ED99-05 Issued 6-16-99 Contribution and Interest Rates for 1999/2000

Employer Directive


TO:

County Superintendents of Schools
District Superintendents of Schools
Community College Districts and
Other Employing Agencies

SUBJECT:

Employer Directive 99-05

Contribution and Interest Rates for 1999/2000

PURPOSE

The purpose of this directive is to inform employers of the Regular Interest Rate, Credited Interest Rate, Minimum Interest Rate for the Cash Balance Plan, Employer Contribution Rate for Reduced Workload Program, and the Present Value Factor for Unused Excess Sick Leave Service Credit that were adopted by the California Teachers’ Retirement Board for the fiscal year beginning July 1, 1999, and ending June 30, 2000.

SCOPE

This directive applies to all county superintendents of schools, school districts, community college districts and other employer agencies that employ persons to perform creditable service under the California State Teachers’ Retirement System (CalSTRS) Defined Benefit and Cash Balance Programs.

DISCUSSION

Each employer must contribute to CalSTRS a specified percentage of the total creditable compensation earned by the employees who are members of the Defined Benefit (DB) or Cash Balance (CB) Programs. The employer and member contribution rates for the CB Program may be negotiated through the collective bargaining process and may vary by employer. For the DB Program, the following member and employer contribution rates are set in statute and do not vary by fiscal year:

Defined Benefit
Contribution Rates

Rate

Education Code Section

Member Contribution Rate

8.00%

22901

Employer Contribution Rate

8.25%

22950 and 22951

Each year, the Teachers’ Retirement Board adopts the Regular Interest and Credited Interest Rate for the new fiscal year. The Regular Interest Rate is used by CalSTRS to charge interest on previously refunded contributions when a member elects to redeposit, and to charge interest on the installment payments for a members’ redeposit or purchase of additional service credit. The Regular Interest Rate is also used to charge employers for late remittance of contributions to the DB Program and for late submission or submission of unacceptable Monthly Report of Retirement Contributions (F-496). Credited Interest Rate is the interest that is credited to members’ accumulated retirement contributions for service performed after June 30, 1935, excluding all accumulated contributions while being paid an allowance. For the CB Program, the Teachers’ Retirement Board adopts a Minimum Interest Rate that is used to credit employee and employer accounts during the plan year. The rates for 1999/2000 are as follows:

 

Rate for FY 1999/2000

Education Code Section

Regular Interest Rate

6.50%

22162

Credited Interest Rate-
Defined Benefit Program

5.00%

22216

Minimum Interest Rate-
Cash Balance Program

5.50%

26604

Interest Rate for Late Remittance Contributions

6.50%

23003

Penalty Rate for Late or Unacceptable Monthly Report

6.50%

23006

Each year, the Teachers’ Retirement Board adopts employer contribution rates for members who participate in the Reduced Workload Program, and for members who are on a compensated leave of absence to serve as an elected officer of an employee organization during the new fiscal year. The rates are as follows:

 

Rate for FY 1999/2000

Education Code Section

Employer Contribution Rate-
Reduced Workload Program

8.25%

22713

Employer Contribution Rate-
Elected Officer of Employee Organization

* This rate will be set by the CalSTRS Board at the July 1999 meeting.

22711

The Teachers’ Retirement Board also adopts the present value factor used to calculate the cost of the member’s allowance attributable to unused excess sick leave days. The cost of unused excess sick leave service credit must be paid to CalSTRS by the employer before the member can receive the benefit. The present value factor for unused excess sick leave service credit for 1999/2000 is as follows:

 

Factor for
FY 1999/2000

Education Code Section

California Code of Regulations

Present Value Factor for Unused Excess Sick Leave Service Credit

.241

22718

23000-23005

ACTION

Please refer questions concerning the Defined Benefit Program to CalSTRS Membership Division Reporting Contact, questions concerning the Present Value Factor for Unused Excess Sick Leave Service Credit to the CalSTRS Service Retirement Division at (916) 229-3574, and questions concerning the Cash Balance Program to the CalSTRS External Affairs and Program Development Branch at (916) 229-3874.

JAMES D. MOSMAN

Chief Executive Office

Employer Directives [ED] convey legal requirements and prohibitions and document CalSTRS policy for school district and community college employers.

For an accessible version of this directive, contact ADACoordinator@CalSTRS.com.