AD97-03 Issued 5-1-97 Exemptions to the STRS Earnings Limitation for Retired Members Employed to teach in the Class Size Reduction Program
All County Superintendents of Schools
District Superintendents of Schools
Community College Districts and
Other Employing Agencies
Administrative Directive AD97-03
Exemptions to the STRS Earnings Limitation for Retired Members
Employed to teach in the Class Size Reduction Program
The purpose of this Administrative Directive is to inform employers of recent statutory provisions that permit an exemption from the post-retirement earnings limitation specified in Subdivisions (d), (e) and (f) of Education Code Section 24214. Section 24216.5 was added to the Education Code by Assembly Bill 1068 (Chapter 948, Statutes of 1996). Under specific, limited circumstances provided by Section 24216.5, members who have retired for service on or before July 1, 1996, may be granted an exemption from the post-retirement earnings limitation for teaching as a direct result of the Class-Size Reduction Program. An urgency clause caused Section 24216.5 to become operative on February 11, 1997, with the passage of AB 18 (Chapter 1, Statutes of 1997). The bill contains retroactive language that provides for this section to be effective July 1, 1996, and end July 1, 1999, unless a later enacted statute deletes or extends this date.
This Directive provides information and direction to school districts and charter schools that request an exemption under the recent law change from the post-retirement earnings limitation for State Teachers’ Retirement System (STRS) members who are retired for service and are employed in the Class-Size Reduction program. The new law does not apply to service performed for a county office of education or a community college district.
The Class-Size Reduction program provides funding for school districts to reduce class sizes to no more than 20 pupils in Grades Kindergarten through 3. Education Code Section 24216.5 was added to the Education Code to provide an exemption from the post-retirement earnings limitation for STRS members who retired for service on or before July 1, 1996, and are subsequently hired to fill vacancies created by the Class-Size Reduction program under specific, limited circumstances. Employers may certify exemptions for a period commencing July 1, 1996, and extending through June 30, 1999, provided the employment meets the criteria established in Section 24216.5. It is anticipated that within three years from the effective date of the bill, the California public school system can recruit enough qualified teachers to fill the increased demand.
This legislation allows school districts to request an exemption from the post-retirement earnings limitation for a qualified retired member if the following requirements are met:
- The member retired for service with an effective date on or before July 1, 1996.
- The employment is necessary to meet the objectives of the Class-Size Reduction program set forth in the California Education Code commencing with Section 52120 (as enacted by Chapter 163, Statutes of 1996).
- A school district employs the retired member to provide direct classroom instruction to students in Grades Kindergarten through 12 under the following specific circumstances: (1) until permanent teachers can be recruited to instruct in the newly created classes (Grades K-3), or (2) temporarily fill positions in Grades 4 through 12 that were vacated due to transfers to Grades K-3 within the same school district.
The following conditions apply to the exemption:
- All members retired for service whose employment with a school district meets the specified conditions shall be treated as a distinct class of temporary employees within the existing bargaining unit.
- The rate of pay for service performed shall be the rate established in accordance with Education Code Section 24214(b) and agreed to in the collective bargaining agreement between the employer and the exclusive representative for employees of the school district.
The school district that employs a member who retired for service shall maintain accurate records of the retired member’s earnings and report those earnings to STRS monthly using member code 2 and assignment code 63, regardless of the method of payment or the source of funds from which the earnings are paid. Employers must adjust the reporting lines for exempt members who have been reported under assignment code 61 since July 1, 1996, to assignment code 63. Districts required to report through their county should either send a copy of the certification to the county and mail the original to STRS; or, if required by the county, send an original certification to the county superintendent for signature and the county will mail the certification to STRS.
This legislation allows certain members who have reinstated to active member status and became employed in the Class-Size Reduction program to cancel their reinstatement and return to their prior retirement status. STRS will notify retired members who have reinstated between July 1, 1996 and April 11, 1997, that they may be eligible to return to their previous retirement status. The notification will include form SR 0239, Reinstatement Application Cancellation Request. If the member wishes to cancel his/her reinstatement due to employment in the Class-Size Reduction program, he/she must complete the top portion of the form and submit it to the employer. The employer will then verify the correctness of the top portion before completing the bottom portion and submitting the form to STRS.
For members canceling reinstatement, employers must adjust the reporting lines from active to retired members and report under member code 2 and assignment code 63. There is no need to list those who choose to remain reinstated; these members should be reported as active members under member code 1 along with the appropriate assignment code.
STRS requires the school district to certify the criteria for exemption from Education Code 24214 (d), (e) and (f) have been met by completing and submitting one of the following employer certification forms to STRS along with the Employee Certification form.
- For members retired for service, SR 0184 (Class-Size Reduction Exemption Certification – Part I and as many pages of Part II as needed);
- For members canceling their reinstatement, the school district must complete the bottom portion of form SR 0239 (Reinstatement Application Cancellation Request) which will be provided to the member by STRS.
It is the employer’s responsibility to provide each exempt retired member with a form SR 0185 (Member’s Certification for Class-Size Reduction) for his or her signature. The employer must submit the signed SR 0185 to STRS along with the appropriate employer certification form.
Frequency of Certification
Frequency of certification is dependent upon the contract agreement with the member. Districts must inform STRS of any changes in the member’s status, such as reinstatement, resignation, termination, or change in employment that is not under the Class Size Reduction program. STRS will notify the district if there is a problem with the documentation submitted.
All information received is subject to audit by STRS (Education Code Section 22206). Exemptions for the Class-Size Reduction program are based on the employer certification submitted to STRS. It is the employer’s responsibility to retain all supporting documentation for hiring each exempt person under the Class-Size Reduction program. If the district is found to have incorrectly certified a retired member as exempt under the Class Size Reduction program, post-retirement earnings in excess of the annual limit will be collected from the retired member. The amount of the reduction may be equal to the monthly allowance payable but shall not exceed the amount of the annual allowance payable for the fiscal year in which the excess compensation was earned. For this reason, STRS requires that each member read and sign the criteria for exemption contained in form SR 0185, Member’s Certification for Class-Size Reduction.
If a retired member’s allowance is withheld because he/she has exceeded the earnings limitation and STRS subsequently receives the employer’s certification that the employment of that member was exempt due to employment in the Class-Size Reduction program, the amount withheld will be refunded to the member.
To minimize the consequence of disqualification of exemptions, please submit certification forms prior to the appointment. Send the appropriate certification form to:
STRS Benefit Adjustments Unit, Mail Station 70.
P.O. Box 15275
Sacramento, CA 95851-0275
Attention: Marlene Wilgus
Inquiries should be directed to Sheba Lamba, (916) 229-3588 or Marlene Wilgus, (916) 229-4664. If you have questions about the cancellation of reinstatement, please call Public Service at 1 (800) 228-5453 or Theresa Romeo at (916) 229-3841.
JAMES D. MOSMAN
Chief Executive Officer