Bill Text

Bill Information

Add To My Favorites | print page

SB-1465 State teachers’ retirement.(2005-2006)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
SB1465:v94#DOCUMENT

Senate Bill No. 1465
CHAPTER 654

An act to amend Sections 22115, 22217, 22362, 22803, 22820, 23852, 23855, and 24410.6 of, and to add Section 22404 to, the Education Code, relating to state teachers’ retirement, and making an appropriation therefor.

[ Approved by Governor  September 29, 2006. Filed with Secretary of State  September 29, 2006. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 1465, Soto. State teachers’ retirement.
(1) Under existing law, the compensation earnable for a member of the State Teachers’ Retirement System employed by a community college prior to July 1, 1996, is defined by a specified number of hours based on provisions in effect on June 30, 1996.
This bill would permit the Teachers’ Retirement Board to establish and implement certain factors and assumptions to determine the compensation earnable of a member employed by a community college prior to July 1, 1996.
(2) Existing law requires the Teachers’ Retirement Board to employ a certified public accountant or public accountant, who is not in public employment, to annually audit the financial statements of the State Teachers’ Retirement System. Existing law requires the board to file a copy of the audit report with the Governor, the Secretary of the Senate, and the Chief Clerk of the Assembly.
This bill would instead require that the audit report be incorporated into the annual report filed with the Governor and the Legislature.
(3) Existing law requires the Teachers’ Retirement Board to give first priority to investing not less than 25% of all funds of the plan that become available in a fiscal year for new investments in specified real estate investments. Upon a specified determination, the board is permitted to substitute higher yielding investments, to the extent these are actually available for acquisition. In this case, the board is required to provide certain information regarding estimates to the Governor and the Joint Legislative Audit Committee, as specified.
This bill would eliminate the requirement that this information be provided upon the substitution of higher yielding investments.
(4) Existing law permits a member of the Defined Benefit Program of the State Teachers’ Retirement System to receive credit for specified service.
This bill would permit a member of the Defined Benefit Program of the State Teachers’ Retirement System to receive up to 2 years’ service credit for time served as a member of the Peace Corps, as specified.
(5) Existing law authorizes a state agency, upon authorization of the Franchise Tax Board, to forego collection of taxes, licenses, fees, or money owing to the state for any reason if the amount to be collected is $250 or less.
This bill would permit the board to establish a specified amount or amounts below which the State Teachers’ Retirement System may dispense with adjustments of benefit payments, not to exceed $10.
(6) Existing law allows a member of the State Teachers’ Retirement System to purchase service credit for out-of-state service credited in a public retirement system for service performed in public education in another state or territory of the United States, as specified.
This bill would revise these provisions to eliminate the requirement that the out-of-state service be credited in a public retirement system. The bill would apply these provisions to service for teaching performed while employed by a public educational institution, as specified, or as an employee of the United States.
(7) The State Teachers’ Retirement System provides for certain death benefits to be paid to the spouse, registered domestic partner, children, and the beneficiary of eligible members under specified circumstances. If a surviving spouse or registered domestic partner elect to receive a lump-sum return of a members’ accumulated contributions, then a survivor benefit allowance is not paid.
This bill would provide that, if there is not an eligible surviving spouse or domestic partner, each eligible dependent child or children, if any, shall receive the child’s portion of the survivor benefit allowance, subject to certain limits.
(8) This bill would make additional conforming, technical, and nonsubstantive changes to these provisions.
This bill would also appropriate $290,000 from the Teachers’ Retirement Fund to the Teachers’ Retirement Board to fund the expenditures required by this act.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 22115 of the Education Code is amended to read:

22115.
 (a) “Compensation earnable” means the creditable compensation a person could earn in a school year for creditable service performed on a full-time basis, excluding service for which contributions are credited by the system to the Defined Benefit Supplement Program.
(b) The board may determine compensation earnable for persons employed on a part-time basis.
(c) When service credit for a school year is less than 1.000, compensation earnable shall be the quotient obtained when creditable compensation paid in that year is divided by the service credit for that year, except as provided in subdivision (d).
(d) When a member earns creditable compensation at multiple pay rates during a school year and service credit at the highest pay rate is at least 0.900 of a year, compensation earnable shall be determined as if all service credit for that year had been earned at the highest pay rate. This subdivision shall be applicable only for purposes of determining final compensation. When a member earns creditable compensation at multiple pay rates during a school year and service credit at the highest pay rate is less than 0.900 of a year, compensation earnable shall be determined pursuant to subdivision (c).
(e) (1) For purposes of determining compensation earnable for a member employed by a community college prior to July 1, 1996, full time shall be defined pursuant to Section 22138.5 and pursuant to Section 20521 of Title 5 of the California Code of Regulations, as those provisions read on June 30, 1996, if application of that definition will increase the compensation earnable or otherwise enhance the benefits of the member.
(2) For purposes of administering this subdivision, the board shall have the authority to do both of the following:
(A) Establish and implement factors and assumptions necessary to calculate and compare the benefits payable under the definition of compensation earnable described in this subdivision. Those factors and assumptions may be based on information reported by the employer, including, but not limited to, all of the following:
(i) Base hours.
(ii) Actual earnings.
(iii) Compensation earnable.
(B) Review member benefit calculations that were performed using the factors and assumptions described in subparagraph (A). If the board determines that an employer failed to identify part-time service performed, the board shall consider that part-time service to be performed in a part-time lecture assignment as defined by the employer. If the board determines by the review of the member benefit calculations that the required information reported by the employer is inaccurate, incomplete, or the factors and assumptions were applied incorrectly, the board may recalculate member benefits using additional factors and assumptions that may include, but are not limited to, all of the following:
(i) Base hours.
(ii) Actual earnings.
(iii) Compensation earnable.
(3) This subdivision shall apply to a member employed by a community college prior to July 1, 1996, if the community college subsequently acts to reduce the minimum standard for full time as described in subdivision (c) of Section 22138.5 and that community college provides written notice to the system of the act of the community college to reduce that minimum standard.
(4) This subdivision shall not apply to a member employed by a community college that has not reduced the minimum standard as described in subdivision (c) of Section 22138.5.

SEC. 2.

 Section 22217 of the Education Code is amended to read:

22217.
 (a) The board shall employ a certified public accountant or public accountant, who is not in public employment, to audit the financial statements of the system. The costs of the audit shall be paid from the income of the retirement fund. The audit shall be made annually and the audit report shall be incorporated into the annual report filed with the Governor and the Legislature pursuant to Section 22324.
(b) These audits shall not be duplicated by the Department of Finance or the State Auditor. The system shall be exempt from a pro rata general administrative charge for auditing.

SEC. 3.

 Section 22362 of the Education Code is amended to read:

22362.
 (a) Notwithstanding any other provision of law, the board shall give first priority to investing not less than 25 percent of all funds of the plan that become available in a fiscal year for new investments, in any of the following:
(1) Obligations secured by a lien or charge solely on residential realty, including rental housing, located in the state and on the security of which, commercial banks are permitted to make loans pursuant to Article 2 (commencing with Section 1220) of Chapter 10 of Division 1 of the Financial Code.
(2) Securities representing a beneficial interest in a pool of obligations secured by a lien or charge solely on residential realty located in the state.
(3) Certificates of deposit issued by savings and loan associations, if the savings and loan associations agree to make loans, or to fund tax-exempt notes or bonds issued by housing authorities, cities, or counties, on residential realty located in the state, including rental housing, in an amount equal to the amount of the deposit.
(b) Funds subject to investment pursuant to this section include all moneys received as employer and member contributions, investment income, and the proceeds from all net gains and losses from securities, reduced by the amount of benefit payments and withdrawals occurring during the fiscal year. In computing the amount of investment pursuant to this section, a dollar-for-dollar credit shall be given for residential realty investments described in this section that are contractually agreed to be made by a financial institution from which the board, in consideration thereof, purchases other such investments. In computing the amount of investment pursuant to this section, the board may elect to include the dollar amount of commitments to purchase mortgages from public revenue bond programs in the year the commitment is given. However, that election may not exceed one-fifth of the total guideline amount.
(c) Nothing in this section shall be construed to require the acquisition of any instrument or security at less than the market rate.
(d) If the board determines during any fiscal year that compliance with this section will result in lower overall earnings for the retirement fund than obtainable from alternative investment opportunities that would provide equal or superior security, including guarantee of yield, the board may substitute those higher yielding investments, to the extent actually available for acquisition, for the investments otherwise specified by this section. Additionally, if, and to the extent that, adherence to the diversification guideline specified in this section would conflict with its fiduciary obligations in violation of Section 9 of Article I of the California Constitution or Section 10 of Article I of the United States Constitution, or would conflict with the standard for prudent investment of the fund as set forth in Section 17 of Article XVI of the California Constitution, the board may substitute alternative investments.
(e) The board, upon determining the final amount of funds available for investment in substitute alternative investments and the estimated amount of funds invested pursuant to subdivision (a), shall submit that information to the Governor and the Joint Legislative Audit Committee. Thereafter, the Joint Legislative Audit Committee shall transmit the report of the State Auditor to the Speaker of the Assembly and the Senate Committee on Rules for transmittal to the affected policy committees.

SEC. 4.

 Section 22404 is added to the Education Code, to read:

22404.
 (a) Notwithstanding any other provision of this part or Part 14 to the contrary, the board may establish by plan amendment a specified amount or amounts, not to exceed ten dollars ($10), below which the system may dispense with the processing of benefit payments or collection of benefit overpayments that result from adjustments made to the benefit paid to a member, participant, or beneficiary.
(b) When the cumulative dollar amount associated with one or more benefit adjustments equals or exceeds the amount described in subdivision (a), that amount shall be paid to, or collected from, the member, participant, or beneficiary. That cumulative amount paid or collected shall not be credited with interest.

SEC. 5.

 Section 22803 of the Education Code is amended to read:

22803.
 (a) A member may elect to receive credit for any of the following:
(1) Service performed in a teaching position in a publicly supported and administered university or college in this state not covered by another public retirement system.
(2) Service performed in a certificated teaching position in a child care center operated by a county superintendent of schools or a school district in this state.
(3) Service performed in a teaching position in the California School for the Deaf or the California School for the Blind, or in special classes maintained by the public schools of this state for the instruction of the deaf, the hard of hearing, the blind, or the semisighted.
(4) Service performed in a certificated teaching position in a federally supported and administered Indian school in this state.
(5) Time served, not to exceed two years, in a certificated teaching position in a job corps center administered by the United States government in this state if the member was employed to perform creditable service subject to coverage under the Defined Benefit Program within one year prior to entering the job corps and returned to employment to perform creditable service subject to coverage under the Defined Benefit Program within six months following the date of termination of service in the job corps.
(6) Time served, not to exceed two years, in a teaching position as a member of the Peace Corps if the member was employed to perform creditable service subject to coverage under the Defined Benefit Program within one year prior to entering the Peace Corps and returned to employment to perform creditable service subject to coverage under the Defined Benefit Program within six months following the date of termination of service in the Peace Corps.
(7) Time spent on a sabbatical leave, approved by an employer in this state, after July 1, 1956.
(8) Time spent on an approved leave, approved by an employer in this state, to participate in any program under the federal Mutual Educational and Cultural Exchange Program.
(9) Time spent on an approved maternity or paternity leave of two years or less in duration, regardless of whether or not the leave was taken before or after the addition of this subdivision.
(10) Time spent on an approved leave, up to four months in any 12-month period, for family care or medical leave purposes, as defined by Section 12945.2 of the Government Code, as it read on the date leave was granted, excluding maternity and paternity leave.
(11) Time spent employed by the Board of Governors of the California Community Colleges in a position subject to coverage by the Public Employees’ Retirement System between July 1, 1991, and December 31, 1997, provided the member has elected to return to coverage under the State Teachers’ Retirement System pursuant to Section 20309 of the Government Code.
(b) In no event shall the member receive credit for service or time described in paragraphs (1) to (11), inclusive, of subdivision (a) if the member has received or is eligible to receive credit for the same service or time in the Cash Balance Benefit Program under Part 14 (commencing with Section 26000) or another retirement system.

SEC. 6.

 Section 22820 of the Education Code is amended to read:

22820.
 (a) A member, other than a retired member, may elect to purchase credit for out-of-state service for service performed in a position while employed by a public educational institution located in another state or territory of the United States, or for educational service performed as an employee of the United States. The member may not receive credit for this service if the member retains or is eligible to receive credit for the same service in the Cash Balance Benefit Program under Part 14 (commencing with Section 26000) or another public retirement system, excluding social security.
(b) The amount of out-of-state service for which a member may purchase credit may not exceed the number of years of service performed by the member in a position described in subdivision (a).
(c) Out-of-state service credit may be purchased under this section by means of any of the following actions:
(1) Paying an amount equal to the amount refunded from the other public retirement system and receiving service credit under the Defined Benefit Program pursuant to subdivision (a) of Section 22823.
(2) Paying the contributions required under the Defined Benefit Program pursuant to subdivision (a) of Section 22823 for the service credited in the other public retirement system.
(3) Paying an amount equal to the amount refunded from the other public retirement system and an additional amount in accordance with subdivision (a) of Section 22823 for the service credited in the other public retirement system.
(4) Paying the contributions required under the Defined Benefit Program pursuant to subdivision (a) of Section 22823 for the service not credited to a public retirement system.
(d) Compensation for out-of-state service may not be used in determining the highest average annual compensation earnable when calculating final compensation.
(e) The service credit purchased under this section may not be used to meet the eligibility requirements for benefits provided under Sections 24001 and 24101.

SEC. 7.

 Section 23852 of the Education Code is amended to read:

23852.
 Upon receipt of proof of death of a member who has no preretirement option in effect:
(a) The surviving spouse may elect to receive either of the following:
(1) The member’s accumulated retirement contributions in a lump sum.
(2) The survivor benefit allowance pursuant to Sections 23854 and 23855.
(b) If there is no eligible surviving spouse, each eligible dependent child or children shall receive the child’s portion of the survivor benefit allowance pursuant to Sections 23854, 23855, and 23856. The child’s portion of the survivor benefit allowance shall be paid in lieu of the return of the member’s accumulated retirement contributions.
(c) If there is no eligible surviving spouse or eligible dependent child or children, the member’s accumulated retirement contributions shall be paid to the member’s beneficiary in a lump sum.
(d) The member’s accumulated annuity deposit contributions shall be paid to the member’s beneficiary in a lump sum.
(e) The payment of accumulated contributions in a lump sum shall include credited interest through the date of payment.

SEC. 8.

 Section 23855 of the Education Code is amended to read:

23855.
 (a) The survivor benefit allowance is a monthly allowance equal to one-half of the modified retirement allowance the member would have received at 60 years of age, if the member had retired and elected Option 3 pursuant to Section 24300, naming the spouse as the option beneficiary.
(b) The allowance payable under this subdivision shall be based on the member’s actual service credit and final compensation as of the date of his or her death, the retirement factor at 60 years of age, and the member’s and spouse’s ages as of the date the member would have attained 60 years of age. If the member’s death occurs after he or she attains 60 years of age, his or her actual final compensation, the retirement factor at 60 years of age, and the member’s and spouse’s ages as of the date of the member’s death shall be used in the allowance calculation.
(c) The allowance calculation shall include service credit for the unused sick leave that had accrued to the member as of the date of his or her death. Eligibility for the inclusion of unused sick leave service credit and the calculation of that service credit shall be determined pursuant to Section 22717.
(d) (1) The allowance calculation shall not include either of the following:
(A) The increase in the percentage of final compensation pursuant to Section 24203.5.
(B) The increase of the monthly allowance pursuant to Section 24203.6.
(2) The amendments to this section made by the act adding this paragraph do not constitute a change in, but are declaratory of, existing law.
(e) The surviving spouse may elect to begin receiving the survivor benefit allowance immediately as of the date of the member’s death or to defer receipt of the allowance to the date the member would have attained 60 years of age. If allowance payments to the surviving spouse commence prior to the date the member would have attained 60 years of age, the allowance payable shall be actuarially reduced.
(f) If the spouse elects, pursuant to Section 23852, to receive the survivor benefit allowance, an additional 10 percent of final compensation shall be payable for each dependent child who is under 21 years of age, up to a maximum of 50 percent of final compensation. The child’s portion shall begin to accrue on the day following the member’s date of death and shall be payable even if the spouse elects to postpone receipt of the spouse’s survivor benefit allowance until the date the member would have attained 60 years of age.
(g) If there is no surviving spouse, an allowance in an amount equal to 10 percent of the deceased member’s final compensation shall be paid to each dependent child who is under 21 years of age, up to a maximum of 50 percent of final compensation. If there are more than five dependent children, they shall receive allowances in equal shares of the 50 percent of final compensation. A child’s portion of the survivor benefit allowance shall begin to accrue on the day following the member’s date of death.

SEC. 9.

 Section 24410.6 of the Education Code is amended to read:

24410.6.
 (a) Notwithstanding any provision of this part, including, but not limited to, subdivision (e) of Section 22664, and except as provided in subdivisions (b) and (c), the annual allowance payable on the effective date of this section to a retired member, an option beneficiary, or a surviving spouse receiving an allowance pursuant to either Section 23805 or 23855 shall not be less than the amount identified in the following schedule for the number of years of the member’s credited service under the Defined Benefit Program at the time of the member’s retirement, disability, or death, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, after the application of all allowances and allowance increases authorized by this part, including those specified in Sections 24412 and 24415, as those sections read on December 31, 2000, and excluding increases authorized by Section 24410.7 and annuities payable from the accumulated annuity deposit contributions or the accumulated tax-sheltered annuity contributions:
20 years of credited service ........................
$15,000
21 years of credited service ........................
$15,500
22 years of credited service ........................
$16,000
23 years of credited service ........................
$16,500
24 years of credited service ........................
$17,000
25 years of credited service ........................
$17,500
26 years of credited service ........................
$18,000
27 years of credited service ........................
$18,500
28 years of credited service ........................
$19,000
29 years of credited service ........................
$19,500
30 years or more of credited service ........................
$20,000
(b) Notwithstanding subdivision (a), the amount identified in the schedule in subdivision (a) shall be reduced:
(1) By 50 percent for a beneficiary receiving an allowance under Option 3 or Option 7.
(2) By one-third for an option beneficiary receiving an allowance under Option 4 after the death of the member or for a member receiving an allowance under Option 4 after the death of the option beneficiary.
(3) By 50 percent for an option beneficiary receiving an allowance under Option 5 after the death of the member or for a member receiving an allowance under Option 5 after the death of the option beneficiary.
(4) By a percentage equal to 100 percent minus the percentage of the member’s modified allowance received by the option beneficiary for each option beneficiary receiving an allowance under Option 8.
(5) By 60 percent for a surviving spouse receiving an allowance pursuant to subdivision (a) of Section 23805.
(6) By 50 percent for a surviving spouse receiving an allowance pursuant to subdivision (c) of Section 23805 or Section 23855.
(c) A benefit shall be paid pursuant to this section if both of the following apply:
(1) The retired member, the option beneficiary, or the surviving spouse had an allowance payable on January 1, 2000, and was not eligible to receive a benefit pursuant to Section 24410.5.
(2) The retired member or the member whose service was the basis of the allowance payable to the option beneficiary or surviving spouse was one of the following:
(A) A member who retired prior to the age of 55 years, provided the minimum allowance specified in subdivision (a) shall be reduced to an amount equal to that minimum allowance multiplied by the ratio of the percentage of final compensation per year of credited service on which the member’s initial allowance was based to 1.4.
(B) A member who was paid a retirement allowance pursuant to Section 24211, 24212, or 24213, if the member’s credited service, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, was less than 20 years but whose projected service to normal retirement age, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, was equal to or greater than 20 years, provided that the minimum allowance payable shall be based on 20 years of credited service.
(C) A member who retired as an inactive member.
(D) A member who retired prior to March 21, 1974, with 19.5 years or more of credited service, provided that the minimum allowance payable shall be based on 20 years of credited service.
(E) A member who retired on or after March 21, 1974, and prior to January 1, 2000, and whose credited service, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, was less than 20 years, but whose credited service, excluding service credited pursuant to Sections 22714, 22715, and 22826, but including service credited pursuant to Section 22717, was equal to or greater than 20 years, provided that the minimum allowance payable shall be based on 20 years of credited service.
(F) A member whose credited service, excluding service credited pursuant to Sections 22714, 22715, and 22826, but including credited service that a court has ordered be awarded to the member’s nonmember spouse pursuant to Section 22652, equaled at least 20 years, provided that the amount payable to the member pursuant to this section shall be based on the amount of service credited to the member, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, and the amount awarded to the nonmember spouse, and further provided that the minimum allowance specified in subdivision (a) shall be reduced to an amount equal to that minimum allowance multiplied by the ratio of (i) the amount of service credited to the member, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, to (ii) the sum of the amount of service credited to the member, excluding service credited pursuant to Sections 22714, 22715, 22717, and 22826, and the amount awarded to the nonmember spouse.
(d) A benefit shall be paid pursuant to this section to a retired member receiving a benefit pursuant to Section 24410.5 if (1) the member meets the criteria of subparagraph (F) of paragraph (2) of subdivision (c), and (2) the allowance payable under that subparagraph, after the application of all allowances and allowance increases authorized by this part, including those specified in Sections 24412 and 24415, is greater than the allowance payable under Section 24410.5, after the application of all allowances and allowance increases authorized by this part, including those specified in Sections 24412 and 24415.
(e) A retired member, option beneficiary, or surviving spouse subject to this section shall receive the annual minimum allowance pursuant to this section unless the system receives in writing, on a form prescribed by the system, notification from the member, option beneficiary, or surviving spouse of his or her election not to receive the increase provided under this section.
(f) Benefits payable under this section shall be initially paid by the system on or before September 1, 2001.
(g) The amendments to this section made by the act adding this subdivision does not constitute a change in, but is declaratory of, the existing law.

SEC. 10.

 The sum of two hundred ninety thousand dollars ($290,000) is hereby appropriated from the Teachers’ Retirement Fund to the Teachers’ Retirement Board to fund expenditures required by the provisions of this act.