolled 09/07/12 - Enrolled pdf September 07, 2012
• Amended 06/20/12 - Amended Senate pdf June 20, 2012
• Introduced 02/29/12 - Introduced pdf February 29, 2012
• AB2663 View text html

Action History

1. September 30, 2012

   Chaptered by Secretary of State - Chapter 864, Statutes of 2012.

2. September 30, 2012

   Approved by the Governor.

3. September 11, 2012

   Enrolled and presented to the Governor at 12:30 p.m.

4. August 28, 2012

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 79. Noes 0. Page 6428.).

5. August 27, 2012

   Assembly Rule 77 suspended. (Page 6357.)

6. August 24, 2012

   In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 28 pursuant to Assembly Rule 77.

7. August 23, 2012

   Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0. Page 4784.).

8. August 15, 2012

   Ordered to special consent calendar.

9. August 08, 2012

   Read second time. Ordered to third reading.

10. August 07, 2012

    From committee: Do pass. (Ayes 7. Noes 0.) (August 6).

11. June 26, 2012

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0.) (June 25). Re-referred to Com. on APPR.

12. June 20, 2012

    From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on P.E. & R.

13. May 24, 2012

    Referred to Com. on P.E. & R.

14. May 17, 2012

    In Senate. Read first time. To Com. on RLS. for assignment.

15. May 17, 2012

    Read third time. Passed. Ordered to the Senate. (Ayes 75. Noes 0. Page 4888.)

16. May 10, 2012

    Read second time. Ordered to consent calendar.

17. May 09, 2012

    From committee: Do pass. To consent calendar. (Ayes 17. Noes 0.) (May 9).

18. April 26, 2012

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (April 26). Re-referred to Com. on APPR.

19. March 22, 2012

    Referred to Com. on P.E., R. & S.S.

20. March 01, 2012

    From printer. May be heard in committee March 30.

21. February 29, 2012

    Read first time. To print.

Sponsors

• Retirement and Social Security Committee on Public Employees · Primary

Votes

Subjects