This bill would extend eligibility for an exemption from the post-retirement earnings limitation to retired members who received additional service credit at retirement under the Golden Handshake provisions, subject only to a one-year waiting period.

Under current provisions of the Education Code, a retired member may accept a position in the California public school system while receiving a service retirement allowance. Compensation earned from post-retirement employment is subject to an earnings limitation, $17,850 during the 1996-1997 school year. The member's retirement allowance is reduced dollar for dollar by the amount that compensation earned from post-retirement creditable service exceeds the earnings limit. Current law also provides that a retired member who does not want to be subject to the earnings limitation, may reinstate to active status. Upon reinstatement, the member's retirement allowance is terminated.

A retired member may be granted a two-year exemption from the post-retirement earnings limitation for a limited-term appointment by the Superintendent of Public Instruction or a limited-term assignment by a County Superintendent of schools as a trustee or administrator in a financially insolvent school district. The exemption period begins on the date of the appointment or assignment and ends two calendar years from that date.

An exemption from the post-retirement earnings limitation may also be granted for employment in an emergency situation to fill a vacant administrative position. A retired member who accepts such a position is exempt from the earnings limitation for up to one- half of the full-time equivalent for the position. A retired member who received additional service credit under the Golden Handshake provisions is not eligible for an exemption from the post-retirement earnings limitation in this situation, nor in the situation described above.

Current law also provides an exemption from the post-retirement earnings limitation from July 1, 1996 through June 30, 1999, to retired members who have been recruited to fill the vacancies created by the Class-Size-Reduction program. A member who received Golden Handshake service credit is eligible for exemption in this situation.

This bill would provide that a member who received additional service credit at retirement under the Golden Handshake provisions will be ineligible for an exemption from the post-retirement earnings limitation for one year from the effective date of retirement for work performed in the district from which he or she retired. Presumably, a member who received a Golden Handshake would not be subject to the one-year waiting period if employed by a different district than the one by whom the member was employed immediately prior to retirement.

An employer who makes the Golden Handshake available must demonstrate a net savings to the district, a reduction in the number of certificated employees as a result of declining enrollment, or the retention of certificated employees who are credentialed to teach in teacher shortage disciplines. It usually takes two years for employers to realize the expected savings; it may take up to four years for the savings to be realized.

Under AB-373, eligibility for an exemption from the earnings limitation after the one-year waiting period would be extended to certificated and academic employees who are currently ineligible because of service credit received under the Golden Handshake provisions. The bill would not extend this eligibility to retired State or CSU employees who received service credit under the Golden Handshake provisions.

Program - There are no program costs associated with this bill.
Administrative - Administrative costs associated with this bill are minor and could be absorbed.

The Teachers' Retirement Board has adopted a support position on Assembly Bill 373. STRS would incur only minor absorbable costs associated with the bill.

 
Assembly Bill 373 posted: June 26, 1997