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SB-1094 State Teachers’ Retirement Plan: creditable compensation.(2005-2006)

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SB1094:v98#DOCUMENT

Amended  IN  Senate  April 12, 2005

CALIFORNIA LEGISLATURE— 2005–2006 REGULAR SESSION

Senate Bill
No. 1094


Introduced  by  Senator Soto

February 22, 2005


An act to amend Section 31007 of the Government 22119.2 of the Education Code, relating to retirement.


LEGISLATIVE COUNSEL'S DIGEST


SB 1094, as amended, Soto. County employees retirement. State Teachers’ Retirement Plan: creditable compensation.
Members of the Defined Benefit Program of the State Teachers’ Retirement Plan receive service retirement benefits calculated, in part, on the members’ final compensation. An element in the calculation of final compensation is creditable compensation, as defined, which excludes certain types of remuneration, including fringe benefits.
This bill would specify that housing stipends and car allowances are fringe benefits that are excluded from the definition of creditable compensation.

The County Employees Retirement Law of 1937 sets forth a comprehensive system retirement benefits for county and district employees.

This bill would make technical, nonsubstantive changes to these provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.Section 31007 of the Government Code is amended to read:
31007.

This part does not require or authorize the employment of any person in a particular county employment who has reached the compulsory retirement age prescribed by a county employees’ retirement system for that particular employment whether the person is a member of the county employees’ retirement system or not.

SECTION 1.

 Section 22119.2 of the Education Code is amended to read:

22119.2.
 (a) “Creditable compensation” means remuneration that is payable in cash by an employer to all persons in the same class of employees and is paid to an employee for performing creditable service. Creditable compensation shall include:
(1) Salary paid in accordance with a salary schedule or employment agreement.
(2) Remuneration that is paid in addition to salary, providing it is payable to all persons who are in the same class of employees in the same dollar amount, the same percentage of salary, or the same percentage of the amount being distributed.
(3) Remuneration that is paid for the use of sick leave, vacation, and other employer-approved leave, except as provided in paragraph (4) of subdivision (c).
(4) Member contributions that are picked up by an employer pursuant to Section 22903 or 22904.
(5) Amounts that are deducted from a member’s compensation, including, but not limited to, salary deductions for participation in a deferred compensation plan; deductions to purchase an annuity contract, tax- deferred retirement plan, or insurance program; and contributions to a plan that meets the requirements of Section 125, 401(k), or 403(b) of Title 26 of the United States Code.
(6) Any other payments the board determines to be “creditable compensation.”
(b) Any salary or other remuneration determined by the board to have been paid for the principal purpose of enhancing a member’s benefits under the plan shall not be credited under the Defined Benefit Program. Contributions on that compensation shall be credited to the Defined Benefit Supplement Program. A presumption by the board that salary or other remuneration was paid for the principal purpose of enhancing the member’s benefits under the plan may be rebutted by the member or by the employer on behalf of the member. Upon receipt of sufficient evidence to the contrary, a presumption by the board that salary or other remuneration was paid for the principal purpose of enhancing the member’s benefits under the plan may be reversed.
(c) “Creditable compensation” does not mean and shall not include:
(1) Remuneration that is not payable in cash or is not payable to all persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable service pursuant to Section 22119.5.
(3) Remuneration that is paid in addition to salary if it is not payable to all persons in the same class of employees in the same dollar amount, the same percentage of salary, or the same percentage of the amount being distributed pursuant to paragraph (2) of subdivision (a).
(4) Remuneration that is paid for unused accumulated leave.
(5) Annuity contracts, tax-deferred retirement plans, or insurance programs and contributions to plans that meet the requirements of Section 125, 401(k), or 403(b) of Title 26 of the United States Code when the cost is covered by an employer and is not deducted from the member’s salary.
(6) Fringe benefits provided by an employer, including, but not limited to, housing stipends or car allowances.
(7) Job-related expenses paid or reimbursed by an employer.
(8) Severance pay or compensatory damages or money paid to a member in excess of salary as a compromise settlement.
(9) Any other payments the board determines not to be “creditable compensation.”
(d) An employer or individual who knowingly or willfully reports compensation in a manner inconsistent with subdivision (a) or (c) shall reimburse the plan for benefit overpayments that occur because of that inconsistent reporting and may be subject to prosecution for fraud, theft, or embezzlement in accordance with the Penal Code. The system may establish procedures to ensure that compensation reported by an employer is in compliance with this section.
(e) For purposes of this section, remuneration shall be considered payable if it would be paid to any person who meets the qualifications or requirements specified in a collective bargaining agreement or an employment agreement as a condition of receiving the remuneration.
(f) This definition of “creditable compensation” reflects sound principles that support the integrity of the retirement fund. Those principles include, but are not limited to, consistent treatment of compensation throughout a member’s career, consistent treatment of compensation among an entire class of employees, preventing adverse selection, and excluding from compensation earnable remuneration that is paid for the principal purpose of enhancing a member’s benefits under the plan. The board shall determine the appropriate crediting of contributions between the Defined Benefit Program and the Defined Benefit Supplement Program according to these principles, to the extent not otherwise specified pursuant to this part.
(g)  The section shall become operative on July 1, 2002, if the revenue limit cost-of-living adjustment computed by the Superintendent of Public Instruction for the 2001–02 fiscal year is equal to or greater than 3.5 percent. Otherwise this section shall become operative on July 1, 2003.