Benefit Legislation Signed into Law

News release

With the close of the bill signing season, Governor Schwarzenegger has acted upon all legislation affecting CalSTRS sent to him by the Legislature during the 2003-04 Regular Session. CalSTRS members will be pleased to learn that the Governor signed into law all the CalSTRS benefit legislation that reached his desk.

Legislation Signed into Law

Chapter 442, Statutes of 2004 (AB 1586—PER&SS) permits the recalculation of benefits paid to part-time and adult education community college employees who were members of the Defined Benefit Program prior to 7/1/96 to correct inadvertent reductions in benefits paid as a result of legislation enacted in 1996 and 1998. Currently, these members’ service credit and compensation earnable are calculated using two full-time equivalents – 1,050 hours for the service performed prior to 7/1/96, and 525 hours (part-time instructors) or 875 hours (adult education instructors) for the subsequent service. Beginning 1/1/05, CalSTRS will compare the benefits these retired members currently receive (based on the two FTEs) compared to the benefit that they would receive if their FTE had not been reduced; whichever calculation results in a higher benefit will be used and the higher benefit paid.

Chapter 935, Statutes of 2004 (AB 1852—Mullin) for members who retire on or after 1/1/05, expands eligibility for the partial lump-sum payment to members under age 60. The bill also eliminates the one-year prohibition on employment in a California public school for K-12 members who receive a Retirement Incentive benefit. In addition, Chapter 935 extends a five-year ban on members returning to work for the K-12 employer that granted them the incentive benefit to all participating community college and county office of education members and employers.

Chapter 934, Statutes of 2004 (AB 2554—Pavley) extends from January 1, 2005, to January 1, 2008, exemptions to the CalSTRS post-retirement earnings limit that allow retired members to return to part-time or full-time teaching without restrictions in their income or reductions to their retirement benefits. Specifically, the bill extends from 1/1/00 to 1/1/04 the date a Defined Benefit member must retire by in order to receive an exemption for direct classroom instruction to pupils enrolled in grades K-12 or direct remedial instruction. It also broadens the K-12 exemption to include Defined Benefit members providing instruction in special education and English language learner programs, and establishes a two-year limit on the earnings limit exemption for postretirement employment under a vacant administrative position.

Chapter 474, Statutes of 2004 (AB 3076—Mullin) beginning July 1, 2005, changes the way CalSTRS determines mandatory membership in the Defined Benefit Program for community college employees, and creates a common employment standard used to determine eligibility for tenure and other benefits. A part-time community college employee will no longer be forced into the Defined Benefit Program if they work beyond specified levels in a pay period. Instead, mandatory membership will be based on their basis of employment for the school year so that only an employee who accepts a position or comes under a contract to work 60 percent or more of a full-time load will automatically become a member of the Defined Benefit Program.

Chapter 911, Statutes of 2004 (SB 102—Burton) allows up to 2/10 of one year of unused sick leave to count towards qualifying for one-year final compensation, longevity bonus and other benefit enhancements.

Vetoed Legislation

SB 1137 (Burton) would have required the retired member seat on the Teachers’ Retirement Board be elected by retired members of the Defined Benefit Program and those receiving a disability allowance, and participants of the Cash Balance Benefit Program receiving annuity payments. Click here for the Governor’s veto message.

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