The Public Employees Retirement Law permits a member of the Public Employees Retirement System (PERS) who is employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education to elect to have specified service excluded from coverage by the Defined Benefit Program of the State Teachers Retirement Plan and instead be subject to coverage by PERS, as specified.

This bill would limit the application of that option to a member of PERS who was employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education within 120 days before the members date of hire to perform service that requires membership in the Defined Benefit Program of the State Teachers Retirement Plan.

The Public Employees Retirement Law permits a member of the Public Employees Retirement System (PERS) who is employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education to elect to have specified service excluded from coverage by the Defined Benefit Program of the State Teachers Retirement Plan and instead be subject to coverage by PERS, as specified.

This bill would limit the application of that option to a member of PERS who was employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education within 120 days before the members date of hire to perform service that requires membership in the Defined Benefit Program of the State Teachers Retirement Plan.

The Public Employees Retirement Law permits a member of the Public Employees Retirement System (PERS) who is employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education to elect to have specified service excluded from coverage by the Defined Benefit Program of the State Teachers Retirement Plan and instead be subject to coverage by PERS, as specified.

This bill would limit the application of that option to a member of PERS who was employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education within 120 days before the members date of hire to perform service that requires membership in the Defined Benefit Program of the State Teachers Retirement Plan.

SENATE COMMITTEE ON

PUBLIC EMPLOYMENT AND RETIREMENT

Dr. Richard Pan, Chair

2017 - 2018 Regular

Bill No: AB 590 Hearing Date: 6/12/17

Subject: Public employees’ retirement: membership election

SOURCE: California Public Employees’ Retirement System

ASSEMBLY VOTES:

DIGEST: This bill provides greater flexibility in permitting a CalPERS member who becomes employed in a CalSTRS covered position to elect to retain CalPERS membership.

ANALYSIS:

Existing law:

• 1. Allows a member of California Public Employees’ Retirement System (CalPERS) who is an employee of a school, California Community College, or State Department of Education, and who performs service subject to coverage by the California State Teachers’ Retirement System (CalSTRS) Defined Benefit Program, to elect to retain coverage in CalPERS for that subsequent service.
  2. Requires a member who elects to retain coverage in CalPERS for that subsequent service, to submit the written election, as specified, to CalPERS, and a copy of the election to CalSTRS, within 60 days after the employee’s date if hire.
  3. Specifies that a member who elects to retain coverage in CalPERS is deemed to be a school member while employed by a school employer.
  4. Specifies that this election applies to a member of the system who is either a) employed by a school, California Community Colleges, or State Department of Education, or b) has at least five years of credited service in CalPERS.
  5. Provides that once an election is made by the member, it is effective on the first day of employment in the position that qualified the member to make an election.

This bill:

Clarifies that a person who was a CalPERS member within 120 days before becoming employed by a school employer, as specified, for service that requires membership in CalSTRS to elect to retain CalPERS membership instead of becoming a CalSTRS member.

Background

Currently, a CalPERS member who becomes employed in a CalSTRS covered position may elect to retain CalPERS membership rather than begin coverage in CalSTRS if the member has five years of service in CalPERS (i.e., is vested) or if the member is currently employed by a school employer, the Board of Governors of the California Community Colleges, or the State Department of Education. For example, if a classified employee becomes a certificated employee at a school. However, CalPERS has determined that under the current reading of statute (which uses the present tense “is” rather than “was”) any break in service by a non-vested employee eliminates the ability of the employee to elect to remain in CalPERS because the employee is no longer a member of CalPERS after the break in service. Thus, when a classified employee ends their job on Friday and takes a teaching position on Monday at another school district, the employee ceases to be a member of CalPERS on Friday. When the employee starts the new teaching job on Monday, the employee is not eligible to elect to stay in CalPERS since he or she is officially no longer a CalPERS member.

This bill would create a 120 day window from the time the employee switched positions so that the employee could retain eligibility to elect to remain in CalPERS either when starting at a new district or when starting a new position in the same district in the next school year (e.g., after the summer break).

Under a related program in which CalSTRS members can retain CalSTRS membership when moving into CalPERS covered employment, the member does not have the same break in service issue.

Related/Prior Legislation

SB 215 (Beall, Chapter 778, Statutes of 2013), the CalPERS annual housekeeping bill, contained a provision to clarify that non-vested CalPERS members could have a break in service of 120 days and still be eligible to retain CalPERS membership in a CalSTRS covered position. However, the provision was not included in the chaptered version of the bill.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to Assembly Appropriations Committee, this bill would result in a one-time modest administrative cost to implement the new policy that would be offset by ongoing savings from the reduction in work associated with invalid election requests.

SUPPORT:

California Public Employees’ Retirement System (source)

OPPOSITION:

None received.

ARGUMENTS IN SUPPORT: According to the sponsor, this bill “would provide greater equity and conformity between CalPERS’ and CalSTRS’ administration of these elections, ease confusion for school members and employers, and reduce the use of CalPERS resources to address invalid elections and respond to related administrative appeals.”

 CONSENT  

Bill No: AB 590

Author:

:

Vote:

SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 6/12/17

AYES: Pan, Morrell, Leyva, Moorlach, Portantino

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 69-0, 5/18/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: California Public Employees’ Retirement System

DIGEST:

This bill provides greater flexibility in permitting a California Public Employees’ Retirement System (CalPERS) member who becomes employed in a California State Teachers’ Retirement System (CalSTRS) covered position to elect to retain CalPERS membership.

ANALYSIS:

Existing law:

1. Allows a member of CalPERS who is an employee of a school, California Community College (CCC), or State Department of Education (SDE), and who performs service subject to coverage by the CalSTRS Defined Benefit Program, to elect to retain coverage in CalPERS for that subsequent service.
2. Requires a member who elects to retain coverage in CalPERS for that subsequent service, to submit the written election, as specified, to CalPERS, and a copy of the election to CalSTRS, within 60 days after the employee’s date if hire.
3. Specifies that a member who elects to retain coverage in CalPERS is deemed to be a school member while employed by a school employer.
4. Specifies that this election applies to a member of the system who is either a) employed by a school, CCCs, or SDE, or b) has at least five years of credited service in CalPERS.
5. Provides that once an election is made by the member, it is effective on the first day of employment in the position that qualified the member to make an election.

This bill clarifies that a person who was a CalPERS member within 120 days before becoming employed by a school employer, as specified, for service that requires membership in CalSTRS to elect to retain CalPERS membership instead of becoming a CalSTRS member.

Background

Currently, a CalPERS member who becomes employed in a CalSTRS covered position may elect to retain CalPERS membership rather than begin coverage in CalSTRS if the member has five years of service in CalPERS (i.e., is vested) or if the member is currently employed by a school employer, the Board of Governors of the CCCs, or the SDE. For example, if a classified employee becomes a certificated employee at a school. However, CalPERS has determined that under the current reading of statute (which uses the present tense “is” rather than “was”) any break in service by a non-vested employee eliminates the ability of the employee to elect to remain in CalPERS because the employee is no longer a member of CalPERS after the break in service. Thus, when a classified employee ends their job on Friday and takes a teaching position on Monday at another school district, the employee ceases to be a member of CalPERS on Friday. When the employee starts the new teaching job on Monday, the employee is not eligible to elect to stay in CalPERS since he or she is officially no longer a CalPERS member.

This bill creates a 120 day window from the time the employee switched positions so that the employee could retain eligibility to elect to remain in CalPERS either when starting at a new district or when starting a new position in the same district in the next school year (e.g., after the summer break).

Under a related program in which CalSTRS members can retain CalSTRS membership when moving into CalPERS covered employment, the member does not have the same break in service issue.

Related/Prior Legislation

SB 215 (Beall, Chapter 778, Statutes of 2013), the CalPERS annual housekeeping bill, contained a provision to clarify that non-vested CalPERS members could have a break in service of 120 days and still be eligible to retain CalPERS membership in a CalSTRS covered position. However, the provision was not included in the chaptered version of the bill.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/27/17)

California Public Employees’ Retirement System (source)

OPPOSITION: (Verified 6/27/17)

None received

ARGUMENTS IN SUPPORT: According to the sponsor, this bill “would provide greater equity and conformity between CalPERS’ and CalSTRS’ administration of these elections, ease confusion for school members and employers, and reduce the use of CalPERS resources to address invalid elections and respond to related administrative appeals.”

ASSEMBLY FLOOR: 69-0, 5/18/17

AYES: Acosta, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Cervantes, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Gallagher, Cristina Garcia, Eduardo Garcia, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood

NO VOTE RECORDED: Aguiar-Curry, Calderon, Chau, Frazier, Friedman, Gipson, Gloria, Holden, Mullin, Santiago, Rendon

Prepared by:

6/28/17 15:35:31

**** END ****

Date of Hearing: May 10, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 590

Author:(Medina) – As Introduced Ver:February 14, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill provides that certain non-vested members of the California Public Employees’ Retirement System (CalPERS) who have a break in service of up to 120 days are still eligible to remain in CalPERS after moving to new employment requiring mandatory participation in California State Teachers Retirement System (CalSTRS).

FISCAL EFFECT:

One-time modest administrative costs to implement the new policy that would be offset by ongoing savings from the reduction in work associated with invalid election requests.

COMMENTS:

1. Background. Generally, classified school members, like office or custodial staff, are members of CalPERS whereas certificated school employees, like teachers, are members of CalSTRS. Under existing law, certain CalPERS members who are employed by a school employer and have less than the five years of service needed to vest for benefit can elect to remain in CalPERS when they move into a certified position that would otherwise require membership in CalSTRS. However, these employees can only remain in CalPERS if there is no break in service. This can mean that even an employee who leaves one position on a Friday to enter a credentialed position the following Monday is no longer allowed to make an election to remain in CalPERS.

Conversely, CalSTRS members may elect to remain in CalSTSRS when they are appointed to certain positions that are otherwise subject to mandatory CalPERS participation. In these cases, CalSTRS members are allowed to make the election even if there is a break in service.

1. Purpose. According to the bill’s sponsor, CalPERS, AB 590 will provide greater equity and conformity between CalPERS’ and CalSTRS’ administration and ease confusion for school members and employers.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081