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SB-159 State Teachers’ Retirement System: health care benefits.(1999-2000)



Current Version: 10/10/99 - Chaptered

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SB159:v93#DOCUMENT

Senate Bill No. 159
CHAPTER 740

An act to amend and renumber Sections 25000 and 25001 of, and to add Part 13.5 (commencing with Section 25000) to Division 1 of Title 1 of, the Education Code, relating to the State Teachers’ Retirement System, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

[ Filed with Secretary of State  October 10, 1999. Approved by Governor  October 07, 1999. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 159, Johnston. State Teachers’ Retirement System: health care benefits.
Under existing law, the State Teachers’ Retirement System provides retirement, disability, and survivor benefits to members of the system and their beneficiaries.
This bill would require the system to develop a program to provide health care benefits to members of the system and to their beneficiaries, children, and dependent parents, as defined, and would require the costs incurred by the system to be paid by allocations from the Teachers’ Retirement Fund as appropriated for that purpose. Implementation of the program would require enactment of a specific statute.
The bill would also appropriate $625,000 from the Teachers’ Retirement Fund to develop a program pursuant to the bill.
The bill would declare that it is to take effect immediately as an urgency statute.
Appropriation: YES  

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


SECTION 1.

 Section 25000 of the Education Code is amended and renumbered to read:

24975.
 (a) The board may develop one or more deferred compensation plans under Section 457 of the Internal Revenue Code that an employer may choose to establish and offer to its employees who are members of the plan under this part or Part 14 (commencing with Section 26000).
(b) If an employer adopts a deferred compensation plan described in subdivision (a):
(1) The employer shall enter into a written contractual arrangement with the system under which the system, or a third-party administrator acting on behalf of the system, shall provide investment, recordkeeping, and administrative services for the deferred compensation plan.
(2) The initial period of the contractual arrangement described in paragraph (1) shall be for a term of five years.
(3) The deferred compensation plan shall continue to constitute a separate plan established and maintained by the adopting employer.
(4) The system shall be treated as acting on behalf of the employer in administering the deferred compensation plan.
(5) The terms and administration of the deferred compensation plan shall be in accordance with the applicable provisions of Section 457 of the Internal Revenue Code.
(6)  In administering the deferred compensation plan on behalf of the employer, the board shall have the same investment authority and discretion and be subject to the same fiduciary standards pursuant to Chapter 4 (commencing with Section 22250), with respect to amounts deferred under the deferred compensation plan as applied by the system with respect to the Teachers’ Retirement Fund.
(c) If an employer establishes and maintains a deferred compensation plan described in subdivision (a), the deferred compensation plan shall be offered to all of its employees who are members of the plan under this part or Part 14 (commencing with Section 26000).
(d) An employee participating in a deferred compensation plan established by an employer under this section shall enter into a written agreement with the employer for the deferral of compensation prior to the performance of the services to which that compensation relates.
(e) If an employer chooses to establish and maintain a deferred compensation plan described in subdivision (a) that is to be administered by the system, the employer shall take all necessary or appropriate action to implement this section in cooperation with the system.

SEC. 2.

 Section 25001 of the Education Code is amended and renumbered to read:

24976.
 (a) The Teachers’ Deferred Compensation Fund is hereby established to serve as the repository of funds for the deferred compensation plans administered by the system pursuant to this chapter. Notwithstanding any other provision of law, the system may retain a bank or trust company to serve as custodian of the moneys of the Teachers’ Deferred Compensation Fund and to provide for safekeeping, recordkeeping, delivery, securities valuation, or investment performance reporting services, or services in connection with investment of the Teachers’ Deferred Compensation Fund.
(b) The Teachers’ Deferred Compensation Fund shall consist of the following sources and receipts, and disbursements shall be accounted for as set forth below:
(1) Premiums determined by the system and paid by participating employers and employees for the cost of administering the deferred compensation plan.
(2) Asset management fees as determined by the system assessed against investment earnings of investment option or of other investment funds. These fees shall be disclosed to employees participating in the deferred compensation plan.
(3) Compensation deferrals to be paid in monthly installments by employers sponsoring deferred compensation plans described in Section 24975 for investment by the system. The moneys shall be deposited in the investment corpus account within the Teachers’ Deferred Compensation Fund and invested in accordance with the investment options selected by the participating employee.
(4) All moneys in the Teachers’ Deferred Compensation Fund for disbursement to participating employees shall be continuously appropriated without regard to fiscal year. Disbursements to participating employees shall be paid from a disbursement account within the Teachers’ Deferred Compensation Fund in accordance with applicable federal law pertaining to deferred compensation plans.
(5) Income, of whatever nature, earned on the Teachers’ Deferred Compensation Fund shall be credited to the appropriate account. The accounts of participating employees of the employer shall be individually posted to reflect amounts of compensation deferred and investment gains and losses. A periodic statement shall be given to each participating employee.
(6) The system shall have exclusive control of the administration and investment of the Teachers’ Deferred Compensation Fund.
(7) All of the system’s costs of administering the deferred compensation plans shall be recovered from the employees who participate in the plans or assets of the Teachers’ Deferred Compensation Fund in a manner acceptable to the board.

SEC. 3.

 Part 13.5 (commencing with Section 25000) is added to Division 1 of Title 1 of the Education Code, to read:

PART 13.5. HEALTH CARE BENEFITS PROGRAM

CHAPTER  1. General Provisions

25000.
 (a) The State Teachers’ Retirement System shall develop a program to provide health care benefits for members, beneficiaries, children, and dependent parents.
(b) All costs incurred by the system pursuant to this part shall be paid by allocations from the Teachers’ Retirement Fund as appropriated for that purpose.
(c) The health care benefits program developed by the system pursuant to this part shall not be implemented by the system unless specifically authorized by a statute enacted by the Legislature.

CHAPTER  2. Definitions

25100.
 Unless the context otherwise requires, the definitions set forth in this chapter govern the construction of this part.

25110.
 “Beneficiary” or “beneficiaries” means any person or entity receiving or entitled to receive an allowance and payment pursuant to Part 13 (commencing with Section 22000) or 14 (commencing with Section 26000) because of the disability or death of a member.

25115.
 (a) “Dependent child” or “dependent children” means a member’s unmarried offspring or stepchild who is not older than 22 years of age and who is financially dependent upon the member on the date the member becomes eligible for benefits pursuant to this part.
(b) “Offspring” shall include the member’s child who is born within the 10-month period commencing on the date the member becomes eligible for benefits pursuant to this part.
(c) “Offspring” shall include a child adopted by the member.
(d) “Dependent child” shall not include the member’s offspring or stepchild who is adopted by a person other than the member’s spouse.
(e) “Financially dependent,” for purposes of this section, means that at least one-half of the child’s support was being provided by the member on the date the member became eligible for benefits pursuant to this part. The system may require that income tax records or other data be submitted to substantiate the child’s financial dependence. In the absence of substantiating documentation, the system may determine that the child was not dependent on the date the member became eligible for benefits pursuant to this part.

25120.
 “Dependent parent” or “dependent parents” means a natural parent or parents of a member, or a parent or parents who adopted the member prior to the earlier of the occurrence of the member’s marriage or his or her attaining 18 years of age, and who was receiving one-half or more of his or her support from the member at the time the member became eligible for benefits pursuant to this part.

25125.
 “Member” means a current or retired employee of an employer, as defined in Section 22131.

SEC. 4.

 There is hereby appropriated from the Teachers’ Retirement Fund the sum of six hundred twenty-five thousand dollars ($625,000) to develop a health care benefits program pursuant to this act.

SEC. 5.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to commence the development of a health benefits program as soon as possible, it is necessary that this act take effect immediately.