Employer And State Contributions - State Teachers' Retirement System - CA Education

Section § 22950

Every month, employers must contribute 8% of the salary on which teacher retirement savings are based. Part of this money is used to ensure there's enough in the Teachers' Retirement Fund to cover promised retirement benefits. Anything not needed for benefits goes into a health fund for teachers. Additionally, a small part might be used for developing the retirement program, but this amount can't exceed a tiny fraction of the total salaries paid in the previous year.

(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 taking into account the contributions made pursuant to Sections 22901, 22901.7, 22950.5, 22951, 22955, and 22955.1.

(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.

employer contributions Teachers' Retirement Fund creditable compensation Defined Benefit Program actuarial valuation funding period Teachers’ Health Benefits Fund contributions allocation liabilities financing Teachers’ Retirement Program Development Fund

(Amended by Stats. 2015, Ch. 123, Sec. 15. (AB 991) Effective January 1, 2016.)

Section § 22950.5

This law outlines how the contributions that members must make to the Defined Benefit Program will increase over time. Starting on July 1, 2014, the percentage of contributions went up each year until 2020, maxing out at 10.85%. From 2021 onwards, the board can adjust these contributions yearly to pay off remaining debts by 2046, as long as changes don’t exceed 1% per year and never go over 12% total. Adjustments are designed to eliminate unpaid obligations from before mid-2014. The section will become inactive in 2046, unless repealed earlier under specific conditions.

(a) Commencing July 1, 2014, the amount of contributions required under subdivision (a) of Section 22950 shall increase by the following percentages of the creditable compensation upon which members’ contributions under the Defined Benefit Program are based:

(1) On July 1, 2014, by 0.63 percent.

(2) On July 1, 2015, by 2.48 percent.

(3) On July 1, 2016, by 4.33 percent.

(4) On July 1, 2017, by 6.18 percent.

(5) On July 1, 2018, by 8.03 percent.

(6) On July 1, 2019, by 9.88 percent.

(7) On July 1, 2020, by 10.85 percent.

(b)

(1) For fiscal year 2021–22 and each fiscal year thereafter, the board shall increase or decrease the percentages paid specified in this section from the percentage paid during the prior fiscal year to reflect the contribution required to eliminate by June 30, 2046, the remaining unfunded actuarial obligation with respect to service credited to members before July 1, 2014, as determined by the board based upon a recommendation from its actuary.

(2) If a rate adjustment is required, the percentages authorized in paragraph (1) shall not change in any single fiscal year by more than 1.00 percent of the creditable compensation upon which members’ contributions to the Defined Benefit Program are based. The percentages described in subdivision (a) and as may be adjusted pursuant to this subdivision shall not exceed 12.00 percent of the creditable compensation upon which members’ contributions to the Defined Benefit Program are based, inclusive of the percentages identified in subdivision (a).

(3) The board shall not increase the rates in order to supplant the state’s obligation pursuant to Section 22955.1.

(c)

(1) Except as described in paragraph (2), this section shall become inoperative on July 1, 2046, and as of January 1, 2047, is repealed.

(2) Notwithstanding paragraph (1), on July 1 of the first fiscal year after a 30-day notice has been sent to the Joint Legislative Budget Committee and the Controller in compliance with subdivision (d) of Section 22957, this section shall become inoperative and, as of the following January 1, is repealed.

Defined Benefit Program contributions increase creditable compensation fiscal year adjustments unfunded actuarial obligation 2020 contribution cap member contributions annual rate change maximum 12 percent limit 2021 adjustments 2046 inoperative date obligation elimination annual percentage increase actuary recommendations State Board regulations

(Added by Stats. 2014, Ch. 47, Sec. 7. (AB 1469) Effective June 24, 2014. Section inoperative July 1, 2046, or sooner as prescribed in subd. (c). Repealed on or before January 1, 2047, by its own provisions. Adding action may become inoperative under conditions prescribed by Stats. 2014, Ch. 47, Sec. 13, subds. (b), (c), and (d).)

Section § 22950.6

This law section states that the California Legislature is allocating over two billion dollars from the state's General Fund for the 2018-19 fiscal year to support the Teachers’ Retirement Fund. This money is specifically used to reduce the financial contributions that school employers need to make to the pension fund over the next few years. For the fiscal years 2019-20, 2020-21, and 2021-22, the funds will help decrease what employers owe by specified percentages. Any leftover money from this allocation will be used to reduce the unfunded pension obligations that employers are responsible for.

The Legislature hereby appropriates two billion two hundred forty-six million dollars ($2,246,000,000) from the General Fund for the 2018–19 fiscal year to be transferred to the Teachers’ Retirement Fund for the Defined Benefit Program, consistent with the requirements of this section and at the direction of the Department of Finance. The Department of Finance shall provide the Controller a schedule establishing the timing of specific transfers to be used for these payments. The payment to the Teachers’ Retirement Fund shall be apportioned as follows:

(a) A dollar amount to pay in advance, on behalf of employers, part of the contributions required by employers for the 2019–20 fiscal year, such that it will result in employers having to contribute 1.03 percentage points less in the 2019–20 fiscal year than the percentage set by paragraph (6) of subdivision (a) of Section 22950.5.

(b) A dollar amount to pay in advance, on behalf of employers, part of the contributions required by employers for the 2020–21 fiscal year, such that it will result in employers having to contribute 2.95 percentage points less in the 2020–21 fiscal year than the percentage set by paragraph (7) of subdivision (a) of Section 22950.5.

(c) A dollar amount to pay in advance, on behalf of employers, part of the contributions required by employers for the 2021–22 fiscal year, such that it will result in employers having to contribute 2.18 percentage points less in the 2021–22 fiscal year than the percentage set by the board pursuant to subdivision (b) of Section 22950.5.

(d) Any remainder of the payment that has not been committed to the purposes specified in subdivisions (a), (b), and (c) shall be allocated to reduce the employers’ share of the unfunded actuarial obligation determined pursuant to Section 22950.5.

Teachers' Retirement Fund General Fund Defined Benefit Program Department of Finance employer contributions 2019-20 fiscal year 2020-21 fiscal year 2021-22 fiscal year unfunded actuarial obligation percentage points reduction employers' pension payments pre-paid contributions pension fund transfer Controller schedule advance payment for employers

(Amended by Stats. 2020, Ch. 16, Sec. 1. (AB 84) Effective June 29, 2020.)

Section § 22951

This law requires employers to pay a monthly contribution of 0.25% of the salary that counts towards a teacher's retirement into the Teachers’ Retirement Fund. This payment is in addition to any other contributions required.

In addition to any other contributions required by this part, employers shall, on account of liability for benefits pursuant to Section 22717, contribute monthly to the Teachers’ Retirement Fund 0.25 percent of the creditable compensation upon which members’ contributions under this part are based.

employer contributions Teachers’ Retirement Fund creditable compensation monthly contribution teacher retirement additional payment 0.25 percent retirement benefits funding Section 22717 liability member contributions education employee compensation retirement funding requirements teachers' benefits California education benefits employer liability

(Amended by Stats. 2000, Ch. 1025, Sec. 22. Effective January 1, 2001.)

Section § 22951.5

If the board finds that there isn't enough money in a specific account to cover a certain benefit payment, they can require employers to pay more money to make up the shortfall.

In addition to any other contributions required by this part, if the board determines that the Supplemental Benefit Maintenance Account will not have sufficient funds to make the maximum payment under this part pursuant to Section 24417, the board may increase the employer contribution rate as provided in Section 24416.

Supplemental Benefit Maintenance Account employer contribution rate maximum payment Section 24417 board authority fund sufficiency Section 24416 contribution requirements payment shortfall employer payments benefit maintenance funding increase

(Amended by Stats. 1998, Ch. 965, Sec. 117. Effective January 1, 1999.)

Section § 22954

This law sets up an annual transfer of funds from California's General Fund to a special account for teacher retirement benefits. Each year, 2.5% of qualifying teacher pay is transferred to support supplemental payments for retirees. However, starting from the 2008-09 fiscal year, this amount is capped at specific limits depending on the year. Transfers occur twice a year, in October and April, although specific exceptions were made for the 2010-11 fiscal year. The board can also use part of these funds for managing the supplemental payments. This law ensures continuous funding to help maintain retiree benefits as a secured commitment by the legislature.

(a) Notwithstanding Section 13340 of the Government Code, a continuous appropriation is hereby annually made from the General Fund to the Controller, pursuant to this section, for transfer to the Supplemental Benefit Maintenance Account in the Teachers’ Retirement Fund.

(b) Except as reduced pursuant to subdivision (c), the total amount of the appropriation for each year shall be equal to 2.5 percent of the total of the creditable compensation of the fiscal year ending in the immediately preceding calendar year upon which members’ contributions are based for purposes of funding the supplemental payments authorized by Section 24415, as reported annually to the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, and the Legislative Analyst pursuant to Section 22955.5.

(c) Beginning with the 2008–09 fiscal year, the appropriation in subdivision (b) shall be reduced in accordance with the following schedule:

(d) Transfers made to the Supplemental Benefit Maintenance Account, pursuant to subdivision (a) shall be made on October 15 and April 15 of each fiscal year with each payment to be 50 percent of the annual appropriation.

(e) Notwithstanding subdivision (d), for the 2010–11 fiscal year only, the transfer that would have been made pursuant to subdivision (d) on October 15, 2010, shall be made on November 15, 2010, and the transfer that would have been made pursuant to subdivision (d) on April 15, 2011, shall be made on March 14, 2011.

(f) The board may deduct from the annual appropriation made pursuant to this section an amount necessary for the administrative expenses of Section 24415.

(g) It is the intent of the Legislature in enacting this section to establish the supplemental payments pursuant to Section 24415 as vested benefits pursuant to a contractually enforceable promise to make annual contributions from the General Fund to the Supplemental Benefit Maintenance Account in the Teachers’ Retirement Fund in order to provide a continuous annual source of revenue for the purposes of making the supplemental payments under Section 24415.

continuous appropriation General Fund Supplemental Benefit Maintenance Account Teachers’ Retirement Fund creditable compensation supplemental payments fiscal year cap administrative expenses vested benefits contractually enforceable October 15 and April 15 transfers special exceptions 2010-11 annual contributions

(Amended by Stats. 2010, Ch. 713, Sec. 2. (AB 1624) Effective October 8, 2010.)

Section § 22954.1

The board is responsible for regularly forecasting whether current funds can continue supporting the purchasing power protection benefits from a specific account. If they predict there's enough money, they'll specify how much protection can be maintained. If they predict a shortfall, they'll indicate the sustainable levels. The board uses its powers under the California Constitution to make these decisions, which involve fiduciary responsibilities. They also decide how often and when to make new forecasts and must report their findings to certain government officials and committees, including any changes to benefits.

(a) Consistent with a process it establishes pursuant to subdivision (e), the board shall periodically adopt an actuarial projection regarding the ability of the system to continue providing, over a term to be established by the board, the purchasing power protection that is, at the time of the projection, being provided from the funds of the Supplemental Benefit Maintenance Account.

(b) If the board, in adopting the actuarial projection described in subdivision (a), determines that the annual transfers to the Supplemental Benefit Maintenance Account described in Section 22954, combined with all other anticipated sources of income to the account, are likely to be more than sufficient over the term established by the board to continue providing the purchasing power protection being provided at the time of the projection, it shall identify the maximum level of purchasing power protection benefits that it expects to be sustainable over that term from these contributions and other sources of income.

(c) If the board, in adopting the actuarial projection described in subdivision (a), determines that the annual transfers to the Supplemental Benefit Maintenance Account described in Section 22954, combined with all other anticipated sources of income to the account, are likely to be less than sufficient over the term established by the board to continue providing the purchasing power protection being provided at the time of the projection, it shall identify the maximum level of purchasing power protection benefits that it expects to be sustainable over that term from these contributions and other sources of income.

(d) It is the intent of the Legislature that the board shall adopt the projections and determinations described in subdivisions (a), (b), and (c) pursuant to its powers and responsibilities under Section 17 of Article XVI of the California Constitution, including, but not limited to, the board’s fiduciary responsibility to the system’s participants and their beneficiaries and the board’s sole and exclusive power to provide for actuarial services of the system. Therefore, in its adoption of the projections and determinations required in subdivisions (a), (b), and (c), the board may utilize any actuarial assumptions, methods, and standards that it deems appropriate to determine the level of purchasing power protection benefits that it expects can be sustained over the term established by the board by funds of the Supplemental Benefit Maintenance Account.

(e) The board shall determine the frequency and timing of its adoption of the actuarial projection described in subdivision (a) in regulations that it adopts pursuant to subdivision (e) of Section 24415.5.

(f) The board shall promptly provide to the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, the chairpersons of the Senate Committee on Public Employment and Retirement and the Assembly Committee on Public Employees, Retirement and Social Security, and the Legislative Analyst a summary of its actuarial projections and other determinations, as adopted pursuant to subdivisions (a), (b), and (c). The report shall include a description of any adjustments of benefits made pursuant to Section 24415.5.

actuarial projection purchasing power protection Supplemental Benefit Maintenance Account fiduciary responsibility forecasting funds benefit adjustments California Constitution financial sustainability government reporting financial management

(Amended by Stats. 2008, Ch. 751, Sec. 6. Effective September 30, 2008.)

Section § 22954.5

This law section involves allocating funds from the General Fund to support the Teachers’ Retirement Fund. Specifically, it outlines how much money should be transferred each year from 2009 to 2013 to the Supplemental Benefit Maintenance Account, totaling roughly $57 million annually. The Legislature wants these funds clearly noted in budget reports, reflecting their commitment to fulfill a debt obligation from a legal case involving teachers’ retirement. The funds are intended to cover interest on a past legal judgment related to teachers' retirement benefits.

(a) In addition to the amounts appropriated for transfer to the Supplemental Benefit Maintenance Account in Section 22954, there is hereby appropriated from the General Fund to the Controller for transfer to the Supplemental Benefit Maintenance Account in the Teachers’ Retirement Fund the following amounts in each of the specified fiscal years, as follows:

(b) It is the intent of the Legislature that the annual Budget Act for each of the fiscal years described in subdivision (a) display the amounts listed above in Item 1920-011-0001 as an informational item, along with other estimated amounts required to be transferred from the General Fund to the Teachers’ Retirement Fund pursuant to Sections 22954 and 22955. In the reports, calculations, and schedules that the system submits pursuant to Section 22955.5 for the purpose of informing the Department of Finance, the Legislature, and the Controller of the state’s appropriations pursuant to Sections 22954 and 22955 in each of the fiscal years listed in subdivision (a), the system shall also include the amounts appropriated for transfer to the Supplemental Benefit Maintenance Account in subdivision (a). Upon appropriation, the amounts listed in subdivision (a) may be transferred on or after July 1 in each of the fiscal years indicated.

(c) The appropriation in subdivision (a) fulfills the intent of the Legislature described in Chapter 59 of the Statutes of 2008 to pay interest on the judgment in the case of Teachers’ Retirement Board v. Genest and Chiang, Sacramento County Superior Court Case No. 03CS01503.

Supplemental Benefit Maintenance Account Teachers’ Retirement Fund General Fund transfer fiscal years 2009-2013 Budget Act Teachers’ Retirement Board v. Genest and Chiang interest payment Sacramento County Superior Court Case No. 03CS01503 financial appropriation judgment interest payment Chapter 59 of the Statutes of 2008

(Repealed and added by Stats. 2008, Ch. 751, Sec. 8. Effective September 30, 2008.)

Section § 22955

This law outlines how money is allocated from California's General Fund to the Teachers’ Retirement Fund. Each year, a portion of teachers' salaries, called 'creditable compensation,' is used to calculate how much the government contributes to this fund. Starting from July 1, 2003, they allocate 2.017% of this amount, and from October 1, 2003, an additional contribution is made at 0.524%. This second percentage can adjust up to 1.505% based on whether there's a funding shortage or extra costs. Adjustments can’t exceed 0.25% per year. The funds help cover any existing deficits or financial shortfalls. Importantly, this section ensures that teachers have a financially sound retirement system, and any changes are in line with past court decisions. These policies will stop in 2014 and restart no later than 2046, depending on budget conditions.

(a) Notwithstanding Section 13340 of the Government Code, commencing July 1, 2003, a continuous appropriation is hereby annually made from the General Fund to the Controller, pursuant to this section, for transfer to the Teachers’ Retirement Fund. The total amount of the appropriation for each year shall be equal to 2.017 percent of the total of the creditable compensation of the fiscal year ending in the immediately preceding calendar year upon which members’ contributions are based, as reported annually to the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, and the Legislative Analyst pursuant to Section 22955.5, and shall be divided into four equal payments. The payments shall be made on, or the following business day after, July 1, October 1, December 15, and April 15 of each fiscal year.

(b) Notwithstanding Section 13340 of the Government Code, commencing October 1, 2003, a continuous appropriation, in addition to the appropriation made by subdivision (a), is hereby annually made from the General Fund to the Controller for transfer to the Teachers’ Retirement Fund. The total amount of the appropriation for each year shall be equal to 0.524 percent of the total of the creditable compensation of the fiscal year ending in the immediately preceding calendar year upon which members’ contributions are based, as reported annually to the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, and the Legislative Analyst pursuant to Section 22955.5, and shall be divided into four equal quarterly payments. The percentage shall be adjusted to reflect the contribution required to fund the normal cost deficit or the unfunded obligation as determined by the board based upon a recommendation from its actuary. If a rate increase is required, the adjustment may be for no more than 0.25 percent per year and in no case may the transfer made pursuant to this subdivision exceed 1.505 percent of the total of the creditable compensation of the fiscal year ending in the immediately preceding calendar year upon which members’ contributions are based. At any time when there is neither an unfunded obligation nor a normal cost deficit, the percentage shall be reduced to zero. The funds transferred pursuant to this subdivision shall first be applied to eliminating on or before June 30, 2027, the unfunded actuarial liability of the fund identified in the actuarial valuation as of June 30, 1997.

(c) For the purposes of this section, the term “normal cost deficit” means the difference between the normal cost rate as determined in the actuarial valuation required by Section 22311 and the total of the member contribution rate required under Section 22901 and the employer contribution rate required under Section 22950, and shall exclude (1) the portion for unused sick leave service credit granted pursuant to Section 22717, and (2) the cost of benefit increases that occur after July 1, 1990. The contribution rates prescribed in Section 22901 and Section 22950 on July 1, 1990, shall be utilized to make the calculations. The normal cost deficit shall then be multiplied by the total of the creditable compensation upon which member contributions under this part are based to determine the dollar amount of the normal cost deficit for the year.

(d) Pursuant to Section 22001 and case law, members are entitled to a financially sound retirement system. It is the intent of the Legislature that this section shall provide the retirement fund stable and full funding over the long term.

(e) This section continues in effect but in a somewhat different form, fully performs, and does not in any way unreasonably impair, the contractual obligations determined by the court in California Teachers’ Association v. Cory, 155 Cal.App.3d 494.

(f) Subdivision (b) shall not be construed to be applicable to any unfunded liability resulting from any benefit increase or change in contribution rate under this part that occurs after July 1, 1990.

(g) The provisions of this section shall be construed and implemented to be in conformity with the judicial intent expressed by the court in California Teachers’ Association v. Cory, 155 Cal.App.3d 494.

(h) Subdivisions (a) through (g), inclusive, shall be inoperative on and after July 1, 2014, and shall become operative beginning the earlier of July 1, 2046, or July 1 of the first fiscal year after a 30-day notice has been sent to the Joint Legislative Budget Committee and the Controller in compliance with subdivision (d) of Section 22957.

Teachers’ Retirement Fund creditable compensation normal cost deficit unfunded obligation General Fund appropriation stable funding financially sound retirement California Teachers’ Association v. Cory actuarial valuation unfunded actuarial liability annual appropriation legislation intent contractual obligations normal cost rate financial shortfalls

(Amended by Stats. 2014, Ch. 47, Sec. 8. (AB 1469) Effective June 24, 2014. Section inoperative from July 1, 2014, until operation resumes on date prescribed in subd. (h) (July 1, 2046, or sooner). Amending action may become inoperative under conditions prescribed by Stats. 2014, Ch. 47, Sec. 13, subd. (b).)

Section § 22955.1

This law outlines how money is transferred from California’s General Fund to the Teachers’ Retirement Fund every year to ensure teachers' pensions are properly funded. Starting July 1, 2003, 2.017% of teachers' salary-related contributions are transferred, with payments divided evenly across the year. From July 1, 2014, additional increases were added in phases, with the possibility of further adjustments each year to cover any remaining pension shortfall. The law also outlines that adjustments can be made based on the fund's financial needs, but in 2020-2021, the set rate remained unchanged. This system aims to maintain a financially stable pension system for teachers. The law will stop being effective in 2046 unless an earlier change is triggered by specific conditions being met.

(b)

(1) Commencing July 1, 2014, the amount of the appropriation required under subdivision (a) shall increase by the following percentages of the creditable compensation upon which that appropriation is based:

(A) On July 1, 2014, by 1.437 percent.

(B) On July 1, 2015, by 2.874 percent.

(2) Except as provided in paragraph (3), for the 2017–18 fiscal year and each fiscal year thereafter, the board shall increase or decrease the percentage specified in this subdivision from the percentage paid during the prior fiscal year to reflect the contribution required to eliminate the remaining unfunded actuarial obligation, as determined by the board based upon a recommendation from its actuary. If a rate increase is required, the adjustment may be for no more than 0.50 percent per year of the total of the creditable compensation of the fiscal year ending in the immediately preceding calendar year upon which members’ contributions are based. At any time when there is not an unfunded actuarial obligation as determined by the board, the percentage specified in this subdivision shall be reduced to zero.

(3) For the 2020–21 fiscal year, the percentage specified in this subdivision shall be the percentage set by the board pursuant to paragraph (2) for the 2019–20 fiscal year, and the board shall not increase or decrease the percentage specified in this paragraph for the 2020–21 fiscal year. This paragraph does not prevent payments towards the unfunded actuarial obligation from being made from other sources of funding, including, but not limited to, other sources in the General Fund.

(c) Pursuant to Section 22001 and case law, members are entitled to a financially sound retirement system. It is the intent of the Legislature that this section shall provide the retirement fund stable and full funding over the long term.

(d) This section continues in effect but in a somewhat different form, fully performs, and does not in any way unreasonably impair, the contractual obligations determined by the court in California Teachers Association v. Cory (1984) 155 Cal.App.3d 494.

(e) Subdivision (b) shall not be construed to be applicable to any unfunded actuarial obligation resulting from any benefit increase or change in contribution rate under this part that occurs after July 1, 1990, except that state contributions made pursuant to subdivision (b) shall be allocated to reduce the unfunded actuarial obligation resulting from the benefits and contribution rates in effect as of July 1, 1990.

(f) The provisions of this section shall be construed and implemented to be in conformity with the judicial intent expressed by the court in California Teachers Association v. Cory (1984) 155 Cal.App.3d 494.

(g)

(1) Except as described in paragraph (2), this section shall become inoperative on July 1, 2046, and as of January 1, 2047, is repealed.

Teachers' Retirement Fund General Fund appropriation creditable compensation pension funding retirement system unfunded actuarial obligation financially sound retirement system pension shortfall fixed percentage transfer funding stability annual payments court decision compliance Cory case operative date rate adjustments

(Amended by Stats. 2020, Ch. 16, Sec. 2. (AB 84) Effective June 29, 2020. Section inoperative July 1, 2046, or sooner as prescribed in subd. (g). Repealed on or before January 1, 2047, by its own provisions.)

Section § 22955.2

This section of the law ensures that additional money is allocated to support the Teachers’ Retirement Fund beyond what's normally required. It specifies that the extra funding is meant to help pay off the state's existing unfunded pension obligations to teachers. The Department of Finance is responsible for deciding when and how these funds are transferred, and this payment is considered an additional obligation of the state under specific constitutional rules.

(a) In addition to the appropriation required pursuant to Section 22955.1, the Legislature hereby appropriates the amount identified for appropriation pursuant to subclause (IV) of clause (ii) of subparagraph (B) of paragraph (1) of subdivision (c) of Section 20 of Article XVI of the California Constitution equivalent to the amount described in paragraph (3) of subdivision (d) of Section 35.50 of the annual Budget Act to supplement the state’s appropriation to the Teachers’ Retirement Fund, consistent with the requirements of this section and at the direction of the Department of Finance. The Department of Finance shall provide to the Controller a schedule establishing the timing of specific transfers to be used for these purposes.

(b) The supplemental payment described in this section is for the state’s unfunded actuarial obligation determined pursuant to Section 22955.1 and is in excess of the current appropriation. Therefore, any amount transferred to a fund identified in subdivision (a) constitutes an obligation pursuant to subclause (IV) of clause (ii) of subparagraph (B) of paragraph (1) of subdivision (c) of Section 20 of Article XVI of the California Constitution.

Teachers' Retirement Fund unfunded actuarial obligation supplemental payment Section 22955.1 Department of Finance California Constitution Article XVI annual Budget Act state's pension obligations Controller financial appropriations legislative appropriation fund transfers budget allocation for education public employees pension retirement funding supplement

(Added by Stats. 2019, Ch. 33, Sec. 2. (SB 90) Effective June 27, 2019.)

Section § 22955.5

This law section explains that 'creditable compensation' refers to the money that members contribute to the Defined Benefit Program, which is used to calculate the state's financial obligations. Each year, between October 1st and 25th, a report is made on the total creditable compensation from the previous fiscal year and sent to several state officials. Any changes to this number must be communicated by April 15th. This final number determines the state's funding commitments for the upcoming fiscal year. Copies of these calculations and fund transfer schedules must be sent to state finance officials and the Controller by May 1st to guide financial distribution beginning July 1st.

(a) For purposes of Sections 22954, 22955, and 22955.1, “creditable compensation” shall include only creditable compensation for which member contributions are credited under the Defined Benefit Program.

(b) On or after October 1 and on or before October 25 of each year, beginning in 2008, the board shall calculate the total amount of creditable compensation for the fiscal year that ended on the immediately preceding June 30. For the purpose of informing the Department of Finance and the Legislature of the amount of the state’s appropriations pursuant to Sections 22954, 22955, and 22955.1 in the next fiscal year, the system shall immediately submit a report that includes this calculation to the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, and the Legislative Analyst.

(c) After submission of the report described in subdivision (b), on or before the April 15 after submission of the report described in subdivision (b), the system shall notify the Director of Finance, the Chairperson of the Joint Legislative Budget Committee, and the Legislative Analyst of any revisions in its calculation of the total amount of creditable compensation for the fiscal year that ended on the immediately preceding June 30.

(d) The last revised calculation submitted pursuant to subdivision (c) on or before April 15 of each year or, if no such revised calculation is submitted, the calculation in the report submitted pursuant to subdivision (b) shall be the calculation of creditable compensation upon which the state’s appropriations pursuant to Sections 22954, 22955, and 22955.1 will be based in the next fiscal year. On or after April 15 and on or before May 1 of each year, the system shall submit to the Controller a copy of this calculation, along with a requested schedule of transfers to be made pursuant to the appropriations in Sections 22954, 22955, and 22955.1 in the next fiscal year beginning on the next July 1. The system shall also provide a copy of this schedule to the Director of Finance and the Legislative Analyst.

creditable compensation Defined Benefit Program annual calculation fiscal year report financial obligations member contributions state appropriations October report April revision Controller submission schedule of transfers

(Amended by Stats. 2014, Ch. 47, Sec. 10. (AB 1469) Effective June 24, 2014. Amending action may become inoperative under conditions prescribed by Stats. 2014, Ch. 47, Sec. 13, subd. (b).)

Section § 22956

This section explains that any contributions made by employers and the state to fund retirement benefits under a specific pension plan are not credited to individual members’ accounts. Instead, these contributions go into a general fund used to cover the overall cost of benefits. No individual member, including their spouses or beneficiaries, can claim these contributions directly.

Employer and state contributions made to the plan pursuant to this part for service credited under the Defined Benefit Program shall not be credited to the individual member accounts. These contributions shall be held in the reserves of the plan to finance the employers’ share of the cost of all benefits payable under the plan with respect to the Defined Benefit Program. Under no circumstances shall these employer and state contributions be allocated or awarded to individual members, their spouses, or beneficiaries.

employer contributions state contributions retirement benefits Defined Benefit Program member accounts plan reserves benefits funding general fund spouses and beneficiaries pension plan individual accounts cost of benefits allocation restrictions contribution allocation financial reserves

(Amended by Stats. 2000, Ch. 1025, Sec. 23. Effective January 1, 2001.)

Section § 22957

This section explains that the changes outlined in Section 22950.5 aren't considered new responsibilities or costs for schools and community colleges that need new funding or adjustments. If someone wants to challenge this, they'd need to file a lawsuit in Sacramento within 60 days. Each year by June, the Director of Finance checks whether a legal ruling requires more funding for schools or local governments due to these changes. If extra funding over $10 million is needed, the Director has the authority to decide this and must inform certain government bodies. This decision is made at the Director's discretion without needing other cost estimates first.

(a) The Legislature hereby finds and declares that the provisions of Section 22950.5 do not constitute a new functional responsibility for schools and community colleges pursuant to subdivision (c) of Section 41204, and do not require an adjustment pursuant to subdivision (b) of Section 8 of Article XVI of the California Constitution. The Legislature further finds and declares that the provisions of Section 22950.5 do not constitute a reimbursable mandate for school districts pursuant to Article XIII B of the California Constitution. Any challenge to these findings shall be filed in Sacramento Superior Court within 60 days of the effective date of the act adding this section. Any action so filed shall be consolidated with any action filed pursuant to Section 22958.

(b) On or before June 1 of each year, the Director of Finance shall determine if an adjustment to the constitutional minimum guarantee of funding for schools shall be made pursuant to a final, unappealable judicial decision holding that the increased contributions in Section 22950.5 constitute a new functional responsibility for schools and community colleges, pursuant to subdivision (c) of Section 41204, or any other final, unappealable, judicial decision holding that the increased contributions in Section 22950.5 require an adjustment in funding provided to schools and community colleges pursuant to subdivision (b) of Section 8 of Article XVI of the California Constitution. If the Director of Finance estimates that an adjustment will require increased General Fund expenditures of more than ten million dollars ($10,000,000), then the determination described in this subdivision shall be considered to have been met. This estimate shall be calculated solely within the discretion of the Director of Finance.

(c) On or before June 1 of each year, the Director of Finance shall determine if any amounts are needed to fund school districts or other local governments due to a final unappealable administrative or judicial decision holding that the increased contributions in Section 22950.5 constitute a reimbursable mandate pursuant to Article XIII B of the California Constitution. If the Director of Finance estimates that the cost of the mandate is more than ten million dollars ($10,000,000), then the determination described in this subdivision shall be considered to have been met. This estimate shall be solely within the discretion of the Director of Finance, and the director need not wait for a final cost estimate, nor any other administrative determination, from the Commission of State Mandates prior to making this determination.

(d) If, before June 1 of each year, the Director of Finance determines that the determinations described in subdivisions (b) or (c) have been met, then the Director of Finance shall immediately notify, in writing, the Joint Legislative Budget Committee and the Controller of this determination.

Director of Finance funding adjustment constitutional minimum guarantee reimbursable mandate Section 22950.5 judicial decision General Fund expenditures Sacramento Superior Court school districts community colleges new functional responsibility California Constitution Joint Legislative Budget Committee Controller

(Added by Stats. 2014, Ch. 47, Sec. 11. (AB 1469) Effective June 24, 2014. Adding action may become inoperative under conditions prescribed by Stats. 2014, Ch. 47, Sec. 13, subd. (b).)

Section § 22958

If someone wants to question the legality of a decision under the act that added this section, they must do so in a specific legal manner as laid out in another chapter of the legal code. This section gives all the involved parties the necessary approval to take such action. Any legal challenges must be filed in the Superior Court of Sacramento County.

(a) Any action or proceeding challenging the validity of any matter authorized by the act adding this section by any person or entity shall be brought in accordance with, and within the time specified in, Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure.

(b) This section provides the authorization for all entities referenced in the act adding this section as required by Section 860 of the Code of Civil Procedure.

challenge validity authorized matters legal proceedings Code of Civil Procedure Superior Court Sacramento Chapter 9 Section 860 entity authorization legal action timeframe county-specific court

(Added by Stats. 2014, Ch. 47, Sec. 12. (AB 1469) Effective June 24, 2014. Adding action may become inoperative under conditions prescribed by Stats. 2014, Ch. 47, Sec. 13, subd. (b).)

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