Chapter 1. General Provisions of California Education Code >> Division 1. >> Title 1. >> Part 13. >> Chapter 1.

This part may be known and cited as the E. Richard Barnes Act and together with Part 14 (commencing with Section 26000) shall be known as the Teachers' Retirement Law.

In order to provide a financially sound plan for the retirement, with adequate retirement allowances, of teachers in the public schools of this state, teachers in schools supported by this state, and other persons employed in connection with the schools, the State Teachers' Retirement System is established. The system is a unit of the Government Operations Agency.

The Legislature hereby finds and declares that on July 1, 1996, the State Teachers' Retirement System Cash Balance Plan was created and established to provide a retirement plan for persons employed by an employer offering the Cash Balance Plan, excluding community college districts, to perform creditable service for less than 50 percent of the full-time equivalent for the position or employed by a community college district offering the Cash Balance Plan to perform creditable service on a temporary basis pursuant to Section 87474, 87478, 87480, 87481, 87482, or 87482.5, or employed by an employer offering the Cash Balance Plan to perform creditable service as a substitute employee. The persons eligible for the Cash Balance Plan were excluded from mandatory membership in the State Teachers' Retirement System Defined Benefit Plan. Both plans are administered by the Teachers' Retirement Board. Prior to the creation and establishment of the Cash Balance Plan, the State Teachers' Retirement System Defined Benefit Plan had been identified simply as the State Teachers' Retirement System. As a result, the system was identified as both the administrative body and the retirement plan. The State Teachers' Retirement Law was amended to identify the retirement plan as the State Teachers' Retirement System Defined Benefit Plan in order to distinguish that plan from the Cash Balance Plan. Because both plans were intended to provide for the retirement of teachers and other persons employed in connection with public schools of this state and schools supported by this state, a merger of these two plans is now hereby made for the purpose of establishing a single retirement plan that shall be known and may be cited as the State Teachers' Retirement Plan consisting of the different benefit programs set forth in this part and Part 14 (commencing with Section 26000). This plan shall be administered by the Teachers' Retirement Board as set forth in this part and Part 14 (commencing with Section 26000). This part, together with Part 14 (commencing with Section 26000) shall be known and may be cited as the Teachers' Retirement Law.

The Legislature recognizes that the assets of the State Teachers' Retirement Plan with respect to the Defined Benefit Program are insufficient to meet the obligations of that program already accrued or to accrue in the future with respect to service credited to members of that program prior to July 1, 1972. Therefore, the Legislature declares the following policies with respect to the financing of the Defined Benefit Program of the State Teachers' Retirement Plan:
  (a) Members shall contribute a percentage of creditable compensation, unless otherwise specified in this part.
  (b) Employers shall contribute a percentage of the total creditable compensation on which member contributions are based.
  (c) The state shall contribute a sum certain for a given number of years for the purpose of payment of benefits under this part.

The Legislature finds and declares all of the following:
  (a) The current and projected assets of the State Teachers' Retirement Plan administered by the State Teachers' Retirement System with respect to the Defined Benefit Program are insufficient to meet the obligations of that program already accrued or projected to be accrued in the future with respect to service credited to members of that program before July 1, 2014.
  (b) Various legal rulings have determined that vested contractual rights of existing members generally cannot be changed without providing a comparable new advantage.
  (c) The improvement factor currently provided under the Defined Benefit Program pursuant to Sections 22140 and 22141, as those sections read before July 1, 2014, is not a contractually enforceable promise.
  (d) The Legislature hereby increases the contributions of active members by an amount not to exceed the normal cost of the improvement factor, providing a comparable new advantage by removing the statutory right to adjust the improvement factor, and thereby establishing the improvement factor as a contractually enforceable promise.
  (e) The statutory changes adopted by the act that added this section address the long-term funding needs of the Defined Benefit Program in a manner that allocates increased contributions among members of the system and school employers, consistent with the contractual rights of existing members.
  (f) The provisions of the act that added this section were based on various legal understandings and would not have been adopted without those understandings. The new obligations and benefits provided in Sections 7 and 9 of the act adding this section are contingent on those legal understandings being accurate. Thus if there is a final unappealable judicial decision that holds 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, and correspondingly require an adjustment pursuant to subdivision (b) of Section 8 of Article XVI of the California Constitution, or a final unappealable administrative or judicial decision that holds that the increased contributions in Section 22950.5 constitutes a reimbursable mandate pursuant to Article XIII B of the California Constitution, then it is the intent of the Legislature that the provisions added by the act adding this section shall cease to be effective.
  (g) It is in the public interest and a matter of urgency to authorize, and to implement as soon as possible, a remedy to the funding problem of the system. This remedy is necessary to ensure that funds will be available to support a pension system upon which hundreds of thousands of teachers rely and for which the current funding structure raises significant fiscal policy concerns.
  (h) It is of great importance to the state, the system, and school districts that there not be long term doubt about the feasibility of the solutions provided in the act that added this section. In order to fulfill the important objective of facilitating the system's and school districts' financial transactions the legality of the act that added this section must be quickly affirmed. The system, school districts, and teachers need to settle promptly all questions about the validity of each other's duties and obligations under this statute.
  (i) It is well-established that the terms and conditions of public retirement plans generally are established by statute or other comparable enactment rather than by contract. Statutes governing the terms of compensation and deferred compensation of public employees are thus significant financial obligations contemplated and covered by Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure.

The revision of the State Teachers' Retirement Law, enacted at the 1971 and 1972 Regular Sessions of the Legislature, shall not be construed to affect benefits of persons retired prior to July 1, 1972, or their beneficiaries, except as specifically provided.

If the provisions of this part are in conflict with the provisions of a memorandum of understanding reached pursuant to Chapter 12 (commencing with Section 3560) of Division 4 of Title 1 of the Government Code, the memorandum of understanding shall be controlling without further legislative action, except that if the provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.

The right of a person to a pension, retirement allowance, return of contributions, any optional benefit, or any other right accrued or accruing to any person under this part is exempt from taxation, including any inheritance tax, whether state, county, municipal, or district.

The right of a person to an annuity or a retirement allowance, to the return of contributions, the annuity, or retirement allowance itself, any optional benefit, any other right or benefit accrued or accruing to any person under this part, and the moneys in the fund created under this part are not subject to execution or any other process whatsoever, except to the extent permitted by Section 704.110 of the Code of Civil Procedure, and are unassignable except as specifically provided in this part.

The obligations of any member, or the member's beneficiaries, to this system and the Defined Benefit Program continue throughout membership, and thereafter until all of the obligations of this system and the Defined Benefit Program to or in respect to the member or the member's beneficiaries have been discharged.

Except as excluded by subdivision (d) of Sections 22661 and 23812, subdivision (e) of Section 24300.1, subdivision (d) of Section 25011.1, subdivision (c) of Section 25018.1, subdivision (d) of Section 26807.5, and subdivision (c) of Section 26906.5, a person who is the registered domestic partner of a member, as established pursuant to Section 297 or 299.2 of the Family Code, shall be treated in the same manner as a "spouse," as defined in Section 22171.

For the purposes of payments into or out of the retirement fund for adjustments of errors or omissions with respect to the Defined Benefit Program or the Defined Benefit Supplement Program, the period of limitation of actions shall be applied, except as provided in Sections 23302 and 24613, as follows:
  (a) No action may be commenced by or against the board, the system, or the plan more than three years after all obligations to or on behalf of the member, former member, beneficiary, or annuity beneficiary have been discharged.
  (b) If the system makes an error that results in incorrect payment to a member, former member, beneficiary, or annuity beneficiary, the system's right to commence recovery shall expire three years from the date the incorrect payment was made.
  (c) If an incorrect payment is made due to lack of information or inaccurate information regarding the eligibility of a member, former member, beneficiary, or annuity beneficiary to receive benefits under the Defined Benefit Program or Defined Benefit Supplement Program, the period of limitation shall commence with the discovery of the incorrect payment.
  (d) Notwithstanding any other provision of this section, if an incorrect payment has been made on the basis of fraud or intentional misrepresentation by a member, beneficiary, annuity beneficiary, or other party in relation to or on behalf of a member, beneficiary, or annuity beneficiary, the three-year period of limitation shall not be deemed to commence or to have commenced until the system discovers the incorrect payment.
  (e) The collection of overpayments under subdivisions (b), (c), and (d) shall be made pursuant to Section 24617.

If any provision of this part or the application thereof to any person or circumstance is held invalid, that invalidity shall not affect other provisions or applications of this part that can be given effect without the invalid provision or application, and to this end the provisions of this part are severable.

(a) It is unlawful for a person to do any of the following:
  (1) Make, or cause to be made, any knowingly false material statement or material representation, to knowingly fail to disclose a material fact, or to otherwise provide false information with the intent to use it, or allow it to be used, to obtain, receive, continue, increase, deny, or reduce any benefit administered by this system.
  (2) Present, or cause to be presented, any knowingly false material statement or material representation for the purpose of supporting or opposing an application for any benefit administered by this system.
  (3) Knowingly accept or obtain payment from this system with knowledge that the recipient is not entitled to the payment under the provisions of this part or Part 14 (commencing with Section 2600) and with the intent to retain the payment for personal use or benefit.
  (4) Knowingly aid, abet, solicit, or conspire with any person to do an act prohibited by this section.
  (b) For purposes of this section, "statement" includes, but is not limited to, any oral or written application for benefits, report of family relationship, report of injury or physical or mental limitation, hospital records, test results, physician reports, or other medical records, employment records, duty statements, reports of compensation, or any other evidence material to the determination of a person's initial or continued eligibility for a benefit or the amount of a benefit administered by this system.
  (c) A person who violates any provision of this section is punishable by imprisonment in a county jail not to exceed one year, or by a fine of not more than five thousand dollars ($5,000), or by both that imprisonment and fine.
  (d) A person violating any provision of this section may be required by the court in a criminal action to make restitution to this system, or to any other person determined by the court, for the amount of the benefit unlawfully obtained, unless the court finds that restitution, or a portion of it, is not in the interests of justice. Any restitution order imposed pursuant to this section shall be satisfied before any criminal fine imposed under this section may be collected.
  (e) The provisions provided by this section are cumulative and shall not be construed as restricting the application of any other law.

For an application or document requiring a signature, that signature shall be in a form prescribed by the system, including, but not limited to, on paper or made by electronic means. Notwithstanding any other law, an application or document made under this part that is signed and submitted by the person authorized to do so using technology and security measures prescribed by the system shall be deemed to be a signed and valid original document.