SB 1165

Bill Subjects

Abstract

Existing law, the Teachers' Retirement Law, establishes the State Teachers' Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers' Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administrated by the Teachers' Retirement Board. Existing law creates the Cash Balance Benefit Program, which is administered by the board, to provide a retirement plan for the benefit of participating employees who provide creditable service for less than 50% of full time. (1) Existing law, applicable to both the Defined Benefit Program and the Cash Balance Benefit Program, defines "school year" as the fiscal year or the academic year. Existing law defines "school term" with reference to a minimum period of time that creditable service is required to be performed by a member employed on a full-time basis, subject to certain exclusions. Under existing law, the "school term" is the same for members employed less than full-time who perform the same duties as members employed on a full-time basis. This bill would redefine "school year" as the period of time beginning on July 1 of one calendar year and ending on June 30 of the following calendar year. The bill would make a variety of conforming amendments to reference school term instead of school year. (2) Existing law authorizes concurrent membership, as defined, in STRS and other specified retirement systems and grants certain rights to members with concurrent membership, among them having compensation from the other retirement system included as an element in the final compensation calculation. Existing law prohibits service under another system performed during the same pay period as service under the Defined Benefit Program from being used to determine final compensation for purposes of a concurrent retirement in connection with two different formulations of final compensation. The Defined Benefit Program prescribes, in this regard, different pay periods to be considered periods of service, as specified. This bill would clarify the prohibition on using service under another retirement system for determination of final compensation when it is performed during the same pay period as Defined Benefit Program service by linking it directly to provisions describing the pay periods. (3) Existing law authorizes a retired member to cancel a selected pension option upon divorce if specified conditions are met and prescribes a procedure for a subsequent election of a new option. This bill would authorize a retired member who has elected a new option upon divorce, as described above, who was not married or in a registered domestic partnership at the time of election, and who subsequently marries or registers in a domestic partnership, to elect a new pension option naming his or her new spouse or partner as an option beneficiary. The bill would prescribe a procedure for this purpose. (4) Existing law authorizes a member of the Defined Benefit Program who becomes employed by different entities subject to membership in the Public Employees' Retirement System to elect to have this new service covered by the Defined Benefit Program and excluded from the other systems, if certain requirements are met. Existing law requires a member's election forms to be received at the STRS headquarters within 30 days of the date of the member's signature, among other things. This bill would revise the required date of receipt, described above, to instead be 60 days and require that the election be made within 60 calendar days from the date of hire. The bill would specify that the election be on a form that is properly executed. (5) Existing law authorizes specified people while performing what may be creditable service to elect membership in the Defined Benefit Program while they are employed. Existing law requires a member's election forms to be received at the STRS headquarters within 30 days of the date of the member's signature, among other things, and provides that membership is effective the first day of the pay period following the election. This bill would revise the required date of receipt, described above, to instead be 60 days. The bill would require that membership not be earlier than the first day of the pay period in which the election is made. The bill would specify that the election be on a form that is properly executed. (6) Existing law entitles beneficiaries of Defined Benefit Program members, in certain instances, to receive payments or benefits, as applicable, in the event of the member's death. This bill would specify that a beneficiary may waive the right to these payments and benefits and would prescribe a process for this purpose. (7) Existing law prescribes requirements pursuant to which a Defined Benefit Program member may apply for a disability allowance or disability retirement. Existing law requires that when a member who was granted a disability allowance attains normal retirement age the disability allowance is terminated and the member becomes eligible for a service retirement. This bill would clarify these provisions with regard to the filing of a written disability application and the termination of the disability allowance if the member has an eligible dependent child. (8) Existing law prescribes how an annuity under the Defined Benefit Supplement Program is to be determined and paid. If a joint and survivor annuity is elected, existing law requires the annuity to be calculated using the age of the member and the age of the member's beneficiary on the member's retirement date. This bill would require, if a joint and survivor annuity is elected, that the calculation use the annuity effective date, rather than the member's retirement date. The bill would also provide for the continuance of certain Defined Benefit Supplement Program annuities upon the termination of a member's disability retirement for subsequent service retirement, as specified, and would make a conforming change. (9) Existing law authorizes certain employees participating in the Cash Balance Benefit Program to elect coverage under the federal Social Security Act or an alternative retirement plan. Existing law requires members of the Cash Balance Benefit Program to terminate coverage under that program when they become subject to mandatory membership in the Defined Benefit Program in various instances. This bill would provide that a person who elected coverage under federal Social Security or an alternative retirement plan who becomes a member of the Defined Benefit Program for another employer may continue that coverage. (10) The bill would make technical, correctional, and conforming changes.