1989 State Legislation



AB-50 *
Intro 12/6/88)
Section 415 Limits; Annual Report Requirements 1) Amends STRS law to comply with IRC section 415 benefit limitations. Passage of this bill prevents the System from losing its “tax qualified plan” status and avoids adverse tax consequences for STRS and STRS members; and 2) requires book value return as a performance measure to be included in the Annual Report. 1004 (9/29/89), effective 1/1/90
AB-59 *
Intro 12/6/88
Clarifies Fiduciary Liability Restructures and revises the STRS fiduciary liability provisions to clarify the scope of personal liability of the TRB and certain STRS employees. 542 (9/20/89), effective 1/1/90
Intro 12/12/88
Rule of 85 Would have added an additional, optional, Rule of 85 early retirement incentive provision to the STRS to permit service retirement at or over age 50 without any actuarial reduction in the normal retirement age factor (age 60) if the total of the member’s age and credited service is at least 85. The employer would have been required to pay the actuarial present value cost of the increased allowance plus related STRS administrative costs. The Governor vetoed this bill because STRS members already have the option to retire before age 60, but with a reduced retirement allowance; school districts, when feasible, may offer Golden Handshake programs; the program is very costly and would divert funds from the classroom; concerns with the impact of Purchasing Power Protection earlier than normal retirement; and future impact on Section 415 limits and potential for STRS to lose its federal tax exempt status. Sponsored by Marin County Superintendents Governor Veto (9/25/89); Position: NEUTRAL
Intro 12/12/88
Retirement Calculation Factors Provides, subject to a collective bargaining agreement entered into by the member’s employing school district and payment to STRS for additional benefits paid, that the “final compensation” period for “classroom teachers” (as defined) who retire after 6/30/90 shall be the highest 12 consecutive months. Final compensation is one of the three factors used to determine STRS retirement benefits. (The two other factors are length of service and age at the time of retirement.) Sponsored by UTLA 1184 (10/1/89), effective 1/1/90; Position: OPPOSE
Intro 1/12/89
Medicare Election Authorizes employers to apply to PERS during the period of 7/1/90 to 7/1/93 to conduct elections to permit employees who held positions covered by this System on 3/31/86 to elect to be covered by the federal Medicare program. Both the employer and employee would have to pay the required rates for the coverage. Note: STRS has no role in any such election, nor would it affect any STRS benefits. Sponsored by CTA 1006 (9/29/89), effective 1/1/90
Intro 3/1/89
Disability Leave As an urgency measure, would have required the governing board of a school district to grant a leave of absence to any certificated employee who applied to STRS for a disability allowance and, if the employee is determined by the System to be eligible for the disability allowance, requires the employee’s leave of absence to be extended for the term of the disability, but not more than 39 months. The Governor determined this bill to be similar to another bill he vetoed in 1987 (AB-420, Hughes). Granting a disability leave of absence is discretionary and should be bargained at the local level, not mandated in state law. Sponsored by UTLA Governor Veto (9/16/89); Position: SUPPORT
AB-1284 *
Intro 3/3/89
STRS/PERS (Chief Investment Officer Issues) Authorizes the TRB and the PERS Board to meet in closed session to consider matters pertaining to the recruitment or removal of the Chief Investment Officer of each System, and adds authorization for the PERS Board to meet in closed session to consider personnel matters pertaining to the Chief Executive Officer. 177 (7/19/89), effective 1/1/90
Intro 3/9/89
Investments (Deteriorated Housing) Would have required STRS/PERS to study the feasibility, consistent with their fiduciary duties, of investing in community projects for housing in deteriorated neighborhoods and to report their findings and recommendations to the Legislature by 1/1/91. The Governor determined that these retirement systems were to act as trustees to invest the funds of their members safely and prudently, and should not be mandated to study placing funds in speculations where earnings, if any, are questionable. Governor Veto (9/26/89); Position: OPPOSE
Intro 3/9/89
Investments (Shareholder Voting Rights) Allows companies which incorporate in CA to divide its board of directors into two or three classes to serve terms of two or three years. It would also allow them to either eliminate cumulative voting or to restrict cumulative voting to each class. This could have an impact upon the way STRS exercises its rights as a shareholder during proxy voting. 876 (9/26/89), effective 1/1/90; Position: OPPOSE
(Burton, et al)
Intro 3/10/89
Investments (Northern Ireland) Would have required the governing body of each state retirement system to: 1) annually investigate the extent to which U.S. corporations operating in Northern Ireland (NI), in which the assets of the retirement system are invested, adhere to the principles of nondiscrimination in employment and freedom of workplace opportunity; and 2) whenever feasible, to sponsor, co-sponsor, or support shareholder resolutions designed to encourage corporations in which the governing body has invested to pursue a policy of affirmative action in NI. Although sensitive to the sincere desire of many Californians to ease the hardships faced by the Catholic minority in NI, the Governor supported all who believed (STRS/PERS, British Government, and Catholic Social Democratic and Labor Party of NI) the enactment would create a roadblock against the free flow of investment to Northern Ireland. Sponsored by American Irish Political Education Committee Governor Veto (9/26/89); Position: OPPOSE
(C. Green)
Intro 2/27/89
Workload Balancing Programs; Spousal Signature Requirements 1) Authorizes the governing boards of CC districts to adopt workload balancing programs, subject to the TRL, for certificated employees; and 2) requires a spousal signature to withdraw STRS annuity deposits. Sponsored by FACCC 270 (8/3/89), effective 1/1/90; Position: SUPPORT
(C. Green)
Intro 2/27/89
Scientific Surveys of STRS Membership Requires STRS to establish procedures for evaluating and implementing requests of organizations and agencies to conduct scientific surveys of the membership. The Governor had concerns with any bill that would authorize scientific surveys not relative to retirement issues, and perceived this to be inconsistent with STRS’ primary mission. Also, there was no way to predict the workload for allocation of resources through the budget process. Sponsored by CTA Governor Veto (9/19/89); Position: NEUTRAL
SB-686 *
(C. Green)
Intro 2/27/89
Emergency Payment of Benefits 1) Adds option beneficiaries to the benefit recipients who would receive interest due to the late payment of monthly allowances; and 2) authorizes STRS to make payments of 75% of the return of accumulated retirement contributions, on an emergency basis, to persons who have terminated STRS membership. 327 (9/8/89), effective 1/1/90
SB-751 *
Intro 3/1/89
TRL Technical Housekeeping A “housekeeping bill” which makes corrective, clarifying, and technical changes in various provisions of the TRL. 118 (7/11/89), effective 1/1/90
Intro 3/6/89
Investments (Corporate Governance Center) Would have established the CA Center for Corporate Research to facilitate the study and understanding of issues concerning corporate governance and shareholder rights. The Governor determined that the bill was unnecessary since there are already 3 centers for corporate governance in the U.S. studying these issues; there is nothing precluding the University of CA, or any other university, from establishing its own private center; and, it was unclear whether this center was private sector or a governmental entity subject to civil service rules, conflict of interest rules, budgetary oversight or other similar restrictions. Governor Veto (9/29/89); Position: SUPPORT
(C. Green)
Intro 3/7/89
Modify Post-retirement Earnings Limit Changes the indexing of the STRS post-retirement earnings limit from 50% to 100% of the change in the CCPI. Sponsored by CFT 227 (7/27/89), effective 1/1/90
Intro 3/8/89
STRS/PERS (Affordable Housing) As an urgency measure, requires PERS/STRS to join with the Department of Housing and Community Development, Treasurer’s Office, and the CA Housing Authority to determine what can be done to produce affordable housing in rural communities with prisons. PERS/STRS would be required to jointly participate in preparing a report with recommendations to the Governor and Legislature by 1/15/90. 1338 (10/2/89), effective 10/2/89; Position: OPPOSE
(C. Green, et al)
Intro 3/9/89
SBMA (Purchasing Power – Annual Transfer from GF) Establishes a funding mechanism (the SBMA) requiring an annual transfer from the GF to restore the purchasing power of STRS benefits. The amount transferred will increase annually to a maximum of 2.5% of the statewide teacher payroll. This bill was double-joined with SB-1513. Sponsored by CRTA 115 (7/10/89), effective 1/1/90; Position: SUPPORT
(W. Campbell, et al)
Intro 3/10/89
SBMA (Purchasing Power Adjustments) Requires annual distribution of the proceeds of the SBMA, in nonvested quarterly payments, to members and their beneficiaries to restore benefit purchasing power to up to 68.2% of its original purchasing power. This bill was double-jointed with SB-1407. Sponsored by CRTA 116 (7/10/89), effective 1/1/90; Position: SUPPORT
Intro 3/10/89
Retirement Homes Would have authorized: 1) various state retirement systems including STRS to establish, operate, or enter into joint ventures or contracts for services for retirement homes for their respective retired members; 2) retired members entering those homes to elect direct payment of all or part of their retirement allowances to the homes, as specified.; and 3) STRS/PERS to buy, build, finance, or enter into joint ventures to provide low and moderate income housing for their active and retired members. The Governor determined that various public retirement systems were not prepared in terms of experience or personnel to enter into this unfamiliar area; STRS should concentrate on its primary mission to provide retirement benefits to its members and manage its investment programs in a prudent and successful manner; and, the investments could result in STRS being subjected to unrelated business income taxes. Governor Veto (9/26/89); Position: OPPOSE
NOTE: Unless otherwise noted in italicized lettering, or with an asterisk (*) indicating STRS sponsored, legislation was sponsored by the author(s) or committee introducing the bill. Also, refer to the “Legend” for an explanation of abbreviations used.

Decade of Legislation, 1989 State Updated: May 11, 2001