Legislation passed in 2005 provided CalSTRS with the authority to perform benefit comparison calculations for certain part-time and adult education community college employees. For those members whose community college employer reduced or changed their minimum standard (base hours) used for full-time equivalent after 1996, this resulted in the member accruing service credit at an accelerated rate because the minimum standard or base hours for full-time equivalent had been reduced. While these members earned more service credit than before, an unintended consequence of the reduction or change to the minimum standard or based hours was the fact that the final compensation (compensation earnable) became reduced at a corresponding rate.

As a result, some members realized a reduced benefit amount or allowance at the time that their monthly benefit allowance became payable because their final compensation (compensation earnable) had been reduced. To remedy such a result, AB1586, effective January 1, 2005, requires CalSTRS to calculate what the member's benefit would have been had the minimum standard or base hours never changed. This first benefit calculation is based on less service credit but higher final compensation. Once this amount is calculated, it is then compared to what the normal retirement benefit or allowance would be based on the reduced or changed based hours. This second benefit calculation is based on more service credit but lower final compensation. These two benefit calculations are then compared and the member receives whichever benefit calculation amount is higher.

On October 28, 2006, those member accounts that were currently in benefit status, and which were eligible for the AB 1586 benefit comparision calculation were run through the recalculation process described above. This led to 6,800 benefit accounts being systematically reviewed to determine if the AB 1586 recalculation would result in an increased benefit to those eligible member accounts. After the AB 1586 benefit comparision calculation process was completed, individualized letters were generated and mailed to those members whose benefit accounts were eligible notifying them of the results of the benefit comparision calculation.

Currently, and to fully implement AB 1586, when an eligible member account enters benefit status the system will automatically perform the AB 1586 benefit comparision calculation and calculate two benefits, one using the service credit and compensation earnable as reported by the employer, and another using a change factor calculated as if the employer had never reduced their minimum standard or base hours. These two benefit calculations will then be compared and the member will receive whichever benefit calculation amount is higher.

Learn about how AB 1586 might affect you.