This bill would require that the four "teacher" members of he Teachers' Retirement Board (Board) be elected to the Board from their respective constituencies rather than appointed by the Governor.

The Board did not take a position on any of the following measures which also would have required election of the four State Teachers' Retirement System (STRS) members of the Board:

1997/AB-885 (Honda) vetoed
1996/SB-168 (Hughes) died - Assembly Policy Committee
1994/SB-277 (Hughes) vetoed
1991/AB-216 (Hughes) died - Assembly Floor
1990/AB-2642 (Elder) vetoed
1988/AB-3194 (Elder) vetoed

Under existing law, the STRS and the Teachers' Retirement Cash Balance Plan are administered by the 12-member Teachers' Retirement Board (Board), comprised as follows:

1. Four members serve in an ex-officio capacity by virtue of their constitutional office: the State Superintendent of Public Instruction (SPI); the State Controller; the State Treasurer; and the State Director of Finance;
2. Two teacher representatives from grades K-12 who are appointed from a list of candidates recommended by the SPI;
3. A retired member of STRS who is appointed from a list of candidates recommended by the SPI;
4. A community college instructor who has expertise in the areas of business, economics, or both, appointed from a list submitted by the Board of Governors of the California Community Colleges;
5. A member of the governing board of a school district or a community college district, who is appointed from a list of candidates recommended by the SPI.
6. An insurance official (requires Senate confirmation);
7. An officer of a bank or savings and loan institution, who has at least five years of broad professional investment experience (requires Senate confirmation);
8. A person to serve as a public representative (requires Senate confirmation).

With the exception of the ex-officio members, all the remaining Board members are appointed by the Governor to serve four-year terms.

Specifically, AB-2768 would make the following changes:

1. Would require that the two K-12 active teacher members be elected from and by the active members of the Defined Benefit or participants of the Cash Balance Plan, commencing upon the expiration of the terms in existence on January 1, 1999. Would also eliminate the requirement that they be classroom teachers.
2. Would require that the retired member be elected by the retired members of the Defined Benefit Plan and the participants receiving an annuity under the Cash Balance Plan, commencing upon the expiration of the term in existence on January 1, 1999.
3. Would require that the community college instructor be elected by the active community college members of STRS, commencing upon the expiration of the term in existence on January 1, 1999 and would eliminate the requirement that he or she have expertise in business, economics, or both.
4. Would require that the school board member be appointed by the Governor from a list submitted by the State Superintendent of Public Instruction. Currently, the law is not specific regarding origination of a list from which the school board member is appointed.
5. Would eliminate the requirement that two of the Governor's appointees be insurance and banking officials and instead would simply require them to be representatives of the public.
6. Would adjust the 4-year term expiration dates of the members who would be elected so as to commence on January 1 and to expire on December 31 of the calendar year.
7. Provide that the Board member elections be conducted by, and pursuant to, regulations adopted by the Teachers' Retirement Board and that they be conducted in the most cost-effective manner deemed feasible.

Would authorize the Board to establish a full-time position to implement the provisions of the bill and would require that all costs of elections be paid for by allocations from the Teachers' Retirement Fund as appropriated for that purpose in the annual Budget Act.

The provisions requiring an appropriation in the annual Budget Act are inconsistent with Proposition 162 and should be deleted from the bill. The Board has the authority to appropriate funds for positions without authorization in the Budget Act.

Staff have estimated that a minimum of twelve months would be required to complete the process for development and adoption of regulations. Therefore, the January 1, 1999, effective date may not provide adequate time to properly implement the provisions of this legislation.

Supporters of this legislation in the past have argued that elected Board members would be more responsive to the System's membership. Opponents have contended that such responsiveness is not necessarily good on a Board which controls the assets and benefit levels of a retirement system.

Program - None

Administrative - Based on the Public Employees' Retirement System's experience with Board elections, STRS has estimated administrative costs of approximately $614,296 per election cycle, or $153,574 per year assuming that the 2 active member elections can be held at the same time. The annual costs would vary from year-to-year according to the Board position being filled.

None - The Board did not adopt a position on this bill, consistent with current Board policy, which states that the TRB does not take a position on legislation which concerns its composition.

 
Assembly Bill 2768 posted: May 15, 1998