October 4, 2004

Sacramento – In the last days of the 2003-04 bill signing season, Governor Arnold Schwarzenegger took action on nine bills affecting the California State Teachers’ Retirement System and its members. All bills affecting benefits were signed into law by the governor, including:

• AB 1586 (authored by the Assembly Public Employees Retirement and Social Security Committee) – Beginning January 1, 2005, allows CalSTRS to recalculate benefits paid to part-time and adult education community college employees who were members of the Defined Benefit Program prior to July 1, 1996. This law will correct inadvertent reductions in benefits paid as a result of legislation enacted in 1996 and 1998.
• AB 1852 (Mullin) – Expands eligibility for the partial lump-sum benefit and eliminates the one-year prohibition on employment in a K-12 California public school for members who receive a Retirement Incentive benefit. This law standardizes return-to-work rules for employees of K-12 school districts, community college districts and county offices of education who receive a CalSTRS Retirement Incentive from their employer.
• AB 2554 (Pavley) – Extends for up to two years an existing exemption for retired Defined Benefit Program members who fill a vacant administrative position in an emergency situation. It also extends several other existing earnings limit exemptions until January 1, 2008. This law is consistent with CalSTRS’ goal to proactively develop benefits and products that meet customer needs.
• AB 3076 (Mullin) – Beginning July 1, 2005, bases the threshold for mandatory membership in the Defined Benefit Program for community college instructors on the employee's basis of employment for the school year, rather than on the amount of service performed in one pay period. This law is consistent with the Teachers’ Retirement Board’s goals to simplify the design of the programs within the Teachers’ Retirement Plan; it will also result in estimated savings to the General Fund totaling $33 million over 30 years.
• SB 102 (Burton) – Permits up to two-tenths of one year of unused sick leave to be used in determining eligibility for career-based enhancements (such as a single year final compensation, the career factor and the longevity bonus). This law will reduce the disruptions caused by members who work only a few days at the beginning of the school year to qualify for benefit enhancements and then retire.

An additional three bills affecting CalSTRS, addressing technical and administrative changes for the agency, were also signed into law. The only CalSTRS legislation vetoed by the Governor was a bill that would have allowed retirees to elect their own representative to the Teachers’ Retirement Board.

“We are pleased that the governor recognized the importance of these issues, as well as the fact that the very modest cost of implementation would be well worth the benefit to our members,” said CalSTRS Chief Executive Officer Jack Ehnes.

Click here to read the full text of the bills and CalSTRS analyses.

CalSTRS, with a $114 billion portfolio, is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s public school teachers from kindergarten through community college, serving more than 735,000 members and their families.