(1) Existing law, the Teachers' Retirement Law, establishes the State Teachers' Retirement System, administered by the Teachers' Retirement Board, 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. The Defined Benefit Program is funded by employer and employee contributions, as well as investment returns and state appropriations, which are deposited or credited to the Teachers' Retirement Fund.
Existing law increases employer and state contributions to the Defined Benefit Program according to prescribed schedules, to be operative until July 1, 2046, as specified, in accordance with certain notice requirements.
This bill would appropriate $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, for apportionment of specified amounts for required employer contributions for the 2019–20 and 2020–21 fiscal years, such that it will result in employers having to contribute 1.03 percentage points less than that amount set in those existing prescribed schedules in the 2019–20 fiscal year and 0.70 percentage point less in the 2020–21 fiscal year, as specified. The bill would require the remainder of the payment not committed for those purposes to be allocated to reduce the employers' share of the unfunded actuarial obligation determined by the board upon recommendation from its actuary.
(2) Existing law establishes a continuous appropriation from the General Fund to the Controller for transfer to the Teachers' Retirement Fund, in specified amounts, which equal a percentage of total creditable compensation of the fiscal year upon which members' contributions are based under the State Teachers' Retirement Law. For the 2017–18 fiscal year, and each fiscal year thereafter, existing law requires the board to increase or decrease certain percentages relating to the state appropriation to reflect the contribution required to eliminate the unfunded actuarial obligation of the system.
This bill would appropriate an additional amount identified for appropriation pursuant to the constitutionally prescribed equivalent to an amount described in the annual Budget Act, for unfunded liabilities, to supplement the state's appropriation to the Teachers' Retirement Fund, as prescribed. The bill would require the Department of Finance to provide to the Controller a schedule establishing the timing of specific transfers to be used for the purpose of reducing the state's unfunded actuarial obligation.
(3) The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) for the purpose of providing pension and benefits to state employees and their beneficiaries and prescribes the rights and duties of employers participating in the system. Under PERL, benefits are funded by investment income and employer and employee contributions, which are deposited into the Public Employees' Retirement Fund, a continuously appropriated trust fund administered by the system's board of administration. PERL prescribes methods for the calculation and payment of the state employer contribution for its employees who are PERS members. PERL provides for an annual adjustment of the state's contribution in the budget and quarterly appropriations to the Public Employees' Retirement Fund from the General Fund and other funds that are responsible for payment of the employer contribution.
The bill would appropriate $2,500,000,000 from the General Fund for fiscal year 2018–19 to be transferred to the Public Employees' Retirement Fund, for apportionment to prescribed state employee member categories, as directed by the Department of Finance, consistent with a schedule of payments that the Department of Finance would provide to the Controller to establish the timing of specific transfers. The bill would appropriate $265,000,000 from the General Fund for fiscal year 2020–21, $200,000,000 in General Fund moneys in fiscal year 2021–22, and $35,000,000 in General Fund moneys in fiscal year 2022–23, to be transferred to the Public Employees' Retirement Fund, consistent with a schedule of payments that the Department of Finance would provide to the Controller to establish the timing of specific transfers. The bill would require the latter supplemental payments to be apportioned among the state employee member categories, as directed by the Department of Finance, in proportion to the amount of estimated General Fund moneys appropriated to make required contributions to each state employee member category for the fiscal year that the supplemental payment is transferred. The bill would require that the supplemental payments be applied to unfunded state liabilities for enumerated state employee member categories.
The bill would additionally appropriate $904,000,000 from the General Fund for fiscal year 2018–19 to be transferred to the Public Employees' Retirement Fund, for payments relating to school employers' contributions and unfunded liabilities, consistent with a schedule of payments that the Department of Finance would provide to the Controller to establish the timing of specific transfers.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.