State teachers' retirement.

Existing law, the Teachers' Retirement Law, establishes the State Teachers' Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers' Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administrated by the Teachers' Retirement Board. The Defined Benefit Program is funded by employer and employee contributions, as well as investment returns and state appropriations, which are deposited or credited to the Teachers' Retirement Fund. (1) Existing law authorizes a disabled member to apply for a disability allowance or a disability retirement if he or she has 5 or more years of service and specified requirements are met. STRS provides retired and disabled members certain supplemental benefits, including those that maintain purchasing power up to a specified percent. Existing law prescribes base dates for purposes of applying postretirement benefit increases based on whether final compensation is used to calculate a service retirement upon termination of a disability allowance or if the disability allowance is continued, as specified. Existing law defines base allowance for these purposes. This bill would provide that definition of base allowance does not apply to provisions relating to base dates, as described above. The bill would, instead, revise the base date provisions to prescribe a method for their determination when applied to supplemental benefits and a disability allowance effective date is used. (2) Existing law defines a break in service for the purpose of defining a member's final compensation and defines final compensation with respect to a member whose salary while an active member was reduced because of a reduction in school funds, as specified. Existing law provides that, for these purposes, periods in which a member's salary was reduced may be aggregated, as specified. This bill would repeal these provisions and revise definitions of final compensation to address breaks in service, including with reference to periods during which a member's salary was reduced because of a reduction in school funds. The bill would define school term for these purposes. The bill would define final compensation for purposes of calculating a benefit that does not include service credit, which would include disability and family allowances. The bill, among other things, would also revise and clarify provisions relating to determining final compensation in connection with concurrent retirement when a member has concurrent membership in another retirement system. The bill would make various conforming changes in connection with these changes. (3) Existing law authorizes members who become employed in specified capacities in positions that are covered by other retirement systems, or who perform service that may be excluded from coverage in certain respects, to elect coverage under the Defined Benefit Program. These provisions prescribe requirements for making this election effective, generally providing that they be made on a form prescribed by the system within 60 days of hire. This bill would revise these requirements to require that the election forms be received by STRS, as specified, within 30 days of signature. (4) Federal law, the Uniformed Services Employment and Reemployment Rights Act of 1994, requires pension plans to treat members who return from military service as if they did not have a break in service for purposes of certain provisions, which requirements are reflected in various provisions of the Teachers' Retirement Law. Existing law establishes the Defined Benefit Supplement Program for the purpose of providing supplemental benefits to members whose earnings are in excess of specified amounts. Existing law establishes the Cash Balance Benefit Program, administered by the Teachers' Retirement Board, as a separate benefit program within the State Teachers' Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service. This bill would make clarifying, conforming, and technical changes to reflect the requirements of federal law and specifically to account for its application to the Defined Benefit Supplement Program. (5) Existing law requires that specified member contributions and employer contributions be credited to a member's individual account in the Defined Benefit Program or the Defined Benefit Supplement Program pursuant to the applicable provisions in the Teachers' Retirement Law. Existing law requires the system to make a determination regarding the timing of the crediting of contributions relating to compensation for creditable service in excess of one year. Existing law prescribes how these provisions become operative based on a computation to be made by the Superintendent of Public Instruction for the 2001–02 fiscal year. This bill would repeal and reenact these provisions, as of July 1, 2018, eliminating obsolete language regarding their operation and establishing when contributions are credited without regard to a determination by the system. (6) Existing law requires that disability allowances and disability retirement allowances become effective on a date designated by the member, subject to certain requirements, including that the date is later than the last day of creditable service for which compensation is payable. This bill would revise the reference to creditable service to instead refer to the last day the member earned creditable compensation, as defined. (7) Existing law prescribes different methods of calculating a STRS service retirement, which depend on whether a member had previously received a disability allowance, disability retirement, or service retirement subsequent to which he or she reinstated in the system. Existing law identifies different methods of calculating service credit in this context, which may be applied to certain benefit enhancements such as that related to longevity. Existing law generally permits unused sick leave to be used for the purpose of calculating service credit, subject to a specified calculation. This bill would provide, for purposes of the service retirements described above, that a certain amount of credited service that results from application of unused sick leave is to be applied to specified benefit enhancements. The bill would prohibit a member who elects a lump-sum retirement benefit from being eligible for specified disability benefits. The bill would prescribe a method for calculating service credit from unused sick leave for specified members. (8) Existing law requires amounts of benefits that cannot be paid because a member or beneficiary cannot be located be returned to the retirement fund. Existing law prohibits interest from accruing on returned warrants in payment of benefits and contributions that are drawn and canceled by the Controller. This bill would prohibit the accruing of interest on payments rejected pursuant to electronic fund transfers. (9) Existing law permits a participant in the Cash Balance Benefit Program, who is employed while receiving an annuity under the program, to terminate the annuity and again make contributions to the program, subject to certain conditions, including that the participant has reached normal retirement age and has been receiving an annuity for at least a year. This bill would revise the conditions pursuant to which an annuity may be terminated to eliminate the requirements that the participant has reached normal retirement age and has been receiving an annuity for at least a year, and prescribe administrative provisions. (10) Existing law requires that employee contributions and employer contributions for the Cash Balance Benefit Program be credited to their respective accounts as of the first working day following the date all contributions to fully satisfy the contribution report, as specified, are received by the system. This bill, on and after July 1, 2018, would require that employee contributions and employer contributions be credited to their respective accounts as of the day contributions are required to be transmitted to the plan. The bill would also make a conforming change. (11) This bill would also make other technical, clarifying, and conforming changes.