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1997 Federal Legistlation

 

Elk Hills – The Department of Energy has executed agreements preparing for the sale of the U.S. interest in the Elk Hills Naval Petroleum Reserve (78%) to the successful bidder (Occidental Petroleum Corporation) for a sales price of $3.65 billion in cash, making it the largest privatization in U.S. Government history. The Elk Hills acquisition will be completely funded by Occidental by using $2 billion of net proceeds from the divestiture of MidCon and an additional $1.6 billion they expect to raise from the sale of other assets. STRS would receive 9% of the net sales revenues after sales costs (approximately $320 million) in installments over 5-7 years. STRS must ensure that the first of the annual installments is included in the President’s budget he submits to Congress in January `98 and ensure the same for each subsequent year until the agreement is satisfied, then continue to work with members of the House Appropriations Committee to strongly push the appropriation for STRS’ compensation claim through the House and Senate. The appropriation will support 75% Purchasing Power for STRS members as enacted in Chapter 939, Statutes of 1997 (SB-1026, Schiff). Property sold 10/1/97 with final closing in February `98; payment settlement in progress
Mandatory Social Security (SS) – Congress is seeking possible options for protecting the long-term financial solvency of the SS system including possible options for partial privatization of investments. A SS Advisory Council agreed that a viable solution would be to propose mandatory SS for all newly hired state and local government workers which could raise about $16.3 billion over a 5 year period. The House Ways and Means SS Subcommittee is holding a series of hearings on “The Future of SS for this Generation and the Next” to examine “the impact of alternative solutions of SS’s financing problems” and is doing a study to determine how STRS and other retirement systems might be impacted by this mandate. STRS has participated in various studies on this issue and believes that the imposition of the costs of mandatory SS coverage on STRS members and school employers would likely adversely impact the retirement benefits offered by STRS to new hires. Position: OPPOSE; TRB approved STRS’ membership in “OPPOSE” 9/11/97 to participate in on-going lobbying efforts
Social Security “Windfall Offset” – The National Education Association is proposing to change the SS “windfall offset” as it applies to retired State and local government employees who are the surviving spouses of retirees who were covered by SS. Currently, a retired member who collects a State or local government pension can have his or her SS spousal benefit reduced substantially or even eliminated (offset) altogether. In progress; (H.R. 2273, Jefferson, Intro 7/25/97)
Taxpayer Relief Act of 1997 – Co-sponsored by nearly a majority of Democrats and Republicans on the House Ways and Means Committee with strong bipartisan majority on the Senate Finance Committee, enacted into law the statutory provisions STRS drafted to make permanent the present moratorium on the application of the nondiscrimination tax rules which would have caused severe cost burdens and disruptions if made applicable to governmental plans; made changes in procedures related to the application of the Simplified General Rule method for determining the non-taxable portion of a retirement allowance (refer to implementation memorandums dated 9/25/97 (guidelines) and 10/4/97 (general direction) for a summary of changes impacting STRS); allows for portability of permissive service credit under governmental pension plans; and assists Plans in passing Section 415 limits when purchasing service credit and applies to contributions made in years beginning after 12/31/97, and provides transition relief. Signed by President Clinton 8/5/97 (8/11/97); line item veto (H.R. 2014, Budget Reconciliation bill for 1998), effective 1/1/99
(Public Law 105-34)
Uniform Management of Public Employee Retirement Systems Act (MPERS) – The goal of the Act is to “modernize”, clarify and make uniform the rules governing the management of public retirement systems in order to provide state and local pension funds some of the protections afforded private sector pension plans by ERISA, and to serve as a guide for those legislatures seeking higher standards of independence, reporting and fiduciary responsibility for public pension funds in their jurisdictions. This “model act” is expected to be introduced in several states in 1998. Currently under review by the American Bar Assoc.; likely to vote for acceptance in January `98; anticipate another release in October `97; Position: NO POSITION
 
* STRS SPONSORED LEGISLATION
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, 1997 Federal Updated: May 11, 2001


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