AD97-08 Issued 7-15-97 Earnings Limitation for the 1997-98 School/Fiscal Year for Members Retired for Service from STRS
All County Superintendents of Schools
District Superintendents of Schools
Community College Districts and
Other Employing Agencies
Administrative Directive 97-08
Earnings Limitation for the 1997-98 School/Fiscal Year for Members Retired for Service from STRS
The purpose of this Administrative Directive is to (1) inform employers of the adjusted post-retirement earnings limitation for creditable service performed during the 1997/98 school year, (2) provide references to sections of the Education Code pertaining to STRS members who are retired for service and performing creditable service, and (3) refer to exemptions from the post- retirement earnings limitation under Code Sections 24216 and 24216.5.
This directive applies to all county Superintendents of Schools, school districts, community college districts, and other employing agencies that employ retired STRS members to perform creditable service.
NOTE: All Section references to the Education Code.
Section 22119.5 identifies the activities that are creditable service when performed for an employer under specified circumstances.
Section 24214 establishes a limitation on the amount of compensation that a retired member may earn for performing creditable service in the California public school system. The limitation is adjusted each year on July 1, to reflect the increase in the California Consumer Price Index. The limitation on post-retirement earnings for the 1997/98 school year (July 1, 1997 through June 30, 1988) is $18,300. The limitation applies regardless of whether a retired member performs creditable service as an employee of the employer, as an independent contractor, or as an employee of a third party.
Section 24214 also requires STRS to reduce the member’s retirement allowance by the compensation earned in excess of the annual dollar limit. The amount of the reduction may be less than or equal to the gross monthly allowance payable, depending on the amount of excess compensation earned. The member’s allowance will be reduced dollar-for-dollar from the gross monthly allowance until the excess compensation has been paid in full; but, the reduction will be no more than the amount of the annual allowance.
EXAMPLE: Mr. Smith retired with a gross monthly allowance of $1,500, then returned to employment in the California public school system in September 1997. He stopped working at the end of April 1998, having earned $11,600 from district #1 and $8,450 from district #2, for total post-retirement earnings of $20,050, which is $1,750 in excess of the earnings limitation. The excess earnings will be collected from Mr. Smith’s monthly retirement allowance as follows:
|JUNE 1998||JULY 1998||AUGUST 1998|
|Monthly retirement allowance||$1,500||$1,500||$1,500|
|Excess earnings deduction at 100 percent of monthly allowance||-1.500||-250||-0-00|
|Amount payable to Mr. Smith||-0-||$1,250||$1,500|
Exceptions to the post-retirement earnings limitation are stipulated in Sections 24216 and 24216.5 Section 24216 addresses the provisions relating to limited-term or emergency exemptions for administrators. STRS Administrative Directive 97-01 contains instructions and forms for requesting an exemption under Section 24216. Exemptions under the class-size reduction effort are specified in Section 24216.5. The instructions and forms for certifying an exemption under Section 24216.5 are contained in STRS Administrative Directive 97-03.
All information and supporting documentation pertaining to certification provided to STRS is subject to audit by STRS’ Office of Audits pursuant to Section 22206. The employer is required to maintain accurate records of compensation earned by retired members and to report the compensation earned to STRS (on Monthly Report of Contributions, F-496) and to the retired members regardless of the method of payment or the fund from which the payments were made.
The employer is also required by Section 22461 to advise retired STRS members who perform creditable service of the annual limitation on earnings for performing such service.
Questions regarding the post-retirement earnings limitation should be directed to the Benefit Adjustments Unit of STRS at (916) 229-4664.
JAMES D. MOSMAN
Chief Executive Officer