SB 27 - An Act to Amend Sections 22112.5, 22119.2, 22461, 22905, 25009, 26302, and 26505 Of, to Amend and Repeal Section 24214.5 Of, to Amend, Repeal, and Add Section 26806 Of, and to Add Sections 24214.6 and 26307 To, the Education Code, and to Amend Sections 20221, 20630, 20636, 20636.1, and 21220 Of, and to Add Section 21220.3 To, the Government Code, Relating to Public Retirement Systems.

An Act to Amend Sections 22112.5, 22119.2, 22461, 22905, 25009, 26302, and 26505 Of, to Amend and Repeal Section 24214.5 Of, to Amend, Repeal, and Add Section 26806 Of, and to Add Sections 24214.6 and 26307 To, the Education Code, and to Amend Sections 20221, 20630, 20636, 20636.1, and 21220 Of, and to Add Section 21220.3 To, the Government Code, Relating to Public Retirement Systems.

SB 27 — 2011-2012 Legislature

Summary

(1)The State Teachers’ Retirement Law (STRL) establishes the Defined Benefit Program of the State Teachers’ Retirement System, which provides a defined benefit to members of the system based on final compensation, credited service, and age at retirement, subject to certain variations. STRL also establishes the Defined Benefit Supplement Program, which provides supplemental retirement, disability, and other benefits, payable either in a lump-sum payment, an annuity, or both to members of the State Teachers’ Retirement Plan. STRL defines creditable compensation for these purposes as remuneration that is payable in cash to all persons in the same class of employees, as specified, for performing creditable service.

This bill would revise the definition of creditable compensation for these purposes and would identify certain payments, reimbursements, and compensation that are creditable compensation to be applied to the Defined Benefit Supplement Program. The bill would prohibit one employee from being considered a class. The bill would revise the definition of compensation with respect to the Defined Benefit Supplement Program to include remuneration earnable within… More

(1)The State Teachers’ Retirement Law (STRL) establishes the Defined Benefit Program of the State Teachers’ Retirement System, which provides a defined benefit to members of the system based on final compensation, credited service, and age at retirement, subject to certain variations. STRL also establishes the Defined Benefit Supplement Program, which provides supplemental retirement, disability, and other benefits, payable either in a lump-sum payment, an annuity, or both to members of the State Teachers’ Retirement Plan. STRL defines creditable compensation for these purposes as remuneration that is payable in cash to all persons in the same class of employees, as specified, for performing creditable service.

This bill would revise the definition of creditable compensation for these purposes and would identify certain payments, reimbursements, and compensation that are creditable compensation to be applied to the Defined Benefit Supplement Program. The bill would prohibit one employee from being considered a class. The bill would revise the definition of compensation with respect to the Defined Benefit Supplement Program to include remuneration earnable within a 5-year period, which includes the last year in which the member’s final compensation is determined, when it is in excess of 125% of that member’s compensation earnable in the year prior to that 5-year period, as specified. The bill would prohibit a member who retires on or after January 1, 2013, who elects to receive his or her retirement benefit under the Defined Benefit Supplement Program as a lump-sum payment from receiving that sum until 180 days have elapsed following the effective date of the member’s retirement.

(2)Existing law permits a retired member of STRS to perform specified activities as an employee of an employer in the system, as 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 limitations on the rate of pay of the member and the total amount of compensation. Existing law prohibits compensation, in this regard, for a member who is below normal retirement age for the first 6 months after retirement for service.

This bill would apply the prohibition described above to employees retiring on or after January 1, 2013, for the first 180 days after retirement for service. The bill, beginning January 1, 2013, and until June 30, 2014, would exclude from that postretirement compensation limitation up to $2,500 of compensation earned by a member who retired for service and returned to work during the first 180 days after retirement as a substitute employee, as specified, if other conditions are met.

(3)Existing law establishes the Cash Balance Benefit Program, administered by the Teachers’ Retirement Board, as a separate benefit program within the State Teachers’ Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service. Existing law provides that the normal form of benefit under the program is a lump-sum payment, after which further benefits are not payable.

This bill would permit the board to assess penalties for late and improper adjustments on contributions in connection with the Cash Balance Benefit Program. The bill would prohibit a member who retires on or after January 1, 2013, from receiving the lump-sum payment under the program until 180 days have elapsed following the effective date of the member’s termination of employment.

(4)The Public Employees’ Retirement Law (PERL) establishes the Public Employees’ Retirement System, which is administered by its board of administration, and which provides a defined benefit to its members based on age at retirement, service credit, and final compensation. PERL defines compensation earnable and other related terms for purposes of calculating a member’s retirement allowance. PERL requires employers and contracting agencies participating in the system to provide notice to the board of the change of status of a member.

This bill would require a participating employer and contracting agencies to immediately notify the board of a change that may affect a member’s payrate for purposes of compensation earnable and would authorize the board to assess a reasonable fee upon an employer that fails to do so. The bill would authorize the board to assess a reasonable amount to cover the cost of audit, adjustment, or correction, if it determines that an employer knowingly failed to comply with requirements regarding the reporting of compensation. The bill would specify that payrate means, among other things, the member’s monthly base pay, would connect payrate to publicly available pay schedules, and would establish requirements for computation of the payrate of a member for a leave without pay. The bill would prescribe a process for determining if specific compensation items are special compensation. The bill would prohibit a person who retires on or after January 1, 2013, from being employed in any capacity by the state, the University of California, a school employer, or a contracting agency until that person has been separated from service for a period of at least 180 days, subject to existing exceptions, unless the employee is subject to a collectively bargained early retirement plan with the California State University in effect prior to January 1, 2013.

The bill also would make additional related changes and would make a statement of legislative findings.

This bill would provide that its provisions would become operative on July 1, 2012, except as specified. Hide

Learn More

At LegInfo.ca.gov

Title

An Act to Amend Sections 22112.5, 22119.2, 22461, 22905, 25009, 26302, and 26505 Of, to Amend and Repeal Section 24214.5 Of, to Amend, Repeal, and Add Section 26806 Of, and to Add Sections 24214.6 and 26307 To, the Education Code, and to Amend Sections 20221, 20630, 20636, 20636.1, and 21220 Of, and to Add Section 21220.3 To, the Government Code, Relating to Public Retirement Systems.

Author(s)

Joe Simitian, Lou Correa

Co-Authors

• Elaine Alquist
• Ron Calderon
• Kevin De Leon
• Gloria Negrete McLeod
• Michael Rubio

Subjects

• Public employees’ retirement

Major Actions

Introduced	12/06/2010
Referred to Committee
Passed Senate Committee on Public Employment and Retirement	3/21/2011
Passed Senate Committee on Appropriations	4/11/2011
Passed Senate Committee on Appropriations	5/26/2011
Passed Senate	6/01/2011
Passed Assembly Committee on Public Employees, Retirement and Social Security	7/06/2011

Bill History

• All Votes
• All Actions

	Chamber/Committee	Motion	Date	Result
select this vote	Senate Committee on Public Employment and Retirement	Do pass, but re-refer to the Committee on Appropriations.	3/21/2011	This motion PASSED the Senate Committee on Public Employment and Retirement 5 voted YES 0 voted NO 0 voted present/not voting
select this vote	Senate Committee on Appropriations	Placed on Appropriations Suspense file.	4/11/2011	This motion PASSED the Senate Committee on Appropriations 8 voted YES 0 voted NO 1 voted present/not voting
select this vote	Senate Committee on Appropriations	Do pass.	5/26/2011	This motion PASSED the Senate Committee on Appropriations 8 voted YES 0 voted NO 1 voted present/not voting
currently selected	Senate	Senate 3rd Reading SB27 Simitian	6/01/2011	This bill PASSED the Senate 39 voted YES 0 voted NO 1 voted present/not voting
select this vote	Assembly Committee on Public Employees, Retirement and Social Security	Do pass as amended and be re-referred to the Committee on Appropriations.	7/06/2011	This motion PASSED the Assembly Committee on Public Employees, Retirement and Social Security 5 voted YES 0 voted NO 1 voted present/not voting

	Action	Date	Description
	Introduced	12/06/2010
		12/06/2010	Introduced. Read first time. To Com. on RLS. for assignment. To print.
		12/07/2010	From printer. May be acted upon on or after January 6.
		1/20/2011	Referred to Com. on P.E. & R.
		3/03/2011	From committee with author's amendments. Read second time and amended. Re-referred to Com. on P.E. & R.
		3/15/2011	Set for hearing March 21.
select this vote	Vote	3/21/2011	Do pass, but re-refer to the Committee on Appropriations.
		3/22/2011	From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0. Page 416.) (March 21). Re-referred to Com. on APPR.
		4/01/2011	Set for hearing April 11.
		4/11/2011	Placed on APPR. suspense file.
select this vote	Vote	4/11/2011	Placed on Appropriations Suspense file.
		5/20/2011	Set for hearing May 26.
select this vote	Vote	5/26/2011	Do pass.
		5/26/2011	From committee: Do pass. (Ayes 8. Noes 0. Page 1111.) (May 26).
		5/27/2011	Read second time. Ordered to third reading.
		6/01/2011	Read third time. Passed. (Ayes 39. Noes 0. Page 1222.) Ordered to the Assembly.
currently selected	Senate Vote on Passage	6/01/2011	Senate 3rd Reading SB27 Simitian
		6/02/2011	In Assembly. Read first time. Held at Desk.
		6/20/2011	Referred to Com. on P.E., R. & S.S.
		6/28/2011	From committee with author's amendments. Read second time and amended. Re-referred to Com. on P.E., R. & S.S.
select this vote	Vote	7/06/2011	Do pass as amended and be re-referred to the Committee on Appropriations.
		7/06/2011	From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 5. Noes 0.) (July 6).
		7/07/2011	Read second time and amended. Re-referred to Com. on APPR.
		8/15/2011	From committee with author's amendments. Read second time and amended. Re-referred to Com. on APPR.
		8/17/2011	Set, first hearing. Referred to APPR. suspense file.
		8/25/2011	Hearing postponed by committee.