This bill would add section 22112.6 to the Education Code to provide authority for any County Office of Education, under specified circumstances, to establish two classes of employees for members of the State Teachers' Retirement System (STRS) Defined Benefit (DB) Plan who are employed in a special education program. The classes of employees would be determined by the number of days required of employees in each class for full-time service.

Under the provisions of section 22112.5 of the Education Code employees who are employed to perform similar duties, are employed in the same type of program, or share other similarities related to the nature of the work being performed must be considered as a group and the group would be a class of employees.

"Full-time" is defined in section 22138.5 of the Education Code as the days or hours of creditable service the employer requires to be performed by a class of employees in a school year in order for an individual in that class to earn the annual compensation that a person would earn if he or she were employed on a full-time basis. For persons employed on a part-time basis, the employer must establish a full-time equivalent (FTE) that would be the time the person who is employed on a part-time basis would be required to serve in a school year if he or she were employed full time in that position. For members employed on a part-time basis, service credit in the DB Plan is determined by the ratio of time worked to time required for full time service.

AB-686 would permit employers who operate a special education program to circumvent the current statutory requirement that employees who perform similar duties or who are employed in the same type of program be grouped in the same class of employees. The bill would permit employers to establish two separate classes of employees for employees in special education programs and would permit different requirements for full time service for each class of employees. The bill provides for full time for one class of employees to be 216 days; and full time for the other class of employees to be fewer than 216 days, but the exact number of days is not set forth in the bill. The bill would also require that current employees in special education programs elect the class of employees to which they wish to belong. All new employees after a specified date would automatically be assigned to the class of employees for whom full time service would be fewer than 216 days.

The bill does not provide direction regarding the election so there would not be uniformity among employers who would be required to have employees make an election. Also, there is no requirement for employers to notify STRS of the outcome once the election has been made by an employee. It would be very difficult for STRS to identify the appropriate FTE for any particular individual.

Implementation of AB-686, if the bill is enacted, would not require a substantial effort on the part of STRS. However, it would set a precedent for circumventing the statutory provisions regarding a class of employees under other circumstances in the future and would establish a situation that is likely to result in adverse selection that is detrimental to the DB Plan. In addition, it would be difficult for STRS staff who perform on-site audits of employers to determine whether or not compensation had been correctly reported for any particular special education employee. STRS' concern with this bill is not the implementation effort, but rather the potential for adverse selection and the dissimilar treatment of members employed in the same type of program who should be grouped in the same class of employees and have the same standard for full time service.

AB-686 has been proposed to address a problem of compensation earnable that will affect some employees if a particular employer changes the FTE for that employer's special education program. The bill would provide a consistent determination of compensation earnable for current members employed in a special education program who might otherwise experience a reduction in compensation earnable if the employer reduces the FTE for the program. However, from a plan design perspective, a more appropriate alternative for addressing the problem would be to enact language that would "grandfather" current employees who remain continuously employed in the special education program with that employer. This alternative would preclude adverse selection and would not circumvent the current statutory requirement that employees who perform similar duties be grouped in the same class of employees.

Program - There are neither program costs nor savings associated with this bill.

Administrative - Administrative costs associated with implementation of this bill would be minor and absorbable.

This bill would set a precedent for changing the statutory provisions regarding a class of employees under other circumstances and would establish a situation that is likely to result in adverse selection that is detrimental to the DB Plan. Staff recommends that the Board adopt an oppose position on AB-686.

 
Assembly Bill 686 posted: June 26, 1997