Bill Text: CA AB1381 | 2013-2014 | Regular Session | Chaptered
Bill Title: State Teachers' Retirement Law: pension reform.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Passed) 2013-10-04 - Chaptered by Secretary of State - Chapter 559, Statutes of 2013. [AB1381 Detail]
Download: California-2013-AB1381-Chaptered.html
BILL NUMBER: AB 1381 CHAPTERED
BILL TEXT
CHAPTER 559
FILED WITH SECRETARY OF STATE OCTOBER 4, 2013
APPROVED BY GOVERNOR OCTOBER 4, 2013
PASSED THE SENATE SEPTEMBER 9, 2013
PASSED THE ASSEMBLY SEPTEMBER 10, 2013
AMENDED IN SENATE SEPTEMBER 4, 2013
AMENDED IN SENATE AUGUST 12, 2013
AMENDED IN SENATE JUNE 14, 2013
INTRODUCED BY Committee on Public Employees, Retirement and Social
Security (Bonta (Chair), Jones-Sawyer, Mullin, Rendon, and
Wieckowski)
FEBRUARY 26, 2013
An act to amend Sections 22115, 22119.2, 22134.5, 22135, 22148,
22327, 22664, 22826, 22901, 22905, 22909, 23855, 24202, 24202.5,
24202.6, 24202.7, 24203, 24205, 24206, 24209, 24210, 24214, 24214.5,
24600, 26139, 26503.5, 26504, 26800, 26810, 26812, and 26813 of, to
add Sections 22109.8, 22146.2, 22160.5, 24252, 26132.5, 26135.5,
26135.7, and 26139.5 to, and to repeal and add Section 22119.3 of,
the Education Code, relating to public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1381, Committee on Public Employees, Retirement and Social
Security. State Teachers' Retirement Law: pension reform.
Existing law, the Teachers' Retirement Law, establishes the
Defined Benefit Program of the State Teachers' Retirement Plan, which
provides a defined benefit to members of the program. The defined
benefit is based on final compensation, credited service, and age at
retirement, subject to certain variations. The State Teachers'
Retirement System (STRS) is administered by the Teachers' Retirement
Board. Existing law establishes the Defined Benefit Supplement
Program, which provides supplemental retirement, disability, and
other benefits, payable either in a lump-sum payment, an annuity, or
both to members of the State Teachers' Retirement Plan. Existing law
establishes a program commonly referred to as the Replacement
Benefits Program to provide benefit payments to members of STRS whose
benefits exceed specified federal limits. 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.
The California Public Employees' Pension Reform Act of 2013
(PEPRA), on and after January 1, 2013, generally requires a public
retirement system, as defined, to modify its plan or plans to comply
with the act, as specified. Among other things, PEPRA requires a
public retirement system to modify its plan or plans to comply with
the act and establishes new retirement formulas that a public
employer offering a defined benefit pension plan may not exceed for
new employees. PEPRA prohibits offering supplemental defined benefit
plans for new employees. PEPRA defines pensionable compensation for
the purposes of its provisions and requires new employees of
specified public employers who participate in a defined benefit plan
to have an initial contribution rate of at least 50% of the normal
cost rate for that defined benefit plan, rounded to the nearest 1/4
of 1%, or the current contribution rate of similarly situated
employees, whichever is greater. PEPRA generally prohibits a retired
person who retires from a public employer from serving, being
employed by, or being employed through a contract directly by, a
public employer in the same retirement system from which the retiree
receives a pension benefit without reinstatement, subject to certain
exceptions and limitations. The act prohibits reemployment of a
retiree pursuant to these provisions for a period of 180 days
following the date of retirement unless he or she falls within
certain exceptions to the prohibition.
This bill would make various changes in the Teachers' Retirement
Law to conform with the provisions of PEPRA. The bill would revise
the definition of creditable compensation and salary, and specify
exclusions from the definition of creditable compensation and salary,
for purposes of the Defined Benefit Program and the Cash Balance
Benefit Program, as specified. The bill would define a member subject
to PEPRA and would except from that definition a member who is also
a member in certain other retirement systems, prior to January 1,
2013, as specified. The bill would revise provisions prescribing the
amounts that members are required to contribute to the retirement
fund for the Defined Benefit Program, and that participants in the
Cash Balance Benefit Program contribute, to reflect the requirements
of PEPRA. The bill would provide, consistent with provisions of
PEPRA, that the normal retirement age is 62 years of age for a new
member of, or a participant in, these systems, with respect to
various provisions of the programs, including those related to
survivors' benefits, retirement for service following reinstatement,
and performance of postretirement service. The bill would add new
limitations on compensation that may be paid to a member of the
Defined Benefit Program or a participant in the Cash Balance Benefit
Program performing postretirement activities, as defined. The bill
would prohibit application of the Replacement Benefits Program to
employees subject to PEPRA. The bill would define a participant in
the Cash Balance Benefit Program who is subject to PEPRA to account
for concurrent membership in that program and other public retirement
systems. The bill would prescribe new requirements applicable to
participants in the Cash Balance Benefit Program who perform retired
participant activities, including requirements imposed on governing
bodies seeking to employ these participants. The bill would make
additional conforming and technical changes.
The bill would also revise provisions that permit the use of a
one-year period for the calculation of final compensation for members
who are not subject to PEPRA, subject to negotiation by a teacher
employer and an exclusive classroom teacher representative, to
require that a written agreement addressing this subject be entered
into prior to January 1, 2014. The bill would prohibit an employer
from paying member contributions for defined benefits for employees
who are not subject to PEPRA on or after January 1, 2014, as
specified. The bill would provide that compensation for
postretirement activities that are not supported by state, local, or
federal funds is not subject to postretirement earnings limitations.
The bill would apply postretirement compensation limitations to
employer payments for, among other things, deferred compensation
plans, the purchase of annuities, and payments to various tax
qualified retirement plans.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares that this act, as it
applies to the State Teachers' Retirement Plan, clarifies the
California Public Employees' Pension Reform Act of 2013, is
declaratory of existing law, and is intended to apply concurrently
with the initial operation of that act. The amendments made by this
act, excluding those amendments made in Sections 4, 12, 28, 29, 30,
and 36 shall be deemed to be operative January 1, 2013, unless
otherwise stated.
SEC. 2. Section 22109.8 is added to the Education Code, to read:
22109.8. "California Public Employees' Pension Reform Act of 2013"
means the California Public Employees' Pension Reform Act of 2013
(Article 4 (commencing with Section 7522) of Chapter 21 of Division 7
of Title 1 of the Government Code).
SEC. 3. Section 22115 of the Education Code is amended to read:
22115. (a) "Compensation earnable" means the creditable
compensation a person could earn in a school year for creditable
service performed on a full-time basis, excluding service for which
contributions are credited by the system to the Defined Benefit
Supplement Program.
(b) The board may determine compensation earnable for persons
employed on a part-time basis.
(c) If service credit for a school year is less than 1.000,
compensation earnable shall be the quotient obtained when creditable
compensation paid in that year is divided by the service credit for
that year, except as provided in subdivision (d).
(d) If a member earns creditable compensation at multiple pay
rates during a school year and service credit at the highest pay rate
is at least 0.900 of a year, compensation earnable shall be
determined as if all service credit for that year had been earned at
the highest pay rate. This subdivision shall be applicable only for
purposes of determining final compensation. If a member earns
creditable compensation at multiple pay rates during a school year
and service credit at the highest pay rate is less than 0.900 of a
year, compensation earnable shall be determined pursuant to
subdivision (c).
(e) (1) Except as provided in subdivision (f), for purposes of
determining compensation earnable for a member employed by a
community college prior to July 1, 1996, full time shall be defined
pursuant to Section 22138.5 and pursuant to Section 20521 of Title 5
of the California Code of Regulations, as those provisions read on
June 30, 1996, if application of that definition will increase the
compensation earnable or otherwise enhance the benefits of the
member.
(2) For purposes of administering this subdivision, the board
shall have the authority to do both of the following:
(A) Establish and implement factors and assumptions necessary to
calculate and compare the benefits payable under the definition of
compensation earnable described in this subdivision. Those factors
and assumptions may be based on information reported by the employer,
including, but not limited to, all of the following:
(i) Base hours.
(ii) Actual earnings.
(iii) Compensation earnable.
(B) Review member benefit calculations that were performed using
the factors and assumptions described in subparagraph (A). If the
board determines that an employer failed to identify part-time
service performed, the board shall consider that part-time service to
be performed in a part-time lecture assignment as defined by the
employer. If the board determines by the review of the member benefit
calculations that the required information reported by the employer
is inaccurate, incomplete, or the factors and assumptions were
applied incorrectly, the board may recalculate member benefits using
additional factors and assumptions that may include, but are not
limited to, all of the following:
(i) Base hours.
(ii) Actual earnings.
(iii) Compensation earnable.
(3) This subdivision shall apply to a member employed by a
community college prior to July 1, 1996, if the community college
subsequently acts to reduce the minimum standard for full time as
described in subdivision (c) of Section 22138.5 for the class of
employees, and that community college provides written notice to the
system of the act of the community college to reduce that minimum
standard.
(4) This subdivision shall not apply to a member employed by a
community college that has not reduced the minimum standard as
described in subdivision (c) of Section 22138.5.
(f) Subdivision (e) shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 4. Section 22119.2 of the Education Code is amended to read:
22119.2. (a) "Creditable compensation" means remuneration that is
paid in cash by an employer to all persons in the same class of
employees for performing creditable service in that position.
Creditable compensation shall include:
(1) Salary or wages paid in accordance with a publicly available
written contractual agreement, including, but not limited to, a
salary schedule or employment agreement.
(2) Remuneration that is paid in addition to salary or wages,
provided it is paid to all persons who are in the same class of
employees in the same dollar amount, the same percentage of salary or
wages, or the same percentage of the amount being distributed.
(3) Remuneration that is paid for the use of sick leave, vacation,
and other employer-approved leave, except as provided in paragraph
(4) of subdivision (c).
(4) Member contributions that are picked up by an employer
pursuant to Section 22903 or 22904.
(5) Amounts that are deducted from a member's remuneration,
including, but not limited to, deductions for participation in a
deferred compensation plan; deductions to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
contributions to a plan that meets the requirements of Section 125,
401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United
States Code.
(6) Any other payments the board determines to be "creditable
compensation."
(b) Any creditable compensation determined by the system to have
been paid to enhance a member's benefits shall not be credited under
the Defined Benefit Program. Contributions on that compensation shall
be credited to the Defined Benefit Supplement Program. A presumption
by the system that creditable compensation was paid to enhance a
member's benefits may be rebutted by the member or by the employer on
behalf of the member. Upon receipt of sufficient evidence to the
contrary, a presumption by the system that creditable compensation
was paid to enhance the member's benefits may be reversed.
(c) "Creditable compensation" does not mean and shall not include:
(1) Remuneration that is not paid in cash or is not paid to all
persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable
service pursuant to Section 22119.5.
(3) Remuneration that is paid in addition to salary or wages if it
is not paid to all persons in the same class of employees in the
same dollar amount, the same percentage of salary or wages, or the
same percentage of the amount being distributed pursuant to paragraph
(2) of subdivision (a).
(4) Remuneration that is paid in exchange for the relinquishment
of unused accumulated leave.
(5) Payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer and is not
deducted from the member's salary.
(6) Fringe benefits provided by an employer.
(7) Expenses paid or reimbursed by an employer.
(8) Severance pay, including lump-sum and installment payments, or
money paid in excess of salary or wages to a member as compensatory
damages or as a compromise settlement.
(9) Any other payments the board determines not to be "creditable
compensation."
(d) An employer or individual who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (c) may
be subject to prosecution for fraud, theft, or embezzlement in
accordance with the Penal Code. The system may establish procedures
to ensure that compensation reported by an employer is in compliance
with this section.
(e) For purposes of this section, remuneration shall be considered
paid if distributed to any person in the same class of employees who
meets the qualifications or requirements specified in a publicly
available written contractual agreement, including, but not limited
to, a collective bargaining agreement or an employment agreement, as
a condition of receiving the remuneration.
(f) This definition of "creditable compensation" reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member's career, consistent treatment of
compensation among an entire class of employees, consistent treatment
of compensation for the position, preventing adverse selection, and
excluding from compensation earnable remuneration that is paid to
enhance a member's benefits. The system shall determine the
appropriate crediting of contributions between the Defined Benefit
Program and the Defined Benefit Supplement Program according to these
principles, to the extent not otherwise specified pursuant to this
part.
(g) The section shall become operative on July 1, 2002.
(h) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 5. Section 22119.3 of the Education Code is repealed.
SEC. 6. Section 22119.3 is added to the Education Code, to read:
22119.3. (a) "Creditable compensation" for members who are
subject to the California Public Employees' Pension Reform Act of
2013 means remuneration that is paid each pay period in which
creditable service is performed for that position. Creditable
compensation shall be paid in cash by an employer to all persons in
the same class of employees in accordance with a publicly available
written contractual agreement, including, but not limited to, a
salary schedule or employment agreement. Creditable compensation
shall include:
(1) Remuneration that is paid for the use of sick leave, vacation,
and other employer-approved leave, except as provided in paragraph
(4) of subdivision (b).
(2) Member contributions that are picked up by an employer
pursuant to Section 22903 or 22904.
(3) Amounts that are deducted from a member's remuneration,
including, but not limited to, deductions for participation in a
deferred compensation plan; deductions to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
contributions to a plan that meets the requirements of Section 125,
401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United
States Code.
(4) Notwithstanding paragraphs (6) and (8) of subdivision (c) of
Section 7522.34 of the Government Code, remuneration that is paid for
creditable service that exceeds one year in a school year.
(b) "Creditable compensation" does not mean and shall not include:
(1) Remuneration that is not paid in cash or is not paid to all
persons who are in the same class of employees.
(2) Remuneration that is paid for service that is not creditable
service pursuant to Section 22119.5.
(3) Remuneration that is not paid each pay period in which
creditable service is performed for that position.
(4) Remuneration that is paid in exchange for the relinquishment
of unused accumulated leave.
(5) Payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer.
(6) Fringe benefits provided by an employer.
(7) Expenses paid or reimbursed by an employer.
(8) Severance pay, including lump-sum and installment payments, or
money paid in excess of salary or wages to a member as compensatory
damages or as a compromise settlement.
(9) Creditable compensation determined by the system to have been
paid to enhance a member's benefit.
(10) Compensation paid to the member in lieu of benefits provided
to the member by the employer or paid directly by the employer to a
third party other than the system for the benefit of the member.
(11) Any one-time or ad hoc payments made to a member.
(12) Any employer-provided allowance, reimbursement, or payment,
including, but not limited to, one made for housing, vehicle, or
uniform.
(13) Any bonus paid in addition to compensation described in
subdivision (a).
(14) Any other payments the board determines not to be "creditable
compensation."
(c) (1) Except for purposes of calculating credited service in the
Defined Benefit Program and for reporting compensation earnable on
or after January 1, 2013, creditable compensation in any fiscal year
shall not exceed:
(A) One hundred twenty percent of the "contribution and benefit
base," as determined under Section 430(b) of the Social Security Act
(42 U.S.C. Sec. 430(b)), on January 1, 2013, for a member whose
service is not included in the federal system.
(B) One hundred percent of the "contribution and benefit base," as
determined under Section 430(b) of the Social Security Act (42
U.S.C. Sec. 430(b)), on January 1, 2013, for a member whose service
is included in the federal system pursuant to any changes in state or
federal law enacted on or after January 1, 2013.
(2) The system shall adjust the limit in paragraph (1) based on
the annual changes to the Consumer Price Index for All Urban
Consumers: City Average, calculated by dividing the Consumer Price
Index for All Urban Consumers: City Average for the month of February
in the fiscal year preceding the adjustment by the Consumer Price
Index for All Urban Consumers: City Average for the month of February
of the previous year rounded to the nearest thousandth.
Notwithstanding paragraph (1) of subdivision (d) of Section 7522.10
of the Government Code, the adjustment shall be effective annually on
July 1, beginning July 1, 2014.
(3) The Legislature reserves the right to modify the requirements
of this subdivision with regard to all members subject to this
subdivision, except that the Legislature may not modify these
provisions in a manner that would result in a decrease in benefits
accrued prior to the effective date of the modification.
(4) This subdivision shall apply to compensation paid during the
2013-14 fiscal year and each fiscal year thereafter.
(d) An employer or individual who knowingly or willfully reports
compensation in a manner inconsistent with subdivision (a) or (b) may
be subject to prosecution for fraud, theft, or embezzlement in
accordance with the Penal Code. The system may establish procedures
to ensure that compensation reported by an employer is in compliance
with this section.
(e) For purposes of this section, remuneration shall be considered
paid if distributed to any person in the same class of employees who
meets the qualifications or requirements specified in a publicly
available written contractual agreement, including, but not limited
to, a collective bargaining agreement or an employment agreement, as
a condition of receiving the remuneration.
(f) This definition of "creditable compensation" reflects sound
principles that support the integrity of the retirement fund. Those
principles include, but are not limited to, consistent treatment of
compensation throughout a member's career, consistent treatment of
compensation among an entire class of employees, consistent treatment
of compensation for the position, preventing adverse selection, and
excluding from creditable compensation remuneration that is paid to
enhance a member's benefits. The system shall determine the
appropriate crediting of contributions according to these principles,
to the extent not otherwise specified pursuant to this part. A
presumption by the system that creditable compensation was paid to
enhance the member's benefits may be rebutted by the member or by the
employer on behalf of the member. Upon receipt of sufficient
evidence to the contrary, a presumption by the system that creditable
compensation was paid to enhance the member's benefits may be
reversed.
SEC. 7. Section 22134.5 of the Education Code is amended to read:
22134.5. (a) Notwithstanding Section 22134, "final compensation"
means the highest average annual compensation earnable by a member
during any period of 12 consecutive months while an active member of
the Defined Benefit Program or time during which he or she was not a
member but for which the member has received credit under the Defined
Benefit Program, except time that was so credited for service
performed outside this state prior to July 1, 1944.
(b) For purposes of this section, periods of service separated by
breaks in service may be aggregated to constitute a period of 12
consecutive months, if the periods of service are consecutive except
for the breaks.
(c) The determination of final compensation of a member who has
concurrent membership in any other retirement system pursuant to
Section 22115.2 shall take into consideration the compensation
earnable while a member of any other system, provided that both of
the following exist:
(1) Service under any other system was not performed during the
same pay period with service under the Defined Benefit Program.
(2) Retirement under the Defined Benefit Program is concurrent
with the member's retirement under any other system.
(d) If a member has received service credit for part-time service
performed prior to July 1, 1956, the member's final compensation
shall be adjusted for that service in excess of one year by the ratio
that part-time service bears to full-time service.
(e) The board may specify a different final compensation with
respect to disability allowances, disability retirement allowances,
family allowances, and children's portions of survivor benefit
allowances payable on and after January 1, 1978. The compensation
earnable for periods of part-time service shall be adjusted by the
ratio that part-time service bears to full-time service.
(f) This section shall apply to the following:
(1) A member who has 25 or more years of credited service,
excluding service credited pursuant to the following:
(A) Section 22714.
(B) Section 22715.
(C) Section 22717, except as provided in subdivision (b) of
Section 22121.
(D) Section 22826.
(2) A nonmember spouse, if the member had 25 or more years of
credited service, as calculated in paragraph (1), on the date the
parties separated, as established in the judgment or court order
pursuant to Section 22652.
(3) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 8. Section 22135 of the Education Code is amended to read:
22135. (a) Notwithstanding subdivisions (a) and (b) of Section
22134, "final compensation" means the highest average annual
compensation earnable by an active member who is a classroom teacher
not subject to the California Public Employees' Pension Reform Act of
2013 and who retires, becomes disabled, or dies, after June 30,
1990, during any period of 12 consecutive months during his or her
membership in the plan's Defined Benefit Program.
(b) Section 22134, except subdivision (a) of that section, shall
apply to classroom teachers who retire after June 30, 1990, and any
statutory reference to Section 22134 or "final compensation" with
respect to a classroom teacher who retires, becomes disabled, or
dies, after June 30, 1990, shall be deemed to be a reference to this
section.
(c) As used in this section, "classroom teacher" means any of the
following:
(1) All teachers and substitute teachers in positions requiring
certification qualifications who spend, during the last 10 years of
their employment with the same employer which immediately precedes
their retirement, 60 percent or more of their contract time each year
providing direct instruction. For the purpose of determining
continuity of employment within the meaning of this subdivision, an
authorized leave of absence for sabbatical or illness or other
collectively bargained or employer-approved leaves shall not
constitute a break in service.
(2) Other certificated personnel who spend, during the last 10
years of their employment with the same employer that immediately
precedes their retirement, 60 percent or more of their contract time
each year providing direct services to pupils, including, but not
limited to, librarians, counselors, nurses, speech therapists,
resource specialists, audiologists, audiometrists, hygienists,
optometrists, psychologists, driver safety instructors, and personnel
on special assignment to perform school attendance and adjustment
services.
(d) As used in this section, "classroom teacher" does not include
any of the following:
(1) Certificated employees whose job descriptions require an
administrative credential.
(2) Certificated employees whose job descriptions include
responsibility for supervision of certificated staff.
(3) Certificated employees who serve as advisers, coordinators,
consultants, or developers or planners of curricula, instructional
materials, or programs, who spend, during the last 10 years of their
employment with the same employer that immediately precedes their
retirement, less than 60 percent of their contract time in direct
instruction.
(4) Certificated employees whose job descriptions require
provision of direct instruction or services, but who are functioning
in nonteaching assignments.
(5) Classified employees.
(e) This section shall apply only to teachers employed by an
employer that has, pursuant to Chapter 10.7 (commencing with Section
3540) of Division 4 of Title 1 of the Government Code, entered into,
extended, renewed, or amended a written agreement with an exclusive
representative, prior to January 1, 2014, that makes this section
applicable to all of its classroom teachers, as defined in
subdivision (c).
(f) The written agreement shall include a mechanism to pay for all
increases in allowances provided for by this section through
employer contributions or employee contributions or both, which shall
be collected and retained by the employer in a trust fund to be used
solely and exclusively to pay the system for all increases in
allowances provided by this section and related administrative costs;
and a mechanism for disposition of the employee's contributions if
employment is terminated before retirement, and for the establishment
of a trust fund board. The trust fund board shall administer the
trust fund and shall be composed of an equal number of members
representing classroom teachers chosen by the bargaining agent and
the employer. If the employer agrees to pay the total cost of
increases in allowances, the establishment of a trust fund and a
trust fund board shall be optional to the employer. The employer,
within 30 days of receiving an invoice from the system, shall
reimburse the retirement fund the amount determined by the Teachers'
Retirement Board to be the actuarial equivalent of the difference
between the allowance the member or beneficiary receives pursuant to
this section and the allowance the member or beneficiary would have
received if the member's final compensation had been computed under
Section 22134 and the proportionate share of the cost to the plan's
Defined Benefit Program, as determined by the Teachers' Retirement
Board, of administering this section. The payment shall include the
cost of all increases in allowances provided for by this section for
all years of service credited to the member as of the benefit
effective date. Interest shall be charged at the regular interest
rate for any payment not received within 30 days of receipt of the
invoice. Payments not received within 30 days after receipt of the
invoice may be collected pursuant to Section 23007.
(g) Upon the execution of the agreement, the employer shall notify
all certificated employees of the agreement and any certificated
employee of the employer, who is a member of the Public Employees'
Retirement System pursuant to Section 22508, that he or she may,
within 60 days following the date of notification, elect to terminate
his or her membership in the Public Employees' Retirement System and
become a member of this plan's Defined Benefit Program. However,
only service credited under the Defined Benefit Program subsequent to
the date of that election shall be subject to this section.
(h) An employer that agrees to become subject to this section,
shall, on a form and within the timeframes prescribed by the system,
certify the applicability of this section to a member pursuant to the
criteria set forth in this section when a retirement, disability, or
family allowance becomes payable.
(i) For a nonmember spouse, final compensation shall be determined
pursuant to paragraph (5) of subdivision (c) of Section 22664. The
employer, within 30 days of receiving an invoice from the system,
shall reimburse the retirement fund pursuant to subdivision (f).
Interest shall be charged at the regular interest rate for payments
not received within the prescribed timeframe. Payments not received
within 30 days of invoicing may be collected pursuant to Section
23007.
SEC. 9. Section 22146.2 is added to the Education Code, to read:
22146.2. (a) Notwithstanding subdivision (f) of Section 7522.04
of the Government Code, "member subject to the California Public
Employees' Pension Reform Act of 2013" means a person who first
becomes employed to perform creditable service subject to coverage
under the Defined Benefit Program on or after January 1, 2013.
(b) A member as defined in subdivision (a) does not include a
person who was a member on or before December 31, 2012, of the
California Public Employees' Retirement System, the Legislators'
Retirement System, the University of California Retirement System, a
county retirement system established under Chapter 3 (commencing with
Section 31450) of Part 3 of Division 4 of Title 3 of the Government
Code, or the San Francisco Employees' Retirement System, and the
person performed service in the other retirement system within the
six months prior to the commencement of creditable service
under the Defined Benefit Program.
(c) This section shall be deemed to have become operative on
January 1, 2013.
SEC. 10. Section 22148 of the Education Code is amended to read:
22148. "Normal retirement" and "normal retirement age" mean 60
years of age, or 62 years of age for a member subject to the
California Public Employees' Pension Reform Act of 2013, which is the
age upon attainment of which the member becomes eligible under the
Defined Benefit Program for a service retirement allowance without
reduction because of age and without special qualifications.
SEC. 11. Section 22160.5 is added to the Education Code, to read:
22160.5. "Public employer" means a public employer as defined in
subdivision (i) of Section 7522.04 of the Government Code.
SEC. 12. Section 22327 of the Education Code is amended to read:
22327. Notwithstanding any other provision of law, the Employment
Development Department shall disclose to the system information in
its possession relating to the earnings of any person who is a member
of the Defined Benefit Program, if the member is receiving a
disability benefit or performing retired member activities. The
earnings information shall be released to the system only upon
written request from the system specifying that the person is a
member of the Defined Benefit Program and is receiving a disability
benefit or performing retired member activities. The system shall use
the information obtained pursuant to this section only for purposes
of Chapter 25 (commencing with Section 24001), Chapter 26 (commencing
with the Section 24100), Section 24214, or Section 24214.5. The
request may be made by the chief executive officer of the system or
by an employee of the system so authorized and identified by name and
title by the chief executive officer in writing. The system shall
notify members receiving a disability benefit or performing retired
member activities that earnings information shall be obtained from
the Employment Development Department upon request by the system. The
system shall not release any earnings information received from the
Employment Development Department to any person, agency, or other
entity. The system shall reimburse the Employment Development
Department for all reasonable administrative expenses incurred
pursuant to this section.
SEC. 13. Section 22664 of the Education Code is amended to read:
22664. The nonmember spouse who is awarded a separate account
shall have the right to a service retirement allowance and, if
applicable, a retirement benefit under this part.
(a) The nonmember spouse shall be eligible to retire for service
under this part if the following conditions are satisfied:
(1) The member had at least five years of credited service during
the period of marriage, at least one year of which had been performed
subsequent to the most recent refund to the member of accumulated
retirement contributions. The credited service may include service
credited to the account of the member as of the date of the
dissolution or legal separation, previously refunded service,
out-of-state service, and permissive service credit that the member
is eligible to purchase at the time of the dissolution or legal
separation.
(2) The nonmember spouse has at least 21/2 years of credited
service in his or her separate account.
(3) The nonmember spouse has attained 55 years of age or more.
(b) A service retirement allowance of a nonmember spouse under
this part shall become effective upon a date designated by the
nonmember spouse, provided:
(1) The requirements of subdivision (a) are satisfied.
(2) The nonmember spouse has filed an application for service
retirement on a properly executed form provided by the system, that
is executed no earlier than six months before the effective date of
the retirement allowance.
(3) The effective date is no earlier than the first day of the
month that the application is received at the system's headquarters
office as described in Section 22375, and the effective date is after
the date the judgment or court order pursuant to Section 22652 was
entered.
(c) (1) Upon service retirement at normal retirement age under
this part, the nonmember spouse shall receive a retirement allowance
that shall consist of an annual allowance payable in monthly
installments equal to 2 percent of final compensation for each year
of credited service.
(2) If the nonmember spouse's retirement is effective at less than
normal retirement age and between early retirement age under this
part and normal retirement age, the retirement allowance shall be
reduced by one-half of 1 percent for each full month, or fraction of
a month, that will elapse until the nonmember spouse would have
reached normal retirement age.
(3) If the nonmember spouse's service retirement is effective at
an age greater than normal retirement age and is effective on or
after January 1, 1999, the percentage of final compensation for each
year of credited service shall be determined pursuant to the
following table:
Age at Retirement Percentage
60 1/4 ..................... 2.033
60 1/2 ..................... 2.067
60 3/4 ..................... 2.10
61 ......................... 2.133
61 1/4 ..................... 2.167
61 1/2 ..................... 2.20
61 3/4 ..................... 2.233
62 ......................... 2.267
62 1/4 ..................... 2.30
62 1/2 ..................... 2.333
62 3/4 ..................... 2.367
63 and over ................ 2.40
(4) In computing the retirement allowance of the nonmember spouse,
the age of the nonmember spouse on the last day of the month that
the retirement allowance begins to accrue shall be used.
(5) Final compensation, for purposes of calculating the service
retirement allowance of the nonmember spouse under this subdivision,
shall be calculated according to the definition of final compensation
in Section 22134, 22134.5, 22135, or 22136, whichever is applicable,
and shall be based on the member's compensation earnable up to the
date the parties separated, as established in the judgment or court
order pursuant to Section 22652. The nonmember spouse shall not be
entitled to use any other calculation of final compensation.
(d) Upon service retirement under this part, the nonmember spouse
shall receive a retirement benefit based on an amount equal to the
balance of credits in the nonmember spouse's Defined Benefit
Supplement account on the date the retirement benefit becomes
payable.
(1) A retirement benefit shall be a lump-sum payment, or an
annuity payable in monthly installments, or a combination of both a
lump-sum payment and an annuity, as elected by the nonmember spouse
on the application for a retirement benefit. A retirement benefit
paid as an annuity under this chapter shall be subject to Sections
22660, 25011, and 25011.1.
(2) Upon distribution of the entire retirement benefit in a
lump-sum payment, no other benefit shall be payable to the nonmember
spouse or the nonmember spouse's beneficiary under the Defined
Benefit Supplement Program.
(e) If the member is or was receiving a disability allowance under
this part with an effective date before or on the date the parties
separated as established in the judgment or court order pursuant to
Section 22652, or at any time applies for and receives a disability
allowance with an effective date that is before or coincides with the
date the parties separated as established in the judgment or court
order pursuant to Section 22652, the nonmember spouse shall not be
eligible to retire until after the disability allowance of the member
terminates. If the member who is or was receiving a disability
allowance returns to employment to perform creditable service subject
to coverage under the Defined Benefit Program or has his or her
allowance terminated under Section 24015, the nonmember spouse may
not be paid a retirement allowance until at least six months after
termination of the disability allowance and the return of the member
to employment to perform creditable service subject to coverage under
the Defined Benefit Program, or the termination of the disability
allowance and the employment or self-employment of the member in any
capacity, notwithstanding Section 22132. If at the end of the
six-month period, the member has not had a recurrence of the original
disability or has not had his or her earnings fall below the amounts
described in Section 24015, the nonmember spouse may be paid a
retirement allowance if all other eligibility requirements are met.
(1) The retirement allowance of the nonmember spouse under this
subdivision shall be calculated as follows: the disability allowance
the member was receiving, exclusive of the portion for dependent
children, shall be divided between the share of the member and the
share of the nonmember spouse. The share of the nonmember spouse
shall be the amount obtained by multiplying the disability allowance,
exclusive of the portion for dependent children, by the years of
service credited to the separate account of the nonmember spouse,
including service projected to the date of separation, and dividing
by the projected service of the member. The nonmember spouse's
retirement allowance shall be the lesser of the share of the
nonmember spouse under this subdivision or the retirement allowance
under subdivision (c).
(2) The share of the member shall be the total disability
allowance reduced by the share of the nonmember spouse. The share of
the member shall be considered the disability allowance of the member
for purposes of Section 24213.
(f) The nonmember spouse who receives a retirement allowance is
not a retired member under this part. However, the allowance of the
nonmember spouse shall be increased by application of the improvement
factor and shall be eligible for the application of supplemental
increases and other benefit maintenance provisions under this part,
including, but not limited to, Sections 24412 and 24415 based on the
same criteria used for the application of these benefit maintenance
increases to the service retirement allowances of members.
(g) Paragraphs (1) through (3), inclusive, of subdivision (c)
shall not apply to a nonmember spouse of a member subject to the
California Public Employees' Pension Reform Act of 2013. For a person
who is a nonmember spouse of a member subject to the California
Public Employees' Pension Reform Act of 2013 and is awarded a
separate account, the retirement allowance shall equal the percentage
of final compensation for each year of credited service that is
equal to the percentage specified in Section 24202.6 based on the age
of the nonmember spouse on the effective date of the allowance.
SEC. 14. Section 22826 of the Education Code is amended to read:
22826. (a) A member, other than a retired member, may request to
purchase up to five years of nonqualified service credit provided the
member is vested in the Defined Benefit Program as provided in
Section 22156.
(b) A member who requests to purchase nonqualified service credit
as provided in this chapter shall contribute to the retirement fund
the actuarial cost of the service, including interest as appropriate,
as determined by the board based on the most recent valuation of the
plan with respect to the Defined Benefit Program in effect on the
date of the request, in accordance with subdivisions (a), (f), (g),
and (h) of Section 22801.
(c) This section shall apply only to an application to purchase
nonqualified service credit on a properly executed form provided by
the system and received at the system's headquarters office, as
established pursuant to Section 22375, prior to January 1, 2013, that
is subsequently approved by the system.
SEC. 15. Section 22901 of the Education Code is amended to read:
22901. (a) Each member of the Defined Benefit Program shall
contribute to the retirement fund an amount equivalent to 8 percent
of the member's creditable compensation, unless he or she is a member
subject to the California Public Employees' Pension Reform Act of
2013.
(b) Each member subject to the California Public Employees'
Pension Reform Act of 2013 shall contribute to the retirement fund an
amount equivalent to the percentage of the member's creditable
compensation calculated as follows:
(1) An initial percentage equal to 50 percent of the normal cost
rate of benefits applicable to members subject to the California
Public Employees' Pension Reform Act of 2013, rounded to the nearest
quarter of 1 percent. The normal cost rate shall be adopted by the
board.
(2) Notwithstanding paragraph (1), once established, the
percentage described in paragraph (1) shall not be adjusted on
account of a change to the normal cost rate, as adopted by the board,
unless the normal cost rate increases or decreases by more than 1
percent of payroll above or below the normal cost rate in effect at
the time the percentage is first established or, if later, the normal
cost rate in effect at the time of the last adjustment.
(3) Notwithstanding subdivision (e) of Section 7522.30 of the
Government Code, this subdivision shall not be subject to the
collective bargaining process.
(c) Notwithstanding Section 22905, any member contributions for
service performed during the 2010-11 school year with a service
period ending after December 31, 2010, shall be credited pursuant to
subdivision (a).
SEC. 16. Section 22905 of the Education Code is amended to read:
22905. (a) Member contributions pursuant to Section 22901,
employer contributions pursuant to Section 22903 or 22904, and member
contributions made by an employer pursuant to Section 22909 shall be
credited to the member's individual account under the Defined
Benefit Program or the Defined Benefit Supplement Program, whichever
is applicable pursuant to the provisions of this part.
(b) Except as provided in subdivision (f), member and employer
contributions, exclusive of contributions pursuant to Section 22951,
on a member's compensation under the following circumstances shall be
credited to the member's Defined Benefit Supplement account:
(1) Compensation for creditable service that exceeds one year in a
school year.
(2) Compensation that is consistent with subdivision (b) of
Section 22119.2.
(3) Compensation that is paid for a limited number of times as
specified by law, a collective bargaining agreement, or an employment
agreement.
(c) A member may not make voluntary pretax or posttax
contributions under the Defined Benefit Supplement Program, except as
provided in subdivision (d), nor may a member redeposit amounts
previously distributed based on the balance in the member's Defined
Benefit Supplement account.
(d) Member and employer contributions pursuant to paragraph (1) of
subdivision (b) under the Defined Benefit Supplement Program shall
be credited to the accounts of members as of July 1 each year
following a determination by the system under the provisions of this
part that those contributions should be credited to the Defined
Benefit Supplement Program. Any other contributions under the Defined
Benefit Supplement Program pursuant to paragraph (2) or (3) of
subdivision (b), shall be credited to the individual account of the
member upon receipt by the system. Contributions to a member's
Defined Benefit Supplement account shall be identified separately
from the member's contributions credited under the Defined Benefit
Program.
(e) The provisions of this section shall become operative on July
1, 2002, if the revenue limit cost-of-living adjustment computed by
the Superintendent of Public Instruction for the 2001-02 fiscal year
is equal to or greater than 3.5 percent. Otherwise this section shall
become operative on July 1, 2003.
(f) Paragraphs (2) and (3) of subdivision (b) shall not apply to a
member subject to the California Public Employees' Pension Reform
Act of 2013.
SEC. 17. Section 22909 of the Education Code is amended to read:
22909. (a) Notwithstanding Sections 22901, 22956, and 23000, an
employer may pay all or a portion of the contributions required to be
paid by a member of the Defined Benefit Program. Where the member is
included in a group or class of employment in which no members are
subject to the California Public Employees' Pension Reform Act of
2013, the payment shall be for all members in the group or class of
employment. The payments shall be credited to member accounts
pursuant to Section 22905. The employer shall report contributions to
the system as if the member and the employer were paying the
contributions in accordance with this part, notwithstanding this
section. For purposes of this chapter, the member's contributions
shall be considered to be the percentage of the member's creditable
compensation that would have been paid pursuant to this chapter,
notwithstanding this section. Notwithstanding Section 22119.2,
contributions paid pursuant to this section may not be included in
creditable compensation.
(b) Nothing in this section shall be construed to limit the
authority of an employer to periodically increase, reduce, or
eliminate the payment by the employer of all or a portion of the
contributions required to be paid by members of the Defined Benefit
Program, as authorized by this section.
(c) This section shall only apply to an employer that is picking
up members' contributions pursuant to Section 22903 or 22904.
(d) As of January 1, 2013, this section shall not apply if the
group or class of employment includes members who are subject to the
Public Employees' Pension Reform Act of 2013. If the terms of a
written agreement with an exclusive representative that is in effect
on January 1, 2013, would be impaired by this subdivision, this
subdivision shall not apply to the employer and members subject to
that written agreement until the expiration of that written
agreement. A renewal, amendment, or any other extension of that
written agreement shall be subject to the requirements of this
subdivision.
(e) As of January 1, 2014, this section shall not apply if the
group or class of employment does not include members who are subject
to the Public Employees' Pension Reform Act 2013. If the terms of a
written agreement with an exclusive representative that is in effect
on January 1, 2014, would be impaired by this subdivision, this
subdivision shall not apply to the employer and members subject to
that written agreement until the expiration of that written
agreement. A renewal, amendment, or any other extension of that
written agreement shall be subject to the requirements of this
subdivision.
SEC. 18. Section 23855 of the Education Code is amended to read:
23855. (a) The survivor benefit allowance is a monthly allowance
equal to one-half of the modified retirement allowance the member
would have received at normal retirement age, if the member had
retired and elected Option 3 pursuant to Section 24300, as that
section read on December 31, 2006, naming the spouse as the option
beneficiary.
(b) The allowance payable under this subdivision shall be based on
the member's actual service credit and final compensation as of the
date of his or her death, the retirement factor at normal retirement
age, and the member's and spouse's ages as of the date the member
would have attained normal retirement age. If the member's death
occurs after he or she attains normal retirement age, his or her
actual final compensation, the retirement factor at normal retirement
age, and the member's and spouse's ages as of the date of the member'
s death shall be used in the allowance calculation.
(c) The allowance calculation shall include service credit for the
unused sick leave that had accrued to the member as of the date of
his or her death. Eligibility for the inclusion of unused sick leave
service credit and the calculation of that service credit shall be
determined pursuant to Section 22717.
(d) (1) The allowance calculation shall not include either of the
following:
(A) The increase in the percentage of final compensation pursuant
to Section 24203.5.
(B) The increase of the monthly allowance pursuant to Section
24203.6.
(2) The amendments to this section made by the act adding this
paragraph do not constitute a change in, but are declaratory of,
existing law.
(e) The surviving spouse may elect to begin receiving the survivor
benefit allowance immediately as of the date of the member's death
or to defer receipt of the allowance to the date the member would
have attained normal retirement age. If allowance payments to the
surviving spouse commence prior to the date the member would have
attained normal retirement age, the allowance payable shall be
actuarially reduced.
(f) If the spouse elects, pursuant to Section 23852, to receive
the survivor benefit allowance, an additional 10 percent of final
compensation shall be payable for each dependent child who is under
21 years of age, up to a maximum of 50 percent of final compensation.
The child's portion shall begin to accrue on the day following the
member's date of death and shall be payable even if the spouse elects
to postpone receipt of the spouse's survivor benefit allowance until
the date the member would have attained normal retirement age.
(g) If there is no surviving spouse, an allowance in an amount
equal to 10 percent of the deceased member's final compensation shall
be paid to each dependent child who is under 21 years of age, up to
a maximum of 50 percent of final compensation. If there are more than
five dependent children, they shall receive allowances in equal
shares of the 50 percent of final compensation. A child's portion of
the survivor benefit allowance shall begin to accrue on the day
following the member's date of death.
SEC. 19. Section 24202 of the Education Code is amended to read:
24202. (a) A member who retires for service after June 30, 1972,
shall receive a retirement allowance consisting of both of the
following:
(1) An annual allowance payable in monthly installments, upon
retirement at normal retirement age but less than age 601/4, equal to
2 percent of the final compensation for each year of credited
service. If the member's retirement is effective at less than normal
retirement age and between early retirement age and normal retirement
age, the member's allowance shall be reduced by one-half of 1
percent for each full month, or fraction of a month that will elapse
until the member will attain normal retirement age.
(2) An annuity that shall be the actuarial equivalent of the
accumulated annuity deposit contributions standing to the credit of
the member's account at the time of retirement.
(b) In computing the amounts described in subdivision (a), the age
of the member on the last day of the month in which the retirement
allowance begins to accrue or such later date as provided in Section
24204 shall be used.
(c) The amendments to this section during the 1997-98 Regular
Session of the Legislature shall not apply to state employees.
(d) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 20. Section 24202.5 of the Education Code is amended to read:
24202.5. (a) A member who retires for service on or after January
1, 1999, shall receive a retirement allowance consisting of all of
the following:
(1) An annual allowance payable in monthly installments, upon
retirement equal to the percentage of the final compensation set
forth opposite the member's age at retirement in the following table
multiplied by each year of credited service:
Age at Retirement Percentage
60 ......................... 2.00
60 1/4 ..................... 2.033
60 1/2 ..................... 2.067
60 3/4 ..................... 2.10
61 ......................... 2.133
61 1/4 ..................... 2.167
61 1/2 ..................... 2.20
61 3/4 ..................... 2.233
62 ......................... 2.267
62 1/4 ..................... 2.30
62 1/2 ..................... 2.333
62 3/4 ..................... 2.367
63 and over ................ 2.40
If the member's retirement is effective at less than normal
retirement age and between early retirement age and normal retirement
age, the member's allowance shall be reduced by one-half of 1
percent for each full month, or fraction of a month that will elapse
until the member will attain normal retirement age.
(2) An annuity that shall be the actuarial equivalent of the
member's accumulated annuity deposit contributions at the time of
retirement.
(3) An annuity based on the balance of credits in the member's
Defined Benefit Supplement account, pursuant to Section 25012, if
elected by the member pursuant to Section 25011 or 25011.1.
(b) In computing the amounts described in paragraph (1) of
subdivision (a), the age of the member on the last day of the month
in which the retirement allowance begins to accrue or the later date
as described in Section 24204 shall be used.
(c) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 21. Section 24202.6 of the Education Code is amended to read:
24202.6. (a) A member subject to the California Public Employees'
Pension Reform Act of 2013 shall receive a retirement allowance
consisting of all of the following:
(1) An annual allowance payable in monthly installments upon
retirement equal to the percentage of the final compensation set
forth opposite the member's age at retirement in the following table
multiplied by each year of credited service:
Age at Retirement Percentage
62...................... 2.000
62 1/4.................. 2.033
62 1/2.................. 2.067
62 3/4.................. 2.100
63...................... 2.133
63 1/4.................. 2.167
63 1/2.................. 2.200
63 3/4.................. 2.233
64...................... 2.267
64 1/4.................. 2.300
64 1/2.................. 2.333
64 3/4.................. 2.367
65...................... 2.400
(2) If a member retires after attaining early retirement age but
before attaining normal retirement age, the member's allowance shall
be reduced by one-half of 1 percent for each full month, or fraction
of a month, that will elapse until the member will attain normal
retirement age.
(b) In computing the amounts described in paragraph (1) of
subdivision (a), the age of the member on the last day of the month
in which the retirement allowance begins to be payable or the later
date as described in Section 24204 shall be used.
(c) Creditable compensation used to calculate the
defined benefit shall be limited as described in Section 22119.3.
SEC. 22. Section 24202.7 of the Education Code is amended to read:
24202.7. Notwithstanding any other provision of this part, for a
member subject to the California Public Employees' Pension Reform Act
of 2013, the minimum retirement age shall be 55 years of age, the
early retirement age shall be 55 years of age, and the normal
retirement age shall be 62 years of age.
SEC. 23. Section 24203 of the Education Code is amended to read:
24203. (a) A member who has 30 years of credited service under
this part may retire at age 50 years or older and receive an annual
allowance equal to 2 percent of final compensation for each year of
credited service. If the member has attained age 50 years, but has
not attained early retirement age, the allowance shall be reduced by
one-quarter of 1 percent for each full month or fraction of a month
that will elapse until the member will attain early retirement age
and one-half of 1 percent for each full month, or fraction of a month
between early retirement age and normal retirement age.
(b) In computing the amounts described in subdivision (a), the age
of the member on the last day of the month in which the retirement
allowance begins to accrue or any later date provided in Section
24204 shall be used.
(c) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 24. Section 24205 of the Education Code is amended to read:
24205. A member retiring prior to 60 years of age, and who has
attained 55 years of age, may elect to receive one-half of the
service retirement allowance for normal retirement age for a limited
time and then revert to the full retirement allowance for normal
retirement age.
(a) The retirement allowance shall be based on service credit and
final compensation as of the date of retirement for service and shall
be calculated with the factor for normal retirement age.
(b) If the member elects a joint and survivor option under Section
24300 or 24300.1, the actuarial reduction shall be based on the
member's and beneficiary's ages as of the effective date of the early
retirement. If the member elected a preretirement option under
Section 24307, the actuarial reduction shall be based on the member's
and beneficiary's ages as determined by the provisions of that
section.
(c) One-half of the retirement allowance as of 60 years of age
shall be paid for a period of time equal to twice the elapsed time
between the effective date of retirement and the date of the retired
member's 60th birthday.
(d) The full retirement allowance as calculated under subdivision
(a) or (b) shall begin to accrue as of the first of the month
following the reduction period as specified in subdivision (c). The
full retirement allowance shall not begin to accrue prior to this
time under any circumstances, including, but not limited to, divorce
or death of the named beneficiary.
(e) The annual improvement factor provided for in Sections 22140
and 22141 shall be based upon the retirement allowance as calculated
under subdivision (a) or (b). The improvement factor shall begin to
accrue on September 1 following the retired member's 60th birthday.
These increases shall be accumulated and shall become payable when
the full retirement allowance for normal retirement age first becomes
payable.
(f) Any ad hoc benefit increase with an effective date prior to
the retired member's 60th birthday shall not affect an allowance
payable under this section. Only those ad hoc improvements with
effective dates on or after the retired member's 60th birthday shall
be accrued and accumulated and shall first become payable when the
full retirement allowance for normal retirement age becomes payable.
(g) The cancellation of an option election in accordance with
Section 24305 shall not cancel the election under this section. Upon
cancellation of the joint and survivor option, one-half of the
retired member's retirement allowance as calculated under subdivision
(a) shall become payable for the balance of the reduction period
specified in subdivision (c).
(h) If a retired member who has elected a joint and survivor
option dies during the period when the reduced allowance is payable,
the beneficiary shall receive one-half of the allowance payable to
the beneficiary until the date when the retired member would have
received the full retirement allowance for normal retirement age. At
that time, the beneficiary's allowance shall be increased to the full
amount payable to the beneficiary plus the appropriate annual
improvement factor increases and ad hoc increases.
(i) This section shall not apply to a member who retires for
service pursuant to Section 24201.5, 24209, 24209.3, 24210, 24211, or
24212.
(j) This section shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 25. Section 24206 of the Education Code is amended to read:
24206. The minimum unmodified allowance for service retirement
under the Defined Benefit Program, exclusive of annuities payable
from accumulated annuity deposit contributions and exclusive of the
balance of credits in the member's Defined Benefit Supplement
account, shall not be less than ten dollars ($10) per month
multiplied by the member's years of credited service. This guaranteed
amount shall be reduced by the amount of an unmodified allowance
payable from a local system based on service credited under the
Defined Benefit Program. If the retirement is effective at less than
normal retirement age this allowance shall be reduced by one-half of
1 percent for each full month or fraction of a month that will elapse
until the member would have reached normal retirement age.
SEC. 26. Section 24209 of the Education Code is amended to read:
24209. (a) Upon retirement for service following reinstatement,
the member shall receive a service retirement allowance equal to the
sum of both of the following:
(1) An amount equal to the monthly allowance the member was
eligible to receive immediately preceding reinstatement, exclusive of
any amounts payable pursuant to Section 22714 or 22715, increased by
the improvement factor that would have been applied to the allowance
if the member had not reinstated.
(2) An amount calculated pursuant to Section 24202, 24202.5,
24202.6, 24203, 24203.5, or 24206 on service credited subsequent to
the most recent reinstatement, the member's age at retirement, and
final compensation.
(b) If the total amount of credited service, other than that
accrued pursuant to Sections 22714, 22715, 22717, 22717.5, and 22826,
is equal to or greater than 30 years, the amounts identified in
paragraphs (1), for members who initially retired on or after January
1, 1999, and (2) of subdivision (a) shall be calculated pursuant to
Section 24203.5.
(c) If the total amount of credited service, other than that
accrued pursuant to Sections 22714, 22715, 22717, 22717.5, and 22826,
is equal to or greater than 30 years, upon retirement for service
following reinstatement, a member who retired pursuant to Section
24213, and received the terminated disability allowance for the prior
retirement, shall receive a service retirement allowance equal to
the sum of the following:
(1) An amount based on the service credit accrued prior to the
effective date of the disability allowance, the member's age at the
prior retirement increased by the factor provided in Section 24203.5,
and projected final compensation.
(2) An amount calculated pursuant to Section 24202, 24202.5,
24202.6, 24203.5, or 24206 on service credited subsequent to the
reinstatement, the member's age at retirement, and final
compensation.
(d) For purposes of this section, final compensation shall not be
based on a determination of compensation earnable as described in
subdivision (e) of Section 22115.
SEC. 27. Section 24210 of the Education Code is amended to read:
24210. Upon retirement for service following a prior disability
retirement granted pursuant to Chapter 26 (commencing with Section
24100) that was terminated, the member shall receive a service
retirement allowance calculated pursuant to Section 24202, 24202.5,
24202.6, 24203, 24203.5, or 24206 and equal to the sum of both of the
following:
(a) An amount based on service credit accrued prior to the
effective date of the disability retirement, the member's age as of
the effective date of the service retirement, and indexed final
compensation to the effective date of the service retirement.
(b) An amount based on the service credit accrued after
termination of the disability retirement, the member's age as of the
effective date of service retirement, and final compensation.
SEC. 28. Section 24214 of the Education Code, as amended by
Section 6 of Chapter 296 of the Statutes of 2012, is amended to read:
24214. (a) A member retired for service under this part may
perform retired member activities, but the member shall not make
contributions to the retirement fund or accrue service credit based
on compensation earned from that service. The employer shall maintain
accurate records of the earnings of the retired member and report
those earnings monthly to the system and retired member as described
in Section 22461.
(b) If a member is retired for service under this part, the
annualized rate of pay for retired member activities, performed by
that member shall not be less than the minimum, nor exceed the
maximum, paid by the employer to other employees performing
comparable duties.
(c) A member retired for service under this part shall not be
required to reinstate for performing retired member activities.
(d) A member retired for service under this part may earn
compensation for performing retired member activities in any one
school year up to the limitation specified in subdivision (f) without
a reduction in his or her retirement allowance.
(e) The postretirement compensation limitation provisions set
forth in this section are not applicable to compensation earned for
the performance of retired member activities that are not wholly or
in part supported by state, local, or federal funds.
(f) (1) The limitation that shall apply to the compensation paid
in cash to the retired member for performance of retired member
activities, excluding reimbursements paid by an employer for expenses
incurred by the member in which payment of the expenses by the
member is substantiated, shall, in any one school year, be an amount
calculated by the system each July 1 equal to one-half of the median
final compensation of all members who retired for service during the
fiscal year ending in the previous calendar year.
(2) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or amended
on or after January 1, 2014, the limitation in paragraph (1) shall
also apply to payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer.
(g) If a member retired for service under this part earns
compensation for performing retired member activities, in excess of
the limitation specified in subdivision (f), and if that compensation
is not exempt from that limitation under subdivision (e) or (h) or
any other law, the member's retirement allowance shall be reduced by
the amount of the excess compensation. The amount of the reduction
may be equal to the monthly allowance payable but shall not exceed
the amount of the annual allowance payable under this part for the
fiscal year in which the excess compensation was earned after any
reduction made in accordance with subdivision (h) of Section 24214.5.
(h) The limitation specified in this section is not applicable to
compensation paid to a member retired for service under this part who
has returned to work after the date of retirement:
(1) As a trustee appointed by the Superintendent of Public
Instruction pursuant to Section 41320.1.
(2) As a fiscal adviser or fiscal expert appointed by a county
superintendent of schools pursuant to Article 2 (commencing with
Section 42122) of Chapter 6 of Part 24 of Division 3 of Title 2.
(3) As a receiver or trustee appointed by the State Board of
Education pursuant to Article 3.1 (commencing with Section 52055.57)
of Chapter 6.1 of Part 28 of Division 4 of Title 2.
(4) As a special trustee appointed by the Board of Governors of
the California Community Colleges pursuant to Section 84040.
(i) The Superintendent of Public Instruction, the Executive
Director of the State Board of Education, the Chancellor of the
California Community Colleges, or the county superintendent of
schools exercising the exemption pursuant to subdivision (h) shall
submit all documentation required by the system to substantiate the
eligibility of the retired member for the exemption, including
compliance with subdivisions (j) and (k). The documentation shall be
received by the system prior to the retired member's performance of
retired member activities.
(j) Subdivision (h) shall not apply to a retired member who has
not attained normal retirement age at the time the compensation is
earned by the member, received additional service credit pursuant to
Section 22714 or 22715, or received from any public employer any
financial inducement to retire in the previous six months. For
purposes of this section and Section 24214.5, "financial inducement
to retire" includes, but is not limited to, any form of compensation
or other payment that is paid directly or indirectly by a public
employer to the member, even if not in cash, either before or after
retirement, if the member retires for service on or before a specific
date or specific range of dates established by the public employer
on or before the date the inducement is offered. The system shall
liberally interpret this subdivision to further the Legislature's
intent to make subdivision (h) inapplicable to members if the member
received a financial incentive from any public employer to retire or
otherwise terminate employment with the public employer.
(k) The documentation required for subdivision (i) shall include
certification of the following:
(1) The position was first advertised for appointment to current
active or inactive members of the program with the necessary
qualifications to perform the requirements of the position and no
qualified current active or inactive member was available to be
appointed.
(2) The appointing authority made a good faith effort to hire a
retired member who reinstated to active membership for the position
at the same salary that was offered as first advertised pursuant to
paragraph (1).
(3) The appointing authority, having tried and failed to hire a
current active or inactive member or a reinstated retired member,
hired a retired member and the salary offered to the retired member
subject to this paragraph does not exceed the salary that was offered
as first advertised pursuant to paragraph (1).
(4) The salary paid shall be no greater than the salary offered to
current active members for the appointed position.
( l ) The amendments to this section enacted during the
1995-96 Regular Session shall be deemed to have become operative on
July 1, 1996.
(m) The amendments to this section enacted during the second year
of the 2011-12 Regular Session shall apply to compensation paid
during the 2012-13 and 2013-14 fiscal years.
(n) The amendments to this section enacted during the first year
of the 2013-14 Regular Session shall apply to compensation paid on or
after January 1, 2014.
(o) This section shall become inoperative on July 1, 2014, and, as
of January 1, 2015, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2015, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 29. Section 24214 of the Education Code, as amended by
Section 7 of Chapter 296 of the Statutes of 2012, is amended to read:
24214. (a) A member retired for service under this part may
perform retired member activities, but the member shall not make
contributions to the retirement fund or accrue service credit based
on compensation earned from that service. The employer shall maintain
accurate records of the earnings of the retired member and report
those earnings monthly to the system and retired member as described
in Section 22461.
(b) If a member is retired for service under this part, the
annualized rate of pay for retired member activities performed by
that member shall not be less than the minimum, nor exceed the
maximum, paid by the employer to other employees performing
comparable duties.
(c) A member retired for service under this part shall not be
required to reinstate for performing retired member activities.
(d) A member retired for service under this part may earn
compensation for performing retired member activities in any one
school year up to the limitation specified in subdivision (f) without
a reduction in his or her retirement allowance.
(e) The postretirement compensation limitation provisions set
forth in this section are not applicable to compensation earned for
the performance of retired member activities that are not wholly or
in part supported by state, local, or federal funds.
(f) (1) The limitation that shall apply to the compensation paid
in cash to the retired member for performance of retired member
activities, excluding reimbursements paid by an employer for expenses
incurred by the member in which payment of the expenses by the
member is substantiated, shall, in any one school year, be an amount
calculated by the system each July 1 equal to one-half of the median
final compensation of all members who retired for service during the
fiscal year ending in the previous calendar year.
(2) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or amended
on or after January 1, 2014, the limitation in paragraph (1) shall
also apply to payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer.
(g) If a member retired for service under this part earns
compensation for performing retired member activities, in excess of
the limitation specified in subdivision (f), the member's retirement
allowance shall be reduced by the amount of the excess compensation.
The amount of the reduction may be equal to the monthly allowance
payable but may not exceed the amount of the annual allowance payable
under this part for the fiscal year in which the excess compensation
was earned after any reduction made in accordance with subdivision
(h) of Section 24214.5.
(h) The language of this section derived from the amendments to
the section of this number added by Chapter 394 of the Statutes of
1995, enacted during the 1995-96 Regular Session, is deemed to have
become operative on July 1, 1996.
(i) This section shall become operative on July 1, 2014.
SEC. 30. Section 24214.5 of the Education Code is amended to read:
24214.5. (a) (1) Notwithstanding subdivision (f) of Section
24214, the postretirement compensation limitation that shall apply to
the compensation paid in cash to the retired member for performance
of retired member activities, excluding reimbursements paid by an
employer for expenses incurred by the member, in which payment of the
expenses by the member is substantiated, shall be zero dollars ($0)
during the first 180 calendar days after the most recent retirement
of a member retired for service under this part.
(2) For written agreements pertaining to the performance of
retired member activities entered into, extended, renewed, or amended
on or after January 1, 2014, the limitation in paragraph (1) shall
also apply to payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer.
(b) If the retired member has attained normal retirement age at
the time the compensation is earned, subdivision (a) shall not apply
and Section 24214 shall apply if the appointment has been approved by
the governing body of the employer in a public meeting, as reflected
in a resolution adopted by the governing body of the employer prior
to the performance of retired member activities, expressing its
intent to seek an exemption from the limitation specified in
subdivision (a). Approval of the appointment may not be placed on a
consent calendar. Notwithstanding any other provision of Article 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code or any state or federal law incorporated by
subdivision (k) of Section 6254 of the Government Code, the
resolution shall be subject to disclosure by the entity adopting the
resolution and the system. The resolution shall include the following
specific information and findings:
(1) The nature of the employment.
(2) A finding that the appointment is necessary to fill a
critically needed position before 180 calendar days have passed.
(3) A finding that the member is not ineligible for application of
this subdivision pursuant to subdivision (d).
(4) A finding that the termination of employment of the retired
member with the employer is not the basis for the need to acquire the
services of the member.
(c) Subdivision (b) shall not apply to a retired member whose
termination of employment with the employer is the basis for the need
to acquire the services of the member.
(d) Subdivision (b) shall not apply if the retired member received
additional service credit pursuant to Section 22714 or 22715 or
received from any public employer any financial inducement to retire.
For purposes of this section, "financial inducement to retire"
includes, but is not limited to, any form of compensation or other
payment that is paid directly or indirectly by a public employer to
the member, even if not in cash, either before or after retirement,
if the participant retires for service on or before a specific date
or specific range of dates established by a public employer on or
before the date the inducement is offered. The system shall liberally
interpret this subdivision to further the Legislature's intent to
make subdivision (b) inapplicable to members if the member received a
financial incentive from any public employer to retire or otherwise
terminate employment with a public employer.
(e) The Superintendent, the county superintendent of schools, or
the chief executive officer of a community college shall submit all
documentation required by the system to substantiate the eligibility
of the retired member for application of subdivision (b), including,
but not limited to, the resolution adopted pursuant to that
subdivision.
(f) The documentation required by this section shall be received
by the system prior to the retired member's performance of retired
member activities.
(g) Within 30 calendar days after the receipt of all documentation
required by the system pursuant to this section, the system shall
inform the entity seeking application of the exemption specified in
subdivision (b), and the retired member whether the compensation paid
to the member will be subject to the limitation specified in
subdivision (a).
(h) If a member retired for service under this part earns
compensation for performing retired member activities in excess of
the limitation specified in subdivision (a), the member's retirement
allowance shall be reduced by the amount of the excess compensation.
The amount of the reduction may be equal to the monthly allowance
payable but may not exceed the amount of the allowance payable during
the first 180 calendar days, after a member retired for service
under this part.
(i) The amendments to this section enacted during the first year
of the 2013-14 Regular Session shall apply to compensation paid on or
after January 1, 2014.
SEC. 31. Section 24252 is added to the Education Code, to read:
24252. This chapter shall not apply to a member subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 32. Section 24600 of the Education Code is amended to read:
24600. (a) A retirement allowance under this part begins to
accrue on the effective date of the member's retirement and ceases on
the earlier of the day of the member's death or the day on which the
retirement allowance is terminated for a reason other than the
member's death.
(b) A retirement allowance payable to an option beneficiary under
this part begins to accrue on the day following the day of the
retired member's death and ceases on the day of the option
beneficiary's death.
(c) A disability allowance under this part begins to accrue on the
effective date of the member's disability allowance and ceases on
the earlier of the day of the member's death or the day on which the
disability allowance is terminated for a reason other than the member'
s death.
(d) A family allowance under this part begins to accrue on the day
following the day of the member's death and ceases on the day of the
event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have attained
normal retirement age or on the day following the day of the member's
death, as elected by the surviving spouse, and ceases on the day of
the surviving spouse's death.
(f) (1) Except as provided in paragraph (2), a child's portion of
an allowance under this part begins to accrue on the effective date
of that allowance and ceases on the earlier of either the termination
of the child's eligibility or the termination of the allowance.
(2) A child's portion of a disability retirement
allowance under Chapter 26 (commencing with Section 24100) ceases on
the earlier of either:
(A) The termination date of the child's eligibility.
(B) The termination of the allowance for reasons other than death.
(g) Supplemental payments issued under this part pursuant to
Sections 24412 and 24415 to retired members, disabled members, and
beneficiaries shall begin to accrue pursuant to Sections 24412 and
24415 and shall cease to accrue as of the termination dates specified
in subdivisions (a) to (f), inclusive, of this section.
(h) Notwithstanding any other provision of this part or other law,
distributions payable under the plan with respect to the Defined
Benefit Program and the Defined Benefit Supplement Program shall be
made in accordance with applicable provisions of the Internal Revenue
Code of 1986 and related regulations. The required beginning date of
benefit payments that represent the entire interest of the member in
the plan with respect to the Defined Benefit Program and the Defined
Benefit Supplement Program shall be either:
(1) In the case of a refund of contributions, as described in
Chapter 18 (commencing with Section 23100) of this part and
distribution of an amount equal to the balance of credits in a member'
s Defined Benefit Supplement account, as described in Chapter 38
(commencing with Section 25000) of this part, not later than April 1
of the calendar year following the later of (A) the calendar year in
which the member attains the age at which the Internal Revenue Code
of 1986 requires a distribution of benefits or (B) the calendar year
in which the member terminates employment within the meaning of
subdivision (i).
(2) In the case of a retirement allowance, as defined in Section
22166, not later than April 1 of the calendar year following the
later of (A) the calendar year in which the member attains the age at
which the Internal Revenue Code of 1986 requires a distribution of
benefits or (B) the calendar year in which the member terminates
employment within the meaning of subdivision (i), to continue over
the life of the member or the lives of the member and the member's
option beneficiary, or over the life expectancy of the member or the
life expectancy of the member and the member's option beneficiary.
(i) For purposes of subdivision (h), the phrase "terminates
employment" means the later of:
(1) The date the member ceases to perform creditable service
subject to coverage under this plan.
(2) The date the member ceases employment in a position subject to
coverage under another public retirement system in this state if the
compensation earnable while a member of the other system may be
considered in the determination of final compensation pursuant to
Section 22134, 22135, or 22136.
SEC. 33. Section 26132.5 is added to the Education Code, to read:
26132.5. (a) "Participant subject to the California Public
Employees' Pension Reform Act of 2013" means, notwithstanding
subdivision (f) of Section 7522.04 of the Government Code, a person
who first becomes employed to perform creditable service subject to
coverage under the Cash Balance Benefit Program on or after January
1, 2013.
(b) A participant as defined in subdivision (a) does not include a
person who was a member on or before December 31, 2012, of the
California Public Employees' Retirement System, the Legislators'
Retirement System, the University of California Retirement System,
county retirement systems established under Chapter 3 (commencing
with Section 31450) of Part 3 of Division 4 of Title 3 of the
Government Code, or the San Francisco Employees' Retirement System,
and the person performed service in the other retirement system
within the six months prior to the commencement of creditable service
under the Cash Balance Benefit Program.
(c) This section shall be deemed to have become operative on
January 1, 2013.
SEC. 34. Section 26135.5 is added to the Education Code, to read:
26135.5. "Public employer" means a public employer as defined by
subdivision (i) of Section 7522.04 of the Government Code.
SEC. 35. Section 26135.7 is added to the Education Code, to read:
26135.7. (a) "Retired participant activities" means one or more
activities identified in subdivision (a) or (b) of Section 22119.5 or
(a) or (b) of Section 26113 within the California public school
system and performed by a participant retired for service under this
part as one of the following:
(1) An employee of an employer.
(2) An employee of a third party, except as specified in
subdivision (b).
(3) An independent contractor.
(b) The activities of an employee of a third party shall not be
included in the definition of "retired participant activities" if all
of the following conditions apply:
(1) The employee performs an assignment of 24 months or less.
(2) The third-party employer does not participate in a California
public pension system.
(3) The activities performed by the individual are not normally
performed by employees of an employer, as defined in Section 22131.
SEC. 36. Section 26139 of the Education Code is amended to read:
26139. (a) "Salary" means remuneration paid in cash by an
employer to a participant for creditable service performed in that
position subject to coverage under the Cash Balance Benefit Program.
Salary shall include:
(1) Money paid in accordance with a publicly available written
contractual agreement, including, but not limited to, a salary
schedule, based on years of training and years of experience as
specified in Section 45028 for creditable service performed.
(2) For participants not paid according to a salary schedule,
money paid for creditable service performed in accordance with a
publicly available written contractual agreement, including, but not
limited to, a collective bargaining agreement or an employment
agreement.
(3) Money paid for the participant's absence from performance of
creditable service as approved by an employer, except as provided in
paragraph (5) of subdivision (b).
(4) Employee contributions picked up by an employer pursuant to
Section 26502.
(5) Amounts deducted by an employer from the participant's salary,
including, but not limited to, deductions for participation in a
deferred compensation plan; deductions for the purchase of an annuity
contract, tax-deferred retirement plan, or other insurance program;
and deductions for participation in a plan that meets the
requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457
(f) of Title 26 of the United States Code.
(6) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) if paid to all employees in a class in the same
dollar amount, the same percentage of salary, or the same percentage
of the amount being distributed.
(7) Any other payments the board determines by plan amendment to
be "salary."
(b) "Salary" does not mean and shall not include:
(1) Money paid for service that is not creditable service.
(2) Money paid by an employer in addition to salary paid under
paragraph (1) or (2) if not paid to all employees in a class in the
same dollar amount, the same percentage of salary, or the same
percentage of the amount being distributed.
(3) Fringe benefits provided by an employer.
(4) Expenses paid or reimbursed by an employer.
(5) Money paid in exchange for the relinquishment of unused
accumulated leave.
(6) Severance pay, including lump-sum and installment payments, or
money paid in excess of salary or wages to a participant as
compensatory damages or as a compromise settlement.
(7) Payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement program, or other insurance
program; and for participation in a plan that meets the requirements
of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26
of the United States Code that are purchased by an employer for a
participant.
(8) Any payments determined by the system to have been made by an
employer to enhance a participant's benefits.
(9) Any other payments the board determines by plan amendment not
to be "salary."
(c) Any employer or person who knowingly or willfully reports
salary in a manner inconsistent with the provisions of subdivisions
(a) or (b) may be subject to prosecution for fraud, theft, or
embezzlement in accordance with provisions of the Penal Code. The
system may establish procedures to ensure that salary reported by an
employer is in compliance with this section.
(d) For purposes of this section, remuneration shall be considered
paid if distributed to any person in the same class of employees who
meets the qualifications or requirements specified in a publicly
available written contractual agreement, including, but not limited
to, a collective bargaining agreement or an employment agreement, as
a condition of receiving the remuneration.
(e) This section shall be deemed to have become operative on July
1, 1996.
(f) This section shall not apply to a participant subject to the
California Public Employees' Pension Reform Act of 2013.
SEC. 37. Section 26139.5 is added to the Education Code, to read:
26139.5. (a) "Salary," for participants subject to the California
Public Employees' Pension Reform Act of 2013, means remuneration
paid each pay period in cash by an employer to a participant for
creditable service performed in that position subject to coverage
under the Cash Balance Benefit Program in accordance with a publicly
available written contractual agreement, including, but not limited
to, a salary schedule or employment agreement, based on years of
training and years of experience as specified in Section 45028.
Salary shall include:
(1) Money paid for the participant's absence from performance of
creditable service as approved by an employer, except as provided in
paragraph (5) of subdivision (b).
(2) Employee contributions picked up by an employer pursuant to
Section 26502.
(3) Amounts deducted by an employer from the participant's salary,
including, but not limited to, deductions for participation in a
deferred compensation plan; deductions for the purchase of an annuity
contract, tax-deferred retirement plan, or other insurance program;
and deductions for participation in a plan that meets the
requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457
(f) of Title 26 of the United States Code.
(4) Any other payments the board determines by plan amendment to
be "salary."
(b) "Salary" does not mean and shall not include:
(1) Money paid for service that is not creditable service.
(2) Money not paid each pay period in which creditable service is
performed for that position.
(3) Fringe benefits provided by an employer.
(4) Expenses paid or reimbursed by an employer.
(5) Money paid in exchange for the relinquishment of unused
accumulated leave.
(6) Severance pay, including lump-sum and installment payments, or
money paid in excess of salary to a participant as compensatory
damages or as a compromise settlement.
(7) Payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement program, or other insurance
program; and for participation in a plan that meets the requirements
of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26
of the United States Code that are purchased by an employer for a
participant.
(8) Any payments determined by the system to have been made by an
employer to enhance a participant's benefits under the plan.
(9) Money paid to the participant in lieu of benefits provided to
the participant by the employer or paid directly by the employer to a
third party other than the system for the benefit of the
participant.
(10) Any one-time or ad hoc payments made to a participant.
(11) Any employer-provided allowance, reimbursement, or payment,
including, but not limited to, one made for housing, vehicle, or
uniform.
(12) Any bonus paid in addition to compensation described in
subdivision (a).
(13) Any other payments the board determines by plan amendment not
to be "salary."
(c) (1) Salary in any fiscal year shall not exceed:
(A) One hundred twenty percent of the "contribution and benefit
base," as determined under Section 430(b) of the Social Security Act
(42 U.S.C. Sec. 430(b)), on January 1, 2013, for a participant whose
service is not included in the federal system.
(B) One hundred percent of the "contribution and benefit base," as
determined under Section 430(b) of the Social Security Act (42
U.S.C. Sec. 430(b)), on January 1, 2013, for a participant whose
service is included in the federal system pursuant to any changes in
state or federal law enacted on or after January 1, 2013.
(2) The system shall adjust the limit in paragraph (1) based on
the annual changes to the Consumer Price Index for All Urban
Consumers: U.S. City Average, calculated by dividing the Consumer
Price Index for All Urban Consumers: U.S. City Average for the month
of February in the fiscal year preceding the adjustment by the
Consumer Price Index for All Urban Consumers: U.S. City Average for
the month of February of the previous year rounded to the nearest
thousandth. Notwithstanding paragraph (1) of subdivision (d) of
Section 7522.10 of the Government Code, the adjustment shall be
effective annually on July 1, beginning July 1, 2014.
(3) The Legislature reserves the right to modify the requirements
of this subdivision with regard to all participants subject to this
subdivision, except that the Legislature may not modify these
provisions in a manner that would result in a decrease in benefits
accrued prior to the effective date of the modification.
(d) Any employer or person who knowingly or willfully reports
salary in a manner inconsistent with the provisions of subdivisions
(a) or (b) may be subject to prosecution for fraud, theft, or
embezzlement in accordance with provisions of the Penal Code. The
system may establish procedures to ensure that salary reported by an
employer is in compliance with this section.
(e) For purposes of this section, remuneration shall be considered
paid if distributed to any person in the same class of employees who
meets the qualifications or requirements specified in a publicly
available written contractual agreement, including, but not limited
to, a collective bargaining agreement or an employment agreement, as
a condition of receiving the remuneration.
SEC. 38. Section 26503.5 of the Education Code is amended to read:
26503.5. If a person elects, pursuant to Section 26403, to
participate in the Cash Balance Benefit Program, his or her employer
shall make contributions, as provided in Section 26503, based on the
salary or other compensation paid for trustee service. For a
participant subject to the California Public Employees' Pension
Reform Act of 2013, other compensation paid for trustee service is
subject to the same requirements as "salary" as defined in Section
26139.5.
SEC. 39. Section 26504 of the Education Code is amended to read:
26504. The employer may enter into a collective bargaining
agreement to pay a different employer contribution rate and a
different employee contribution rate, provided all of the following
conditions are met:
(a) The sum of the employee contributions and employer
contributions for each participant shall equal or exceed 8 percent of
salary.
(b) The employee contribution rate may exceed the employer
contribution rate but in no event shall the employer contribution
rate be less than 4 percent.
(c) The employee contribution rate shall not be less than the
employer contribution rate. If the terms of a collective bargaining
agreement that is in effect on January 1, 2014, would be impaired by
this subdivision, this subdivision shall not apply to the employer
and participants subject to that contract until the expiration of
that contract. A renewal, amendment, or any other extension of that
contract shall be subject to the requirements of this subdivision.
(d) The employee contribution rate and employer contribution rate
shall be the same for each participant employed by the employer.
(e) The employee contribution rate and employer contribution rate
shall be in one-quarter percent increments.
(f) The employee contribution rate and employer contribution rate
as determined under the collective bargaining agreement shall become
effective on the first day of the plan year following notification to
the system and shall remain in effect for at least one plan year.
However, the employee contribution rate and the employer contribution
rate as determined under the collective bargaining agreement may
become effective as of the first day of the plan year in which notice
is given if it is so provided in the collective bargaining agreement
and if a lump-sum contribution is made to the plan equal to the
additional employee and employer contributions, if any, that would
have been required if the contribution rates had been in effect on
the first day of the plan year. Interest shall be credited at the
minimum interest rate with respect to the lump-sum contribution
commencing with the first month after the contribution is made.
(g) The employer has filed notice of the employee contribution
rate and the employer contribution rate on a form prescribed by the
system.
SEC. 40. Section 26800 of the Education Code is amended to read:
26800. The normal retirement age for the Cash Balance Benefit
Program is 60 years of age, or 62 years of age for a participant
subject to the California Public Employees' Pension Reform Act of
2013.
SEC. 41. Section 26810 of the Education Code is amended to read:
26810. (a) A participant who is employed to perform creditable
service subject to coverage by the Cash Balance Benefit Program while
receiving an annuity under the program may voluntarily terminate the
annuity upon employment and make contributions to the program based
on salary paid by the employer for the employment, provided the
participant has attained normal retirement age and has been receiving
a retirement annuity for at least one year. The participant shall
continue to be subject to Section 26808.
(b) The participant shall request in writing within 60 days of
employment that the annuity be terminated. Termination of the
participant's annuity shall become effective on the first day of the
month following the month in which verification of the participant's
employment is received by the system from the participant's employer.
(c) Upon voluntary termination of the annuity, the employee and
employer account of the participant shall be credited with respective
balances that reflect the actuarial equivalent of the participant's
retirement benefit as of the date the participant terminates the
annuity and the Annuitant Reserve shall be reduced by the amount of
the credits.
(d) The portion of the annuity derived from the amounts credited
to the employee account and employer account, as of the date the
participant terminates the annuity, shall be calculated using the
actuarial assumptions in effect on the initial retirement date using
the age of the participant and, if the participant elected a joint
and survivor option the age of the beneficiary on the current
retirement date.
(e) Upon election of a subsequent annuity, the credits in the
participant's employee account and employer account shall be
transferred to the Annuitant Reserve.
SEC. 42. Section 26812 of the Education Code is amended to read:
26812. (a) A participant retired for service under this part may
perform retired participant activities, but the participant shall not
make contributions to the plan or accrue service credit under the
Defined Benefit Program based on compensation earned from that
service. The employer shall maintain accurate records of the earnings
of the retired participant and report those earnings monthly to the
system and retired participant.
(b) If a participant is retired for service under this part, the
annualized rate of pay for retired participant activities performed
by that participant shall not be less than the minimum, nor exceed
the maximum, paid by the employer to other employees performing
comparable duties.
(c) A participant retired for service under this part shall not be
required to reinstate for performing retired participant activities.
(d) (1) If all of the following apply to a participant retired for
service under this part, the participant's annuity shall be reduced
by the amount of the compensation:
(A) The participant is receiving an annuity under the Cash Balance
Benefit Program.
(B) The participant is below normal retirement age or retired on
or after January 1, 2014.
(C) The participant earns compensation paid in cash for performing
retired participant activities, excluding reimbursements paid by an
employer for expenses incurred by the participant in which payment of
the expenses by the participant is substantiated.
(2) The reduction in paragraph (1) shall only be made for
compensation paid in cash during the first 180 calendar days after a
participant retired for service under this part. The amount of the
reduction may be equal to the monthly annuity payable but shall not
exceed the amount of the annuity payable during the first 180
calendar days after a participant retired for service under this
part. For written agreements pertaining to the performance of retired
participant activities entered into, extended, renewed, or amended
on or after January 1, 2014, the reduction in paragraph (1) shall
also be made for payments, including, but not limited to, those for
participation in a deferred compensation plan; to purchase an annuity
contract, tax-deferred retirement plan, or insurance program; and
for contributions to a plan that meets the requirements of Section
125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the
United States Code when the cost is covered by an employer.
(e) If the participant has attained normal retirement age at the
time the compensation is earned, subdivision (d) shall not apply if
the appointment has been approved by the governing body of the
employer in a public meeting, as reflected in a resolution adopted by
the governing body of the employer prior to the performance of
retired participant activities, expressing its intent to seek an
exemption from the limitation specified in subdivision (d). Approval
of the appointment shall not be placed on a consent calendar.
Notwithstanding any other provision of Article 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code or any
state or federal law incorporated by subdivision (k) of Section 6254
of the Government Code, the resolution shall be subject to disclosure
by the entity adopting the resolution and the system. The resolution
shall include the following specific information and findings:
(1) The nature of the employment.
(2) A finding that the appointment is necessary to fill a
critically needed position before 180 calendar days has passed.
(3) A finding that the participant is not ineligible for
application of this subdivision pursuant to subdivision (g).
(4) A finding that the termination of employment of the retired
participant with the employer is not the basis for the need to
acquire the services of the participant.
(f) Subdivision (e) shall not apply to a retired participant whose
termination of employment with the employer is the basis for the
need to acquire the services of the participant.
(g) Subdivision (e) shall not apply if the participant received
additional service credit pursuant to Sections 22714 or 22715 or
received from any public employer any financial inducement to retire.
For purposes of this section, "financial inducement to retire"
includes, but is not limited to, any form of compensation or other
payment that is paid directly or indirectly by a public employer to
the participant, even if not in cash, either before or after
retirement, if the participant retires for service on or before a
specific date or specific range of dates established by a public
employer on or before the date the inducement is offered. The system
shall liberally interpret this subdivision to further the Legislature'
s intent to make subdivision (e) inapplicable to participants if the
participant received a financial incentive from any public employer
to retire or otherwise terminate employment with a public employer.
(h) The superintendent, the county superintendent of schools, or
the chief executive officer of a community college shall submit all
documentation required by the system to substantiate the eligibility
of the retired participant for application of subdivision (e),
including, but not limited to, the resolution adopted pursuant to
that subdivision.
(i) The documentation required by this section shall be received
by the system prior to the retired participant's performance of
retired participant activities.
(j) Within 30 calendar days of the receipt of all documentation
required by the system pursuant to this section, the system shall
inform the entity seeking application of the exemption specified in
subdivision (e) and the retired participant whether the compensation
paid to the participant will be subject to the limitation specified
in subdivision (d).
SEC. 43. Section 26813 of the Education Code is amended to read:
26813. A member retired for service under the Defined Benefit
Program may perform retired participant activities in any one school
year up to the limitation specified in Sections 24214 and 24214.5,
but the member shall not make contributions to the fund. The employer
shall maintain accurate records of the earnings of the retired
member and report those earnings monthly to the system and retired
member as described in Section 22461.
