(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board (board).

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing law limits the postretirement compensation of a retired member of the program, in any school year, to an amount calculated by STRS each July 1 equal to ¹/₂ of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.

This bill would modify that calculation so the limitation of postretirement compensation, in any school year, is instead an amount calculated by STRS each July 1 equal to 70% of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.

Existing law establishes an additional postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to STRS, under penalty of perjury, as prescribed. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would require a written copy or copies of the completed documentation that substantiates the need for the request for exemption to be submitted to the exclusive representative of employees prior to the retired members performance of retired member activities. The bill, among other changes, would also require the board to submit, on or before February 1, 2027, to specified committees of the Legislature a report that includes, among other things, the total number of exemption requests received by STRS from July 1, 2024, to June 30, 2026, inclusive.

(2)Existing law establishes the Cash Balance Benefit Program, administered by the board, as a separate benefit program within the State Teachers Retirement Plan for purposes of providing a retirement plan for persons employed to perform creditable service for less than 50% of full-time equivalent service. Existing law provides that the normal retirement age for the program is 60 or 62 years of age, as applicable.

Under the program, a participant retired for service may perform retired participant activities, but prohibits the participant from making contributions to the plan or accruing service credit under the Defined Benefit Program based on compensation earned from that service. Under the program, if the retired participant performs retired participant activities, receives compensation paid in cash for those activities, and meets other specified conditions, the annuity paid to the retired participant is reduced by the amount of compensation. Existing law, however, does not require reduction of the participants annuity if the governing body of the employer, among other things, approves the appointment of the retired participant by resolution.

This bill would instead exempt a retired participant from the annuity reduction requirement if the Superintendent, the county superintendent of schools, or the chief executive officer of a community college submits a request for exemption to STRS with certification, under penalty of perjury, of specified information. By expanding the crime of perjury, the bill would impose a state-mandated local program. This bill would require a written copy or copies of the completed documentation that substantiates the need for the request for exemption to be submitted to the exclusive representative of employees prior to the retired participants performance of retired participant activities.

(3)This bill would make all of the above-described changes effective from only July 1, 2024, to June 30, 2026, inclusive, before reverting to existing law.

The bill would also make legislative findings and declarations in support of its provisions.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board (board).

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing law limits the postretirement compensation of a retired member of the program, in any school year, to an amount calculated by STRS each July 1 equal to ¹/₂ of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.

This bill would modify that calculation so the limitation of postretirement compensation, in any school year, is instead an amount calculated by STRS each July 1 equal to 70% of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.

Existing law establishes an additional postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to STRS, under penalty of perjury, as prescribed. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would require a written copy or copies of the completed documentation that substantiates the need for the request for exemption to be submitted to the exclusive representative of employees prior to the retired members performance of retired member activities. The bill, among other changes, would also require the board to submit, on or before February 1, 2027, to specified committees of the Legislature a report that includes, among other things, the total number of exemption requests received by STRS from July 1, 2024, to June 30, 2026, inclusive.

(2)Existing law establishes the Cash Balance Benefit Program, administered by the board, as a separate benefit program within the State Teachers Retirement Plan for purposes of providing a retirement plan for persons employed to perform creditable service for less than 50% of full-time equivalent service. Existing law provides that the normal retirement age for the program is 60 or 62 years of age, as applicable.

Under the program, a participant retired for service may perform retired participant activities, but prohibits the participant from making contributions to the plan or accruing service credit under the Defined Benefit Program based on compensation earned from that service. Under the program, if the retired participant performs retired participant activities, receives compensation paid in cash for those activities, and meets other specified conditions, the annuity paid to the retired participant is reduced by the amount of compensation. Existing law, however, does not require reduction of the participants annuity if the governing body of the employer, among other things, approves the appointment of the retired participant by resolution.

This bill would instead exempt a retired participant from the annuity reduction requirement if the Superintendent, the county superintendent of schools, or the chief executive officer of a community college submits a request for exemption to STRS with certification, under penalty of perjury, of specified information. By expanding the crime of perjury, the bill would impose a state-mandated local program. This bill would require a written copy or copies of the completed documentation that substantiates the need for the request for exemption to be submitted to the exclusive representative of employees prior to the retired participants performance of retired participant activities.

(3)This bill would make all of the above-described changes effective from only July 1, 2024, to June 30, 2026, inclusive, before reverting to existing law.

The bill would also make legislative findings and declarations in support of its provisions.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board. Board (board).

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing Existing law limits the postretirement compensation of a retired member of the program, in any school year, to an amount calculated by STRS each July 1 equal to ¹/₂ of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.

Existing law establishes a an additional postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to the system, STRS, under penalty of perjury, as prescribed. By expanding the crime of perjury, the bill would impose a state-mandated local program.

The bill would also make legislative findings and declarations in support of its provisions.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board.

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing law establishes a postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to the system, under penalty of perjury, as prescribed.

Existing law limits the postretirement compensation of a member of the Defined Benefit Program of the Teachers Retirement Plan to an amount calculated by STRS, as specified. If the members postretirement compensation exceeds this amount, the law requires the members retirement allowance to be reduced by the amount of excess compensation. Existing law, however, permits members retired for service from STRS to perform retired member activities, as defined, without being subject to the compensation limit under certain limited conditions and circumstances.

This bill would, commencing July 1, 2024, exempt a retired member, who has returned to perform retired member activities for an employer, after retirement to fulfill a critical need in a certificated teaching position, as defined, from the postretirement compensation limitation, as specified. The bill would require an employer to submit specified documentation, certified under penalty of perjury, to substantiate a retired members eligibility. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would prohibit a retired member from performing retired member activities until after the system has received the specified documentation. The bills exemption to existing laws postretirement compensation limitation would commence on the date the retired member is appointed or assigned to the teaching position and end on June 30 of that school year. The bill would prohibit a retired member from utilizing the exemption for more than 3 school years.

(2)Existing law establishes the Teacher Residency Grant Program and appropriates $350,000,000 from the General Fund to the Commission on Teacher Credentialing for the 202122 fiscal year to award grants to certain applicant local educational agencies to support teacher residency programs that recruit and support the preparation of teachers, as provided. Under the program, a grant award can be no greater than $25,000 per teacher candidate, as provided.

This bill would increase the maximum grant award to instead be no greater than $40,000 per teacher candidate, as provided.

The bill would also make legislative findings and declarations in support of its provisions.

(3)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board.

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing law establishes a postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to the system, under penalty of perjury, as prescribed.

Existing law limits the postretirement compensation of a member of the Defined Benefit Program of the Teachers Retirement Plan to an amount calculated by STRS, as specified. If the members postretirement compensation exceeds this amount, the law requires the members retirement allowance to be reduced by the amount of excess compensation. Existing law, however, permits members retired for service from STRS to perform retired member activities, as defined, without being subject to the compensation limit under certain limited conditions and circumstances.

This bill would, commencing July 1, 2024, and until June 30, 2026, exempt a retired member, who has returned to perform retired member activities for an employer, after retirement to fulfill a critical need in a teaching certificated position, as defined, from the postretirement compensation limitation, as specified. The bill would require an employer to submit specified documentation, certified under penalty of perjury, to substantiate a retired members eligibility. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would prohibit a retired member from performing retired member activities until after the system has received the specified documentation. The bills exemption to existing laws postretirement compensation limitation would commence on the date the retired member is appointed or assigned to the teaching position and end on June 30 of that fiscal school year. The bill would prohibit a retired member from utilizing the exemption for more than 3 school years.

(2)Existing law establishes the Teacher Residency Grant Program and appropriates $350,000,000 from the General Fund to the Commission on Teacher Credentialing for the 202122 fiscal year to award grants to certain applicant local educational agencies to support teacher residency programs that recruit and support the preparation of teachers, as provided. Under the program, a grant award can be no greater than $25,000 per teacher candidate, as provided.

This bill would increase the maximum grant award to instead be no greater than $40,000 per teacher candidate, as provided.

(3)The Cal Grant Program establishes the Cal Grant A and B Entitlement Awards, the California Community College Expanded Entitlement Awards, the California Community College Transfer Entitlement Awards, the Competitive Cal Grant A and B Awards, the Cal Grant C Awards, and the Cal Grant T Awards under the administration of the Student Aid Commission, and establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions. Under existing law, a requirement of the program includes determining financial need to establish an applicants initial eligibility for a Cal Grant award and a renewing recipients continued eligibility, as provided, and agrees to repay the state the total amount of Cal Grant awards received pursuant to the exemption if the applicant fails to enroll in a teacher preparation program within one academic year of completing the applicants baccalaureate degree, as specified.

This bill would, commencing with the 202425 award year, and for each award year thereafter, require 1,000 of the awarded Cal Grants to be exempt from the above-described requirement of determining financial need if the applicant meets the other requirements of the program, as specified, and the applicant files a statement of intent with the commission stating that the applicant agrees to enroll in a teacher preparation program upon completion of a baccalaureate degree, as provided.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board.

Existing law permits members retired for service from STRS to perform retired member activities without reinstatement into the system if certain conditions are met. Existing law, however, requires payment for the performance of retired member activities to be law establishes a postretirement compensation limit of $0 during the first 180 calendar days after the most recent retirement of a retired member, unless certain conditions are met. member for the performance of retired member activities. Under existing law, if a retired member has attained normal retirement age at the time compensation is earned, this postretirement compensation limit does not apply if the appointment has been approved by the employer in a public meeting and a resolution containing certain information has been adopted by the governing body of the employer, as specified.

This bill would instead authorize a member retired from service to perform retired member activities, notwithstanding the above-mentioned 180 calendar days compensation limitation, if a request for exemption containing specified information is submitted by the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to the system, under penalty of perjury, as prescribed. This bills authorization to perform retirement member activities does not apply if a member has not attained a normal retirement age, if the members termination of employment is the basis for the need to acquire the services of the member, or if a member received additional service credit or any financial inducement to retire.

Existing law limits the postretirement compensation of a member of the Defined Benefit Program of the Teachers Retirement Plan to an amount calculated by STRS, as specified. If the members postretirement compensation exceeds this amount, the law requires the members retirement allowance to be reduced by the amount of excess compensation. Existing law, however, permits members retired for service from STRS to perform retired member activities, as defined, without being subject to the compensation limit under certain limited conditions and circumstances.

This bill would, commencing July 1, 2024, and until June 30, 2026, exempt a retired member, who has returned to work perform retired member activities for an employer, after retirement to fulfill a critical need in a teaching position, as defined, from the postretirement compensation limitation, as specified. The bill would require an employer to submit specified documentation, certified under penalty of perjury, to substantiate a retired members eligibility. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would prohibit a retired member from performing retired member activities until after the employer has submitted system has received the specified documentation to the system. documentation. The bills exemption to existing laws postretirement compensation limitation would commence on the date the retired member is appointed or assigned to the teaching position and end on June 30 of that fiscal year.

This bill would make these provisions inoperative on June 30, 2026, and would repeal them as of January 1, 2027.

(2)Existing law establishes the Teacher Residency Grant Program and appropriates $350,000,000 from the General Fund to the Commission on Teacher Credentialing for the 202122 fiscal year to award grants to certain applicant local educational agencies to support teacher residency programs that recruit and support the preparation of teachers, as provided. Under the program, a grant award can be no greater than $25,000 per teacher candidate, as provided.

This bill would increase the maximum grant award to instead be no greater than $40,000 per teacher candidate, as provided.

(3)The Cal Grant Program establishes the Cal Grant A and B Entitlement Awards, the California Community College Expanded Entitlement Awards, the California Community College Transfer Entitlement Awards, the Competitive Cal Grant A and B Awards, the Cal Grant C Awards, and the Cal Grant T Awards under the administration of the Student Aid Commission, and establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions. Under existing law, a requirement of the program includes determining financial need to establish an applicants initial eligibility for a Cal Grant award and a renewing recipients continued eligibility, as provided. provided, and agrees to repay the state the total amount of Cal Grant awards received pursuant to the exemption if the applicant fails to enroll in a teacher preparation program within one academic year of completing the applicants baccalaureate degree, as specified.

This bill would, commencing with the 202425 award year, and for each award year thereafter, require 1,000 of the awarded Cal Grants to be exempt from the above-described requirement of determining financial need if the applicant meets the other requirements of the program, as specified, and the applicant files a statement of intent with the commission stating that the applicant agrees to enroll in a teacher preparation program upon completion of a baccalaureate degree, as provided.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law, the Teachers Retirement Law, establishes the State Teachers Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. Under existing law, STRS is governed by the Teachers Retirement Board.

Existing law limits the postretirement compensation of a member of the Defined Benefit Program of the Teachers Retirement Plan to an amount calculated by STRS, as specified. If the members postretirement compensation exceeds this amount, the law requires the members retirement allowance to be reduced by the amount of excess compensation. Existing law, however, permits members retired for service from STRS to perform retired member activities activities, as defined, without being subject to the compensation limit under certain limited conditions and circumstances.

This bill would, until December 31, 2026, June 30, 2026, exempt a classroom teacher or administrator, retired member, who has returned to work after retirement to fulfill a critical need in a classroom teaching position due to the teacher shortage, from the 180-day break in service requirement and teaching position, as defined, from the postretirement compensation limitation, as specified. The bill would require a local school district, county office of education, or other local educational agency an employer to submit specified documentation, certified under penalty of perjury, to substantiate a retired members eligibility. By expanding the crime of perjury, the bill would impose a state-mandated local program.

This bill would make these provisions inoperative on December 31, 2026, June 30, 2026, and would repeal them as of January 1, 2027. 2027.

(2)Existing law establishes the Teacher Residency Grant Program and appropriates $350,000,000 from the General Fund to the Commission on Teacher Credentialing for the 202122 fiscal year to award grants to certain applicant local educational agencies to support teacher residency programs that recruit and support the preparation of teachers, as provided. Under the program, a grant award can be no greater than $25,000 per teacher candidate, as provided.

This bill would, for the 202324 fiscal year, appropriate an unspecified amount from the General Fund to the Commission on Teacher Credentialing for the above-described purpose. This bill would increase the maximum grant award to instead be no greater than $40,000 per teacher candidate, as provided.

(3)The Cal Grant Program establishes the Cal Grant A and B Entitlement Awards, the California Community College Transfer Entitlement Awards, the Competitive Cal Grant A and B Awards, the Cal Grant C Awards, and the Cal Grant T Awards under the administration of the Student Aid Commission, and establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions. Under existing law, a requirement of the program includes determining financial need to establish an applicants initial eligibility for a Cal Grant award and a renewing recipients continued eligibility, as provided.

This bill would, commencing with the 202425 award year, and for each award year thereafter, require 1,000 of the awarded Cal Grants to be exempt from the above-described requirement of determining financial need if the applicant meets the other requirements of the program, as specified, and the applicant files a statement of intent with the commission stating that the applicant agrees to enroll in a teacher preparation program upon completion of a baccalaureate degree, as provided.

(4)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law establishes a system of public elementary and secondary education in this state.

This bill would state the intent of the Legislature to enact subsequent legislation relating to elementary and secondary education.

 UNFINISHED BUSINESS  

Bill No: SB 765

Author: Portantino (D), et al.

Amended: 8/17/23

Vote: 21

SENATE EDUCATION COMMITTEE: 7-0, 4/19/23

AYES: Newman, Ochoa Bogh, Cortese, Glazer, McGuire, Smallwood-Cuevas, Wilk

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/26/23

AYES: Cortese, Wilk, Durazo, Laird, Smallwood-Cuevas

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

SENATE FLOOR: 39-0, 5/24/23

AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO VOTE RECORDED: Limón

ASSEMBLY FLOOR: 79-0, 9/6/23 - See last page for vote

SUBJECT: Teachers: retired teachers: compensation limitation

SOURCE: State Superintendent of Public Instruction Tony Thurmond

DIGEST:

This bill amends the Teachers’ Retirement Law (TRL) to temporarily increase the postretirement compensation earning limit; authorizes temporary use of an alternative framework for educational employers to hire retired members of the California State Teachers’ Retirement System (CalSTRS); requires CalSTRS to submit a report to specific legislative committees; and, makes these provisions operative commencing July 1, 2024, with a sunset on July 1, 2026, among other provisions.

Assembly Amendments

delete the provisions increasing the award amount for the Teacher Residency Grant Program and delete the provisions related to the Cal Grant Program.

ANALYSIS:

Existing law:

1. Prohibits a retired person from being employed for a period of 180 days following the date of retirement, unless the employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting.
2. Limits the per-school year cash compensation to a retired member for performance of retired member activities, excluding specified reimbursements 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.
3. Requires a superintendent, a county superintendent of schools, or a chief executive officer of a community college to submit all documentation required by CalSTRS to substantiate the eligibility of a retired member for applying the cash compensation summarized in 2) above.

This bill:

1. Increases, temporarily, the postretirement compensation earnings limit under the TRL, administered by CalSTRS, from 50% to 70% of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.
2. Modifies the TRL to temporarily authorize an alternative process for educational employers to hire a retired CalSTRS member prior to satisfying the statutory 180-day separation from service requirement if:
   1. The Superintendent, county superintendent, or chief executive officer (CEO) of a community college district (CCD) seeks an exemption to the 180-day separation from service requirements and zero dollar earnings limit and submits documents to CalSTRS with certification, under penalty of perjury, as to each of the following:
      1. The nature of the employment;
      2. That the appointment is necessary to fill a critically needed position before the 180 calendar days have passed;
      3. That the CalSTRS member is not ineligible for application of these provisions, as provided;
      4. 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; and,
      5. That the employer did not have a reduction-in-force layoff pursuant to existing laws, as specified and provided, within the prior 18 months.
3. Requires the Superintendent, county superintendent, or CEO of a CCD to provide a written copy or written copies of the completed documentation submitted to CalSTRS, as provided, to the exclusive representative that substantiates the need for the exemption prior to the retired member's performance of retired member activities.
4. Requires, on or before February 1, 2027, CalSTRS to submit a report to the Assembly Committee on Public Employment and Retirement, and the Senate Committee on Labor, Public Employment and Retirement, that includes, but is not limited to, the following information by school year:
   1. The total number of requests received by CalSTRS from the Superintendent, county superintendent, or CEO of a CCD for the exemption, as specified during the operative period of the above-described provisions;
   2. The total number of retired members who performed retired member activities with an exemption during the operative period of the above-described provisions;
   3. The total number of retired members who performed retired member activities during the operative period of the above-described provisions;
   4. The total number of retired members who exceeded the 65% postretirement compensation earning limit during the operative period of the above-described provisions; and,
   5. The compensation or remuneration paid to each retired member who performed retired member activities during the operative period of the above-described provisions.
5. Applies, similarly, the above-described to retired CalSTRS Cash Balance (CB) Benefit program participants relating to the 180-day separation from service requirement, and exempts retired participants from a reduction in their annuity, as specified.
6. Makes these provisions operative for two years commencing July 1, 2024, with a sunset on July 1, 2026. Thereafter, existing law becomes operative, and the above-described provisions are repealed on January 1, 2027.

Comments

1. Need for the bill. According to the author, “California is facing a devastating teacher short-age, exacerbated by the COVID-19 pandemic and the Great Resignation. The California Commission on Teacher Credentialing (CTC) reports over 10,000 teacher vacancies across California during the 2021–22 school year. CalSTRS reports that teacher retirements increased by 26 percent in 2020. There are not enough individuals entering the teaching profession to counteract the number of teachers leaving the workforce.

“Additionally, teacher demand is increasing. According to the Learning Policy Institute, in order to ensure a successful Transitional Kindergarten (TK) rollout, between 11,900 and 15,600 additional lead teachers, and between 16,000 and 19,700 assistant transitional kindergarten teachers are needed by 2025–26.

1. Already weak teaching pipeline further damaged by COVID-19 education disruptions. A March 2021 report by the Learning Policy Institute (LPI) raised concerns about the effects of the COVID-19 pandemic on the teacher shortage in California:
   1. Teacher shortages remain a critical problem. Most districts have found teachers to be in short supply, especially for math, science, special education, and bilingual education. Shortages are especially concerning as a return to in-person instruction will require even more teachers to accommodate physical distancing requirements.
   2. Teacher pipeline problems are exacerbated by teacher testing policies and inadequate financial aid for completing preparation. Many districts attributed shortages to having a limited pool of fully credentialed applicants, with more than half reporting that testing requirements and lack of financial support for teacher education pose barriers to entry into teaching.
   3. Teacher workload and burnout are major concerns. The transition to online and hybrid learning models has had a steep learning curve and poses ongoing challenges that have been a primary contributor to some teachers’ decisions to retire earlier than previously planned.
   4. Growing retirements and resignations further reduce supply. In some districts, retirements and resignations are contributing to shortages, while in others, these retirements and resignations offset the need for anticipated layoffs due to expected budget cuts this school year. District leaders anticipate higher retirement rates next year, which could exacerbate teacher shortages.
2. Teacher survey data. In a September 2022 survey of TK-12 teachers in California conducted by Hart Research Associates, aspiring and former teachers shared their suggested policy changes to develop a strategy for teacher retention and recruitment. This survey provided several insights on teacher preparation programs, teacher workload, and the financial costs of teacher preparation programs. Aspiring teachers recommended compensating student teachers to help alleviate financial stress at an important time in the teacher preparation process. Specifically, the report noted:
   1. Aspiring teachers of color were more likely to feel less motivated to teach than their white counterparts, and through those discussions, a clear disparity emerged. The reasons they feel less motivated include heightened financial stress, low or no pay for time spent student-teaching, discouraging feedback, and the required teacher candidate assessments, which some express are racially biased. The testing and evaluation process required to enter the profession was cited as a significant reason for why future teachers of color became less motivated.
   2. The cost of tuition and assessments is a major financial burden and source of stress for these aspiring teachers in California. Many report that they specifically chose the institution they attended based on tuition costs and the availability of scholarships, grants, and financial aid. Several indicated that, had they not had financial support from a spouse or partner or received some form of financial assistance or a scholarship, they likely would not have pursued a career in teaching.
   3. Compensating student teachers was suggested by a significant number of the aspiring teachers and is viewed as a very important policy change that will help alleviate financial stress at an important time in the teacher preparation process.
3. Recently expired executive orders sought to address education staffing shortages via substitute and retired teachers. On January 11, 2022, Governor Gavin Newsom released Executive Order N-3-22 to provide temporary administrative and staffing flexibilities to assist schools in maintaining operations with qualified staff and keep students in learning environments with strong COVID‑19 safety measures.

The following were authorized to local education agencies (LEAs) that made a written finding, signed by the LEA’s superintendent or designee and retained for public access upon request, that temporary staffing flexibility would support maintaining in-person instruction through March 31, 2022:

• 1. Allow LEAs to issue 30-day emergency substitute credentials without regard to whether the recipient has a pending credential or permit application, provided candidates have an undergraduate degree from a regionally accredited college or university and pass a criminal background check.
  2. Lengthen the duration for which substitute teachers can be assigned to a single general education assignment from the current maximum of 60 days to the new limit of 120 days.
  3. Permit student teachers to serve as teachers without the requirement that the student teacher be under the direct supervision of a certificated teacher in a classroom for purposes of calculating a school district’s average daily attendance for apportionment for each day, or portion of a day.
  4. Continue existing financial incentives for retiree teachers. These incentives include suspension of certain post-retirement compensation limitations and suspension of the required 180-day service break — a suspension that applies to classified employees as well.

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

According to the Assembly Appropriations Committee:

• Absorbable one-time special fund costs to CalSTRS.
• Proposition 98 General Fund cost savings in the short term to schools and community colleges to the extent hiring and paying retired educators is less expensive than hiring permanent educators. For example, schools and community colleges likely would not provide employment benefits to a retired employee rehired under the provisions of this bill.
• Potential Proposition 98 General Fund costs to educator employers to increase pension fund contributions and potential General Fund costs to the state to increases its share of CalSTRS costs. According to CalSTRS, to the extent this bill encourages a trend of retired CalSTRS members filling positions normally staffed by contributing members or to the extent this bill encourages members to retire earlier with the intention of returning to work, it could lead to some volatility in CalSTRS funded status. CalSTRS notes, however, that the impact of postretirement work to the overall health of CalSTRS' funded status has been relatively minor to date.

SUPPORT: (Verified 9/6/23)

State Superintendent of Public Instruction Tony Thurmond (source)

Association of California School Administrators

California Association of School Business Officials 

California Association of Suburban School Districts

California Charter Schools Association

California School Boards Association

Central Valley Education Coalition

Los Angeles Unified School District

Orange County Department of Education

Riverside County Office of Education

San Diego Unified School District

OPPOSITION: (Verified 9/6/23)

None received

ASSEMBLY FLOOR: 79-0, 9/6/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Grayson

Prepared by: Ian Johnson / ED. / (916) 651-4105

9/6/23 18:21:21

**** END ****

SENATE THIRD READING

STR Bill Id:SB 765

Author:(Portantino)

As Amended Ver:August 17, 2023

Majority vote

SUMMARY

Amends the Teachers' Retirement Law (TRL) to temporarily increase the postretirement compensation earning limit; authorizes temporary use of an alternative framework for educational employers to hire retired members of the California State Teachers' Retirement System (CalSTRS); requires CalSTRS to submit a report to specific legislative committees; and, makes these provisions operative commencing July 1, 2024, with a sunset on July 1, 2026, among other provisions.

Major Provisions

1. Temporarily increases the postretirement compensation earnings limit under the TRL, administered by CalSTRS, from 50% to 70% of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.
2. Modifies the TRL to temporarily authorize an alternative process for educational employers to hire a retired CalSTRS member prior to satisfying the statutory 180-day separation from service requirement if:
3. The Superintendent, county superintendent, or chief executive officer (CEO) of a community college district (CCD) seeks an exemption to the 180-day separation from service requirements and zero dollar earnings limit and submits documents to CalSTRS with certification, under penalty of perjury, as to each of the following:
4. The nature of the employment;
5. That the appointment is necessary to fill a critically needed position before the 180 calendar days have passed;
6. That the CalSTRS member is not ineligible for application of these provisions, as provided;
7. 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; and,
8. That the employer did not have a reduction-in-force layoff pursuant to existing laws, as specified and provided, within the prior 18 months.
9. Requires the Superintendent, county superintendent, or CEO of a CCD to provide a written copy or written copies of the completed documentation submitted to CalSTRS, as provided, to the exclusive representative that substantiates the need for the exemption prior to the retired member's performance of retired member activities.
10. Requires, on or before February 1, 2027, CalSTRS to submit a report to the Assembly Committee on Public Employment and Retirement, and the Senate Committee on Labor, Public Employment and Retirement, that includes, but is not limited to, the following information by school year:
11. The total number of requests received by CalSTRS from the Superintendent, county superintendent, or CEO of a CCD for the exemption, as specified during the operative period of the above-described provisions;
12. The total number of retired members who performed retired member activities with an exemption during the operative period of the above-described provisions;
13. The total number of retired members who performed retired member activities during the operative period of the above-described provisions;
14. The total number of retired members who exceeded the 65% postretirement compensation earning limit during the operative period of the above-described provisions; and,
15. The compensation or remuneration paid to each retired member who performed retired member activities during the operative period of the above-described provisions.
16. Similarly applies the above-described to retired CalSTRS Cash Balance (CB) Benefit program participants relating to the 180-day separation from service requirement, and exempts retired participants from a reduction in their annuity, as specified.
17. Makes these provisions operative for two years commencing July 1, 2024, with a sunset on July 1, 2026. Thereafter, existing law becomes operative, and the above-described provisions are repealed on January 1, 2027.

COMMENTS

1. Background

Proposed as a critical need to address vacancies in the state's public education system, this bill seeks to provide relief to address resulting challenges.

Under existing law, retired CalSTRS members are authorized to return to work in one of two ways: (i) reinstate to active service from retirement (thus, no longer being a retiree), or, (ii) remain retired and perform what is commonly referred to as permissible "retired member activities," that generally, are those expressly authorized pursuant to the TRL, and administrative regulations, subject to certain requirements and limitations. These activities include, among other things, teaching.

For retired CalSTRS members who return to work to perform permissible "retired member activities," they remain retired and continue to receive their retirement allowance but can earn additional income, subject to a statutory postretirement compensation limitation and 180-day separation from service requirements, but do not earn additional service credit nor do they and the employer pay additional contributions to CalSTRS.

The postretirement compensation limitation and 180-day separation from service requirements serve to provide a reasonable compromise among the competing interests of preventing "double-dipping," providing educational employers additional workforce relief, and giving retirees an option to continue to work part-time while they transition into full-retirement. They also help to curtail "double-dipping" activity to provide the new retiree the ability to have a bona fide separation from service to adapt to postemployment status (i.e., retirement from public service) and make objective decisions regarding their years in retirement. These state policies are part of both the TRL, and Public Employee Pension Reform Act (PEPRA) of 2013.

When a retired CalSTRS member reinstates to active service from retirement, they are no longer a retiree, and are paid remuneration along with other applicable associated benefits offered by the employer, if any, earn additional service credit, and make contributions to CalSTRS towards their retirement for that additional service. The employer also pays its share of contributions to the system.

1. Potential Increase in CalSTRS' Volatility, Actuarial and Financial Risk

To the extent that the increase to the postretirement compensation earning limit and alternative process for educational employers to hire retired CalSTRS members encourages or results in an increase in retirements, or increases CalSTRS' maturity (i.e., a greater ratio of retired members to active members), this may result in increased long-term volatility and actuarial/financial risk to the system. Further, this may result in long-term effects to the system that may require future increased costs borne by: a) education employers in the form of higher CalSTRS contribution rates; b) active members in the form of increased contribution rates; and, c) increased contributions by the state (i.e., taxpayers) via the annual Budget Act, to stem or resolve such volatility and added risk incurred by the system.

1. May Encourage Increased Retirements, and "Double-Dipping" Activity

Because the increase in the postretirement compensation limit services as a financial incentive to entice retired CalSTRS members to return to work while remaining retired, to the extent that this bill may encourage or result in an increase in retirements, it may further result in increased long-term volatility, actuarial, and financial risks to the CalSTRS because both educational employers and retired CalSTRS members would not remit contributions to the system for hiring retired CalSTRS members. Thus, a resulting increase in retirements, retirement allowance payments to retirees, and coupled with a decrease in contributions to the system may contribute to these negative experiences. In turn, this also may negatively affect the timely achievement and success the CalSTRS Funding Plan (which was established to address CalSTRS' Defined Benefit Program unfunded actuarial liabilities (UAL) by the year 2046 through increases in contributions by active members, employers, and the state following a projection before this plan was established, that CalSTRS would exhaust its assets and be unable to pay retirement benefits by the mid-2030s).

Further, because the increase in the postretirement compensation limit serves as a financial incentive to entice retired CalSTRS members to return to the public education workforce while remaining retired, albeit, for a limited period of time given the operative dates of this bill (i.e., two-year sunset), this bill may increase "double-dipping" activity to which specific provisions of the TRL and the PEPRA seek to address and curtail following prior negative public and legislative experience regarding such activity among other questionable activities relating to public employee retirement.

1. May Increased Labor Strife

Because this bill similarly repeats prior policies to address periodic or cyclical deficiencies in recruitment and retention in California's public education system, a continuing reliance on a retired workforce by education employers to fill critical needs may provide budgetary savings to educational employers (again, since no contributions would be remitted to CalSTRS when hiring retirees, and because additional benefits, if any, would not be provided to retirees as they otherwise would be, to permanent employees). Such savings may not necessarily later be utilized for collective bargaining purposes, and could be encumbered by educational employers or their governing bodies for other education-related purposes. Because educational employer reliance on a retired workforce instead of hiring permanent employees is viewed as a form of "contracting out" by employee organizations, such actions by educational employers and those relating to their budgets may increase the potential for labor strife to occur in the future.

1. Equity Solutions and Maximizing Benefits for Underserved and Marginalized Communities

Pursuant to HR 39 (Gipson) of 2021, to continue the Assembly's commitment to investing in equity solutions and maximizing benefits for underserved and marginalized communities, legislative analyses of the Assembly must discuss the equity impact that a bill will, or may, have on such communities, if any.

This bill does not present a particular focus towards addressing equity in relation to maximizing benefits for underserved or marginalized communities as articulated in HR 39.

1. Please see the policy committee analysis for a full discussion of this bill.

According to the Author

"Teachers retired in record numbers in 2020, and these vacancies continue to be unfilled. This bill will provide an incentive to fill some of these vacancies and provide quality education to students that may require an extra helping hand. "[Educational employees] are vital to our state's special needs students' success. Everyone in California deserves a quality education. [Increasing] the postretirement compensation limit for [retired educational employees] will help create a level playing field for our state’s vulnerable students and will help reduce our ever-growing teacher shortage."

Arguments in Support

Among other things, the State Superintendent of Public Instruction states that, "[t]he staggering number of over 10,000 teacher vacancies across the state during the 2021–22 school year, as reported by the Commission on Teacher Credentialing (CTC), highlights the urgent need for action. This shortage disproportionately affects our most vulnerable students in low-income communities and communities of color, who depend heavily on experienced and qualified educators. [This bill] presents a vital solution to this crisis by providing… a swifter and more consistent pathway to reenter the education field. The bill effectively streamlines the burdensome 180-day sit-out requirement for retirees to return to an education position under specific circumstances, while also [increasing the postretirement compensation cap] on retirees' earnings. Additionally, it mandates that local education agencies (LEAs) furnish proper documentation justifying the need for a retired member and their eligibility before commencing their service."

The California School Boards Association (CSBA) states in part that, "[this bill] is a temporary and modest measure to provide immediate assistance to LEAs in addressing critical educational staffing shortages across the state. CSBA believes strongly that a legislative effort is needed to provide a streamlined process for retired educational staff to return to schools to help address our staffing shortage. Current circumstances require immediate and proven tools to help ensure that our public school system is able to provide each and every classroom with a qualified teacher."

Arguments in Opposition

None.

FISCAL COMMENTS

The Assembly Appropriations Committee notes that this bill would result in the following:

1. Absorbable one-time special fund costs to CalSTRS.
2. Proposition 98 General Fund cost savings in the short term to schools and community colleges to the extent hiring and paying retired educators is less expensive than hiring permanent educators. For example, schools and community colleges likely would not provide employment benefits to a retired employee rehired under the provisions of this bill.
3. Potential Proposition 98 General Fund costs to educator employers to increase pension fund contributions and potential General Fund costs to the state to increases its share of CalSTRS costs. According to CalSTRS, to the extent this bill encourages a trend of retired CalSTRS members filling positions normally staffed by contributing members or to the extent the bill encourages members to retire earlier with the intention of returning to work, it could lead to some volatility in CalSTRS funded status. CalSTRS notes, however, that the impact of postretirement work to the overall health of CalSTRS' funded status has been relatively minor to date.

VOTES

SENATE FLOOR: 39-0-1

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Limón

ASM EDUCATION: 6-0-1

YES: Muratsuchi, Megan Dahle, Juan Carrillo, Hoover, McCarty, Quirk-Silva

ABS, ABST OR NV: Lee

ASM PUBLIC EMPLOYMENT AND RETIREMENT: 6-0-1

YES: McKinnor, Lackey, Addis, Vince Fong, Stephanie Nguyen, Schiavo

ABS, ABST OR NV: Haney

ASM APPROPRIATIONS: 16-0-0

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Soria, Weber, Wilson

UPDATED

VERSION: August 17, 2023

CONSULTANT: Michael Bolden / P. E. & R. / (916) 319-3957 FN: 0001506

Date of Hearing: September 1, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 765

Author:(Portantino) – As Amended Ver:August 17, 2023

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

SUMMARY:

This bill temporarily makes changes to the hiring of retired educators, including a temporary increase to the postretirement compensation earnings limit for a retired educator.

Specifically, this bill, from July 1, 2024, to June 30, 2026:

1. Increases, for a retired California State Teachers’ Retirement System (CalSTRS) member who earns postretirement compensation, the postretirement compensation earnings limit from 50% to 70% of the median final compensation of all members who retired from service during the fiscal year ending in the previous calendar year. The bill specifies that the member shall not make contributions to the retirement fund or accrue service credit based on compensation earned from that service.
2. Establishes a new process for an educational employer to hire a retired educator who has been separated from service for fewer than 180 days and who has not satisfied the zero-dollar earnings limit. Specifically, the Superintendent of Public Instruction (SPI), county office of education superintendent, or chief executive officer of a community college district must submit certain documents to CalSTRS, under penalty of perjury, including certification that the hire of the retired educator is necessary to fill a critically needed position.
3. Exempts an individual participating in CalSTRS’ Cash Balance Benefit Program from annuity reduction requirements in current law if the SPI, county office of education superintendent, or chief executive officer of a community college district must submit certain documents to CalSTRS, under penalty of perjury, including certification that the hire of the individual is necessary to fill a critically needed position.

The bill also requires, by February 1, 2027, CalSTRS to submit a report with information pertaining to the use of this bill’s temporary exemptions to the Assembly Committee on Public Employment and Retirement and the Senate Committee on Labor, Public Employment, and Retirement.

FISCAL EFFECT:

1. Minor and absorbable one-time special fund costs to CalSTRS to reallocate staff to process a likely significant increase in requests for exemptions from the 180-day separation from service requirement.
2. Proposition 98 General Fund cost savings in the short term to schools and community colleges to the extent hiring and paying retired educators is less expensive than hiring permanent educators. For example, schools and community colleges likely would not provide employment benefits to retired educators rehired under the provisions of this bill.
3. Potential Proposition 98 General Fund costs to employers of educators to increase pension fund contributions and potential General Fund costs to the state to increases its share of CalSTRS costs. According to CalSTRS, to the extent this bill encourages a trend of retired CalSTRS members filling positions normally staffed by contributing CalSTRS members or to the extent the bill encourages CalSTRS members to retire earlier with the intention of returning to work, it could lead to some volatility in CalSTRS’ funded status. CalSTRS notes, however, that the impact of postretirement work to the overall health of CalSTRS’ funded status has been relatively minor to date.

COMMENTS:

1. Purpose. According to the author, “Teachers retired in record numbers in 2020, and these vacancies continue to be unfilled. This bill will provide an incentive to fill some of these vacancies and provide quality education to students that may require an extra helping hand.”

This bill is co-sponsored by the SPI and supported by school employer groups.

1. Background. CalSTRS administers retirement plans to educators in public schools and colleges serving students in prekindergarten through community college. Specifically, through CalSTRS, employers of educators offer a Defined Benefit program. The CalSTRS’ Defined Benefit Program is a traditional defined benefit plan that provides to a retired member retirement benefits based on a statutory formula, age, service credit, and final compensation. In addition, some employers of part-time educators and adjunct faculty may offer an alternative retirement plan through CalSTRS, known as the Cash Balance Benefit Program. The CalSTRS’ Cash Balance Benefit Program offers to a retired educator a guaranteed retired benefit as a lump sum, or as monthly annuity payments based on a certain balance. Current and retired educators who participate in CAlSTRS programs are known as CalSTRS members.

Current law authorizes a retired CalSTRS member to return to work after retirement by either (a) coming out of retirement to reinstate to active service as an educator or (b) remaining retired and returning to work to perform permissible “retired member activities,” which include teaching activities. A retired CalSTRS member who reinstates to active service from retirement is treated as they were before retirement in most respects. The member’s employer provides a salary and benefits, the member accrues additional service credit towards CalSTRS, and the member and their employer make contributions to CalSTRS towards the member’s retirement for that additional service. A CalSTRS member who returns to work to perform permissible “retired member activities” may earn additional income for that work, on top of their retirement allowance, subject to a statutory postretirement compensation limitation of 50% of the median final compensation of all members who retired from service during the fiscal year ending in the previous calendar year. (Currently, this equates to about $51,000 in additional income.) Current law specifies that if a member earns compensation in excess of the limitation, the member’s retirement allowance shall be reduced by the amount of the excess compensation. In addition, current law requires a member to adhere to a statutory 180-day separation-from-service requirement whereby the member may not earn any additional income for 180 days following retirement. Current law provides an exemption to the 180-day separation-from-service requirement if the retired member’s employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting. Lastly, current law prohibits the member from earning additional service credit and neither the member nor their employer may pay additional contributions to CalSTRS.

This bill temporarily allows a retired CalSTRS member who returns to work to perform “retired member activities” to earn up to 70% of the median final compensation of all members who retired from service during the fiscal year ending in the previous calendar year. (This currently equates to about $70,000 in income, in addition to a member receiving a retirement allowance.) The bill also waives statutory 180-day separation-from-service requirements, if certain requirements are met, including the submission of certain documents to CalSTRS, under penalty of perjury.

Current law authorizes a participant in CalSTRS’ Cash Balance Benefit Program to perform “retired member activities,” but prohibits the participant from making contributions to the Cash Balance Benefit Program plan or accruing additional service credit towards CalSTRS based on compensation earned from that service. In addition, the 180-day separation from service requirement applies to this compensation. Specifically, current law requires the annuity paid to the retired participant to be reduced by the amount of compensation paid to the participant in the first 180 days following retirement, if certain conditions are met. Current law, however, provides an exemption to this reduction of the participant’s annuity if the participant’s employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position.

This bill temporarily exempts an individual participating in CalSTRS’ Cash Balance Benefit Program from annuity reduction requirements in current law if certain conditions are met, including the submission of certain documents to CalSTRS, under penalty of perjury.

1. Pandemic Actions. In response to teacher shortages during the Covid-19 pandemic, on August 16, 2021, the Governor issued an executive order that waived certain procedural requirements for retired teachers to return to the classroom and earn compensation without impacting their retirement benefits. On January 11, 2022, the governor issued another executive order that extended suspension of the postretirement compensation limitations, the 180-day separation-from-service requirements, and other requirements beginning with the 2021 school year and through March 31, 2022. According to data from CalSTRS, under the executive orders, 587 members exceeded the annual postretirement earnings limit and were exempted from that provision of law due to the executive orders. In addition, 154 retired members were exempted from other separation-from-service requirement due to the executive orders.
2. Prior Legislation. AB 1877 (Vince Fong), of the 2021-22 Legislative Session, was similar to a prior version of SB 765 and would have exempted retired educators who return to teach from the postretirement compensation limit. The bill was held in the Assembly Public Employment and Retirement Committee.

Analysis Prepared by: Natasha Collins / APPR. / (916) 319-2081

Date of Hearing: August 23, 2023

ASSEMBLY COMMITTEE ON PUBLIC EMPLOYMENT AND RETIREMENT

Tina S. McKinnor, Chair

SBPCA Bill Id:SB 765

Author:(Portantino) – As Amended Ver:August 17, 2023

SENATE VOTE: 39-0

SUBJECT: Teachers: retired teachers: compensation limitation

SUMMARY: Amends the Teachers’ Retirement Law (TRL) to temporarily increase the postretirement compensation earning limit; authorizes temporary use of an alternative framework for educational employers to hire retired members of the California State Teachers’ Retirement System (CalSTRS); requires CalSTRS to submit a report to specific legislative committees; and, makes these provisions operative commencing July 1, 2024, with a sunset on July 1, 2026, among other provisions. Specifically, this bill:

1. Temporarily increases the postretirement compensation earnings limit under the TRL, administered by CalSTRS, from 50 percent to 70 percent of the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year.
2. Modifies the TRL to temporarily authorize an alternative process for educational employers to hire a retired CalSTRS member prior to satisfying the statutory 180-day separation from service requirement if:
3. The Superintendent, county superintendent, or chief executive officer (CEO) of a community college district (CCD) seeks an exemption to the 180-day separation from service requirements and zero dollar earnings limit and submits documents to CalSTRS with certification, under penalty of perjury, as to each of the following:
4. The nature of the employment;
5. That the appointment is necessary to fill a critically needed position before the 180 calendar days have passed;
6. That the CalSTRS member is not ineligible for application of these provisions, as provided;
7. 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; and,
8. That the employer did not have a reduction-in-force layoff pursuant to existing laws, as specified and provided, within the prior 18 months.
9. Requires the Superintendent, county superintendent, or CEO of a CCD to provide a written copy or written copies of the completed documentation submitted to CalSTRS, as provided, to the exclusive representative that substantiates the need for the exemption prior to the retired member’s performance of retired member activities.
10. Requires, on or before February 1, 2027, CalSTRS to submit a report to the Assembly Committee on Public Employment and Retirement, and the Senate Committee on Labor, Public Employment and Retirement, that includes, but is not limited to, the following information by school year:
11. The total number of requests received by CalSTRS from the Superintendent, county superintendent, or CEO of a CCD for the exemption, as specified during the operative period of the above-described provisions;
12. The total number of retired members who performed retired member activities with an exemption during the operative period of the above-described provisions;
13. The total number of retired members who performed retired member activities during the operative period of the above-described provisions;
14. The total number of retired members who exceeded the 65 percent postretirement compensation earning limit during the operative period of the above-described provisions; and,
15. The compensation or remuneration paid to each retired member who performed retired member activities during the operative period of the above-described provisions.
16. Similarly applies the above-described to retired CalSTRS Cash Balance (CB) Benefit program participants relating to the 180-day separation from service requirement, and exempts retired participants from a reduction in their annuity, as specified.
17. Makes these provisions operative for two years commencing July 1, 2024, with a sunset on July 1, 2026. Thereafter, existing law becomes operative, and the above-described provisions are repealed on January 1, 2027.
18. Includes provisions relating to no reimbursement, as provided.
19. Includes legislative findings and declarations, and makes other technical or conforming changes, for these purposes.

EXISTING LAW:

1. Authorizes the governing board of any school district to employ substitute teachers as it deems necessary, and requires the board to adopt and make public a salary schedule setting the daily or pay period rate or rates for substitute teachers; however, this must not be construed as modifying or repealing any law fixing a minimum annual salary for employees of district.^[1]
2. Authorizes county offices of education (COEs) to issue temporary certificates to teachers employed at nonpublic schools, including out-of-state teachers, while their credential applications are being processed at the California Commission on Teacher Credentialing (CTC), and increases background check requirements for all applicants for temporary certificates.^[2]
3. Provides, pursuant to Section 17 of Article XVI of the California Constitution, that, among other things, “…the members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administrating the system….”^[3]
4. Regarding the TRL:
5. Establishes CalSTRS which provides a Defined Benefit (DB) pension plan, a Defined Benefit Supplement (DBS) program, and a Cash Balance (CB) Benefit program to certificated school employees. CalSTRS is regulated by, and administers, the TRL.

CalSTRS’ DB program is a traditional defined benefit plan that provides retirement, survivor and disability benefits based on a statutory formula, age, service credit, and final compensation. Its DBS program is a hybrid cash balance plan for DB program members that provides additional savings for retirement, and it’s optional CB Benefit program is a hybrid retirement program that is an option to the DB program, social security, and other retirement plans. This option is designed specifically for part-time educators and adjunct faculty and offers a guaranteed benefit as a lump sum, or in monthly annuity payments based on a certain balance.

1. Establishes that the purposes of CalSTRS is to provide a financially sound plan for the retirement, with adequate retirement allowances, of teachers in the public schools of this state, and other persons employed in connection with the schools.^[4]
2. Authorizes a teacher who has retired and receiving a retirement allowance from CalSTRS to return to work in one of two ways:^[5]
3. Return to work as a retired teacher subject to certain conditions such as:
4. The retired member must not make contributions or accrue service credit based on compensation from that service;
5. The employer must maintain records of the earnings of the retired member and report those earnings monthly to CalSTRS;
6. The annualized rate of pay for retired member activities must not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties;
7. The retired member for service must not be required to reinstate for performing retirement member activities; and,
8. Be subject to a postretirement earnings limitation, as specified, without a reduction in their retirement allowance; however, if the retired member’s compensation exceeds the limitation, CalSTRS is required to reduce the amount of the retired member’s retirement allowance in the same amount.
9. Reinstate from retirement to active service, whereby, service credit may be earned for continuing such service.
10. Establishes the Public Employees’ Pension Reform Act of 2013 (PEPRA) – a comprehensive reform of public employee retirement that, among other things, increased contributions towards retirement, decreased benefit formulas, and increased the age of retirement that apply to new members of the system first hired on or after January 1, 2013, and made changes that apply to all members towards resolving unfunded liabilities, manipulation of compensation for purposes of calculating a retirement allowance (i.e., pensions spiking), double-dipping, and other prescribed best practice measures.^[6]
11. Establishes, pursuant to the PEPRA, conditions and limitations on service after retirement that apply to any person who is receiving a pension benefit from a public retirement system. Among these conditions and limitations, a person who retires as such is prohibited from returning to work for 180 days following the date of retirement unless they meet certain specified criteria. However, the governing body of a public employer, as prescribed, may seek an exemption from these conditions and limitations to fill a critically needed position by approving the appointment in a public meeting in which the matter cannot be placed on a consent calendar.^[7]
12. Establishes the CalSTRS Funding Plan of 2014 to address chronic, multi-year underfunding of CalSTRS that would have resulted in the depletion of its assets by a year certain. This plan resolves to ensure that CalSTRS is on an actuarially assumed path to full funding by the year 2046 through incremental shared contribution increases among its DB program contributors: CalSTRS members, employers, and the state, among other provisions.^[8]

FISCAL EFFECT: According to the Senate Appropriations Committee, “[b]y exempting retired teachers that return to work from postretirement compensation limits, this bill could potentially have long-term implications on CalSTRS volatility towards paying benefits. Specifically, it could lead to an undetermined increase in the state’s share of costs and school district pension fund contributions.”

COMMENTS: According to background information provided by the author, ‘[t]eachers retired in record numbers in 2020, and these vacancies continue to be unfilled. This bill will provide an incentive to fill some of these vacancies and provide quality education to students that may require an extra helping hand.

“Starting in the 2021-22 school year, teachers are subject to an earning cap of $48,428. This income is yet another barrier to entry when attempts are made to fill teacher vacancies. Removing this earning limit will eliminate one of the obstacles in teacher recruitment as school districts attempt to reduce teacher shortages and provide adequate compensation for employee retention and satisfaction.

“California special education student enrollment numbers have increased over the past two decades. In 2000, the special education student enrollment was 650,719, and in 2018, that number grew to 795,047. The number of California special education teachers has also risen over the years, but not at levels that maintain or reduce student-to-teacher ratios. School closures during the COVID-19 pandemic delayed students with special needs learning more than their counterparts. Special education teachers are badly needed to address their learning gap.”

Towards this end, the author states that, “[s]pecial education teachers are vital to our state's special needs students' success. Everyone in California deserves a quality education. Removing the postretirement compensation limit for special education teachers will help create a level playing field for our state’s vulnerable students and will help reduce our ever-growing teacher shortage.”

Dual Referral

The committee is informed that this bill was passed as amended by the Assembly Committee on Education (6-0) on June 28, 2023, and the committee is hearing this bill pursuant to Joint Rule 61(a)(10).

Whereas the analysis of this bill by the Assembly Committee on Education adeptly attends to and discusses in detail,^[9] the vacancies in California’s teaching profession and its effects on public education, there exists other matters of equally substantial public import and of concern that require thoughtful examination and contemplation by this committee relating to public employment and retirement.

Although amendments by that committee involve changes to sections of the Education Code known as the TRL, public employee retirement laws such as the TRL, are matters within the subject matter expertise and jurisdiction of this committee. Recent amendments to this bill narrow its provisions specifically relating to the TRL.

1. Brief History: Pre-Public Employee Pension Reform to Present Day

The enactment of the PEPRA resulted from several substantial negative legislative and public experiences that required a statutory response through prudent reforms to public employee retirement.

The enactment of Chapter 555, Statutes of 1999 (Senate Bill 400, Ortiz) that generally increased pension benefit formulas and granted pension contribution holidays (i.e.., reduced or eliminated employer and employee contributions) under a belief that the superfunded (i.e., more than 100 percent funded) status of particular retirement systems would remain for some time following a period of pension system positive investment returns, was thereafter met by economic and financial crises due to the dot-com downturn in the early- to mid-2000s followed by the 2008 economic crisis that caused financial market instability. Both events negatively affected California’s public employee pension systems’ investment returns that took nearly a decade for them to recover. With the enactment of SB 400 (Ortiz) followed by economic crises affecting pension fund investment returns, together, this resulted in increased unfunded or underfunded actuarial liabilities (UAL) or obligations (UAO).

The public outcry against that statute coupled with those economic crises was then followed by regular and increased attention by the media and the public which highlighted the UAL/UAO; pension abuse schemes and manipulation such as pension spiking, double-dipping, and other questionable and concerning pension activities, which amplified the outcry. This included regular attention by various media outlets as to public employees whose pensions annually exceeded $100,000 (i.e., “The $100,000 Club”), among others.

Following those events, the threat of statewide ballot measures by attentive and well-resourced public employee pension critic interests proposed drastic austerity measures, up to and including, the elimination of public employee defined benefit plans (i.e., pensions) in favor of defined contribution plans (e.g., 401(k)-style plans) or draconian reductions to pension benefit formulas, was ever-present.

In response, as a long term solution to address these concerns and others, the Legislature enacted the PEPRA as a means to address questionable pension-related activities, restore public confidence in public employee retirement, and to address long-terms costs relating to UAL/UAO. After enactment of the PEPRA, another crisis in the form of the global COVID-19 health pandemic and its ensuing uncertainty negatively affected all facets of society, including financial markets, which again, resulted in well over $100 billion in California’s pensions systems’ investment losses, followed by recent and ongoing federal inflationary measures that affect the economy and financial markets, investments returns, and short- and long-term assumptions where these systems continue to rigorously assess risks and seek opportunities in an effort to recover and maintain their ability to meet their statutory and constitutional mandates.

Since its enactment approximately a decade ago, two decisions by the California Supreme Court regarding the PEPRA have affirmed the Legislature’s intent and enactment of this policy and today, the PEPRA continue to exist – unmodified, despite numerous prior legislative proposals to do otherwise, as a prudent measure and means to maintain public confidence in public employee retirement and achieve its multiple objectives.^[10]

The committee is informed that, in several ways, what is proposed by this bill is not the first time in which other similar proposals for related objectives have been sought. Since the enactment of the PEPRA, behind the scenes and for several consecutive relatively recent years, including pre-COVID pandemic, similar efforts (including multiple efforts within the same year) by varous educational employer interests have sought similar proposals for inclusion in budgetary trailer bills, and the Legislature has denied those efforts due to overwhelming concerns relating to their potential negative actuarial effects on CalSTRS and its UAL/UAO; the substantial potential that such proposals would increase volatility in CalSTRS and negatively affect the timely achievement of the CalSTRS Funding Plan; and, because existing law provides education employers an ability to accomplish similar objectives proposed by this bill, rather than attempt to circumvent the PEPRA and the TRL for purposes of expediency to address challenges that could be to the detriment of public transparency, scrutiny and accountability, and that could increase costs and sound the alarm again for austerity proposals relating to public employee retirement.

With the exception of Executive Orders by the Governor to address a critical need for teachers during the COVID-19 pandemic,^[11] and more recently, a legislative proposal that was introduced, but not heard by this committee,^[12] those proposals did not advance beyond advocacy by those interests.

This time, this legislative proposal is co-sponsored by the SSPI, and co-sponsored or otherwise supported by various educational employer interests.

As the state’s elected chief executive officer of the California Department of Education (CDE), the SSPI directs all functions of the CDE, executes policies set by the California State Board of Education, and chairs that board. Also important, the SSPI (or its designee representing the SSPI) simultaneously serves as an ex-officio member of the CalSTRS Teachers’ Retirement Board and in this capacity, like all other CalSTRS board members, equally is a fiduciary of the system and has a constitutionally-mandated legal duty to it and its members, above all else.^[13]

However, given the singular-focused approach of this bill to resolve a crisis of vacancies in California’s public education system, even if deemed a limited fashion, stop-gap measure of sorts, this may raise questions as to a seeming divergence from substantive and material fiduciary duties relating to administration of teacher retirement that require long-term views and prudence in decisions and actions inherently owed to the system and its members primarily in pursuit of addressing a particular critical need that may result in exponentially greater financial challenges and needs in the future that could negatively affect the system; the retirement security of present and future CalSTRS members; and, that could burden taxpayers with additional costs.

1. Education Employers are Currently Authorized to Hire Substitute Teachers Under Existing Law to Address the Stated Need Offered by the Author Regarding this Bill

As previously stated, school districts currently are authorized to hire substitute teachers as needed, and county offices of education (COEs) are authorized to issue temporary certificates to teachers employed at nonpublic schools, including out-of-state teachers, as specified.

While existing law authorizes school districts to hire substitute teachers, CalSTRS law provides that upon reaching or exceeding a certain number of days while performing creditable service during a school year for a school district, the substitute teacher is then mandated into a CalSTRS plan, if the employers does not offer that plan.^[14]

Because these options are currently available to educational employers, coupled with the existing statutory process that authorizes school districts to hire retired educational employees (discussed below), questions exist as to the need for this bill.

1. Retired Educational Employees are Currently Authorized to Work to Address the Stated Need Offered by the Author Regarding this Bill

Also as stated under “Existing Law,” retired CalSTRS members are currently authorized to return to work in one of two ways: (i) reinstate to active service from retirement (thus, no longer being a retiree), or, (ii) remain retired and perform what is commonly referred to as permissible “retired member activities,” which includes teaching activities, as specified. Generally, retired member activities are those that are expressly authorized in the TRL and administrative regulations, subject to certain requirements and limitations.

When a retired CalSTRS member reinstates to active service from retirement, they are no longer a retiree, and are paid remuneration along with other applicable associated benefits offered by the employer, if any, earn additional service credit, and make contributions to CalSTRS towards their retirement for that additional service. The employer also pays its share of contributions to the system. As a basic, nonliteral example: A teacher retires after 30 years of teaching service, reinstates from retirement to active service and makes contributions during that period (along with the employer also making contributions), and teaches for another 10 years. Upon retiring again, the teacher would have accrued a total of 40 years of service and their retirement allowance would be based on those additional 10 years of service.^[15]

For retired CalSTRS members who return to work to perform permissible “retired member activities,” they remain retired and continue to receive their retirement allowance, but can earn additional income subject to a statutory postretirement compensation limitation and 180-day separation from service requirements, from the employer resulting from those activities, but do not earn additional service credit nor do they and the employer pay additional contributions to CalSTRS.

Because these options also are currently available to educational employers, questions exist as to the need for this bill.

1. The Postretirement Compensation Limit

As to retired CalSTRS members performing permissible retired member activities, the postretirement compensation limit is a significant part that is similar and relates to the overall PEPRA state policy.

Both the TRL and the PEPRA demonstrate wisdom through foresight in authorizing public employers to be able to utilize when critically necessary, the skills, expertise, and knowledge that a retired public employee possesses, and authorize a public employee to return to work to further contribute to public service to fill a critical need. Pursuant to the TRL’s postretirement compensation limit provisions, a retired CalSTRS member who performs retired member activities currently could earn approximately $51,000 per year in addition to receiving their monthly retirement allowance. This bill would increase that amount to approximately $70,000, again, in addition to the member receiving their retirement allowance, as a financial incentive to address a crisis of vacancies in the state’s public education system. (Emphases added.)

As appropriately articulated in the Senate Committee on Labor, Public Employment and Retirement’s analysis of this bill, “[t]he limitation allows [retired] teachers to work, but caps what they can earn without a reduction to their pension to one-half the median final compensation of the prior year’s retiring class. It provides a reasonable compromise among the competing interests of preventing double dipping, providing school employers additional workforce relief, and giving retirees an option to continue to work part-time while they transition into full-retirement.” (Emphasis added.)

Understanding and appreciating the totality of context, while existing law authorizes retired public employees to return to work, financial incentives for retired CalSTRS members to return to work may have negative effects on the long term viability of the system. Thus, in no uncertain terms, does CalSTRS exist to serve as, or be utilized in a manner that directly or indirectly support, financial incentives (or increased financial incentives) for its retired members to return to work absent reinstatement, on a long-term or full-time basis, nor in a manner to introduce additional financial risk, increase volatility, or add uncertainty into the system that may jeopardize the financial retirement security of its present and future retirees. (Emphasis added.)

However, a cyclical crisis or broader systemic challenge in California’s public education system continues to rely, even if periodically, on such incentives, including this proposal.

1. The 180-day Separation from Service Requirement

Among the several reasons as to enactment of the PEPRA, its 180-day separation from service requirement is another cornerstone of this state policy as an essential tool to prevent questionable or suspicious double-dipping activity where, for example, a public employee retires from an employer on a Friday and returns to work the following Monday to perform the same duties for the same employer or group of employers while being compensated for that work and receiving a retirement allowance. This policy exists, both in the PEPRA and the TRL, to curtail such activity and to provide the new retiree the ability to have a bona fide separation from service to adapt to postemployment status (i.e., retirement from public service) and make objective decisions regarding their years in retirement.

Here, similarly demonstrating wisdom through foresight regarding the employment of retired public employees, both the PEPRA and the TRL authorize a public employer to hire, and a retired public employee to return to work to contribute to public service after a 180-day separation from service following retirement, subject to certain limitations. In addition, a public employer is authorized to hire a retired public employee, and the retiree may return to work prior to the 180-day separation from service requirement period following the most recent date of retirement, and pursuant to the TRL, the retiree is subject to a zero-dollar ($0) earnings limit; however, the employer must satisfy other statutorily specified procedural requirements, e.g., attest that the nature of the employment is to fill a critically needed position before the 180-day period, and approval of the appointment by the governing body of the employer in a public meeting in which the matter must not be placed on a consent calendar, etc.^[16]

This bill would temporarily depart from existing procedural requirements (i.e., employer government body public adoption of a resolution to appoint a retired CalSTRS member, etc.) that support public transparency, scrutiny, and accountability, and instead, shift authority and procedure from elected governing boards to an appointed individual (with the exception of the elected SSPI) to self-certify that essentially, “all of the above is accurate” – so to speak, albeit, under penalty of perjury.

For the moment, let’s assume that the current statutory limitations and procedural requirements regarding the hire of retired CalSTRS members may, perhaps, be untimely or cumbersome to address the critical need stated for the purposes of this bill. Unfortunately, the provisions of this bill that temporarily depart from existing procedural requirements in favor of expediency to address a critical need in the state’s public education system may be akin to allowing a potentially uncontrolled freight train to barrel down winding tracks with a preoccupied engineer on board. However, while temporarily departing from existing procedural guardrails in favor of those that afford expediency to timely address the critical need, the “expedited” procedural process provisions in this bill that authorize the hire of retired CalSTRS members prior to the statutory 180-day separation from service requirements maintain a modicum of transparency by requiring those specifically authorized to certify under penalty of perjury that certain requirements have been satisfied, to also provide documentation to the exclusive representatives, which also may assist in guarding against potential abuse of process.

1. Utilization of the Existing Statutory Process Relating to the Hire of Retired CalSTRS Members

According to data provided by CalSTRS, the rate of utilization of retired CalSTRS members reinstating to active service under the existing statutory authorization and procedural requirements continues to be utilized by school districts, COEs, and local education agencies (LEAs).

The table below displays by fiscal year, the utilization rate of the current process, as authorized and prescribed under existing law, regarding retired CalSTRS members returning to active service; the number of those who are retired and working, but who have not reinstated to active service; and, the percentage of those who are currently retired and working that are subject to the postretirement compensation earnings limit, that exceeded the limitation.

While a decline in reinstatement (i.e., coming out of retirement to active service) forms processed and number of retired members working after retirement (i.e., those who are receiving a retirement allowance and earning additional income while working) occurred during fiscal years 2019-20 and 2020-21, this may be attributed to the severity of COVID-19 pandemic which caused a substantial disruption to the provision of public education services and administration of curricula through in-person or virtual means; shelter-in-place orders; social distancing; school governing body challenges to reconcile the politicization of public health mandates and parental preferences, e.g., masks and vaccines, and widespread concerns and fear by parents, their children, school administrators, teachers, retirees, family members and others relating to the health effects from exposure to, or contracting, COVID-19. However, it is also noted that an increase within the category of “retired members working after retirement” occurred from fiscal years 2020-21 and 2021-22.

As to those who exceeded the earnings limit, recall that the earnings limit is one-half (i.e., 50 percent) of the final compensation of the prior year’s retiring class. Here, and generally, those who exceeded the limitation are subject to a reduction in their retirement allowance equal to the excess earnings. There are several factors in which a retired member may exceed the earnings limitations such as whether a retired member who is working is full-time vs. part-time; whether the remuneration or compensation paid by the employer is based on the lower or higher end of the salary scale; or whether the employer that hired the retired member is the same employer from which the member retired, to name a few.

Some may view the temporary increase to a 70 percent postretirement compensation earnings limit as insufficient to obtain a full school year of employment from such individuals. However, such views would be well reminded to not dismiss or omit the aforementioned key factors, and that retired CalSTRS members are informed prior to reaching or exceeding the limitation and the effects of exceeding the limitation by the system, to help prevent a commensurate reduction to their retirement allowance. Moreover, the purpose of hiring a retired member is to fill a critical need, but not to hire a retired member on a long-term, continuous, or full-time employment basis. Thus, it may reasonably go to follow that, if the crisis requires reliance on long-term, continuous, or full-time employment of a retiree, then the extent of the crisis may likely be greater, unless the rationale supporting the need to hire a retiree as such is doubtful. Or, perhaps a substantially broader alternative solution may be necessary such as improved succession planning, revised recruitment practices, etc.

1. Accessing and Increasing the Availability of Retired Teachers During the COVID-19 Pandemic via Gubernatorial Executive Order and Hiring Outcomes

On March 4, 2020, the Governor proclaimed that a State of Emergency existed as a result of the threat of COVID-19. On August 16, 2021, the Governor issued an Executive Order that waived certain procedural requirements for retired teachers to return to the classroom and earn compensation without impacting their retirement benefits.^[17] On January 11, 2022, the Governor issued an Executive Order relating to public education that, among other important matters, extended suspension of the postretirement compensation limitations earned, certain procedural requirements, and the 180-day separation from service requirements, of existing law as respectively specified, during the 2021-22 school year, through March 31, 2022.^[18] Thereafter, the Executive Order was allowed to expire without being renewed or otherwise extended by the Governor.

According to data from CalSTRS, under the Executive Orders in the 2021-22 fiscal year, there were 587 members who exceeded the annual postretirement earnings limit that were exempted under the Executive Orders. In addition, there were 363 retired members who were exempted from the separation-from-service requirement (i.e., 180-day separation from service). Of those, 209 submitted applications through the existing process set in statute, and 154 were exempted under the Executive Orders.

When considering this data, one viewpoint may hold that given prior numerous attempts to advance proposals similar to this bill, the number of retired CalSTRS members who returned to work under the Executive Order exemptions may not be as impressive to such an extent that warrants a statutory change, and supports the rationale that existing laws that currently allow such retirees to return to the classroom are sufficient and should be maintained as they exist.

Alternatively, another viewpoint may hold that while those numbers might not be as impressive as they otherwise could have been, this might be or is likely attributed to the educational environment during the COVID-19 pandemic which quickly and dramatically increased burdens on schools and educational employees to administer curriculum through alternative methods (i.e., virtual, in-person, or a combination of both) and the difficulties in doing so; and again, the increased politicization of COVID-19 public health mandates vs. parental choice that educational governing bodies wrestled with, and other related factors which discouraged their return to a more demanding, difficult, complex, and lesser-resourced work environment while potentially being exposed to health risks, regardless of teaching (or other educational employee) being a most noble and gratifying profession.

1. Implications Regarding the PEPRA and TRL: This Bill May Encourage Increased “Double-Dipping” Activity and Undermine Other Pension Abuse Guardrails

As stated under “Existing Law,” the PEPRA is a comprehensive reform of public employee retirement that, among other things, increased contributions towards retirement, decreased benefit formulas, and increased the age of retirement that apply to new members of the system first hired on or after January 1, 2013, and made changes that apply to all members towards resolving pension liabilities, manipulation of compensation for purposes of calculating a retirement allowance (i.e., pensions spiking), double-dipping, and other prescribed best practice measures.^[19]

Post-COVID-19 pandemic (including the expiration of the Governor’s Executive Orders), although this bill contains a modicum of guardrails, it temporarily departs from the “spirit” and intent of the PEPRA and TRL state policies that support increased transparency, public scrutiny, and accountability.

The pre-180-day separation from service provisions would be a departure from consistency among both the PEPRA and TRL statutory provisions, and the Legislature’s overall intent regarding these matters in both state policies. As such, it reasonably should be expected to encourage a return of questionable pre-PEPRA retirement-related, double-dipping activities, and may encourage noneducational public employers to also seek similar authority for similar reasons, that would lead to an ongoing undermining and eventual unraveling of these policies.

In addition, this bill may encourage an increase in retirements in the public educational arena where newly-retired individuals could return shortly thereafter for pecuniary advantage through questionable double-dipping practices. By impacting important aspects of the TRL, and the PEPRA indirectly, this bill would kick open the door to questionable pension-related activities at an unknown cost that would be borne by the state, educational employers, and ultimately, California taxpayers in future years; whereas currently, there are sufficient statutory guardrail limitations, protocols and procedures that guard against such abuse, and the costs to taxpayers can be controlled and quantifiable.

1. Increasing Pension Plan Maturity – A Factor that Affects CalSTRS’ Volatility. This Bill Potentially Could Introduce Additional Risk into CalSTRS, Lead to Future and Greater Challenges Relating to CalSTRS Financial Obligations, Increase Volatility, and Pension Costs

According to a CalSTRS board agenda item which included, among other topics, a report on funding levels and risk, the report examines the maturity of the system in the context of the number of active members to retirees, and the projected cash flows and volatility ratios which measure the volatility in contribution rates in response to volatility in investment returns.

In addition, the report states that pension system maturity is being felt by all systems across the nation, as has been long predicted by actuaries, and that this demographic shift has increased the risk faced by the system. The report details various ways to assess the maturity level of a retirement system, and that in 1971, the ratio of active to retired members for CalSTRS was 6-to-1, which has steadily decreased over time. Today, the ratio is 1.5-to-1, and is expected to approach 1-to-1 over the next 40 years; however, assuming that the number of active members in the CalSTRS remains at about 429,000, this ratio is not expected to go below one over that time period. Further, a decline in the CalSTRS active member population (i.e., non-retired teachers) could accelerate this trend and push the ratio below one. Similarly, if improvements in life expectancy end up being greater than the improvements currently built into the actuarial assumption, it would impact the active to retiree ratio and potentially bring the ratio closer to one over a shorter period of time and even possibly below one. It is important to note that the report also states that a mature system will often have a ratio near or below one.^[20]

The report further states that, as retirement systems become more mature, these systems are subject to increased volatility in the contribution rates needed to fully fund benefits. The report also states that, as a pension plan matures, it is normal for benefit payments to exceed contributions coming into the system, and having negative cash flows does not indicate poor management. However, the drop in the active-to-retiree ratio over the last decade has increased the contributions volatility risk for CalSTRS, and this volatility risk will continue to increase as the ratio continues to drop in the future.

Although this bill might not necessarily displace existing educational employees, it would displace prospective active CalSTRS members where statutorily required employer and employee contributions must be remitted to the system, if they are hired. (Emphasis added.) Such potential affects must be considered based on long-term actuarial assumptions by the system.

Recent data from CalSTRS in the table on the following page shows the number of retirement applications processed by the system and the percentage change for each of those fiscal years:

While some may point to the relatively de minimus number of individuals who returned to work during the effective or operative timeframe of the Governor’s prior Executive Orders^[21] as a potential indicator, likelihood, or probability of how many retirees might return to work under this bill, those numbers are actually unknown, especially when this bill proposes to address the critical need in public education through a temporary increase to the postretirement compensation limit, and changes to the procedural process to hire retired CalSTRS members in favor of an expedited process. As such, any such comparisons, assertions or assumptions that the potential figures relating to this bill could or would be similar to COVID-related figures in the prior tables, dismiss the actual reality of unknowns in a post-COVID educational environment where students have physically returned to the classroom, and curriculum is being administered in-person (or a combination of in-person and virtual means) to support the rationale for this bill. In addition, such comparisons, assertions, or assumptions would not consider, or would dismiss, longer term financial implications of potential increased liabilities and volatility in CalSTRS that would need to be addressed in the future if a currently unknown, but potentially substantial number of retired CalSTRS members choose to return to work.

In sum, because this bill would allow schools to expedite the hire of retired CalSTRS members, and to the extent that education employers continue to increasingly, regardless of periodically or cyclically rely on this workforce, it would reduce the amount of required contributions made to the system by those employers; thus, saving them money. Further, since retired CalSTRS members also would not make contributions due to their retired status, while simultaneously, there is an increase in retirements and retirement allowance payments, the increases in outflows (i.e., retirement allowance payments) and decrease of inflows (i.e., employer and employee contributions), would likely result over time in an increase in CalSTRS’ UAL/UAO, which must be addressed to resolve increased risk introduced into the system and its resulting volatility and financial instability. Such risks evidenced by the costs to reduce deficits, again, would be borne by education employers via CalSTRS contribution rate increases, those of active (i.e., non-retired) CalSTRS members, and/or the state (i.e., ultimately taxpayers).

Although proposed as a critical short-term need to resolve a particularly immediate challenge, history demonstrates a continuing or increasing reliance on retirees by the educational community during what may be viewed as periodic or cyclical challenges. Here, it is critically important to appreciate a certain level of irony that may exist. That is, if educational employers must continue to, or increasingly, rely on the hire of retirees to address periodic or cyclical vacancies in this or similar proposed manners, and if resulting increases in employer contribution rates to CalSTRS are necessary to address its increased volatility in the future, there exists the potential that those education employer interests would return to the Legislature with requests for budgetary or other public policy assistance to help address their share of those increased costs, which may be viewed as a form of educational employer “double-“ or perhaps, “triple-dipping” in relation to similar public policies such as this bill, financial assistance via the annual state Budget Act or other public policy vehicle to address their budgetary concerns, and coupled with an ongoing or increased periodic or cyclical reliance on a retired workforce.

In the simplest of terms, in an effort to resolve one problem, another (and potentially more significant long-term) problem is created demonstrating an ongoing cycle or spiral in and of itself.

1. Wash. Rinse, and Repeat: This Bill, in Some Respects, is Similar to Prior Approaches for Similar Needs that Demonstrate What May be Considered as a Concerning Cyclical Trend in California Public Education and Reliance on CalSTRS Retirees to Return to Work

The expressed need for this bill is another example among a historical trend to resolve similar challenges through relatively similar stop-gap solutions, where instead, perhaps, longer-term solutions should or must be considered to eliminate or significantly reduce repetition of this trend that cumulatively or in aggregate, may negatively affect CalSTRS.

Resulting from enactment of the Class-Size Reduction Program more than two decades ago, over 22,000 emergency related credentialed teachers were responsible to assist in teaching tens of thousands of students across the state. Chapter 896, Statutes of 2000 (Assembly Bill 1733, Wildman) was enacted by the Legislature to access retired educational employees by eliminating the postretirement earnings limitation for CalSTRS members who first returned to work more than one year after retirement. It also increased the postretirement compensation earnings limit from $19,050, to $22,000.

Thereafter, Chapter 494, Statutes of 2008 (Assembly Bill 2390, Karnette), among other things, extended to June 30, 2010, the sunset of a prior postretirement limitation statute where the limit at that time was $27,940 (in 2007-08). To address the workforce needs of employers, this was followed by Chapter 306, Statutes of 2009 (Assembly Bill 506, Furutani), which prohibited, as of July 1, 2010, CalSTRS members who retired below age 60 from working in any CalSTRS-related service for the first six months after they retire; extended the sunset date of the prior postretirement earnings limit exemptions from June 30, 2010, to June 30, 2012, and expanded eligibility, where applicable, by one year to CalSTRS members who retired on or before January 1, 2009. Among other provisions, this statute aligned CalSTRS law with the bona fide separation from service requirements under federal Internal Revenue Service regulations; provided that retirees under age 60 must be subject to a zero dollar earnings limit for the first six calendar months after they retire prior to being able to return to work under the earnings limit; established that a vacant administrative position emergency exemption must not apply to a retiree whose retirement is the basis for the vacant administrator position; and, did not require employer contributions when hiring a retiree.

Fast forward to present day, a crisis continues in California’s public education relating to school funding, declining enrollment, and ongoing challenges relating to vacancies, among others. Prior enacted public education policies await full implementation, and current proposed policies to address the crisis continue to proceed through the legislative process. This year, substantial financial allocations to education have been made in the most recent annual state budget.^[22]

Although legislative findings and declarations in Assembly Bill 1733 (Wildman, 2000) expressly state, among other things, that the TRL postretirement earning limit creates a disincentive for retired teachers to reenter the teaching profession, it is also critically important to recall the history discussed earlier in this writing as to other public policies that were enacted at that time that were then followed by public outcries relating to pension giveaways and contribution holidays, financial losses, double-dipping and manipulation, further followed by threats of public employee pension austerity measures, and the necessity of subsequent policies to address those concerns to restore public confidence and reduce costs, as well as to ensure the future financial solvency of CalSTRS.

When considering this history, this bill may be viewed as potentially opening the door again to invite and repeat the concerning and costly public policy mistakes of the past.

1. Other Potential Implications: Increased Labor Strife, Increased Pension Liabilities in the Future, and Negative Effects on the CalSTRS Funding Plan
2. Increased Labor Strife

The operational effects of this bill, as utilized by educational employers, may potentially be viewed and indirectly serve as a means to achieve savings in a manner that amounts to the contracting out of certain educational positions when hiring retirees instead of permanent employees to fill those vacancies, which may lead to labor strife or increased labor strife.

The costs of hiring and paying retired CalSTRS members even on a limited duration basis would be, overall, less than hiring permanent teachers who would be active members of CalSTRS in which employer contributions must be remitted to the system, and when considering that employer contributions would not have to be remitted to CalSTRS when hiring retired teachers. Further, certain other associated employment benefits, if any, also likely may not be provided to a retired employee.

In recent years, labor strife has increased among educational employers and labor organizations, not just in California, but across the nation. More recently, in California, such strife has extensively been covered by various media outlets relating to, for example, the Sacramento Unified School District, and Los Angeles Unified School District, respectively, where strikes by educational employees, including teachers, have occurred due to a number of reasons that include pay and working conditions.

It is acknowledged that the level of vacancies in public education exist and are of concern. Although intended to address the need for more educational employees, this bill would authorize, and potentially encourage ongoing use and increased reliance on retired CalSTRS members at a level of cost, which may increase the potential for additional labor strife over financial and other workplace matters that are often the challenges to be resolved between educational employers and labor organizations during collective bargaining negotiations.

1. Increased Pension Liabilities in the Future and Negative Effects on the CalSTRS Funding Plan

Established pursuant to Chapter 47, Statutes of 2014 (Assembly Bill 1469, Bonta), the CalSTRS Funding Plan is a financial plan to address CalSTRS’ DB Program UAL by the year 2046 through increases in contributions by teachers, employers, and the state, as specified. At the time the statute was made effective, CalSTRS’ UAL was approximately $74 billion and it was projected that CalSTRS would exhaust its assets and be unable to pay retirement benefits by the mid-2030s. (Emphasis added.)

Today, as a result of this plan and ongoing actions by active (i.e., non-retired) teachers, schools, the state, and CalSTRS, the success of this plan might be achieved from a couple, to several, years prior to 2046. Although this plan is complex with a number of variables that could affect its overall and timely success, and the Legislative Analyst’s Office (LAO) continues to offer advice or suggestions to simplify it, the LAO has largely lauded the plan as prudent and a major state accomplishment.^[23]

The complexity towards achieving the success of this plan also includes a number of factors such as: i) success in achieving investment return projections or assumptions; ii) system maturity (previously discussed); and, iii) payroll growth (i.e., schools hiring teachers who would be active members and participants in CalSTRS in which both the employee and employer would be making contributions to the system), to name a few.

If increased maturity (i.e., the ratio of retirees to active members) in CalSTRS continues on its current trajectory without appropriate payroll growth among other things, quite simply, the system may again become vulnerable to increased volatility because it could be in a position where it is paying out significantly more in retirement allowances than what it is receiving in contributions and would negatively affect fulfillment of the CalSTRS Funding Plan as the Legislature intended in its enactment of this policy. To wit, a simple rule in finance, banking, or accounting that is consistent with the aged adage somewhat states, “… one must not write checks without necessary funds in the account that cannot be cashed.”

1. Increasing Reliance by Public Employers on a Contingent, Part-Time, Temporary, or Retired Annuitant Workforce to Provide Public Services

The committee is reminded of its informational hearing on May 10, 2023, titled “Strengthening California through the Public Sector and Its Workforce.”

During that hearing, the committee heard from a number of panelists, including experts from the University of California at Berkeley Labor Center, where data was provided and substantial concerns were expressed about the ongoing and increasing reliance by public employers, including in education, on a contingent, part-time, temporary, or retired annuitant workforce to fill public sector vacancies.

These concerns also detailed how the range of California public employers (i.e., state, local, and educational) are increasingly relying on filling vacancies with such workers whom are being used in a manner that is on a long-term or multi-year basis, and the deleterious effects in which this contributes to operational inconsistency in government provisions of public services; reduces wages; negatively impacts public employee rights; fosters labor strife; and, is contrary to the need for consistency and continuity in the provision of public services by capable, long-term permanent public employees.

1. Information and Suggestion to the Committee

Although this bill provides a short-term, stop-gap solution to current challenges in California’s public education system, given the prior discussion relating to substantially broader financial and other substantive public policy implications, it is suggested that the committee consider other options in the future to prudently address these matters on a permanent basis that significantly reduce, if not eliminate, the likelihood for periodic or cyclical repetition of similar proposals such as this, and that also support or strengthen CalSTRS for its present and future retirees.

1. Equity Solutions and Maximizing Benefits for Underserved and Marginalized Communities

Pursuant to House Resolution (HR) 39 (Gipson, 2021), to continue the Assembly’s commitment to investing in equity solutions and maximizing benefits for underserved and marginalized communities, legislative analyses of the Assembly must discuss the equity impact that a bill will, or may, have on such communities, if any.

This bill does not present a particular focus towards addressing equity in relation to maximizing benefits for underserved or marginalized communities as articulated in HR 39.

1. Comments by Supporters

The State Superintendent of Public Instruction states in part that, “[t]he staggering number of over 10,000 teacher vacancies across the state during the 2021–22 school year, as reported by the CTC, highlights the urgent need for action. This shortage disproportionately affects our most vulnerable students in low-income communities and communities of color, who depend heavily on experienced and qualified educators.

“[This bill] presents a vital solution to this crisis by providing retired teachers with a swifter and more consistent pathway to reenter the education field. The bill effectively streamlines the burdensome 180-day sit-out requirement for retirees to return to an education position under specific circumstances, while also removing the CalSTRS compensation cap on retirees' earnings. Additionally, it mandates that LEAs furnish proper documentation justifying the need for a retired member and their eligibility before commencing their service.

These provisions will empower LEAs to promptly and efficiently fill vacant positions with highly skilled and qualified educators, thereby ensuring that our students have access to the qualified educators, which are critical to their academic success. The bill aligns with previous successful efforts aimed at granting increased flexibility to retired CalSTRS members, effectively addressing critical staffing shortages in the past.

As an ex officio member of the CalSTRS board, I am committed to fulfilling my fiduciary duty of safeguarding the CalSTRS fund and ensuring our educators receive the well-deserved benefits they have tirelessly earned. Moreover, I firmly believe that the measures outlined in this bill will not have a material impact on the fund due to the robust safeguards in place.”

Among other things, the California School Boards Association (CSBA) states that, “[this bill] is a temporary and modest measure to provide immediate assistance to LEAs in addressing critical educational staffing shortages across the state. Specifically, the bill would exempt a retired teacher, who is deemed to help fulfill a critical need in a teaching position from the postretirement compensation limitation until June 30, 2026. In so doing, it would exempt a retired teacher from the 180-day compensation waiting period to allow [the teacher] to serve as a teacher of record and exempts [them] from acquiring additional service credit under CalSTRS, contingent upon the submission of the proper documentation by the employing school district.

“It is not unknown that California’s public education system was, prior to the pandemic experiencing a severe educational workforce shortage, especially in regards to the recruitment and retention of teachers. In fact, the challenges California has been experiencing are not limited to California. Across the country states and school districts have been struggling to fill vacant teaching positions. With the onset of the COVID-19 pandemic in early 2020 the state’s teacher shortage has been vastly exacerbated, in large part due to greater proportions of teachers choosing to leave the profession.”

In addition, “CSBA has long supported efforts to provide multiple pathways for LEAs to address the state’s teacher shortages and bringing retired teachers back into the classroom. We greatly appreciate the major investments the state has made to significantly expand teacher recruitment and retention programs, including the Golden State Teacher Grant Program, however those programs are medium and long-term investments were we may not see new teachers enter the classroom for another two to three years. This is a tool that provides immediate relief, and although a temporary solution, it is a critical tool available for our schools to help ensure that all students have a qualified teacher in their classrooms. CSBA remains committed to ensuring that the sufficiency and resiliency of CalSTRS pension fund is maintained. To this end, it has long advocated for increased support by the state to support LEAs local pension obligations and has historically opposed efforts that would significantly impair the ability of CalSTRS to meet its retirement obligations, including legislative efforts to divest from certain investments that could prove deleterious to the long-term solvency of the retirement fund. However, the state is facing an educational staffing shortage that has reached unprecedented crisis levels due to the pandemic. As such, CSBA believes strongly that a legislative effort is needed to provide a streamlined process for retired educational staff to return to schools to help address our staffing shortage. Current circumstances require immediate and proven tools to help ensure that our public school system is able to provide each and every classroom with a qualified teacher.”

Other proponents of this bill offer similar statements in support. Registered positions of “concern” relate to Cal Grant provisions in this bill that are not germane to the jurisdiction of this committee, and as such, are not reflected here.

1. Comments by Opponents

Commenting on a prior version of this bill, the California Teachers Association states, among other things, that the “… the exemption erodes protections against double-dipping…, which was a key focus of the PEPRA.,” “[s]ince CalSTRS does not receive contributions for members who work after retirement…, [this bill] could increase benefit liabilities…,” and that, “… the exemption could be used inappropriately by employers as a cost-saving measure in order to forgo payments for retirement, health care and other benefits.”

1. Comments by Others

With the exception of the Labor Coalition which states that, “… removal [of its prior opposition] does not apply to opposition from individual member unions [that] have submitted letters of opposition,” it is noted that written comments by other interested entities largely address provisions relating to the Teacher Residency Grant Program (Section 44415.5 of the Educ. Code), which are no longer in this bill following recent amendments. Those provisions were enacted in the education omnibus budget trailer bill: Chapter 48, Statutes of 2023 (Senate Bill 114, Committee on Budget and Fiscal Review).

1. Prior or Related Legislation

Assembly Bill 1877 (V. Fong, 2022) proposed to exempt retired teachers who return to the classroom to teach from the postretirement compensation limit under the TRL. This bill was held in the Assembly Committee on Public Employment and Retirement.

Also see additional prior or related legislation discussed in this analysis.

REGISTERED SUPPORT / OPPOSITION:

Support

Alameda County Office of Education
Association of California School Administrators
California Association of School Business Officials
California Association of Suburban School Districts
California Charter School Association
California County Superintendents
California Federation of Teachers AFL-CIO
California School Boards Association
Central Valley Education Coalition
Los Angeles County Superintendent of Schools, Dr. Debra Duardo
Los Angeles Unified School District
Orange County Department of Education
Riverside County Superintendent of Schools
San Diego Unified School District
State Superintendent of Public Instruction, Tony Thurmond

Opposition

California Teachers Association (prior version)

Other

Campaign for College Opportunity
Labor Coalition
Student Senate for California Community Colleges
The Education Trust - West
The Institute for College Access and Success
uAspire
University of California Student Association
Young Invincibles

Analysis Prepared by: Michael Bolden / P. E. & R. / (916) 319-3957

1. Section 45030 of the Educ. Code. ↑

2. Sections 44332 and 88025, ibid, and Title 5, Cal. Code of Regs. ↑

3. Section 17, art. XVI, Cal. Const. ↑

4. Section 22001 of the Educ. Code. ↑

5. Sections 24214 (re: activities of retired members, limitations, and reduction for excess compensation), 24214.5 (re: separation from service requirements, postretirement compensation limit, exemptions, and procedures regarding exemption), 22327 (re: members receiving a disability benefit and performing retired member activities), 22461 (re: notice of earnings limitation or employment restriction for retired members), and 26813 (re: activities of retired members participating in the CB Benefit program) of the Educ. Code. ↑

6. Sections 7522.02 et seq. of the Government Code. ↑

7. Section 7522.56, ibid. ↑

8. Chapter 47, Statutes of 2014 (Assembly Bill 1469, R. Bonta). ↑

9. Analysis of Senate Bill 765 (Portantino, 2023), Assembly Committee on Education, June 28, 2023. ↑

10. Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn. (2020) 9 Cal.5th 1032, and CAL FIRE Local 2881 v. CalPERS (2019) 6 Cal. 5^th 965. It is noted that while the specific subject matter of the litigation in each of these cases involve “air time” and “pensionable compensation” or “compensation earnable” that did not specifically involve CalSTRS or the TRL, the commentary regarding these two cases is offered under historical context as to ongoing attempts that would undermine the “spirit” and Legislature’s intent regarding the PEPRA. This bill, though well-intended, proposes matters that involve substantive components in which the PEPRA state policy (and the TRL) appropriately and prudently address notions of “double-dipping” transparency, accountability and costs, among others, that would be undermined. ↑

11. See Executive Order N-3-22 relating to school staffing. ↑

12. See Assembly Bill 1877 (V. Fong, 2022). ↑

13. Ref. fn. 3. ↑

14. Sections 22502 of the Educ. Code regarding part-time employees, 22503 regarding substitute employees, and 22504 regarding part-time employees on an hourly or daily basis. ↑

15. As stated, this basic general example only serves to provide context regarding retirement and reinstatement from retirement. It should not be used or construed, nor is it intended to be used or construed, as a literal example as several other factors may exist that affect the calculation of a retirement allowance. ↑

16. Section 7522.56 of the Gov. Code (regarding the PEPRA), and Sections 24214.5, 26812, and 26813 of the Educ. Code (regarding the TRL). ↑

17. See paragraph 8, Executive Order N-12-21. ↑

18. Ref. fn. 12. ↑

19. Section 7522.02 of the Gov. Code. ↑

20. “Measures of Plan Maturity and Volatility,” pp. 25-29, CalSTRS Board Regular Meeting, Agenda Item Number 10, November 4, 2021. ↑

21. Ref. to paragraph (2) under Comment 8). ↑

22. Chapter 48, Statutes of 2023 (Senate Bill 114, Committee on Budget and Fiscal Review) re: education finance: education omnibus budget trailer bill. ↑

23. “A Review of the CalSTRS Funding Plan,” Legislative Analyst’s Office. ↑

Date of Hearing: June 28, 2023

ASSEMBLY COMMITTEE ON EDUCATION

Al Muratsuchi, Chair

SBPCA Bill Id:SB 765

Author:(Portantino) – As Amended Ver:June 19, 2023

[This bill is double referred to the Assembly Public Employment and Retirement Committee and will be heard by that Committee as it relates to issues under its jurisdiction.]

SENATE VOTE: 39-0

SUBJECT: Teachers: retired teachers: teacher preparation: student financial aid

SUMMARY: Exempts a retired member of the State Teachers’ Retirement System (STRS) who returns to work to fill a critical need in a certificated position from postretirement compensation limits for a maximum of three years and exempts them from the 180 day waiting period after retirement; increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate; and annually exempts 1,000 Cal Grant awardees from demonstrating financial need if they agree to enroll in a teacher preparation program after earning their baccalaureate degree. Specifically, this bill:

1. Exempts the compensation earned by a member who retired from STRS from the postretirement compensation limitation if the member performs retired member activities for an employer, excluding a community college district, commencing July 1, 2024.
2. Requires an employer to submit all completed documentation required by STRS to substantiate the eligibility of the retired member for the exemption.
3. Prohibits a retired member from performing retired member activities until after the completed documentation has been received by STRS. The documentation shall include certification, under penalty of perjury, of the following:
4. The member is returning to fulfill a critical need in a certificated position. Defines certificated position to mean a position requiring certification qualifications authorized by the Commission on Teacher Credentialing (CTC), or a position requiring administrative or supervisory credentials.
5. The employer firstly publicly advertised the certificated position for appointment to those individuals with the necessary qualifications to perform the requirements of the position, and no one qualified accepted the appointment;
6. The employer, having tried and failed to hire a qualified individual, hired a retired member, and the salary offered to the retired member does not exceed the salary that was offered as first publicly advertised;
7. The vacancy occurred due to circumstances beyond the control of the employer;
8. The termination of employment of the retired member with the employer is not the basis for the need to acquire the services of the retired member; and
9. The member did not receive additional service credit or receive from any public employer any financial inducement to retire. Defines “financial inducement to retire” to include, but not be 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 a public employer on or before the date the inducement is offered. Requires that this be liberally interpreted to further the Legislature’s intent to make the exemption inapplicable to members if the member received a financial incentive from any public employer to retire or otherwise terminate employment with a public employer.
10. Requires that the period of exemption commence on the date the retired member is appointed or assigned to the certificated position and end on June 30 of that fiscal year.
11. Limits a retired member’s eligibility for the exemption to a maximum of three school years.
12. Permits retired members who are eligible for the earnings limitation exemption described above to be employed within 180 days of the date of their retirement.
13. Increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.
14. Exempts, beginning with the 2024-25 award year, 1,000 Cal Grant applicants from demonstrating financial need if all of the following are met:
15. The applicant meets the applicable grade point average (GPA) requirement;
16. The applicant files a statement of intent with the California Student Aid Commission (CSAC) stating that the applicant agrees to enroll in a teacher preparation program that is approved by the CTC upon completion of the applicant’s baccalaureate degree; and
17. The applicant agrees to repay the state the total amount of Cal Grant awards received if the applicant fails to enroll in a teacher preparation program that is approved by the CTC within one academic year of completing the applicant’s baccalaureate degree.

EXISTING LAW:

1. Prohibits a retired person from being employed for a period of 180 days following the date of retirement, unless the employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting. (Government Code (GOV) 7522.56)
2. Limits the per-school year cash compensation to a retired member for performance of retired member activities, excluding specified reimbursements 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. Requires a superintendent or a county superintendent of schools to submit all documentation required by the STRS to substantiate the eligibility of a retired member for applying the cash compensation. (Education Code (EC) 24214, 24214.5)
3. Establishes the Teacher Residency Grant Program, funded until June 30, 2026, to provide funding to programs that partner with one or more teacher preparation programs accredited by the CTC, in which a prospective teacher teaches at least one-half time alongside a teacher of record, who is designated as the experienced mentor teacher, for at least one full school year while engaging in initial preparation coursework. Requires grants allocated to be up to $25,000 per teacher candidate in the residency program of the jurisdiction of the grant recipient, matched by that grant recipient on a dollar-for-dollar basis. Grant program funding shall be used for, but is not limited to, any of the following: teacher preparation costs, stipends for mentor teachers, stipends for teacher candidates, and mentoring and beginning teacher induction costs following initial preparation. (EC 44415.5)
4. Establishes the Cal Grant program, administered by the California Student Aid

Commission (CSAC), to provide grants to financially needy students to attend a college or university. The Cal Grant programs include both the entitlement and the competitive Cal Grant awards. Supplemental award programs have been created for students with one or more dependent children and former and current foster youth to assist with non-tuition costs. The program consists of the Cal Grant A, Cal Grant B, and Cal Grant C programs, and eligibility is based upon financial need, GPA, California residency and other criteria. Maximum award amounts for California State University (CSU) and University of California (UC) are established in the annual Budget Act and have traditionally covered all systemwide tuition and fees. (EC 69430 – 69433, 69465, 69470, 6945.5)

FISCAL EFFECT: According to the Senate Appropriations Committee:

• The California Student Aid Commission (CSAC) estimates that the ongoing cost for exempting 1,000 Cal Grant awardees from demonstrating financial need would range from $1.6 million to up to $14.2 million. These totals represent the amounts that would no longer be available for students with demonstrated financial need. While the bill does not specify which Cal Grant program it would apply to, the Commission indicates that given the focus on Bachelors of Arts holders and teaching credentials, it is likely that the cost would come in at the higher end of range to reflect students attending the CSU and private institutions.
• The CSAC also estimates ongoing General Fund costs of approximately $386,000 and 3.0 positions for additional workload which includes the development of regulations and tracking the 1,000 students who would be exempt from the financial need element.
• The Commission on Teacher Credentialing (CTC) estimates that increasing the teacher residency grants to $40,000 would reduce the remaining amount available for the program by $44.3 million. This estimate assumes that the bill would apply to future grantees, not existing recipients. Further, school districts would incur additional local costs since grant recipients would need to match the higher amounts at a rate of 80 percent.
• By exempting retired teachers that return to work from postretirement compensation limits, this bill could potentially have long-term implications on CalSTRS volatility towards paying benefits. Specifically, it could lead to an undetermined increase in the state’s share of costs and school district pension fund contributions.

COMMENTS:

Need for the bill. According to the author, “California is facing a devastating teacher shortage, exacerbated by the COVID-19 pandemic and the Great Resignation. The California Commission on Teacher Credentialing (CTC) reports over 10,000 teacher vacancies across California during the 2021–22 school year. CalSTRS reports that teacher retirements increased by 26 percent in 2020. There are not enough individuals entering the teaching profession to counteract the number of teachers leaving the workforce.

Additionally, teacher demand is increasing. According to the Learning Policy Institute, in order to ensure a successful Transitional Kindergarten (TK) rollout, between 11,900 and 15,600 additional lead teachers, and between 16,000 and 19,700 assistant transitional kindergarten teachers are needed by 2025–26. This legislation will help bolster the California teacher pipeline.”

Recently-expired executive orders addressed staffing shortages. On January 11, 2022, Governor Gavin Newsom released Executive Order N-3-22 to provide temporary administrative and staffing flexibilities to assist schools in maintaining operations with qualified staff and keep students in learning environments with strong COVID‑19 safety measures.

The Executive Order authorized local education agencies (LEAs) that made a written finding, signed by the LEA’s superintendent or designee and retained for public access upon request, to use the following flexibilities through March 31, 2022:

• • Allow LEAs to issue 30-day emergency substitute credentials without regard to whether the recipient has a pending credential or permit application, provided candidates have an undergraduate degree from a regionally accredited college or university and pass a criminal background check;
  • Lengthen the duration for which substitute teachers can be assigned to a single general education assignment from the current maximum of 60 days to the new limit of 120 days;
  • Permit student teachers to serve as teachers without the requirement that the student teacher be under the direct supervision of a certificated teacher in a classroom for purposes of calculating a school district’s average daily attendance for apportionment for each day, or portion of a day; and
  • Continue existing financial incentives for retiree teachers. These incentives include suspension of certain post-retirement compensation limitations and suspension of the required 180-day service break — a suspension that applies to classified employees as well.

Effect of the suspension of the earnings limitation for retirees. According to CalSTRS data provided by the bill’s sponsors, in the 2021-22 fiscal year there were 587 members who exceeded the annual postretirement earnings limit and were exempted under the Executive Orders.

As shown in the table below, the number of retirees working after retirement declined during the COVID -19 pandemic, and as of the 2021-22 fiscal year had not returned to pre-pandemic levels.

The percentage of retired members working after retirement who exceeded the earnings limit was 3.12% in 2021-22.

There were 363 retired members who were exempted from the separation-from-service (180 day) requirement. Of those, 209 submitted applications through the existing process in statute, and 154 were exempted under the Executive Orders.

Most recent data shows teacher shortage worsening again, with credential issuance down 16% from 2020. The most recent data available from the CTC on the issuance of teaching credentials show that, after several years of increases, credential issuance declined by over 16% between 2020-21 and 2021-22.

The decline in the issuance of multiple subject (elementary) credentials was particularly steep, with over 25% less credentials issued, and bringing issuance below pre-pandemic levels. Education specialist (special education) issuance was down over 10%. These declines, shown by major credential type, are shown in the table below.

Source: CTC, Teacher Supply Report, 2023

Administrative credential issuance returns to pre-pandemic levels; waivers also increase. According to the CTC, the number of administrative credentials issued in 2021-22 increased by 20% between 2020-21 and 2021-22. There was a 36% increase in issuance of certificates of eligibility (issued to candidates who have met all requirements but do not yet have an offer of employment), and 63% in issuance of preliminary credentialed (issued to candidates who have secured an offer of employment).

There was a significant increase in administrative intern credentials (135%), bringing the number back to pre-pandemic levels. While small in number, there was a significant increase in the issuance of administrative services waivers (from 36 in 2020-21 to 63 in 2021-22), which are issued as the final option when a school district cannot find a fully credentialed individual to fill an administrative position.

Teacher shortage worsened by COVID-19 pandemic.  In the years following the Great Recession, California experienced a dramatic teacher shortage.  According to the Learning Policy Institute (LPI), the number of substandard credentials and permits issued in California nearly tripled from 2012–13 to 2019–20, numbering more than 13,000 annually.  Enrollment in teacher preparation programs had begun to increase modestly in the years immediately preceding the COVID-19 pandemic. 

The pandemic, however, has significantly exacerbated the teacher shortage. Most districts have found teachers to be in short supply, especially for math, science, special education, and bilingual education, and are filling hiring needs with teachers on substandard credentials and permits. The shortages are particularly extreme in special education. As shown in the table below, over 2/3 of new documents issued to teachers serving students with moderate to severe support needs were not fully prepared. There are several factors contributing to the current shortage:

• New positions from federal and state funding.  According to the LPI, a further contributing factor was the creation of additional positions enabled by federal recovery funds. These funds were appropriated to address needs associated with the pandemic, but they had to be used at least in part to support learning recovery, which in turn increased staffing needs.  LPI cited as an example the Los Angeles Unified School District, which used these funds to offer 4x4 block schedules for the 2021–22 school year, a model which requires about 25% more teachers than the traditional 6-period schedule. Other districts used funds to create intervention positions which then needed to be filled by qualified staff.  The expansion of TK in upcoming years will also increase the demand for credentialed teachers.
• Enrollment in teacher preparation. According to the American Association of Colleges of Teacher Education, in both fall 2020 and 2021, the majority of educator preparation programs reported the pandemic had either no impact or a minimal impact on enrollment (defined as a decline of less than 10%). However, for a sizable minority of institutions, COVID-19 had a significant effect on undergraduate enrollment in educator preparation programs. In both fall 2020 and fall 2021, 20% of institutions reported that the pandemic resulted in a decline in new undergraduate enrollment of 11% or more. The impact on graduate student enrollment is somewhat less dramatic, with 13% of respondents reporting significant declines in the number of new graduate students due to the pandemic.
• Staffing crisis fueling attrition. While it is unclear how widespread and temporary this factor may be, there is suggestion that in some areas with severe shortages, staff shortages are becoming a cause of staff shortages in and of themselves.  As noted in the NEA survey of reasons for teacher resignations, 80% of respondents reported “unfilled job openings leading to more work for remaining staff” as a serious problem.  The shortage of substitute teachers presents a particular workload challenge to current teachers. 
• Growing retirements and resignations. In a 2022 report of survey data from large and small school districts serving a total of 20% of California students, the LPI found that the pandemic caused an increase in teacher resignations. In one large district, resignations increased by about two-thirds, and leaves of absence increased by about 50%. This is consistent with a nationally representative survey of 3,600 teachers published by the National Education Association (NEA) in 2022, which found that, among school employees (including classified employees), 55% of educators were considering leaving the profession earlier than they had planned, an increase from 37% from 2021, with higher rates for African American and Latino employees. 86% of respondents said that they have seen more educators leaving the profession or retiring early since the start of the pandemic in 2020. Among the most commonly cited reasons for leaving the profession or retiring early were burnout and general stress from the pandemic.

Teacher residency grant program. This bill would increase the maximum award amount for the Teacher Residency Grant Program from $25,000 to $40,000 per teacher candidate. A teacher residency program is defined as an LEA-based partnership between an LEA and an institution of higher education (IHE) with a CTC-approved preliminary teacher preparation program, and in which a prospective teacher teaches at least half time alongside a teacher of record, who is designated as the experienced mentor teacher, for at least one full school year while engaging in initial preparation coursework. Grantees may receive up to $25,000 per participating teacher resident each year.

The Teacher Residency Grant Programs were initially authorized in the 2018-19 Budget Act to support the development, implementation, and expansion of teacher residency programs, with a total of $75 million for competitive grants. The 2021-22 Budget Act provided $350 million through the 2025-26 fiscal year for Teacher Residency Programs. Of the $350 million, $25 million is set aside for Teacher Residency Capacity Grants. Grant awards may be up to $250,000 for eligible LEAs, which is an increase of $200,000 per grant award from the 2018-19 fiscal year. Teacher Residency Capacity Grants are intended to support a collaborative partnership between eligible LEAs with one or more CTC-approved teacher preparation programs offered by a regionally accredited IHE to expand, strengthen, improve access to, or create a teacher residency program. The remaining $325 million is set aside for Teacher Residency Expansion and/or Implementation grants.

According to the Assembly Budget Committee, for Year One of the Teacher Residency Grant Programs, LEAs reported a total of 309 teacher residents in the thirty-one programs that began a Teacher Residency Program between July 2019 and June 2020.

In spring of 2021, WestEd collected data through the formative evaluation of the grant program in order to help understand the extent to which grantee programs were building toward financial sustainability within the context of their one-time funding sources. This evaluation found that grantee programs have made progress towards key outcomes in the following ways:

• • Residencies are supporting the development of a more diverse teaching workforce;
  • Residents intend to stay and teach in their residency LEAs;
  • Residents, mentor teachers, and partnership team members value their residency programs; and
  • Residents and mentor teachers highlight the importance of residencies’ rich yearlong clinical experience.

The evaluation also noted that the upfront resources to design and launch residency partnerships and provide early cohorts of residents with adequate financial support can be substantial. The following challenges were identified:

• • The majority of residents report experiencing financial hardships during their residency year, and residents of color are disproportionately impacted;
  • Most residency programs are offering district-based employment opportunities to residents (such as having them serve as substitute teachers, paraprofessionals, or tutors), but fewer than half of residents are participating in these opportunities;
  • Most programs are not yet broadening their funding sources and strategies to enable financial sustainability beyond the grant program; and
  • Many programs could strengthen their partnerships with partner LEAs and build their internal capacity to support sustainability.

Cal Grant Program eligibility. The following comments were provided by the Assembly Higher Education Committee;

Existing law establishes the Cal Grant program, administered by the CSAC, to provide grants to financially needy students to attend a college or university. The Cal Grant programs include both the entitlement and the competitive Cal Grant awards. Supplemental award programs have been created for students with one or more dependent children and former and current foster youth to assist with non-tuition costs. The program consists of the Cal Grant A, Cal Grant B, and Cal Grant C programs, and eligibility is based upon financial need, grade point average (GPA), California residency and other criteria. Maximum award amounts for the CSU and the UC are established in the annual Budget Act and have traditionally covered all systemwide tuition and fees (EC 69430 – 69433,69465, 69470, 6945.5).

To qualify for Cal Grants, students must meet certain income and asset criteria. These criteria vary by family size and are adjusted annually for inflation.  For example, in the 2022-23 award year, a dependent student from a family of four must have an annual household income of under $116,800 to qualify for Cal Grant A or C, and under $61,400 to qualify for Cal Grant B.  In most cases, students must also meet a GPA requirement. The specific GPA requirement varies by award type.  Most award types require a minimum high school GPA of 2.0 or 3.0 or a minimum community college GPA of 2.0 or 2.4.

The 2022 Budget Act included the Cal Grant Reform Act (Act) subject to state General Fund availability over the multi-year forecasts beginning in fiscal year 2024-25. The Act would be triggered in 2024-25 if the state determines in Spring 2024 that sufficient General Fund is available to support these actions over a multiyear period.  If “triggered on” the budget agreement will provide $364.8 million General Fund in 2024-25, $348.8 million in 2025-26 and ongoing for this reform.  The Act will restructure the Cal Grant program. Specifically, it would replace the existing award structure with a Cal Grant 2 award that provides nontuition coverage to California Community College (CCC) students and a Cal Grant 4 award that provides tuition coverage at all other segments. 

The eligibility requirements of the new program would differ in several ways from those of the current program. First, the current Cal Grant program has its own income and asset ceilings, the new program would have the same income ceilings as the federal Pell Grant program. Because of the change, the new income ceilings generally would be lower than the current ones. Second, the current program provides only a limited number of awards to older students attending universities; the new program would have no age or time-out-of-high-school restrictions at any segment. Third, the current program requires students to have a minimum GPA, the new program will not have a GPA requirement for CCC students. These program changes are projected to lead to a net increase of 150,000 award offers in 2024-25, at an estimated additional net cost of $365 million. The Act also expresses legislative intent that UC and CSU use institutional aid to cover non-tuition costs for its students.

This bill proposes another eligibility change to the Cal Grant Program—exempting 1,000 Cal Grant applicants from demonstrating financial need if the applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in an approved teacher preparation program after completing their baccalaureate degree.

This has the potential to set a bad precedent. It is problematic to waive the financial need requirement for 1000 Cal Grant recipients, as other workforce entities that have employee “shortages” may then seek to waive the financial need requirement for the Cal Grant in order to “bolster” student participation and subsequent hiring into the shortage field.

Based on the aforementioned and the fact that the Cal Grant Reform Act is awaiting implementation, it appears that this measure is premature in making further changes to the Cal Grant. Further, it is unclear how exempting 1,000 Cal Grant applicants from demonstrating financial need will directly increase the teacher pipeline.

Recommended Committee amendments. Staff recommends that this bill be amended to:

1. Limit the earnings limitation exemption to retirees returning to fill teaching positions requiring certification (this amendment would exclude positions requiring administrative or supervisory credentials from eligibility); and
2. Delete the provisions of the bill pertaining to the Cal Grant program.

Arguments in support. The California School Boards Association writes, “SB 765 is a temporary and modest measure to provide immediate assistance to local educational agencies (LEAs) in addressing critical educational staffing shortages across the state.

It is not unknown that California’s public education system was, prior to the pandemic experiencing a severe educational workforce shortage, especially in regards to the recruitment and retention of teachers. With the onset of the COVID-19 pandemic in early 2020 the state’s teacher shortage has been vastly exacerbated, in large part due to greater proportions of teachers choosing to leave the profession.

In 2020, the California State Teacher’s Retirement System CalSTRS reported that teacher retirements increased by 26 percent (3,202). CalSTRS projected that in 2021 about 16,000 teachers would retire, leaving less educators for our children. The 16,000 retirements would account for 5 percent of the 320,000 teachers in the State. As LEAs continue to try and find new ways to recruit and retain talented and essential school staff, SB 765 would provide an additional and much needed tool local educational agencies (LEAs) can use to help address our state’s school staffing shortages. Additionally, retired teachers and other staff are some of the best-equipped candidates to hit the ground running and provide the best instruction and services to our students.

CSBA has long supported efforts to provide multiple pathways for LEAs to address the state’s teacher shortages and bringing retired teachers back into the classroom. We greatly appreciate the major investments the state has made to significantly expand teacher recruitment and retention programs, including the Golden State Teacher Grant Program, however those programs are medium and long-term investments were we may not see new teachers enter the classroom for another two to three years. This is a tool that provides immediate relief, and although a temporary solution, it is a critical tool available for our schools to help ensure that all students have a qualified teacher in their classrooms.

CSBA remains committed to ensuring that the sufficiency and resiliency of CalSTRS pension fund is maintained. To this end, it has long advocated for increased support by the state to support LEAs local pension obligations and has historically opposed efforts that would significantly impair the ability of CalSTRS to meet its retirement obligations, including legislative efforts to divest from certain investments that could prove deleterious to the long-term solvency of the retirement fund.

However, the state is facing an educational staffing shortage that has reached unprecedented crisis levels due to the pandemic. As such, CSBA believes strongly that a legislative effort is needed to provide a streamlined process for retired educational staff to return to schools to help address our staffing shortage. Current circumstances require immediate and proven tools to help ensure that our public school system is able to provide each and every classroom with a qualified teacher. SB 765 is one of those tools.”

Arguments in opposition. California Teachers Association states, “The annual postretirement earnings limit exemption provided by SB 765 raises the following issues:

• Fuel for pension critics: This exemption erodes protections against double dipping—members receiving their full pension benefit as well as a full working salary—which were a key focus of the Public Employees’ Pension Reform Act of 2013. Any such plan design vulnerabilities could raise reputational risks for CalSTRS by attracting the attention of pension critics and emboldening those pushing for broader pension reform.

• Pension funding: CalSTRS does not receive contributions for members who work after retirement. If retired members supplant active members and their associated contributions, the exemption could amplify impacts to CalSTRS’ funded status. In addition, SB 765 could increase benefit liabilities to the extent it encourages CalSTRS members to retire earlier than originally planned with the intent of returning to work under the exemption. This policy path could be expanded in subsequent legislation, potentially affecting long-term funding if there is a reduction in the number of new members paying into the system.

• Abuse: The exemption could be used inappropriately by employers as a cost-saving measure in order to forgo payments for retirement, health care and other benefits. While this may be of short-term value to employers, over-utilization of this exemption could counteract efforts to attract and hire new teachers. Other loopholes established may create additional instances of abuse.

To address these issues, some guardrails to ensure this exemption is used appropriately and in line with the bill’s intended purpose of addressing the teacher shortage include:

• Limiting use of this exemption solely to those returning to fulfill a critical need in a non-managerial certificated position. This bill defines “certificated position” to mean a position requiring certification qualifications authorized by the Commission on Teacher Credentialing or a position requiring administrative or supervisory credentials and allows retirees to go back to work into a certificated position earning both salary and retirement benefits. This policy path needs to more surgically address the shortage of workers who are choosing to become teachers and could allow high paid administrators to leverage relationships with decision makers to receive excessive compensation.

• Requiring employers to receive approval recognizing the demonstrable need for the exemption from the exclusive representative of members who would normally hold such a role. Union sign-off on employer participation in a program to remove the annual earnings cap validates that the employer made every effort to fill vacant positions, provides a significant safeguard against abusing compensation rules, and prevents employers from stopping current employees from transferring into desirable vacant positions.”

Related legislation. AB 1877 (Fong) of the 2021-2022 Session would have exempted retired teachers who return to the classroom to teach from the postretirement compensation limit, among other provisions. This bill was held in the Assembly Public Employment and Retirement Committee.

AB 1733 (Wildman) Chapter 896, Statutes of 2000, eliminated, until January 1, 2008, the postretirement earnings limitation for retired STRS members who returned to work after retirement and who, for one year, had not performed any creditable service, as specified, and increased the earnings limitation for other retired members.

AB 1736 (Ducheny) Chapter 351, Statutes of 2000 Session exempted earnings paid to a member who retired from service on or before July 1, 2000, and who was employed by a school district to provide direct remedial instruction to pupils in grades 2 to 12, from the earnings limitation, provided other specified conditions were met.

SB 1797 (Alpert) of the 1999-2000 Session would have exempted earnings paid to a member who retired from service on or before July 1, 2000, and who was employed by a school district to provide direct remedial instruction to pupils in grades 2 to 12, from the earnings limitation, provided other specified conditions were met. This bill was held in the Senate Public Employment and Retirement Committee.

AB 141 (Knox) Chapter 22, Statutes of 2000, extended the existing half-year earnings limitation exemption for retired school administrators who returned to service to fill a vacancy.

SB 1505 (Burton) Chapter 1026, Statutes of 2000, initially would have exempted retired STRS members from the earnings limitation, provided they retired prior to January 1, 2000 and returned to provide direct classroom instruction or to support specified programs. It was later amended to expand eligibility for the minimum guaranteed allowance paid to retired members, and enacted in that form.

REGISTERED SUPPORT / OPPOSITION:

Support

Alameda County Office of Education
Association of California School Administrators
California Association of School Business Officials
California Association of Suburban School Districts
California Charter Schools Association
California Charter Schools Association
California School Boards Association
Central Valley Education Coalition
Long Beach Unified School District
Los Angeles Unified School District
Orange County Department of Education
Riverside County Office of Education
San Diego Unified School District
School Employers Association of California
State Superintendent of Public Instruction Tony Thurmond

Opposition

California Teachers Association

Analysis Prepared by: Tanya Lieberman / ED. / (916) 319-2087

 THIRD READING  

Bill No: SB 765

Author: Portantino (D)

Amended: 5/3/23

Vote: 21

SENATE EDUCATION COMMITTEE: 7-0, 4/19/23

AYES: Newman, Ochoa Bogh, Cortese, Glazer, McGuire, Smallwood-Cuevas, Wilk

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/26/23

AYES: Cortese, Wilk, Durazo, Laird, Smallwood-Cuevas

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

SUBJECT: Teachers: retired teachers: teacher preparation: student financial aid

SOURCE: State Superintendent of Public Instruction

DIGEST:

This bill: (1) exempts a retiree teacher returning to work to fulfill a critical need in a teaching position from postretirement compensation limits, (2) increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate, and (3) annually exempts 1,000 Cal Grant awardees from demonstrating financial need if they agree to enroll in a teacher preparation program after earning their baccalaureate degree.

ANALYSIS:

Existing law:

1. Prohibits a retired person from being employed for a period of 180 days following the date of retirement, unless the employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting.
2. Limits the per-school year cash compensation to a retired member for performance of retired member activities, excluding specified reimbursements 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.
3. Requires a superintendent, a county superintendent of schools, or a chief executive officer of a community college to submit all documentation required by the State Teachers’ Retirement System (STRS) to substantiate the eligibility of a retired member for applying the cash compensation summarized in #2 above.
4. Appropriates, for the 2021-22 fiscal year, appropriates $350 million General Fund to the Commission on Teacher Credentialing (CTC) for the Teacher Residency Grant Program to support teacher residency programs that recruit and support the preparation of teachers. The funding is available for encumbrance until June 30, 2026 and grant allocations can be for up to $25,000 per teacher candidate, matched by the grant recipient at a rate of 80 percent of the grant amount received.
5. Establishes the Cal Grant program, administered by the California Student Aid Commission (CSAC), to provide grants to financially needy students to attend a college or university. The Cal Grant programs include both the entitlement and the competitive Cal Grant awards.

This bill:

1. Exempts the compensation earned by a member who retired from STRS from the postretirement compensation limitation if the member performs retired member activities for an employer, excluding a community college district, commencing July 1, 2024.
2. Requires an employer to submit all completed documentation required by STRS to substantiate the eligibility of the retired member for the exemption.
3. Prohibits a retired member from performing retired member activities until after the completed documentation has been received by STRS. The documentation shall include certification, under penalty of perjury, among other specified information.
4. Specifies that the exemption shall commence on the date the retired member is appointed or assigned to the teaching position and shall end on June 30 of that fiscal year.
5. Defines “teaching position” to mean a position requiring certification qualifications authorized by the CTC or a position requiring administrative or supervisory credentials.
6. Specifies that the exemption shall remain in effect only until June 30, 2026.
7. Increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.
8. Exempts, beginning with the 2024-25 award year, 1,000 Cal Grant applicants from demonstrating financial need if all of the following are met:
9. The applicant meets the applicable GPA requirement.
10. The applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in a teacher preparation program that is approved by the CTC upon completion of the applicant’s baccalaureate degree.
11. The applicant agrees to repay the state the total amount of Cal Grant awards received if the applicant fails to enroll in a teacher preparation program that is approved by the CTC within one academic year of completing the applicant’s baccalaureate degree.

Comments

1. Need for the bill. According to the author, “California is facing a devastating teacher short-age, exacerbated by the COVID-19 pandemic and the Great Resignation. The California Commission on Teacher Credentialing (CTC) reports over 10,000 teacher vacancies across California during the 2021–22 school year. CalSTRS reports that teacher retirements increased by 26 percent in 2020. There are not enough individuals entering the teaching profession to counteract the number of teachers leaving the workforce.

“Additionally, teacher demand is increasing. According to the Learning Policy Institute, in order to ensure a successful Transitional Kindergarten (TK) rollout, between 11,900 and 15,600 additional lead teachers, and between 16,000 and 19,700 assistant transitional kindergarten teachers are needed by 2025–26.

1. Already weak teaching pipeline further damaged by COVID-19 education disruptions. A March 2021 report by the Learning Policy Institute (LPI) raised concerns about the effects of the COVID-19 pandemic on the teacher shortage in California:
   1. Teacher shortages remain a critical problem. Most districts have found teachers to be in short supply, especially for math, science, special education, and bilingual education. Shortages are especially concerning as a return to in-person instruction will require even more teachers to accommodate physical distancing requirements.
   2. Teacher pipeline problems are exacerbated by teacher testing policies and inadequate financial aid for completing preparation. Many districts attributed shortages to having a limited pool of fully credentialed applicants, with more than half reporting that testing requirements and lack of financial support for teacher education pose barriers to entry into teaching.
   3. Teacher workload and burnout are major concerns. The transition to online and hybrid learning models has had a steep learning curve and poses ongoing challenges that have been a primary contributor to some teachers’ decisions to retire earlier than previously planned.
   4. Growing retirements and resignations further reduce supply. In some districts, retirements and resignations are contributing to shortages, while in others, these retirements and resignations offset the need for anticipated layoffs due to expected budget cuts this school year. District leaders anticipate higher retirement rates next year, which could exacerbate teacher shortages.
2. Teacher survey data. In a September 2022 survey of TK-12 teachers in California conducted by Hart Research Associates, aspiring and former teachers shared their suggested policy changes to develop a strategy for teacher retention and recruitment. This survey provided several insights on teacher preparation programs, teacher workload, and the financial costs of teacher preparation programs. Aspiring teachers recommended compensating student teachers to help alleviate financial stress at an important time in the teacher preparation process. Specifically the report noted:
   1. Aspiring teachers of color were more likely to feel less motivated to teach than their white counterparts, and through those discussions, a clear disparity emerged. The reasons they feel less motivated include heightened financial stress, low or no pay for time spent student-teaching, discouraging feedback, and the required teacher candidate assessments, which some express are racially biased. The testing and evaluation process required to enter the profession was cited as a significant reason for why future teachers of colors became less motivated.
   2. The cost of tuition and assessments is a major financial burden and source of stress for these aspiring teachers in California. Many report that they specifically chose the institution they attended based on tuition costs and the availability of scholarships, grants, and financial aid. Several indicated that, had they not had financial support from a spouse or partner or received some form of financial assistance or a scholarship, they likely would not have pursued a career in teaching.
   3. Compensating student teachers was suggested by a significant number of the aspiring teachers and is viewed as a very important policy change that will help alleviate financial stress at an important time in the teacher preparation process.
3. Recently expired executive orders sought to address education staffing shortages via substitute and retired teachers. On January 11, 2022, Governor Gavin Newsom released Executive Order N-3-22 to provide temporary administrative and staffing flexibilities to assist schools in maintaining operations with qualified staff and keep students in learning environments with strong COVID‑19 safety measures.

The following were authorized to local education agencies (LEAs) that made a written finding, signed by the LEA’s superintendent or designee and retained for public access upon request, that temporary staffing flexibility would support maintaining in-person instruction through March 31, 2022:

• 1. Allow LEAs to issue 30-day emergency substitute credentials without regard to whether the recipient has a pending credential or permit application, provided candidates have an undergraduate degree from a regionally accredited college or university and pass a criminal background check.
  2. Lengthen the duration for which substitute teachers can be assigned to a single general education assignment from the current maximum of 60 days to the new limit of 120 days.
  3. Permit student teachers to serve as teachers without the requirement that the student teacher be under the direct supervision of a certificated teacher in a classroom for purposes of calculating a school district’s average daily attendance for apportionment for each day, or portion of a day.
  4. Continue existing financial incentives for retiree teachers. These incentives include suspension of certain post-retirement compensation limitations and suspension of the required 180-day service break — a suspension that applies to classified employees as well.

1. Teacher Residency Grant Program overview and initial evaluation. The 2021-22 State Budget appropriates $350 million over a five-year period for Teacher Residency Programs including Capacity, Expansion, and Implementation. While in the program, a prospective teacher teaches at least one-half time alongside a teacher of record, who is designated as the experienced mentor teacher, for at least one full school year while engaging in initial preparation coursework.

In spring of 2021, WestEd collected data through the formative evaluation of the grant program in order to help understand the extent to which grantee programs were building toward financial sustainability within the context of their one-time funding sources. This evaluation found that grantee programs have made progress towards key outcomes in the following ways:

• 1. Residencies are supporting the development of a more diverse teaching workforce.
  2. Residents intend to stay and teach in their residency LEAs.
  3. Residents, mentor teachers, and partnership team members value their residency programs.
  4. Residents and mentor teachers highlight the importance of residencies’ rich yearlong clinical experience.

The evaluation also noted that the upfront resources to design and launch residency partnerships and provide early cohorts of residents with adequate financial support can be substantial. The following challenges were identified:

• 1. The majority of residents report experiencing financial hardships during their residency year, and residents of color are disproportionately impacted.
  2. Most residency programs are offering district-based employment opportunities to residents (such as having them serve as substitute teachers, paraprofessionals, or tutors), but fewer than half of residents are participating in these opportunities.
  3. Most programs are not yet broadening their funding sources and strategies to enable financial sustainability beyond the grant program.
  4. Many programs could strengthen their partnerships with partner LEAs and build their internal capacity to support sustainability.

This bill increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.

1. Recently adopted Cal Grant Program reforms to the award structure and eligibility criteria. The 2022 Budget Act included the Cal Grant Reform Act (Act) subject to state General Fund availability over the multi-year forecasts beginning in fiscal year 2024-25. If “triggered on” the budget agreement will provide $364.8 million General Fund in 2024-25, $348.8 million in 2025-26 and ongoing for this reform. The Act will restructure the Cal Grant program. Specifically, it would replace the existing award structure with a Cal Grant 2 award that provides nontuition coverage to California Community College (CCC) students and a Cal Grant 4 award that provides tuition coverage at all other segments.

The eligibility requirements of the new program would differ in several ways from those of the current program. Notably, whereas the current Cal Grant program has its own income and asset ceilings, the new program would have the same income ceilings as the federal Pell Grant program. Because of the change, the new income ceilings generally would be lower than the current ones.

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

According to the Senate Appropriations Committee:

• The California Student Aid Commission (CSAC) estimates that the ongoing cost for exempting 1,000 Cal Grant awardees from demonstrating financial need would range from $1.6 million to up to $14.2 million. These totals represent the amounts that would no longer be available for students with demonstrated financial need. While this bill does not specify which Cal Grant program it would apply to, the Commission indicates that given the focus on Bachelors of Arts holders and teaching credentials, it is likely that the cost would come in at the higher end of range to reflect students attending the California State University (CSU) and private institutions.
• The CSAC also estimates ongoing General Fund costs of approximately $386,000 and 3.0 positions for additional workload which includes the development of regulations and tracking the 1,000 students who would be exempt from the financial need element.
• The Commission on Teacher Credentialing (CTC) estimates that increasing the teacher residency grants to $40,000 would reduce the remaining amount available for the program by $44.3 million. This estimate assumes that this bill would apply to future grantees, not existing recipients. Further, school districts would incur additional local costs since grant recipients would to need to match the higher amounts at a rate of 80 percent.
• By exempting retired teachers that return to work from postretirement compensation limits, this bill could potentially have long-term implications on CalSTRS volatility towards paying benefits. Specifically, it could lead to an undetermined increase in the state’s share of costs and school district pension fund contributions.

SUPPORT: (Verified 5/18/23)

State Superintendent of Public Instruction (source)

Association of California School Administrators

California Association of School Business Officials 

California Association of Suburban School Districts

California Charter Schools Association

California School Boards Association

Central Valley Education Coalition

Los Angeles Unified School District

Orange County Department of Education

Riverside County Office of Education

San Diego Unified School District

OPPOSITION: (Verified 5/18/23)

None received

Prepared by: Ian Johnson / ED. / (916) 651-4105

5/20/23 13:09:28

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 765 (Portantino) - Teachers: retired teachers: teacher preparation: student financial aid

Bill Summary:

This bill would exempt a retiree teacher returning to work to fulfill a critical need in a teaching position from postretirement compensation limits. This bill would also increase the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate, and annually exempt 1,000 Cal Grant awardees from demonstrating financial need if they agree to enroll in a teacher preparation program after earning their baccalaureate degree.

Fiscal Impact:

• The California Student Aid Commission (CSAC) estimates that the ongoing cost for exempting 1,000 Cal Grant awardees from demonstrating financial need would range from $1.6 million to up to $14.2 million. These totals represent the amounts that would no longer be available for students with demonstrated financial need. While the bill does not specify which Cal Grant program it would apply to, the Commission indicates that given the focus on Bachelors of Arts holders and teaching credentials, it is likely that the cost would come in at the higher end of range to reflect students attending the California State University (CSU) and private institutions.
• The CSAC also estimates ongoing General Fund costs of approximately $386,000 and 3.0 positions for additional workload which includes the development of regulations and tracking the 1,000 students who would be exempt from the financial need element.
• The Commission on Teacher Credentialing (CTC) estimates that increasing the teacher residency grants to $40,000 would reduce the remaining amount available for the program by $44.3 million. This estimate assumes that the bill would apply to future grantees, not existing recipients. Further, school districts would incur additional local costs since grant recipients would to need to match the higher amounts at a rate of 80 percent.
• By exempting retired teachers that return to work from postretirement compensation limits, this bill could potentially have long-term implications on CalSTRS volatility towards paying benefits. Specifically, it could lead to an undetermined increase in the state’s share of costs and school district pension fund contributions.

Background:

Existing law prohibits a retired person from being employed for a period of 180 days following the date of retirement, unless the employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting.

Existing law limits the per-school year cash compensation to a retired member for performance of retired member activities, excluding specified reimbursements 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.

For the 2021-22 fiscal year, the budget includes $350 million General Fund for the Teacher Residency Grant Program to support teacher residency programs that recruit and support the preparation of teachers. The funding is available for encumbrance until June 30, 2026 and grant allocations can be for up to $25,000 per teacher candidate, matched by the grant recipient at a rate of 80 percent of the grant amount received.

Existing law establishes the Cal Grant program, administered by the CSAC, to provide grants to financially needy students to attend a college or university. The Cal Grant programs include both the entitlement and the competitive Cal Grant awards. Supplemental award programs have been created for students with one or more dependent children and former and current foster youth to assist with non-tuition costs. The program consists of the Cal Grant A, Cal Grant B, and Cal Grant C programs, and eligibility is based upon financial need, grade point average (GPA), California residency and other criteria. Maximum award amounts for CSU and University of California (UC) are established in the annual Budget Act and have traditionally covered all systemwide tuition and fees.

To qualify for Cal Grants, students must meet certain income and asset criteria. These criteria vary by family size and are adjusted annually for inflation. For example, in the 2022-23 award year, a dependent student from a family of four must have an annual household income of under $116,800 to qualify for Cal Grant A or C, and under $61,400 to qualify for Cal Grant B. In most cases, students must also meet a GPA requirement. The specific GPA requirement varies by award type. Most award types require a minimum high school GPA of 2.0 or 3.0 or a minimum community college GPA of 2.0 or 2.4.

Proposed Law:

This bill exempts, commencing July 1, 2024, the compensation earned by a member who retired from STRS from the postretirement compensation limitation if the member returns to perform retired member activities for an employer, excluding a community college district. It requires an employer to submit all documentation required by STRS to substantiate the eligibility of the retired member for the exemption. This bill also prohibits a retired member from performing retired member activities until after the documentation has been received by STRS. The documentation shall include certification, under penalty of perjury, as specified, including whether the member is returning to fulfill a critical need in a teaching position. The bill specifies that the exemption shall commence on the date the retired member is appointed or assigned to the teaching position and shall end on June 30 of that fiscal year and remain in effect only until June 30, 2026.

This bill increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.

This bill, beginning with the 2024-25 award year, exempts 1,000 Cal Grant applicants from demonstrating financial need if the following conditions are met: the applicant meets the applicable GPA requirement; the applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in a teacher preparation program that is approved by the CTC upon completion of the applicant’s baccalaureate degree; and the applicant agrees to repay the state the total amount of Cal Grant awards received pursuant to this subdivision if the applicant fails to enroll in a teacher preparation program within one academic year of completing the applicant’s baccalaureate degree.

Staff Comments:

The 2021-22 State Budget appropriates $350 million over a five-year period for Teacher Residency Programs including Capacity, Expansion, and Implementation. Teacher Residency Program grants are available to LEAs to create or expand residency programs that partner with one or more CTC-approved teacher preparation programs offered by a higher education institution. While in the program, a prospective teacher teaches at least one-half time alongside a teacher of record, who is designated as the experienced mentor teacher, for at least one full school year while engaging in initial preparation coursework. The funding is available for encumbrance until June 30, 2026 and grant allocations can be for up to $25,000 per teacher candidate, matched by the grant recipient at a rate of 80 percent of the grant amount received. This bill would increase the maximum award amount to $40,000 per teacher candidate.

This bill also proposes to change eligibility for the Cal Grant Program, exempting 1,000 Cal Grant applicants from demonstrating financial need if the applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in an approved teacher preparation program after completing their baccalaureate degree.

-- END --

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Dave Cortese, Chair

2023 - 2024 Regular

Bill No: SB 765 Hearing Date: April 26, 2023

SUBJECT: Teachers: retired teachers: teacher preparation: student financial aid

KEY ISSUE

Should the state: (1) exempt a CalSTRS retiree who returns to work to fulfill a critical need in a teaching position from postretirement compensation limits, (2) increase the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate, and (3) annually exempt 1,000 Cal Grant awardees from demonstrating financial need if they agree to enroll in a teacher preparation program after earning their baccalaureate degree.

This analysis only assess the bill’s retirement issues related to the postretirement compensation limit exemption in (1). The Senate Education Committee has analyzed the bill’s other provisions related to education policy in (2) and (3).

ANALYSIS

Existing law:

1. Prohibits, pursuant to the Public Employees’ Pension Reform Act (PEPRA), a retired person from serving, being employed by, or being employed through a contract directly by, a public employer in the same public retirement system from which the retiree receives the benefit without reinstatement from retirement, except as specified. This provision applies to any person who is receiving a pension benefit from a public retirement system and shall supersede any other conflicting provision. (Government Code (GC) § 7522.56)
2. Exempts from PEPRA’s post-retirement work rules a person who is retired from the California State Teachers’ Retirement System (CalSTRS), and who is subject to Education Code (ED) §§ 24214, 24214.5, or 26812. (GC § 7522.56 (h)).
3. Permits a retired CalSTRS member to perform retired member activities, as specified, subject to a limitation on compensation equal to one-half the median final compensation of all members who retired for service during the fiscal year ending in the previous calendar year. (ED § 24214)
4. Reduces the retiree’s monthly allowance by an amount in excess of the compensation limitation, as specified. (ED § 24214 (g))
5. Sets the compensation limitation at zero dollars ($0) during the first 180 calendar days after the most recent retirement of a member retired for service, so that during that period the retiree’s pension will be reduced by any amount earned, as specified. (ED § 24214.5)
6. Provides an exemption to the 180-day zero limitation rule if the retiree has attained normal retirement age and if the retiree’s appointment has been publicly approved by the employer’s governing body, as specified. (ED § 24214.5)
7. Requires the Superintendent, the county superintendent of schools, or the chief executive officer of a community college to submit all documentation required by CalSTRS to substantiate the retiree’s eligibility for postretirement employment pursuant to the compensation limitation, as specified. (ED § 24214.5)

This bill:

1. Exempts the compensation earned by a member who retired from CalSTRS from the postretirement compensation limitation if the member returns to perform retired member activities for an employer, excluding a community college district.
2. Requires an employer to submit all documentation required by CalSTRS to substantiate the eligibility of the retired member for the exemption.
3. Prohibits a retired member from performing retired member activities until after CalSTRS have received the documentation. The documentation shall include certification, under penalty of perjury, of the following:
4. The member is returning to fulfill a critical need in a teaching position.
5. The employer first advertised the teaching position for appointment to current active or inactive members of the program with the necessary qualifications to perform the requirements of the teaching position, and no qualified current active or inactive member was available to be appointed.
6. The appointing authority made a good faith effort to hire a retired member who reinstated to active membership for the teaching position at the same salary that was offered as first advertised.
7. 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 does not exceed the salary that was offered as first advertised.
8. The compensation paid for the teaching position is not less than the minimum, nor more than the maximum, paid by the employer to other employees performing comparable duties.
9. The teaching position vacancy occurred due to circumstances beyond the control of the employer. The termination of employment of the retired member with the employer is not the basis for the need to acquire the services of the retired member.
10. The member did not receive additional service credit or financial inducement to retire.
11. Specifies that the exemption shall commence on the date the retired member is appointed or assigned to the teaching position and shall end on June 30 of that fiscal year.
12. Defines “teaching position” to mean a position requiring certification qualifications authorized by the CTC or a position requiring administrative or supervisory credentials.
13. Specifies that the exemption shall remain in effect only until June 30, 2026, and shall be repealed as of January 1, 2027.
14. Eliminates the existing requirement that the employer’s governing board publicly approve the retiree’s appointment and intends to seek an exemption from the 180-day zero dollar limitation.
15. Requires instead that the Superintendent, the county superintendent of schools, or the chief executive officer of a community college submit a request to CalSTRS for an exemption to the 180-day rule with certification of the following:
16. The nature of the employment.
17. That the appointment is necessary to fill a critically needed position before 180 calendar days have passed.
18. That the member is not ineligible for the exemption because of a receipt of a retirement incentive.
19. 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.
20. Requires that the member must have attained normal retirement age at the time the compensation is earned to be eligible for the exemption.
21. Eliminates the existing requirement that the Superintendent, the county superintendent of schools, or the chief executive officer of a community college shall submit all documentation required by CalSTRS to substantiate the eligibility of the retired member for the exemption including, but not limited to, the resolution adopted pursuant to that subdivision.
22. Increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.
23. Beginning with the 2024-25 award year, exempts 1,000 Cal Grant applicants from demonstrating financial need if both of the following are met:
24. The applicant meets the applicable GPA requirement.
25. The applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in a teacher preparation program that is approved by the CTC upon completion of the applicant’s baccalaureate degree.

COMMENTS

1. Background

The sponsor contends that the current teacher shortage warrants changes to one of the hardest fought reforms in pension law achieved by the Brown Administration. For an analysis of the teacher shortage please see the Senate Education Committee’s policy analysis of this bill and the Assembly Public Employment and Retirement Committee’s analysis of AB 1877 (Fong) from 2022, which also sought to establish an exemption from CalSTRS’ postretirement employment compensation limitation. Both documents report on the disruptions to the teaching pipeline and teacher burnout from the COVID-19 pandemic. The latter also has a substantive analysis of the importance of the postretirement employment limitations to pension plan stability. There are many solutions to the teacher shortage as outlined in those analyses; a wholesale revision to important protections for pension fund stability is not likely one of them.

It is easy to forget that PEPRA came about because the 2008 financial crisis posed a significant challenge to the stability of California’s public retirement systems. As asset values plummeted, fund withdrawals from newly unemployed members increased, pension liabilities from previously granted retroactive benefits soared, and liquidity issues complicated pension administrators’ response, the state’s pension funds required substantial support and substantial reforms (enacted by PEPRA and related legislation) to overcome the short-term crisis and ensure the long-term viability of the plans to continue to meet their responsibilities to the people who dedicate their lives to serving the people of California.

One important element of the reform was to place limits on postretirement employment and to curtail double dipping, the practice of receiving both a retirement benefit and a paycheck for doing the same work for the same employer or group of employers covered by the same pension system. Double dipping by public employees engenders deep misgivings if not outright animosity from the general public (especially in difficult economic times, which most economic prognosticators predict are in our near future) and substantially erodes public support for the continuation of public defined benefit pension plans because of what some disparagingly call pension envy but others see as a rationale reconsideration of the societal value of plans whose trust funds are often eyed (and occasionally abused) by others seeking funding or policy solutions to other, non-pension related concerns, knowing that any economic fallout will eventually be borne by taxpayers.

Public perception alone does not sufficiently explain pension policymakers’ concern with double dipping. When retirees can receive their pension and continue to work in their job position while earning their salary, they are unlikely to leave employment, perhaps the very aspect of double dipping the sponsor hopes to encourage to resolve a short-term solution to the teacher shortage. However, in the long term, double dipping harms pension funds since employees who “retire-in-place” stop making contributions to the pension plan, withdraw funds from the plan, and prevent from moving into those positions the next generation of teachers who otherwise make contributions to the plan that the fund could have invested for 20-40 years before the new members draw their pensions. From the perspective of the plan’s financial health, double dipping results in less capital inflow (with fewer opportunities to produce investment return), more capital outflow (with greater need to sell assets at inopportune moments), and reduced prospects for future capital inflow and long-term investment opportunities. We appreciate the challenge of the teacher shortage the sponsor seeks to fix, but we recall an old proverb that even when one is starving, one most save some seeds to grow the next crop.

The bill’s supporters may argue that there is no issue here because the schools want as many teachers as they can get; retirees and newcomers. Lack of supply is the problem they seek to solve. But, like all supply issues, that is a short-term problem that will eventually balance out. Scarcity breeds demand. Demand attracts rewards. However, long-term harm to the pension fund is not easily addressed. Like inflation, it sneaks up until it becomes obvious and solutions are particularly painful. Moreover, it is highly unlikely that a revision to the postemployment rules can be confined to public teachers. The bill already includes certificated administrators. Surely, classified staff will be making their case for parity. As they belong to CalPERS, that system too will face demands to permit double dipping. The truth is that this has already been happening through the Governor’s COVID-19 pandemic executive orders. The rationale provided then was the emergency warranted the temporary suspension of the policy. Plus ça change, plus c’est la même chose. However, exactly because substantial cyclical macroeconomic crises in the economy can materially affect the plan’s asset and liability valuations and its investment return assumptions (both of which then transmute into significant increased pressures on the General Fund), it is critical to buttress the funds now not weaken their foundations.

CalSTRS’ postretirement compensation limitation is an elegant solution to the problem of pension double dipping that PEPRA sought to prohibit. It is partly for that reason that PEPRA exempts CalSTRS members who are subject to the limitation from PEPRA’s postemployment rules. If they are not subject to the limitation, then they are subject to PEPRA’s corresponding rules. The limitation allows teachers to work but caps what they can earn without a reduction to their pension to one-half the median final compensation of the prior year’s retiring class. It provides a reasonable compromise among the competing interests of preventing double dipping, providing school employers additional workforce relief, and giving retirees an option to continue to work part-time while they transition into full-retirement. The 180-day rule (in which the limitation is zero dollars and thus, retirees face a reduction in their pension for every dollar earned in a CalSTRS-covered position for the first six months after they retire) is an essential tool in preventing intentional double dipping. It exists, both in PEPRA and at CalSTRS, to curtail weekend transitions from active employment to retiring in place and also because that period provides a retiree the ability to adapt to postemployment status and make objective decisions based on their needs as to whether they truly want to return to work.

In arguing for this bill, supporters have made much of the education policy imperative to retain and recruit teachers. Meanwhile, they have paid little attention to the pension policy imperative of providing teachers and all pensioners the opportunity to stop work after a long and hard career and simply enjoy their remaining years in activities of their choosing, whether providing childcare for their grandchildren, traveling, or participating in activities to support their local community. Como dijo Don Cheto en su programa del 24 de abril, sobre las personas que ha pasado todo la vida trabajando durisimo, está bien relajarse en el rancho, asar los chiles, y platicar con los pajaros porque terminar de trabar no debería ser mortal. It takes many people some time to learn that lesson. The 180-day rule helps break the connection to the workplace and gives retirees the ability to reassess their priorities without the pressure or temptation of continuing to work. If they wish to return to the classroom and if their districts can demonstrate a critical need for them, current law has a straightforward process to permit that.

Committee Concerns

In the rush to address a systemic teacher shortage, the committee has concerns that this bill potentially tramples on critical pension policy to protect the long- term viability of CalSTRS and other funds should similar proposals promote changes in PEPRA’s post-employment rules. The committee urges care in balancing out these difficult policy goals and encourages further dialogue between the author, stakeholder groups, and committee staff to establish guardrails to mitigate unintended consequences this bill may cause. To address these concerns the committee recommends to the author and sponsor the following:

• Continue to meet with stakeholder groups, particularly CTA and CalSTRS, to work through their concerns regarding both technical and substantive details of the proposal. In particular:
  • Limit the exemption solely to those returning to fulfill a critical need in a non-managerial certificated position.
  • Require employers to receive approval recognizing demonstrable need for the exemption from the exclusive representative of members who would normally hold such a role.
  • Limiting the use of the exemption to one school year per certification, and when paired with removing the sunset date, prohibiting a returned member from utilizing the exemption more than one time.
• Adjust, do not eliminate, the compensation cap. A complete elimination is more likely to spark pure pension double dipping by incentivizing active teachers to retiree to collect their pension and salary.
• Require employers to continue to make pension contributions to CalSTRS (both the employer contribution and the value of non-retired employee contribution) for the filled position.
• Target the exception only to retirees who agree to serve in at-risk/ at-promise districts, where critical needs are most pressing to get experienced teachers to schools and communities most in need and perhaps help excuse the stress on pension policy.
• Keep the 180-day rule. Districts can get an exemption for critical needs but the rule should stay for critical pension policy purposes.

2. Need for this bill?

According to the author:

“California is facing a devastating teacher short-age, exacerbated by the COVID-19 pandemic and the Great Resignation. The California Commission on Teacher Credentialing (CTC) reports over 10,000 teacher vacancies across California during the 2021–22 school year. CalSTRS reports that teacher retirements in-creased by 26 percent in 2020. There are not enough individuals entering the teaching profession to counteract the number of teachers leaving the workforce. Additionally, teacher demand is increasing. According to the Learning Policy Institute, in order to ensure a successful Transitional Kindergarten (TK) rollout, between 11.9K and 15.6K additional lead teachers, and between 16K and 19.7K assistant TK teachers are needed by 2025–26. This bill seeks to address the short term issue of filling critical positions, as well as building out a pipeline to build up our teacher workforce.”

3. Senate Labor, Public Employment and Retirement Committee Amendments

In addition to Senate Education Committee amendments described in Section 4. below (which the author agreed to take when that committee heard the bill), SLPER Committee recommends the following amendments to address concerns from this committee and from key stakeholders as discussed above:

• Substantive amendments as described above in Section 1. Background under Committee Concerns.
• Technical amendments recommended by CalSTRS.
• A technical amendment to correct the citation to the proper referent in ED § 24214.5 (b)(3)…
  • (3) That the member is not ineligible for application of this subdivision pursuant to paragraph (3) of subdivision (c). (d).
• An amendment to clarify the application of Government Code § 7522.56 (h) which exempts CalSTRS members who are subject to ED § 24214 (CalSTRS Compensation Limitation) or ED § 24214.5 (the 180-day Rule) from PEPRA’s post-retirement work rules.

Since this bill creates a new ED § 24214.1 to exempt retired educators from the sections referenced in GC § 7522.56 (h) (cf. exempting within §24214), it is unclear whether the retired educators are subject to those sections. If not, then one could argue they become subject to PEPRA’s post-retirement work rules.

4. Senate Education Committee Amendments

As currently written, this bill exempts 1,000 Cal Grant applicants from demonstrating financial need if the applicant files a statement of intent with the California Student Aid Commission stating that the applicant agrees to enroll in an approved teacher preparation program after completing their baccalaureate degree.  Education Committee staff noted that only requiring a statement of intent to enroll in a teacher preparation program gives little assurances that the teacher pipeline will increase.  The author accepted the following amendment in the Senate Committee on Education which, due to time constraints, will be taken in this Committee:

• Specify that a Cal Grant recipient (pursuant to the bill’s provisions) who does not enroll in a teacher preparation program within one academic year of earning their baccalaureate degree shall agree to repay the state the total Cal Grant funds received.

5. Proponent Arguments

According to the sponsor:

“These provisions will enable LEAs to quickly and efficiently fill vacant positions with experienced and qualified educators, thereby ensuring that our students have access to the resources they need to thrive. The bill is consistent with previous efforts that provided greater flexibility for CalSTRS retired members to assist with pressing staffing shortages and have proven to be effective tools in addressing these shortages in the past.”

6. Opponent Arguments:

None received

7. Dual Referral:

The Senate Rules Committee referred this bill to the Senate Education and to the Senate Labor, Public Employment and Retirement Committee.

8. Prior Legislation:

AB 1877 (Fong, 2022) would have exempted retired teachers who return to the classroom to teach from the postretirement compensation limit under the Teachers’ Retirement Law (TRL), administered by the California State Teachers’ Retirement System (CalSTRS), among other provisions. The bill died in the Assembly Public Employment and Retirement Committee.

SUPPORT

California Superintendent of Public Instruction (Sponsor)

Association of California School Administrators
California Association of School Business Officials
California Association of Suburban School Districts
California Charter Schools Association
California School Boards Association
Central Valley Education Coalition
Los Angeles Unified School District
Orange County Department of Education
Riverside County Office of Education
San Diego Unified School District

OPPOSITION

None received

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SENATE COMMITTEE ON EDUCATION

Senator Josh Newman, Chair

2023 - 2024 Regular

Bill No: SB 765 Hearing Date: April 19, 2023

Subject: Teachers: retired teachers: teacher preparation: student financial aid.

NOTE: This bill has been referred to the Committees on Education and Labor, Public Employment, and Retirement. A "do pass" motion should include referral to the Committee on Labor, Public Employment, and Retirement.

SUMMARY

This bill would: (1) exempt a retiree teacher returning to work to fulfill a critical need in a teaching position from postretirement compensation limits, (2) increase the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate, and (3) annually exempt 1,000 Cal Grant awardees from demonstrating financial need if they agree to enroll in a teacher preparation program after earning their baccalaureate degree.

BACKGROUND

Existing law:

1. Prohibits a retired person from being employed for a period of 180 days following the date of retirement, unless the employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting. (Government Code Section 7522.56)
2. Limits the per-school year cash compensation to a retired member for performance of retired member activities, excluding specified reimbursements 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. (Education Code (EC) Section 24214)
3. Requires a superintendent, a county superintendent of schools, or a chief executive officer of a community college to submit all documentation required by the State Teachers’ Retirement System (STRS) to substantiate the eligibility of a retired member for applying the cash compensation summarized in #2 above. (EC Section 24214.5)
4. For the 2021-22 fiscal year, appropriates $350 million General Fund to the Commission on Teacher Credentialing (CTC) for the Teacher Residency Grant Program to support teacher residency programs that recruit and support the preparation of teachers. The funding is available for encumbrance until June 30, 2026 and grant allocations can be for up to $25,000 per teacher candidate, matched by the grant recipient at a rate of 80 percent of the grant amount received. (EC Section 44415.5)
5. Establishes the Cal Grant program, administered by the California Student Aid

Commission (CSAC), to provide grants to financially needy students to attend a college or university. The Cal Grant programs include both the entitlement and the competitive Cal Grant awards. Supplemental award programs have been created for students with one or more dependent children and former and current foster youth to assist with non-tuition costs. The program consists of the Cal Grant A, Cal Grant B, and Cal Grant C programs, and eligibility is based upon financial need, grade point average (GPA), California residency and other criteria. Maximum award amounts for California State University (CSU) and University of California (UC) are established in the annual Budget Act and have traditionally covered all systemwide tuition and fees.

(EC Section 69430 – 69433 and EC Section 69465, 69470 and 6945.5)

ANALYSIS

This bill:

1. Exempts the compensation earned by a member who retired from STRS from the postretirement compensation limitation if the member returns to perform retired member activities for an employer, excluding a community college district.
2. Requires an employer to submit all documentation required by STRS to substantiate the eligibility of the retired member for the exemption.
3. Prohibits a retired member from performing retired member activities until after the documentation has been received by STRS. The documentation shall include certification, under penalty of perjury, of the following:
4. The member is returning to fulfill a critical need in a teaching position.
5. The teaching 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 teaching position, and no qualified current active or inactive member was available to be appointed.
6. The appointing authority made a good faith effort to hire a retired member who reinstated to active membership for the teaching position at the same salary that was offered as first advertised.
7. 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 does not exceed the salary that was offered as first advertised.
8. The compensation paid for the teaching position is not less than the minimum, nor more than the maximum, paid by the employer to other employees performing comparable duties.
9. The teaching position vacancy occurred due to circumstances beyond the control of the employer. The termination of employment of the retired member with the employer is not the basis for the need to acquire the services of the retired member.
10. The member did not receive additional service credit or financial inducement to retire.
11. Specifies that the exemption shall commence on the date the retired member is appointed or assigned to the teaching position and shall end on June 30 of that fiscal year.
12. Defines “teaching position” to mean a position requiring certification qualifications authorized by the CTC or a position requiring administrative or supervisory credentials.
13. Specifies that the exemption shall remain in effect only until June 30, 2026.
14. Increases the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.
15. Beginning with the 2024-25 award year, exempts 1,000 Cal Grant applicants from demonstrating financial need if both of the following are met:
16. The applicant meets the applicable GPA requirement.
17. The applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in a teacher preparation program that is approved by the CTC upon completion of the applicant’s baccalaureate degree.

STAFF COMMENTS

1. Need for the bill. According to the author, “California is facing a devastating teacher short-age, exacerbated by the COVID-19 pandemic and the Great Resignation. The California Commission on Teacher Credentialing (CTC) reports over 10,000 teacher vacancies across California during the 2021–22 school year. CalSTRS reports that teacher retirements increased by 26 percent in 2020. There are not enough individuals entering the teaching profession to counteract the number of teachers leaving the workforce.

“Additionally, teacher demand is increasing. According to the Learning Policy Institute, in order to ensure a successful Transitional Kindergarten (TK) rollout, between 11,900 and 15,600 additional lead teachers, and between 16,000 and 19,700 assistant transitional kindergarten teachers are needed by 2025–26.

“This legislation will help bolster the California teacher pipeline.”

1. Already weak teaching pipeline further damaged by COVID-19 education disruptions. A March 2021 report by the Learning Policy Institute (LPI) raised concerns about the effects of the COVID-19 pandemic on the teacher shortage in California:
   1. Teacher shortages remain a critical problem. Most districts have found teachers to be in short supply, especially for math, science, special education, and bilingual education. Shortages are especially concerning as a return to in-person instruction will require even more teachers to accommodate physical distancing requirements. Most districts are filling hiring needs with teachers on substandard credentials and permits, reflecting a statewide trend of increasing reliance on underprepared teachers.
   2. Teacher pipeline problems are exacerbated by teacher testing policies and inadequate financial aid for completing preparation. Many districts attributed shortages to having a limited pool of fully credentialed applicants, with more than half reporting that testing requirements and lack of financial support for teacher education pose barriers to entry into teaching.
   3. Teacher workload and burnout are major concerns. The transition to online and hybrid learning models has had a steep learning curve and poses ongoing challenges that have been a primary contributor to some teachers’ decisions to retire earlier than previously planned. With district leaders estimating that teacher workloads have at least doubled, many were concerned that the stressors of managing the challenges of the pandemic on top of the challenges of an increased workload could lead to teacher burnout and increased turnover rates.
   4. Growing retirements and resignations further reduce supply. In some districts, retirements and resignations are contributing to shortages, while in others, these retirements and resignations offset the need for anticipated layoffs due to expected budget cuts this school year. District leaders anticipate higher retirement rates next year, which could exacerbate teacher shortages.
2. Teacher survey data. In a September 2022 survey of TK-12 teachers in California conducted by Hart Research Associates, aspiring and former teachers shared their suggested policy changes to develop a strategy for teacher retention and recruitment. This survey provided several insights on teacher preparation programs, teacher workload, and the financial costs of teacher preparation programs. Aspiring teachers recommended compensating student teachers to help alleviate financial stress at an important time in the teacher preparation process. Specifically the report noted:
   1. Aspiring teachers of color were more likely to feel less motivated to teach than their white counterparts, and through those discussions, a clear disparity emerged. The reasons they feel less motivated include heightened financial stress, low or no pay for time spent student-teaching, discouraging feedback, and the required teacher candidate assessments, which some express are racially biased. The testing and evaluation process required to enter the profession was cited as a significant reason for why future teachers of colors became less motivated.
   2. The cost of tuition and assessments is a major financial burden and source of stress for these aspiring teachers in California. Many report that they specifically chose the institution they attended based on tuition costs and the availability of scholarships, grants, and financial aid. Several indicated that, had they not had financial support from a spouse or partner or received some form of financial assistance or a scholarship, they likely would not have pursued a career in teaching.
   3. Compensating student teachers was suggested by a significant number of the aspiring teachers and is viewed as a very important policy change that will help alleviate financial stress at an important time in the teacher preparation process.
3. Recently expired executive orders sought to address education staffing shortages via substitute and retired teachers. On January 11, 2022, Governor Gavin Newsom released Executive Order N-3-22 to provide temporary administrative and staffing flexibilities to assist schools in maintaining operations with qualified staff and keep students in learning environments with strong COVID‑19 safety measures.

The following were authorized to local education agencies (LEAs) that made a written finding, signed by the LEA’s superintendent or designee and retained for public access upon request, that temporary staffing flexibility would support maintaining in-person instruction through March 31, 2022:

• 1. Allow LEAs to issue 30-day emergency substitute credentials without regard to whether the recipient has a pending credential or permit application, provided candidates have an undergraduate degree from a regionally accredited college or university and pass a criminal background check.
  2. Lengthen the duration for which substitute teachers can be assigned to a single general education assignment from the current maximum of 60 days to the new limit of 120 days.
  3. Permit student teachers to serve as teachers without the requirement that the student teacher be under the direct supervision of a certificated teacher in a classroom for purposes of calculating a school district’s average daily attendance for apportionment for each day, or portion of a day.
  4. Continue existing financial incentives for retiree teachers. These incentives include suspension of certain post-retirement compensation limitations and suspension of the required 180-day service break — a suspension that applies to classified employees as well.

This bill includes substantially similar financial incentives for retiree teachers related to post-retirement compensation limits and the 180-day service break requirement through June 30, 2026.

1. Teacher Residency Grant Program overview and initial evaluation. The 2021-22 State Budget appropriates $350 million over a five-year period for Teacher Residency Programs including Capacity, Expansion, and Implementation. Per the authorizing legislation, Teacher Residency Program grants are available to LEAs to create or expand residency programs that partner with one or more CTC-approved teacher preparation programs offered by a higher education institution. While in the program, a prospective teacher teaches at least one-half time alongside a teacher of record, who is designated as the experienced mentor teacher, for at least one full school year while engaging in initial preparation coursework.

In spring of 2021, WestEd collected data through the formative evaluation of the grant program in order to help understand the extent to which grantee programs were building toward financial sustainability within the context of their one-time funding sources. This evaluation found that grantee programs have made progress towards key outcomes in the following ways:

• 1. Residencies are supporting the development of a more diverse teaching workforce.
  2. Residents intend to stay and teach in their residency LEAs.
  3. Residents, mentor teachers, and partnership team members value their residency programs.
  4. Residents and mentor teachers highlight the importance of residencies’ rich yearlong clinical experience.

The evaluation also noted that the upfront resources to design and launch residency partnerships and provide early cohorts of residents with adequate financial support can be substantial. The following challenges were identified:

• • • 1. The majority of residents report experiencing financial hardships during their residency year, and residents of color are disproportionately impacted.
      2. Most residency programs are offering district-based employment opportunities to residents (such as having them serve as substitute teachers, paraprofessionals, or tutors), but fewer than half of residents are participating in these opportunities.
      3. Most programs are not yet broadening their funding sources and strategies to enable financial sustainability beyond the grant program.
      4. Many programs could strengthen their partnerships with partner LEAs and build their internal capacity to support sustainability.

This bill would increase the maximum award amount for the Teacher Residency Grant Program to $40,000 per teacher candidate.

1. Cal Grant Program overview. The Cal Grant program, the state’s largest financial aid program, is intended to help students with financial need cover college costs. The program offers multiple types of Cal Grant awards. The amount of aid students receive depends on their award type and the segment of higher education they attend. Cal Grant A covers full systemwide tuition and fees at public universities and a fixed amount of tuition at private universities. Cal Grant B provides the same amount of tuition coverage as Cal Grant A in most cases, while also providing an “access award” for nontuition expenses such as food and housing.

To qualify for Cal Grants, students must meet certain income and asset criteria. These criteria vary by family size and are adjusted annually for inflation. For example, in the 2022-23 award year, a dependent student from a family of four must have an annual household income of under $116,800 to qualify for Cal Grant A or C, and under $61,400 to qualify for Cal Grant B. In most cases, students must also meet a GPA requirement. The specific GPA requirement varies by award type. Most award types require a minimum high school GPA of 2.0 or 3.0 or a minimum community college GPA of 2.0 or 2.4.

1. Recently adopted Cal Grant Program reforms to the award structure and eligibility criteria. The 2022 Budget Act included the Cal Grant Reform Act (Act) subject to state General Fund availability over the multi-year forecasts beginning in fiscal year 2024-25. The Act would be triggered in 2024-25 if the state determines in Spring 2024 that sufficient General Fund is available to support these actions over a multiyear period. If “triggered on” the budget agreement will provide $364.8 million General Fund in 2024-25, $348.8 million in 2025-26 and ongoing for this reform. The Act will restructure the Cal Grant program. Specifically, it would replace the existing award structure with a Cal Grant 2 award that provides nontuition coverage to California Community College (CCC) students and a Cal Grant 4 award that provides tuition coverage at all other segments.

The eligibility requirements of the new program would differ in several ways from those of the current program. First, whereas the current Cal Grant program has its own income and asset ceilings, the new program would have the same income ceilings as the federal Pell Grant program. Because of the change, the new income ceilings generally would be lower than the current ones. Second, whereas the current program provides only a limited number of awards to older students attending the universities, the new program would have no age or time-out-of-high-school restrictions at any segment. Third, whereas the current program requires students to have a minimum GPA, the new program will not have a GPA requirement for CCC students. These program changes are projected to lead to a net increase of 150,000 award offers in 2024-25, at an estimated additional net cost of $365 million. The Act also expresses legislative intent that UC and CSU use institutional aid to cover non-tuition costs for its students.

This bill includes yet another eligibility change to the Cal Grant Program—exempting 1,000 Cal Grant applicants from demonstrating financial need if the applicant files a statement of intent with the CSAC stating that the applicant agrees to enroll in an approved teacher preparation program after completing their baccalaureate degree. Staff notes that only requiring a statement of intent to enroll in a teacher preparation program gives little assurances that the teacher pipeline will increase. If it is the desire of the Committee to pass this measure, staff recommends amending the bill to specify that a Cal Grant recipient (pursuant to the bill’s provisions)  who does not enroll in a teacher preparation program within one academic year of earning their baccalaureate degree shall agree to repay the state the total Cal Grant funds received.

SUPPORT

State Superintendent of Public Instruction Tony Thurmond (sponsor)
Association of California School Administrators
California Association of School Business Officials 
California Association of Suburban School Districts
California Charter Schools Association
California School Boards Association
Central Valley Education Coalition
Los Angeles Unified School District
Orange County Department of Education
Riverside County Office of Education
San Diego Unified School District

OPPOSITION

None received

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