Bill Text: CA SB984 | 2013-2014 | Regular Session | Amended
Bill Title: State Teachers' Retirement System: Defined Benefit
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-04-21 - Set, first hearing. Failed passage in committee. (Ayes 2. Noes 2. Page 3216.) Reconsideration granted. [SB984 Detail]
Download: California-2013-SB984-Amended.html
BILL NUMBER: SB 984 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 19, 2014
INTRODUCED BY Senator Walters
FEBRUARY 11, 2014
An act to amend Section 22950 of the Education Code,
relating to state teachers' retirement. An act
relating to the State Teachers' Retirement System, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 984, as amended, Walters. State teachers' retirement
law. State Teachers' Retirement System: Defined
Benefit Program.
Existing law creates the Defined Benefit Program of the State
Teachers' Retirement System for the purpose of providing pension
benefits to members of the system. The Defined Benefit Program is
funded by employer and employee contributions as well as investment
returns and state appropriations.
This bill would appropriate $1,000,000,000 from the General Fund
for transfer to the Teachers' Retirement Fund to reduce the unfunded
liability of the Defined Benefit Program of the State Teachers'
Retirement System. The bill would also appropriate another
$1,000,000,000 to the Teachers' Retirement Fund if the Legislative
Analyst determines in the May Revision of the 2014-15 Budget that the
state has collected more than $1,000,000,000 in unanticipated
General Fund revenue. The bill would require the Governor to form a
working group of specified parties to propose long-term funding
solutions for the unfunded liability of the Defined Benefit Program
of the State Teachers' Retirement System and to report those
solutions to the Legislature by January 1, 2015. The bill would make
a statement of legislative findings and declarations.
This bill would declare that it is to take effect immediately as
an urgency statute.
The Teachers' Retirement Law (TRL) creates the Defined Benefit
Program of the State Teachers' Retirement Plan for the provision of
benefits to members of the plan, which is administered by the
Teachers' Retirement Board. The Defined Benefit Program is funded by
employer and employee contributions as well as investment returns and
state appropriations. Employee and employer contributions are
deposited in the Teachers' Retirement Fund, which is continuously
appropriated.
This bill would make a nonsubstantive change to TRL provisions
prescribing employer contributions and their deposit.
Vote: majority 2/3 . Appropriation:
no yes . Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares the
following:
(a) The Defined Benefit Program of the California State Teachers'
Retirement System (CalSTRS) currently has an unfunded liability of
seventy-one billion dollars ($71,000,000,000). CalSTRS indicates the
need for an additional four billion five hundred million dollars
($4,500,000,000) annually for the next 30 years to fund the Defined
Benefit Plan.
(b) CalSTRS indicates that without an infusion of money, the
unfunded liability increases at a rate of twenty-two million dollars
($22,000,000) per day, which is equivalent to almost one million
dollars ($1,000,000) per hour or two hundred fifty dollars ($250) per
second.
(c) The Legislature has held multiple informational hearings
regarding the unfunded liability of the Defined Benefit Program of
CalSTRS, but has yet to implement a solution.
(d) According to CalSTRS, if funding solutions are not provided,
the Defined Benefit Program will be bankrupt by 2043, leaving every
current and prospective teacher without a beneficial part of their
personal retirement plans.
(e) As the unfunded liability grows, the cost of extinguishing it
will severely affect funding for other government programs, such as
education, public safety, the court system, health care, and the
social safety net.
(f) Failing to fund the teacher's retirement program now places an
undue burden on California families, school districts, teachers, and
generations of future Californians.
(g) The California Teachers Association supports state action:
"Making sure educators have a secure retirement is critical to
attracting and keeping quality educators in the profession. The state
must ensure that the retirement commitments made to our hard-working
teachers and other education professionals are fulfilled."
(h) Governor Brown, Assembly Speaker John A. Pérez, Senate
President pro Tem Darrell Steinberg, Treasurer Bill Lockyer, and
Controller John Chiang have all publicly expressed concerns about
finding a funding solution.
(i) The Governor's budget stresses a need for action, but delays
that action until the 2015-16 fiscal year.
(j) At a time when the state is generating windfall revenues, it
makes sense to dedicate a portion of that revenue to mitigate the
ever-growing unfunded liability in the Defined Benefit Program of
CalSTRS and keep the promises made to teachers.
(k) Given the severity of the issue and the far-reaching impact
upon students, teachers, and all state government services,
addressing the impending bankruptcy of the Defined Benefit Program of
CalSTRS should be one of the state's top priorities now.
SEC. 2. The sum of two billion dollars
($2,000,000,000) is hereby appropriated to the Controller for
transfer to the Teachers' Retirement Fund according to the following
schedule:
(a) An appropriation of one billion dollars (1,000,000,000) is
hereby made from the General Fund to the Controller for transfer to
the Teachers' Retirement Fund to be applied for the purpose of
reducing the unfunded liability of the Defined Benefit Program of the
State Teachers' Retirement System.
(b) If the Legislative Analyst determines in the May Revision of
the 2014-15 Budget that the state has collected more than one billion
dollars ($1,000,000,000) in unanticipated General Fund revenue, an
appropriation of one billion dollars ($1,000,000,000) is hereby made
from the General Fund to the Controller for transfer to the Teachers'
Retirement Fund to be applied for the purpose of reducing the
unfunded liability of the Defined Benefit Program of the State
Teachers' Retirement System.
SEC. 3. (a) The Governor shall form a working
group to propose long-term funding solutions for the unfunded
liability of the Defined Benefit Program of the State Teachers'
Retirement System and to evaluate specifically the role of the state
as a direct contributor to the Teachers' Retirement Fund for the
purpose of supporting the Defined Benefit Program. The working group
shall include, but not be limited to, representatives from the
Governor's office, the Legislature, school districts, teachers, and
the California State Teachers' Retirement System.
(b) The solutions proposed by the working group described in
subdivision (a) shall be included in a report to be submitted to the
Legislature on or before January 1, 2015, so that the solutions may
be included in the proposed 2015-2016 Budget. The report shall be
submitted in compliance with Section 9795 of the Government Code.
SEC. 4. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order that the unfunded liability of the Defined Benefit
Program of the California State Teachers' Retirement System may be
addressed at the earliest possible time and to avoid the potentially
dire consequences to the Defined Benefit Programs as well as other
government programs that could be severely affected, it is necessary
that this act go into immediate effect.
SECTION 1. Section 22950 of the Education Code
is amended to read:
22950. (a) Employers shall contribute monthly to the system 8
percent of the creditable compensation upon which members'
contributions under this part are based.
(b) From the contributions required under subdivision (a), there
shall be deposited in the Teachers' Retirement Fund an amount,
determined by the board, that is not less than the amount, determined
in an actuarial valuation of the Defined Benefit Program pursuant to
Section 22311.5, necessary to finance the liabilities associated
with the benefits of the Defined Benefit Program over the funding
period adopted by the board, after accounting for the contributions
made pursuant to Sections 22901, 22951, and 22955.
(c) The amount of contributions required under subdivision (a)
that is not deposited in the Teachers' Retirement Fund pursuant to
subdivision (b) shall be deposited directly into the Teachers' Health
Benefits Fund, as established in Section 25930, and shall not be
deposited into or transferred from the Teachers' Retirement Fund.
(d) (1) Notwithstanding subdivisions (b) and (c), there may be
deposited into the Teachers' Retirement Program Development Fund, as
established in Section 22307.5, from the contributions required under
subdivision (a), an amount determined by the board, not to exceed
the limit specified in paragraph (2).
(2) The balance of deposits into the Teachers' Retirement Program
Development Fund, minus the subsequent transfer of funds, with
interest, into the Teachers' Retirement Fund pursuant to subdivision
(e) of Section 22307.5, shall not exceed 0.01 percent of the total of
the creditable compensation of the fiscal year ending in the
immediately preceding calendar year upon which member's contributions
to the Defined Benefit Program are based.
(3) The deposits described in this subdivision shall not be
deposited into, or transferred from, the Teachers' Retirement Fund.
