Administrative Directive

AD96-05 Issued 6-28-96 Employer Notice: Adjust Contributions and Refunds

TO:

All County Superintendents of Schools
District Superintendents of Schools
Community College Districts
Other Employing Agencies.

FROM:

EXECUTIVE OFFICE

SUBJECT:

Administrative Directive 96-05
Charter School Self-Assessment Checklist for
Participation in STRS.

PURPOSE

The purpose of this directive is to inform employers of the enactment of AB-2647 (Chapter 507, Statutes of 1994). This legislation amended California Education Code Section 23008.

SCOPE

This directive impacts all County Superintendents of Schools, school districts, community college districts, and other employing agencies that employ individuals in positions covered by the State Teachers’ Retirement System (STRS).

DISCUSSION

Timely and accurate monthly contribution report data are necessary for STRS to pay the proper benefits to members and their beneficiaries. Section 23008 of the California Education Code has required all employers to make proper adjustments within 60 days of discovery, or notification by STRS, whenever more or less than the required contributions are paid to STRS based on compensation paid to a member. Chapter 507, Statutes of 1994, amended subdivision (a) of Section 23008 to require the employer to refund the amount of any overpaid contributions to the member within the same 60 day time period.
The employer is required to properly report adjustments to contributions within 60 days of discovery or notification of an error from STRS, and to refund any overpaid contributions to the member within the same time period. When STRS discovers errors in an employer’s monthly report of retirement contributions, the employer receives a notification listing and letter instructing the employer to make the identified adjustments within 60 days.

There are two types of notification listings, a monthly listing and an annual listing. The monthly listing displays the contribution report line data that were identified as edit exceptions at the time the monthlyreport was processed by the System.

The annual listing, which is cumulative for the prior fiscal year, identifies members whose earnings and contributions must be reviewed because the service reported for the prior year resulted in service credit in excess of one yer. This listing isproduced during the annual update at the end of each fiscal year. By accumualting all creditable service performed throughout the year before determining what is overtime, all members employed in part-time, substitute and adult education positions have their service credit determined in an equitable manner.

Beginning with the July 1996/97 monthly report, the maximum allowable rate for all prior contribution report line exceptions that thave not been cleared within 60 days is four percent of the line count on the current monthly report. If the employer does not make the required adjustments on a monthly report submitted within 60 days of notification, STRS may reject the report in accordance with the provisions of Education Code Section 23006.

A penalty may be assessed on the sum of the member and employer contributions required by the rejected report and at a rate of interest equal to the regular interest rate, or a fee of five hundred dollars, whichever amount is greater. If STRS disburses funds based on the erroneous information, the employer must immediately reimburse the System in full for the amount of the disbursement as required by subdivision © of Section 23008.

ACTION

STRS will continue to notify employers of the contribution report line edit exceptions which require action. Beginning with the July 1996/97 monthly reports, the Reporting Section of the Membership Division will monitor all exceptions which have not been cleared by the employer within 60 days of notification by STRS.
The employer must review the notification listings and make proper adjustments on a monthly report within 60 days of the date of the notification letter from STRS. The employer is also responsible for making any refund of overpaid member contributions to the member within the same 60 day time period. If STRS disburses funds based on the erroneous information, the employer is responsible for reimbursing STRS immediately upon notification of the amount of the erroneous disbursement.

Employer questions regarding this Administrative Directive should be directed to the Reporting Section of the STRS Membership Division.

Signed,

JAMES D. MOSMAN
Chief Executive Officer

Commands