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AB-1316 State teachers’ retirement: disability.(2007-2008)

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AB1316:v97#DOCUMENT

Assembly Bill No. 1316
CHAPTER 332

An act to amend Sections 24001, 24101, 24205, and 24221 of, and to add Section 24201.5 to, the Education Code, relating to state teachers’ retirement.

[ Approved by Governor  October 08, 2007. Filed with Secretary of State  October 08, 2007. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1316, Bass. State teachers’ retirement: disability.
(1) The State Teachers’ Retirement Law permits a member of the Defined Benefit Program to elect from among several forms of retirement benefits based upon age, service credit, and final compensation. That law also permits a member of the Defined Benefit Program to apply for a disability allowance or disability retirement if the member has 5 or more years of credited service, and subject to specified requirements.
This bill would additionally permit a member of the Defined Benefit Program who is eligible and applies for a disability allowance or disability retirement to apply for and receive a service retirement pending a determination of his or her application for disability, and subject to specified requirements and restrictions. The bill would provide that a member may not cancel his or her application for disability prior to a determination of that application unless he or she submits a written request to the State Teachers’ Retirement System, as specified. The bill would permit a member to cancel his or her service retirement application or terminate his or her service retirement allowance pursuant to existing provisions of the State Teachers’ Retirement Law. The bill would also permit the State Teachers’ Retirement System to make appropriate adjustments to the applicable service retirement, disability allowance, or disability retirement of a member if the member cancels his or her service retirement application or terminates his or her service retirement allowance.
The bill would provide that if a member who applies for a service retirement pending a determination of his or her application for disability dies prior to a determination of the application for disability, any subsequent benefits payable to the member’s surviving spouse or beneficiary shall be based on the service retirement allowance, as specified. The bill would also provide that if a member who is granted a disability allowance or a disability retirement dies prior to receiving notification of the approval of his or her application for disability, the disability allowance or disability retirement shall be payable to the member’s surviving spouse or beneficiary, as specified.
The bill would further permit the State Teachers’ Retirement System to recover a service retirement allowance overpayment made to a member subject to these provisions by deducting that overpayment from any subsequent disability benefit payable to the member.
(2) That law permits a member of the Defined Benefit Program who is at least 55 years of age, and prior to reaching 60 years of age, to elect to receive 1/2 of the service retirement allowance for normal retirement age for a limited time and then revert to the full retirement allowance for normal retirement age. That law also permits a member of the Defined Benefit Program who retires for service prior to January 1, 2011, to elect to receive a lump-sum payment and an actuarially reduced monthly allowance in lieu of the monthly unmodified allowance that would otherwise be payable to the member.
This bill would provide that these provisions shall not apply to a member of the Defined Benefit Program who applies for a service retirement pending a determination of his or her application for disability.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 24001 of the Education Code is amended to read:

24001.
 (a) A member may apply for a disability allowance under the Defined Benefit Program if the member has five or more years of credited service and if all of the following requirements are met:
(1) At least four years were credited for actual performance of service subject to coverage under the Defined Benefit Program. Credit received because of workers’ compensation payments shall be counted toward the four-year requirement in accordance with Section 22710.
(2) The last five years of credited service were performed in this state.
(3) Except as described in subdivision (d) of Section 24201.5, at least one year was credited for service performed subsequent to the date on which the member terminated the service retirement allowance under Section 24208.
(4) At least one year was credited for service performed subsequent to the most recent refund of accumulated retirement contributions.
(5) The member has neither attained normal retirement age, nor possesses sufficient unused sick leave days to receive creditable compensation on account of sick leave to normal retirement age.
(6) The member is not applying for a disability allowance because of a physical or mental condition known to exist at the time the most recent membership in the Defined Benefit Program commenced and remains substantially unchanged at the time of application.
(b) Nothing in subdivision (a) shall affect the right of a member to a disability allowance under this part if the reason that the member is credited with less than four years of actual service performed subject to coverage under the Defined Benefit Program is due to an on-the-job injury or a disease that occurred while the member was employed and the four-year requirement can be satisfied by credit obtained under Chapter 14 (commencing with Section 22800) or Chapter 14.5 (commencing with Section 22850) in addition to any credit received from workers’ compensation payments.
(c) Nothing in subdivision (a) shall affect the right of a member under this part who has less than five years of credited service to a disability allowance if the following conditions are met:
(1) The member has at least one year of credited service performed in this state.
(2) The disability is the direct result of an unlawful act of bodily injury that was perpetrated on his or her person by another human being while the member was performing his or her official duties in a position subject to coverage under the Defined Benefit Program.
(3) The member provides documentation of the unlawful act in the form of an official police report or official employer incident report.
(d) A member who is eligible to apply for a disability allowance pursuant to this section may also apply for a service retirement pending a determination of his or her application for disability as described in Section 24201.5.

SEC. 2.

 Section 24101 of the Education Code is amended to read:

24101.
 (a) A member may apply for a disability retirement under this part if the member has five or more years of credited service and if all of the following requirements are met:
(1) At least four years were credited for actual service performed subject to coverage under the Defined Benefit Program. Credit received because of workers’ compensation payments shall be counted toward the four-year requirement in accordance with Section 22710.
(2) The last five years of credited service were performed in this state.
(3) Except as described in subdivision (d) of Section 24201.5, at least one year of credited service was earned subsequent to the date on which the member terminated the service retirement allowance under Section 24208.
(4) At least one year of credited service was earned subsequent to the date on which the member’s disability retirement was terminated.
(5) At least one year of credited service was earned subsequent to the most recent refund of accumulated retirement contributions.
(6) The member is not applying for a disability retirement because of a physical or mental condition known to exist at the time the most recent membership in the Defined Benefit Program commenced and that remains substantially unchanged at the time of application.
(b) Nothing in subdivision (a) shall affect the right of a member to a disability retirement if the reason that the member has performed less than four years of actual service is due to an on-the-job injury or a disease while in employment subject to coverage by the Defined Benefit Program and the four-year requirement can be satisfied by credit obtained under Chapter 14 (commencing with Section 22800) or Chapter 14.5 (commencing with Section 22850) in addition to any credit received from workers’ compensation payments.
(c) Nothing in subdivision (a) shall affect the right of a member under this part who has less than five years of credited service to a disability retirement allowance if the following conditions are met:
(1) The member has at least one year of credited service performed in this state.
(2) The disability is a direct result of an unlawful act of bodily injury that was perpetrated on his or her person by another human being while the member was performing his or her official duties in a position subject to coverage under the Defined Benefit Program.
(3) The member provides documentation of the unlawful act in the form of an official police report or official employer incident report.
(d) A member who is eligible to apply for a disability retirement pursuant to this section may also apply for a service retirement pending a determination of his or her application for disability as described in Section 24201.5.

SEC. 3.

 Section 24201.5 is added to the Education Code, to read:

24201.5.
 (a) A member who is eligible and applies for a disability allowance or retirement pursuant to Section 24001 or 24101 may apply to receive a service retirement allowance pending the determination of his or her application for disability, subject to all of the following:
(1) The member is eligible to retire for service under Section 24201 or 24203.
(2) The member submits an application on a form provided by the system, subject to all of the following:
(A) The application is executed no earlier than six months before the effective date of the retirement allowance and the effective date is no earlier than the first day of the month in which the application is received at the system’s headquarters office, as established pursuant to Section 22375.
(B) The effective date is later than the last day of creditable service for which compensation is payable to the member.
(C) The effective date is no earlier than one year following the date on which a retirement allowance was terminated pursuant to Section 24208 or subdivision (a) of Section 24117.
(3) The effective date of the service retirement allowance can be no earlier than the date upon and continuously after which the member is determined to the satisfaction of the board to have been mentally incompetent.
(4) A member who applies for service retirement under this section is not eligible to receive a lump-sum payment and an actuarially reduced monthly allowance pursuant to Section 24221.
(5) A member who applies for service retirement under this section is not eligible to receive an allowance calculated pursuant to Section 24205.
(6) (A) Except as described in subparagraph (B), a member who applies for service retirement under this section shall not receive service credit for each day of accumulated and unused leave of absence for illness or injury or for education pursuant to Section 22717 or 22717.5.
(B) If the application for disability is denied, the member’s service retirement allowance shall be adjusted to the effective date of the service retirement to include service credited pursuant to Section 22717 or 22717.5.
(7) If the application for disability is denied, a member who applies for a service retirement allowance under this section is subject to the all of the following:
(A) Unless otherwise provided in this part, a member who, on his or her application for service retirement, elects an option pursuant to Section 24300.1 or 24307 may not change or revoke that option.
(B) If the member receives a modified service retirement allowance based on the election of an option pursuant to Section 24300.1 or 24307, that modified service retirement allowance shall continue in effect and unchanged.
(C) If the member did not elect an option pursuant to Section 24300.1 or 24307 and receives an unmodified service retirement allowance, that unmodified service retirement allowance shall continue in effect and unchanged.
(b) A member who applies for service retirement under this section may change or cancel his or her service retirement application pursuant to Section 24204, or may terminate his or her service retirement allowance pursuant to Section 24208.
(c) A member may not cancel his or her application for disability prior to a determination of that application unless he or she submits a written request to the system’s headquarters office, as established pursuant to Section 22375. If a member elects to cancel his or her service retirement application or elects to terminate his or her service retirement allowance as described in subdivision (b), that election shall not cancel the application for disability.
(d) (1) Paragraph (3) of subdivision (a) of Sections 24001 and 24101 shall not apply to a member who cancels an application for service retirement pursuant to Section 24204 or who terminates a service retirement allowance pursuant to Section 24208, if all of the following apply:
(A) The member earned at least one year of credited service subsequent to the most recent terminated service retirement allowance.
(B) The member’s application for disability under this section is pending determination by the board.
(2) If the member’s application for disability under this section is denied, paragraph (3) of subdivision (a) of Sections 24001 and 24101 shall apply if the member submits a new application for disability.
(e) If the board approves the application for disability, and notwithstanding subdivision (e) of Section 24204, the board shall cancel the member’s application for service retirement and shall authorize payment of a disability allowance or disability retirement.
(f) Except as described in subdivision (g), if a member who applies for service retirement under this section dies prior to a determination by the board on the application for disability, any subsequent benefits payable to the member’s surviving spouse or beneficiary shall be based on the service retirement allowance as elected by the member at the time of retirement for service.
(g) (1) Subject to paragraph (2), if a member who applies for service retirement under this section dies prior to receiving notification of the approval of his or her application for disability retirement, the disability retirement shall be payable to the member’s surviving spouse or beneficiary.
(2) If the member elected an option pursuant to Section 24300.1, a modified disability retirement allowance shall be payable to the member’s beneficiary or beneficiaries.
(h) If the member cancels his or her service retirement application or terminates his or her service retirement allowance as described in subdivision (b), the system shall make appropriate adjustments to the applicable service retirement allowance, disability allowance, or disability retirement allowance, retroactive to the effective date of the disability allowance or disability retirement allowance.
(i) The system may recover a service retirement allowance overpayment made to a member by deducting that overpayment from any subsequent disability benefit payable to the member.
(j) Nothing in this section shall be construed to allow a member or beneficiary to receive more than one type of retirement or disability allowance for the same period of time.

SEC. 4.

 Section 24205 of the Education Code is amended to read:

24205.
 A member retiring prior to 60 years of age, and who has attained 55 years of age, may elect to receive one-half of the service retirement allowance for normal retirement age for a limited time and then revert to the full retirement allowance for normal retirement age.
(a) The retirement allowance shall be based on service credit and final compensation as of the date of retirement for service and shall be calculated with the factor for normal retirement age.
(b) If the member elects a joint and survivor option under Section 24300 or 24300.1, the actuarial reduction shall be based on the member’s and beneficiary’s ages as of the effective date of the early retirement. If the member elected a preretirement option under Section 24307, the actuarial reduction shall be based on the member’s and beneficiary’s ages as determined by the provisions of that section.
(c) One-half of the retirement allowance as of 60 years of age shall be paid for a period of time equal to twice the elapsed time between the effective date of retirement and the date of the retired member’s 60th birthday.
(d) The full retirement allowance as calculated under subdivision (a) or (b) shall begin to accrue as of the first of the month following the reduction period as specified in subdivision (c). The full retirement allowance shall not begin to accrue prior to this time under any circumstances, including, but not limited to, divorce or death of the named beneficiary.
(e) The annual improvement factor provided for in Sections 22140 and 22141 shall be based upon the retirement allowance as calculated under subdivision (a) or (b). The improvement factor shall begin to accrue on September 1 following the retired member’s 60th birthday. These increases shall be accumulated and shall become payable when the full retirement allowance for normal retirement age first becomes payable.
(f) Any ad hoc benefit increase with an effective date prior to the retired member’s 60th birthday shall not affect an allowance payable under this section. Only those ad hoc improvements with effective dates on or after the retired member’s 60th birthday shall be accrued and accumulated and shall first become payable when the full retirement allowance for normal retirement age becomes payable.
(g) The cancellation of an option election in accordance with Section 24305 shall not cancel the election under this section. Upon cancellation of the joint and survivor option, one-half of the retired member’s retirement allowance as calculated under subdivision (a) shall become payable for the balance of the reduction period specified in subdivision (c).
(h) If a retired member who has elected a joint and survivor option dies during the period when the reduced allowance is payable, the beneficiary shall receive one-half of the allowance payable to the beneficiary until the date when the retired member would have received the full retirement allowance for normal retirement age. At that time, the beneficiary’s allowance shall be increased to the full amount payable to the beneficiary plus the appropriate annual improvement factor increases and ad hoc increases.
(i) This section shall not apply to a member who retires for service pursuant to Section 24201.5.

SEC. 5.

 Section 24221 of the Education Code is amended to read:

24221.
 (a) A member who retires for service prior to January 1, 2011, may elect, on a form prescribed by the system, to receive a lump-sum payment and an actuarially reduced monthly allowance pursuant to this section in lieu of the monthly unmodified allowance that would otherwise be payable to the member pursuant to this chapter. The election under this section shall be made at the time the member files his or her application for service retirement allowance as provided in Section 24204.
(b) A member who makes the election described in subdivision (a) shall receive a one-time, lump-sum payment in an amount that equals or does not exceed the lesser of the following amounts:
(1) The actuarial present value of the amount by which (A) the monthly unmodified allowance payable to the member pursuant to this chapter exceeds (B) an amount equal to 2 percent of the member’s final compensation multiplied by the number of years of credited service and divided by 12.
(2) Fifteen percent of the actuarial present value of the monthly unmodified allowance payable to the member under this chapter.
(c) Notwithstanding any other provision of this part, a member who makes the election described in subdivision (a) shall receive a monthly unmodified allowance, pursuant to this chapter, that shall be actuarially reduced to reflect the lump-sum amount paid under subdivision (b). The actuarial reduced unmodified allowance may be modified pursuant to Section 24300 or 24300.1.
(d) A member may not apply a lump-sum payment made pursuant to this section for the purposes of redepositing previously refunded retirement contributions pursuant to Chapter 19 (commencing with Section 23200) or purchasing service credit pursuant to Chapter 14 (commencing with Section 22800), Chapter 14.2 (commencing with Section 22820) or Chapter 14.5 (commencing with Section 22850). The Legislature hereby finds and declares that if a member who elects to receive a partial lump-sum payment also elects to redeposit previously refunded retirement contributions or purchase service credit as a result of the receipt of the lump-sum payment, the Defined Benefit Program may experience a net actuarial impact.
(e) An election pursuant to subdivision (a) may have no net actuarial impact to the Defined Benefit Program. The board shall adopt present value factors to establish a corresponding actuarially reduced monthly allowance, that results in no net actuarial impact to the Defined Benefit Program. The Legislature reserves the right to modify the provisions of this section to further the objective of permitting eligible members to receive a lump-sum distribution of a portion of their benefits, with a corresponding actuarial reduction in their monthly allowance, so that there is no net actuarial impact to the Defined Benefit Program.
(f) This section shall not apply to a member who retires for service pursuant to Section 24201.5.