California Assembly Bill AB991 Introduced / Bill

 BILL NUMBER: AB 991INTRODUCED BILL TEXT INTRODUCED BY Committee on Public Employees, Retirement, and Social Security (Assembly Members Bonta (Chair), Cooley, Jones-Sawyer, O' Donnell, and Rendon) FEBRUARY 26, 2015 An act to amend Sections 22001.5, 22121, 22141, 22404, 22509, 22714, 22900, 22903, 22950, 23001, 24114, 24214, 24214.5, 26000, 26002.5, 26132, 26400, 26506, 26806, 26807.6, 26812, 26906.6, and 27100 of, and to add Section 26142.5 to, the Education Code, relating to state teachers' retirement. LEGISLATIVE COUNSEL'S DIGEST AB 991, as introduced, Committee on Public Employees, Retirement, and Social Security. State teachers' retirement. 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. STRS is governed by the Teachers' Retirement Board. Existing law defines credited service for these purposes as service from which required contributions have been paid. Existing law permits the board to amend the plan to dispense with payment for amounts less than $10. Existing law permits specified employers participating in STRS, if it is in the best interests of the school district or office of education, to grant an additional 2 years of service credit in order to encourage retirement, if specified conditions are met. Existing law authorizes specified payments made pursuant to the Teachers' Retirement Law, including disability retirement benefits and compensation for postretirement activities, to be reduced if they are in excess of specified limits. Existing law permits members retired for disability or service from STRS to perform member activities without reinstatement into the system if certain conditions are met. This bill would revise the definition of credited service for purposes of STRS to include service for which required contributions would have been made in absence of specified federal limits. The bill would revise the provisions authorizing the board to dispense with the payment for amounts less than $10 to be more specific in regard to the types of payments and to include adjustments to those payments. The bill would require, in regard to the grant of additional service credit to encourage retirement, to require as a condition of that grant that necessary documentation be provided to the retirement system within a specified time. The bill would make various technical changes to accurately cross-reference current law regarding contributions to fund the system. The bill would specify how reductions in payments are to be made in connection with the amount received in a particular month. The bill would make other technical, conforming changes, and corrections. Existing law establishes the Cash Balance Benefit Program, administered by the Teachers' Retirement Board, as a separate benefit program within the State Teachers' Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service. Existing law states legislative findings and declarations regarding the purpose of the Cash Balance Plan offered pursuant to the program. Existing law defines a participant for these purposes and prescribes the circumstances pursuant to which a person is permitted to participate in the program and how participation may be terminated and service be subject to the Defined Benefit Program offered by STRS. Existing law provides that the normal form of retirement benefit under the Cash Balance Benefit Program is a lump-sum payment. This bill would revise the statement of legislative findings regarding the Cash Balance Benefit Program to specify that it applies to a person working for an employer, except a community college district, that offers the plan, a person who is employed on temporary basis, as specified, by a community college district offering the plan, or a person employed as a substitute employee. The bill would revise the definition of a participant in the plan to require that he or she has not received a lump-sum retirement benefit, as specified. The bill would define the system's headquarters office for purposes of the program. The bill would revise the circumstances pursuant to which a person providing creditable service would be eligible to participate in the plan with reference to whether a person has elected an alternative retirement program, whether a participant's employment with a community college district precludes continued participation in the plan, and how a substitute employee may become and remain a member of the plan. The bill would prohibit payment of a lump-sum retirement benefit before 180 days have elapsed following termination of employment and would require automatic termination of an application for the retirement benefit based on the participant performing creditable service with 180 days of terminating employment, except as specified. The bill would specify how reductions in payments under the Cash Balance Benefit Program are to be made in connection with the amount received in a particular month. The bill would require, with regard to a participant retired for service, that the retired participant application for the retirement benefit be canceled automatically if he or she is anticipated to receive the retirement in a lump-sum payment and earns compensation for performing creditable service with 180 days after termination of employment. The bill would make other technical, conforming changes, and corrections in the Cash Balance Benefit Program. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 22001.5 of the Education Code is amended to read: 22001.5. 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. SEC. 2. Section 22121 of the Education Code is amended to read: 22121. (a) "Credited service" means service for which the required contributions have been paid  and service for which required contributions would have been paid in absence of the limit prescribed by Section 401(a)(17) of Title 26 of the United States Code as described in Section 22317.5  . (b) "Credited service" for members who are subject to the California Public Employees' Pension Reform Act of 2013 means service for which required contributions have been paid and service for which required contributions would have been paid in absence of the limit established by subdivision (c) of Section 22119.3. (c) "Credited service" for the limited purpose of determining eligibility for benefits pursuant to Section 22134.5, 24203.5, or 24203.6 also includes up to two-tenths of one year of service granted pursuant to Section 22717. SEC. 3. Section 22141 of the Education Code is amended to read: 22141. (a) Notwithstanding Section 22140, "improvement factor" means an increase of 2 percent in benefits provided under Sections 24408 and 24409 for each year commencing on September 1, 1981, and under Section 24410.5 for each year commencing September 1, 2001, and under Sections 24410.6 and  24110.7   24410.7  for each year commencing September 1, 2002. The  improvement  factor shall not be compounded nor shall it be applicable to annuities payable from the accumulated annuity deposit contributions or the accumulated tax-sheltered annuity contributions. The Legislature reserves the right to adjust the amount of the improvement factor up or down as the economic conditions dictate. No adjustments of the improvement factor shall reduce the monthly retirement allowance or benefit below that which would be payable to the recipient under this part had this section not been enacted. (b) Beginning July 1, 2014, the improvement factor shall vest for an active member in any calendar year in which active members paid increased member contributions pursuant to Section 22901.7. (c) If, for any reason, the increased employee contribution referenced in subdivision (b), and as required by subdivisions (a) and (b) of Section 22901.7, ceases to be legally required to be made pursuant to the act that added this subdivision, then the Legislature reserves the right to adjust the amount of the improvement factor up or down as the economic conditions dictate for all members who retire on or after January 1, 2014. No adjustments of the improvement factor shall reduce the monthly retirement allowance or benefit below that which would be payable to the recipient under this part had this section not been enacted. (d) For members who retired before the calendar year in which Section 22901.7 was added, the Legislature reserves the right to adjust the amount of the improvement factor up or down as the economic conditions dictate. No adjustments of the improvement factor shall reduce the monthly retirement allowance or benefit below that which would be payable to the recipient under this part had this section not been enacted. SEC. 4. Section 22404 of the Education Code is amended to read: 22404. (a) Notwithstanding any other provision of this part or Part 14 (commencing with Section 26000) to the contrary, the board may establish by plan amendment a specified amount or amounts, not to exceed ten dollars ($10), below which the system may dispense  with the   with:   (1)    The  processing of  benefit or other payments or   a benefit payment, an annuity payment, or any other payment, including adjustments to those payments, payable to a member, participant, or beneficiary.   (2)     The  collection of  benefit or other overpayments that result from adjustments made to the benefit or other amount   a benefit overpayment, annuity overpayment, or any other overpayments  paid to a member, participant, or beneficiary. (b) When the cumulative dollar amount associated with one or more  benefit or other adjustments   benefit payments or overpayments, annuity payments or overpayments, or other payments or overpayments  equals or exceeds the amount described in subdivision (a), that amount shall be paid to, or collected from, the member, participant, or beneficiary. That cumulative amount paid or collected shall not be credited with interest. SEC. 5. Section 22509 of the Education Code is amended to read: 22509. (a) Within 10 working days of the date of hire of an employee who has the right to make an election pursuant to Section 22508 or 22508.5, the employer shall inform the employee of the right to make an election and shall make available to the employee written information provided by each retirement system concerning the benefits provided under that retirement system to assist the employee in making an election. (b) Any election made pursuant to subdivision (a) of Section 22508 or subdivision (a) of Section 22508.5 shall be filed with the office of the State Teachers' Retirement System and a copy of the election shall be filed with the other public retirement system. Any election made pursuant to subdivision  (b)   (c)  of Section 22508 or subdivision (b) of Section 22508.5 shall be filed with the office of the Public Employees' Retirement System and a copy of the election shall be filed with the office of this system. (c) Any election made pursuant to Section 22508 or Section 22508.5 shall become effective as of the first day of employment in the position that qualified the employee to make an election. SEC. 6. Section 22714 of the Education Code is amended to read: 22714. (a) Whenever the governing board of a school district or a community college district or a county office of education, by formal action, determines pursuant to Section 44929 or 87488 that, because of impending curtailment of, or changes in, the manner of performing services, the best interests of the district or county office of education would be served by encouraging certificated employees or academic employees to retire for service and that the retirement will result in a net savings to the district or county office of education, an additional two years of service credit shall be granted under this part to a member of the Defined Benefit Program if all of the following conditions exist: (1) The member is credited with five or more years of service credit and retires for service under Chapter 27 (commencing with Section 24201) during a period of not more than 120 days or less than 60 days, commencing no sooner than the effective date of the formal action of the employer that shall specify the period.  (2) The documentation required by this section is received by the system no later than 30 calendar days after the last day of the window period established in paragraph (1).   (2)   (3   )  (A) The employer transfers to the retirement fund an amount determined by the Teachers' Retirement Board to equal the actuarial equivalent of the difference between the allowance the member receives after receipt of service credit pursuant to this section and the amount the member would have received without the service credit and an amount determined by the Teachers' Retirement Board to equal the actuarial equivalent of the difference between the purchasing power protection supplemental payment the member receives after receipt of service credit pursuant to this section and the amount the member would have received without the service credit. The payment for purchasing power shall be deposited in the Supplemental Benefit Maintenance Account established by Section 22400 and shall be subject to Section 24415. The transfer to the retirement fund shall be made in a manner and a time period, not to exceed eight years, that is acceptable to the Teachers' Retirement Board. The employer shall transfer the required amount for all eligible employees who retire pursuant to this section. (B) Regular interest shall be charged on the unpaid balance if the employer makes the transfer to the retirement fund in installments.  (3)   (4)  The employer transmits to the retirement fund the administrative costs incurred by the system in implementing this section, as determined by the Teachers' Retirement Board.  (4)   (5)  The employer has considered the availability of teachers or academic employees to fill the positions that would be vacated pursuant to this section. (b) (1) The school district shall demonstrate and certify to the county superintendent that the formal action taken would result in a net savings to the district. (2) The county superintendent shall certify to the Teachers' Retirement Board that the result specified in paragraph (1) can be demonstrated. The certification shall include, but not be limited to, the information specified in subdivision (c) of Section 14502.1. (3) The school district shall reimburse the county superintendent for all costs to the county superintendent that result from the certification. (c) (1) The county office of education shall demonstrate and certify to the Superintendent of Public Instruction that the formal action taken would result in a net savings to the county office of education. (2) The Superintendent of Public Instruction shall certify to the Teachers' Retirement Board that the result specified in paragraph (1) can be demonstrated. The certification shall include, but not be limited to, the information specified in subdivision (c) of Section 14502.1. (3) The Superintendent of Public Instruction may request reimbursement from the county office of education for all administrative costs that result from the certification. (d) (1) The community college district shall demonstrate and certify to the chancellor's office that the formal action taken would result in a net savings to the district. (2) The chancellor shall certify to the Teachers' Retirement Board that the result specified in paragraph (1) can be demonstrated. The certification shall include, but not be limited to, the information specified in subdivision (c) of Section 84040.5. (3) The chancellor may request reimbursement from the community college district for all administrative costs that result from the certification. (e) The opportunity to be granted service credit pursuant to this section shall be available to all members employed by the school district, community college district, or county office of education who meet the conditions set forth in this section. (f) The amount of service credit shall be two years. (g) Any member of the Defined Benefit Program who retires under this part for service under Chapter 27 (commencing with Section 24201) with service credit granted under this section and who subsequently reinstates shall forfeit the service credit granted under this section. (h) Any member of the Defined Benefit Program who retires under this part for service under Chapter 27 (commencing with Section 24201) with service credit granted under this section and who takes any job with the school district, community college district, or county office of education that granted the member the service credit less than five years after receiving the credit shall forfeit the ongoing benefit he or she receives from the additional service credit granted under this section. (i) This section does not apply to any member otherwise eligible if the member receives any unemployment insurance payments arising out of employment with an employer subject to this part within one year following the effective date of the formal action under subdivision (a), or if the member is not otherwise eligible to retire for service. SEC. 7. Section 22900 of the Education Code is amended to read: 22900. By accepting employment to perform creditable service, a person consents to make contributions pursuant to  Section 22901   Sections 22901 and 22901.7  for service and compensation credited under this part. SEC. 8. Section 22903 of the Education Code is amended to read: 22903. Notwithstanding Sections 22901,  22901.3, 22901.7,  22956, and 23000,  the state and  each school district, community college district, county board of education, and county superintendent of schools, may pick up, for the sole purpose of deferring taxes, as authorized by Section 414(h)(2) of the Internal Revenue Code of 1986 (26 U.S.C.A. Sec. 414(h)(2)) and Section 17501 of the Revenue and Taxation Code, all of the contributions required to be paid under this part by a member of the Defined Benefit Program, provided that the contributions are deducted from the creditable compensation of the member. SEC. 9. 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 taking into account the contributions made pursuant to Sections 22901,  22951, and 22955.   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. SEC. 10. Section 23001 of the Education Code is amended to read: 23001. Each county superintendent, district superintendent, chancellor of a community college district, or other employing agency that reports directly to the system shall draw requisitions for contributions required by Sections  22901 and 22950   22901, 22901.7, 22950, and 22950.5  in favor of the State Teachers' Retirement System, and the requisitions, when allowed and signed by the county auditor, shall constitute a warrant against the county treasury. The county superintendent, district superintendent, chancellor of a community college district, or other employing agency thereupon shall forward the warrants to the board in the system's headquarters office. The amounts received shall be deposited immediately in the State Treasury to the Teachers' Retirement Fund. SEC. 11. Section 24114 of the Education Code is amended to read: 24114. (a) A member receiving a disability retirement benefit under this part may be employed or self-employed in any capacity, notwithstanding Section 22132, but may not make contributions to the retirement fund with respect to the Defined Benefit Program or accrue service credit under this part based on earnings from any employment. (b) A member receiving a disability retirement benefit under this part may earn in any one calendar year up to the limitation specified in subdivision (c) without a reduction in his or her disability retirement allowance. (c) The limitation that shall apply to the earnings of a member receiving a disability retirement benefit under this part shall be fifteen thousand dollars ($15,000), in any one calendar year, adjusted annually by the board effective each January 1 by the amount of increase in the All Urban California Consumer Price Index using December 1989 as the base. (d) If a member receiving a disability retirement benefit under this part earns in excess of the limitation specified in subdivision (c) from all employment in any calendar year, notwithstanding Section 22132, his or her retirement allowance shall be reduced by the amount of the excess earnings. The amount of the reduction  may be equal to  in an individual month shall be no more than  the monthly allowance payable  but may   in that month, and the total amount of the reduction shall  not exceed the amount of the annual allowance payable under this part for the calendar year in which the excess compensation was earned. (e) The earnings limitation specified in this section does not apply to a member receiving a disability retirement benefit under this part who is participating in an approved rehabilitation program pursuant to Section 24111. (f) This section does not apply to a member receiving a disability retirement benefit under this part who began receiving a disability retirement allowance prior to October 16, 1992. SEC. 12. Section 24214 of the Education Code, as amended by Section 21 of Chapter 32 of the Statutes of 2014, is amended to read: 24214. (a) A member retired for service under this part may perform retired member activities, but the member shall not make contributions to the retirement fund or accrue service credit based on compensation earned from that service. The employer shall maintain accurate records of the earnings of the retired member and report those earnings monthly to the system and retired member as described in Section 22461. (b) If a member is retired for service under this part, the annualized rate of pay for retired member activities, performed by that member shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties. (c) A member retired for service under this part shall not be required to reinstate for performing retired member activities. (d) A member retired for service under this part may earn compensation for performing retired member activities in any one school year up to the limitation specified in subdivision (f) without a reduction in his or her retirement allowance. (e) The postretirement compensation limitation provisions set forth in this section are not applicable to compensation earned for the performance of retired member activities that are not wholly or in part supported by state, local, or federal funds. (f) (1) The limitation that shall apply to the compensation paid in cash to the retired member for performance of retired member activities, excluding reimbursements paid by an employer for expenses incurred by the member in which payment of the expenses by the member is substantiated, shall, in any one school year, be an amount calculated by the system each July 1 equal 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. (2) For written agreements pertaining to the performance of retired member activities entered into, extended, renewed, or amended on or after January 1, 2014, the limitation in paragraph (1) shall also apply to payments  made for the performance of retired member activities  , including, but not limited to, those for participation in a deferred compensation plan; to purchase an annuity contract, tax-deferred retirement plan, or insurance program; and for contributions to a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United States Code when the cost is covered by an employer. (g) If a member retired for service under this part earns compensation for performing retired member activities, in excess of the limitation specified in subdivision (f), and if that compensation is not exempt from that limitation under subdivision (e) or (h) or any other law, the member's retirement allowance shall be reduced by the amount of the excess compensation. The amount of the reduction  may be equal to   in an individual month shall be no more than  the monthly allowance  payable but   payable in that month, and the total amount of the reduction  shall not exceed the amount of the annual allowance payable under this part for the fiscal year in which the excess compensation was earned after any reduction made in accordance with subdivision (h) of Section 24214.5. (h) The limitation specified in this section is not applicable to compensation paid to a member retired for service under this part who has returned to work after the date of retirement: (1) As a trustee appointed by the Superintendent pursuant to Section 41320.1. (2) As a fiscal adviser or fiscal expert appointed by a county superintendent of schools pursuant to Article 2 (commencing with Section 42122) of Chapter 6 of Part 24 of Division 3 of Title 2. (3) As a receiver or trustee appointed by the state board pursuant to Article 3.1 (commencing with Section 52055.57) of Chapter 6.1 of Part 28 of Division 4 of Title 2. (4) As a special trustee appointed by the Board of Governors of the California Community Colleges pursuant to Section 84040. (i) The Superintendent, the Executive Director of the State Board of Education, the Chancellor of the California Community Colleges, or the county superintendent of schools exercising the exemption pursuant to subdivision (h) shall submit all documentation required by the system to substantiate the eligibility of the retired member for the exemption, including compliance with subdivisions (j) and (k). The documentation shall be received by the system prior to the retired member's performance of retired member activities. (j) Subdivision (h) shall not apply to a retired member who has not attained normal retirement age at the time the compensation is earned by the member, received additional service credit pursuant to Section 22714 or 22715, or received from any public employer any financial inducement to retire in the previous six months. For purposes of this section and Section 24214.5, "financial inducement to retire" includes, but is not 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 the public employer on or before the date the inducement is offered. The system shall liberally interpret this subdivision to further the Legislature's intent to make subdivision (h) inapplicable to members if the member received a financial incentive from any public employer to retire or otherwise terminate employment with the public employer. (k) The documentation required for subdivision (i) shall include certification of the following: (1) The 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 position and no qualified current active or inactive member was available to be appointed. (2) The appointing authority made a good faith effort to hire a retired member who reinstated to active membership for the position at the same salary that was offered as first advertised pursuant to paragraph (1). (3) 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 subject to this paragraph does not exceed the salary that was offered as first advertised pursuant to paragraph (1). (4) The salary paid shall be no greater than the salary offered to current active members for the appointed position. (  l  ) The amendments to this section enacted during the 1995-96 Regular Session shall be deemed to have become operative on July 1, 1996. (m) The amendments to this section enacted during the second year of the 2011-12 Regular Session shall apply to compensation paid during the 2012-13 and 2013-14 fiscal years. (n) The amendments to this section enacted during the first year of the 2013-14 Regular Session shall apply to compensation paid on or after January 1, 2014. (o) This section shall become inoperative on July 1, 2017, and, as of January 1, 2018, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2018, deletes or extends the dates on which it becomes inoperative and is repealed. SEC. 13. Section 24214 of the Education Code, as amended by Section 22 of Chapter 32 of the Statutes of 2014, is amended to read: 24214. (a) A member retired for service under this part may perform retired member activities, but the member shall not make contributions to the retirement fund or accrue service credit based on compensation earned from that service. The employer shall maintain accurate records of the earnings of the retired member and report those earnings monthly to the system and retired member as described in Section 22461. (b) If a member is retired for service under this part, the annualized rate of pay for retired member activities performed by that member shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties. (c) A member retired for service under this part shall not be required to reinstate for performing retired member activities. (d) A member retired for service under this part may earn compensation for performing retired member activities in any one school year up to the limitation specified in subdivision (f) without a reduction in his or her retirement allowance. (e) The postretirement compensation limitation provisions set forth in this section are not applicable to compensation earned for the performance of retired member activities that are not wholly or in part supported by state, local, or federal funds. (f) (1) The limitation that shall apply to the compensation paid in cash to the retired member for performance of retired member activities, excluding reimbursements paid by an employer for expenses incurred by the member in which payment of the expenses by the member is substantiated, shall, in any one school year, be an amount calculated by the system each July 1 equal 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. (2) For written agreements pertaining to the performance of retired member activities entered into, extended, renewed, or amended on or after January 1, 2014, the limitation in paragraph (1) shall also apply to payments  made for the performance of retired member activities  , including, but not limited to, those for participation in a deferred compensation plan; to purchase an annuity contract, tax-deferred retirement plan, or insurance program; and for contributions to a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United States Code when the cost is covered by an employer. (g) If a member retired for service under this part earns compensation for performing retired member activities, in excess of the limitation specified in subdivision (f), the member's retirement allowance shall be reduced by the amount of the excess compensation. The amount of the reduction  may be equal to   in an individual month shall be no more than  the monthly allowance payable  but may   in that month, and the total amount of the reduction shall  not exceed the amount of the annual allowance payable under this part for the fiscal year in which the excess compensation was earned after any reduction made in accordance with subdivision (h) of Section 24214.5. (h) The language of this section derived from the amendments to the section of this number added by Chapter 394 of the Statutes of 1995, enacted during the 1995-96 Regular Session, is deemed to have become operative on July 1, 1996. (i) This section shall become operative on July 1, 2017. SEC. 14. Section 24214.5 of the Education Code is amended to read: 24214.5. (a) (1) Notwithstanding subdivision (f) of Section 24214, the postretirement compensation limitation that shall apply to the compensation paid in cash to the retired member for performance of retired member activities, excluding reimbursements paid by an employer for expenses incurred by the member in which payment of the expenses by the member is substantiated, shall be zero dollars ($0) during the first 180 calendar days after the most recent retirement of a member retired for service under this part. (2) For written agreements pertaining to the performance of retired member activities entered into, extended, renewed, or amended on or after January 1, 2014, the limitation in paragraph (1) shall also apply to payments  made for the performance of retired member activities  , including, but not limited to, those for participation in a deferred compensation plan; to purchase an annuity contract, tax-deferred retirement plan, or insurance program; and for contributions to a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United States Code when the cost is covered by an employer. (b) If the retired member has attained normal retirement age at the time the compensation is earned, subdivision (a) shall not apply and Section 24214 shall apply if the appointment has been approved by the governing body of the employer in a public meeting, as reflected in a resolution adopted by the governing body of the employer prior to the performance of retired member activities, expressing its intent to seek an exemption from the limitation specified in subdivision (a). Approval of the appointment may not be placed on a consent calendar. Notwithstanding any other provision of Article 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code or any state or federal law incorporated by subdivision (k) of Section 6254 of the Government Code, the resolution shall be subject to disclosure by the entity adopting the resolution and the system. The resolution shall include the following specific information and findings: (1) The nature of the employment. (2) A finding that the appointment is necessary to fill a critically needed position before 180 calendar days have passed. (3) A finding that the member is not ineligible for application of this subdivision pursuant to subdivision (d). (4) A finding 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. (c) Subdivision (b) shall not apply to a retired member whose termination of employment with the employer is the basis for the need to acquire the services of the member. (d) Subdivision (b) shall not apply if the retired member received additional service credit pursuant to Section 22714 or 22715 or received from any public employer any financial inducement to retire. For purposes of this section, "financial inducement to retire" includes, but is not 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 participant 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. The system shall liberally interpret this subdivision to further the Legislature's intent to make subdivision (b) inapplicable to members if the member received a financial incentive from any public employer to retire or otherwise terminate employment with a public employer. (e) The Superintendent, the county superintendent of schools, or the chief executive officer of a community college shall submit all documentation required by the system to substantiate the eligibility of the retired member for application of subdivision (b), including, but not limited to, the resolution adopted pursuant to that subdivision. (f) The documentation required by this section shall be received by the system prior to the retired member's performance of retired member activities. (g) Within 30 calendar days after the receipt of all documentation required by the system pursuant to this section, the system shall inform the entity seeking application of the exemption specified in subdivision (b), and the retired member whether the compensation paid to the member will be subject to the limitation specified in subdivision (a). (h) If a member retired for service under this part earns compensation for performing retired member activities in excess of the limitation specified in subdivision (a), the member's retirement allowance shall be reduced by the amount of the excess compensation. The amount of the reduction  may be equal to  in an individual month shall be no more than  the monthly allowance  payable but may   payable in that month and the total amount of the reduction shall  not exceed the amount of the allowance payable during the first 180 calendar days, after a member retired for service under this part. (i) The amendments to this section enacted during the first year of the 2013-14 Regular Session shall apply to compensation paid on or after January 1, 2014. SEC. 15. Section 26000 of the Education Code is amended to read: 26000. The Legislature hereby finds and declares that the State Teachers' Retirement System Cash Balance Plan was created and established on July 1, 1996, to provide a retirement plan for persons employed  by an employer offering the Cash Balance Plan, excluding a community college district,  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. Because both plans were intended to provide for the retirement of teachers and other persons employed in connection with the 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 13 (commencing with Section 22000). The plan shall be administered by the Teachers' Retirement Board as set forth in this part and Part 13 (commencing with Section 22000). As a result of this merger, a Cash Balance Benefit Program will be provided under the State Teachers' Retirement Plan and that program is set forth in this part. The governing board of a school district, community college district, or county office of education may, by formal action, elect to provide the benefits of the Cash Balance Benefit Program under this part for their employees. SEC. 16. Section 26002.5 of the Education Code is amended to read: 26002.5. Except as excluded in subdivision (d) of Section 26807.5 or subdivision  (d)   (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 26140. SEC. 17. Section 26132 of the Education Code is amended to read: 26132. "Participant" means a person who has performed creditable service subject to coverage by the Cash Balance Benefit  Program,   Program  and who has contributions credited under the Cash Balance Benefit Program or is receiving an annuity under the Cash Balance Benefit Program by reason of creditable service  or has not yet met the conditions of subdivision (b) of Section 26806  . SEC. 18. Section 26142.5 is added to the Education Code, to read: 26142.5. "System's headquarters office" means the office building established as the permanent headquarters facility for the system, pursuant to Section 22375. SEC. 19. Section 26400 of the Education Code is amended to read: 26400. (a)  (1)    A person employed on a part-time basis by  a school district or county office of education   an employer, excluding community college districts,  to perform creditable service for less than 50 percent of each full-time position shall become a participant on the later of the first day that creditable service is performed for an employer that provides the Cash Balance Benefit Program or the effective date of the employer's governing board's action to provide the Cash Balance Benefit Program, provided that creditable service is not performed for the same employer with whom the person is subject to mandatory membership in the Defined Benefit  Program.   Program, and that the person has not made an election pursuant to subdivision (d).   (2) If the participant's basis of employment with an employer, excluding community college districts, that provides the Cash Balance Benefit Program changes to employment to perform creditable service for 50 percent or more of the full-time position during one school year with the same employer, creditable service performed for that employer shall no longer be covered under the Cash Balance Benefit Program as of the last day of the pay period in which the change in the participant's basis of employment occurred. Creditable service performed for that employer shall be subject to coverage by the Defined Benefit Program as of the first day of the pay period following the change in the participant's basis of employment.  (b)  (1)    A person employed on a temporary basis  pursuant to Section 87474, 87478, 87480, 87481, 87482, or 87482.5  by a community college district, who is not subject to mandatory membership in the Defined Benefit Program pursuant to Section  22501,  22502 or 22504 for each position with the same employer, shall become a participant on the later of the first day that creditable service is performed for an employer that provides the Cash Balance Benefit Program or the effective date of the employer's governing board's action to provide the Cash Balance Benefit Program  , provided that the person has not made an election pursuant to subdivision (d)  .  (2) If the participant's basis of employment with a community college district changes to employment that is subject to mandatory membership in the Defined Benefit Program pursuant to Section 22501, 22502, or 22504 during one school year with the same employer, creditable service performed for that employer shall no longer be covered under the Cash Balance Benefit Program as of the last day of the pay period in which the change in the participant's basis of employment occurred. Creditable service performed for that employer shall be subject to coverage by the Defined Benefit Program as of the first day of the pay period following the change in the participant' s basis of employment.   (c) (1) Any person employed to perform creditable service as a substitute employee for an employer shall become a participant on the later of the first day that creditable service is performed for an employer that provides the Cash Balance Benefit Program or the effective date of the employer's governing board's action to provide the Cash Balance Benefit Program, provided that creditable service is not performed for the same employer with whom the person is subject to mandatory membership in the Defined Benefit Program, and that the person has not made an election pursuant to subdivision (d).   (2) If the participant's basis of employment as a substitute employee for an employer changes to employment that is subject to mandatory membership in the Defined Benefit Program pursuant to Section 22501, 22502, or 22504 during one school year with the same employer, creditable service performed for that employer shall no longer be covered under the Cash Balance Benefit Program as of the last day of the pay period in which the change in the participant's basis of employment occurred. Creditable service performed for that employer shall be subject to coverage under the Defined Benefit Program as of the first day of the pay period following the change in the participant's basis of employment.   (c)  (d)  If the employer's governing board's action to provide the Cash Balance Benefit Program gives employees the right to elect coverage under  social security   the federal Social   Security Act  or an alternative retirement plan offered by the employer in addition to the Cash Balance Benefit Program, the employee may elect within 60 calendar days of the latest of the first day that creditable service is performed, the date of the employer's governing board's action to provide the Cash Balance Benefit Program, or the effective date of the employer's governing board's action to provide the Cash Balance Benefit Program to be covered by  social security   the federal Social Security Act  or to participate in the alternative retirement plan in lieu of participating in the Cash Balance Benefit Program. An election may not preclude an employee from participating in the Cash Balance Benefit Program at a later date so long as the Cash Balance Benefit Program is provided by the employer and the employee is eligible to participate in the Cash Balance Benefit Program.  (d)   (e)  If subdivision  (c)   (d)  is applicable, the employer shall inform employees pursuant to subdivision (c) of Section 26300 of their right to make an election and the election shall be made on a properly executed form provided by the system and filed with the employer. The employer shall retain a copy of the employee's signed election form and mail the original election form to the  system's  headquarters  office of the system as described in Section 22375.   office.  The election shall become effective on the later of the first day that creditable service is performed or the effective date of the employer's governing board's action to provide the Cash Balance Benefit Program.  (e) If the participant's basis of employment with a school district or county office of education that provides the Cash Balance Benefit Program changes to employment to perform creditable service for 50 percent or more of the full-time position during one school year with the same employer, creditable service performed for that employer shall no longer be covered under the Cash Balance Benefit Program. Creditable service performed for that employer shall be subject to coverage by the Defined Benefit Program as of the first day of the pay period following the change in the participant's basis of employment.   (f) If the participant's basis of employment with a community college district changes to employment that is subject to mandatory membership in the Defined Benefit Program pursuant to Section 22501, 22502, or 22504 during one school year with the same employer, creditable service performed for that employer shall no longer be covered under the Cash Balance Benefit Program. Creditable service performed for that employer shall be subject to coverage by the Defined Benefit Program as of the first day of the pay period following the change in the participant's basis of employment.   (g)   (f)  If the governing board of an employer subsequently provides, in addition to the Cash Balance Benefit Program,  social security   federal Social Security Act  coverage, a participant covered by the Cash Balance Benefit Program who is performing creditable service for that employer may elect to be covered by  social security   the federal Social Security Act  in lieu of the Cash Balance Benefit Program. That participant's election shall be made within 60 calendar days of the date the governing board acted to provide coverage under  social security   the federal Social Security Act  or the effective date of the governing board's action to provide  federal Social Security Act  coverage, whichever is later. An election under this subdivision may not preclude an employee from participating in the Cash Balance Benefit Program at a later date if the employee is eligible to participate in the Cash Balance Benefit Program and the employer provides the Cash Balance Benefit Program.  (h)   (g)  If the governing board of an employer provided  social security   federal Social Security Act  coverage with an effective date prior to January 1, 2007, and the employer offered the Cash Balance Benefit Program as of the effective date of the governing board's action to provide  social security   federal Social Security Act  coverage, a participant who was performing creditable service for that employer may elect to be covered by  social security   the federal Social Security Act  in lieu of the Cash Balance Benefit Program. The participant's election shall be made on or after March 1, 2008, and on or before May 1, 2008. The election to participate in  social security   the federal Social Security Act  shall be effective on July 1, 2008. An election under this subdivision may not preclude an employee from participating in the Cash Balance Benefit Program at a later date if the employee is eligible to participate in the Cash Balance Benefit Program and the employer provides the Cash Balance Benefit Program.  (i)   (h)  An election by an employee to terminate his or her participation in the Cash Balance Benefit Program as described in subdivision  (g) or (h)   (f) or (g)  shall be made on a properly executed form provided by the system and filed with the employer. The employer shall retain a copy of the employee' s signed election form and mail the original election form to the headquarters office of the  system, as described in Section 22375.   system.  SEC. 20. Section 26506 of the Education Code is amended to read: 26506. (a) Except as provided in subdivision (b), participants shall not make voluntary pretax or post-tax contributions into the Cash Balance Benefit Program, nor shall participants redeposit amounts previously distributed from employee accounts or employer accounts. (b) Pursuant to terms and conditions established by the board, participants may be permitted to transfer funds from eligible retirement plans into the Cash Balance Benefit Program to the extent that the transfers are allowable under and are completed in a manner prescribed by applicable federal and state laws, and any related regulations. (c) Funds deposited with the Cash Balance Benefit Program by a participant pursuant to subdivision (b) shall be credited to the participant and identified separately from credits in the participant' s employee and employer accounts. Funds so deposited shall be  credited with interest pursuant to Section 26604.   treated as credits to the participant's employee account for all other purposes under this part.  SEC. 21. Section 26806 of the Education Code is amended to read: 26806.  (a)    The normal form of retirement benefit under this part is a lump-sum payment. Upon distribution of the lump-sum payment to the participant, no further benefits shall be payable from the plan with respect to the Cash Balance Benefit Program.  (b) The lump-sum payment in subdivision (a) shall not be payable before 180 calendar days have elapsed following the date of termination of employment.   (c) Except as provided in subdivision (d) or subdivision (e) of Section 26812, the application for the retirement benefit in the form of a lump-sum payment shall be automatically canceled if the participant performs creditable service within 180 calendar days following the date of termination of employment.   (d) Subdivision (c) does not apply if the participant has reached that age at which the Internal Revenue Code of 1986 requires a distribution of benefits. A participant who has reached this age shall receive a distribution commencing on the earlier of the date that the participant has met the conditions of subdivision (b) or the conditions of subdivision (c) of Section 26004.  SEC. 22. Section 26807.6 of the Education Code is amended to read: 26807.6. (a) A participant who retired and elected an annuity pursuant to Section 26807 may elect to change annuities, subject to all of the following: (1) A participant who elected a single life annuity with or without a cash refund feature or a period certain annuity may not change his or her annuity. (2) A participant who elected an annuity under paragraph (3) or (4) of subdivision (b) of Section 26807 may elect an annuity under paragraph (3) of subdivision (a) of Section 26807.5. (3) The election of the participant under this section is made on or after January 1, 2007, and prior to July 1, 2007. (4) The participant designates the same annuity beneficiary that was designated under the prior annuity elected by the participant, if the annuity and annuity designation were effective on December 31, 2006. (5) The annuity beneficiary is not afflicted with a known terminal illness and the participant declares, under penalty of perjury under the laws of this state, that to the best of his or her knowledge, the annuity beneficiary is not afflicted with a known terminal illness. (6) The annuity beneficiary has not predeceased the participant as of the effective date of the change in the annuity by the participant. (b) The change in the annuity by the participant shall be effective on the date the election is signed, provided that the election is on a properly executed form provided by the system and that election is received at the system's headquarters office  as described in Section 22375  within 30 days after the date the election is signed. (c) After receipt of a participant's election document, the system shall mail an acknowledgment notice to the participant that sets forth the new annuity elected by the participant. (d) If the participant and the annuity beneficiary are alive and not afflicted with a known terminal illness, a participant may cancel the election to change annuities and elect to receive the benefit according to the preexisting annuity election. After cancellation, the participant may elect to make a one-time change from the preexisting annuity to any other annuity provided by and subject to the restrictions of paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation or the cancellation and one-time change shall be made on a properly executed form provided by the system and shall be received at the system's headquarters office  as described in Section 22375  no later than 30 calendar days following the date of mailing of the acknowledgment notice. If the participant elects to make the one-time change provided by this subdivision, the change shall be effective as of the participant's signature date on the initial election to change. (e) If the system is unable to mail an acknowledgment notice to the participant on or before June 1, 2007, or prior to the end of the election period, provided that the participant and the annuity beneficiary are alive and not afflicted with a known terminal illness, the system shall allow a participant to cancel the election to change annuities and elect to receive the benefit according to the preexisting annuity election. After cancellation, the participant may elect to make a one-time change from the preexisting annuity to any other annuity provided by and subject to the restrictions of paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation or the cancellation and one-time change may be made after the end of the election period if it is made on a properly executed form provided by the system and is received at the system's headquarters office  as described in Section 22375  no later than 30 calendar days following the date of mailing of the acknowledgment notice. If the participant elects to make the one-time change provided by this subdivision, the change shall be effective as of the participant's signature date on the initial election to change. (f) If the participant elects to change his or her annuity as described in subdivision (a) or (d), the participant's annuity shall be modified in a manner determined by the board to prevent any additional liability to the plan. (g) References to a "participant" in paragraph (1) of subdivision (a) shall apply to the nonmember spouse. (h) The participant shall not change annuities in derogation of a spouse's or former spouse's community property rights as specified in a court order. SEC. 23. Section 26812 of the Education Code is amended to read: 26812. (a) A participant retired for service under this part may perform retired participant activities, but the participant shall not make contributions to the plan or accrue service credit under the Defined Benefit Program based on compensation earned from that service. The employer shall maintain accurate records of the earnings of the retired participant and report those earnings monthly to the system and retired participant. (b) If a participant is retired for service under this part, the annualized rate of pay for retired participant activities performed by that participant shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties. (c) A participant retired for service under this part shall not be required to reinstate for performing retired participant activities. (d) (1) If all of the following apply to a participant retired for service under this part, the participant's annuity shall be reduced by the amount of the compensation: (A) The participant is receiving an annuity under the Cash Balance Benefit Program. (B) The participant is below normal retirement age or retired on or after January 1, 2014. (C) The participant earns compensation paid in cash for performing retired participant activities, excluding reimbursements paid by an employer for expenses incurred by the participant in which payment of the expenses by the participant is substantiated. (2) The reduction in paragraph (1) shall only be made for compensation paid in cash during the first 180 calendar days after a participant retired for service under this part. The amount of the reduction  may be equal to   in an individual month shall be no more than  the monthly annuity payable  but   in that month and the total amount of the reduction  shall not exceed the amount of the annuity payable during the first 180 calendar days after a participant retired for service under this part. For written agreements pertaining to the performance of retired participant activities entered into, extended, renewed, or amended on or after January 1, 2014, the reduction in paragraph (1) shall also be made for payments  made for the performance of retired participant activities  , including, but not limited to, those for participation in a deferred compensation plan; to purchase an annuity contract, tax-deferred retirement plan, or insurance program; and for contributions to a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457 (f) of Title 26 of the United States Code when the cost is covered by an employer.  (3) Subject to the limitation described in paragraph (4), if all of the following apply to a participant retired for service under this part, the participant's application for the retirement benefit shall automatically be canceled:   (A) The participant is anticipated to receive the retirement benefit in the form of a lump-sum payment.   (B) The participant earns compensation for performing creditable service within 180 calendar days following the date of termination of employment.   (4) Paragraph (3) does not apply if the participant has reached that age at which the Internal Revenue Code of 1986 requires a distribution of benefits. A participant who has reached that age shall receive a distribution commencing on the earlier of the date that the participant has met the conditions of subdivision (b) of Section 26806 or the conditions of subdivision (c) of Section 26004.  (e) If the participant has attained normal retirement age at the time the compensation is earned, subdivision (d) shall not apply if the appointment has been approved by the governing body of the employer in a public meeting, as reflected in a resolution adopted by the governing body of the employer prior to the performance of retired participant activities, expressing its intent to seek an exemption from the limitation specified in subdivision (d). Approval of the appointment shall not be placed on a consent calendar. Notwithstanding any other provision of Article 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code or any state or federal law incorporated by subdivision (k) of Section 6254 of the Government Code, the resolution shall be subject to disclosure by the entity adopting the resolution and the system. The resolution shall include the following specific information and findings: (1) The nature of the employment. (2) A finding that the appointment is necessary to fill a critically needed position before 180 calendar days has passed. (3) A finding that the participant is not ineligible for application of this subdivision pursuant to subdivision (g). (4) A finding that the termination of employment of the retired participant with the employer is not the basis for the need to acquire the services of the participant. (f) Subdivision (e) shall not apply to a retired participant whose termination of employment with the employer is the basis for the need to acquire the services of the participant. (g) Subdivision (e) shall not apply if the participant received additional service credit pursuant to Sections 22714 or 22715 or received from any public employer any financial inducement to retire. For purposes of this section, "financial inducement to retire" includes, but is not limited to, any form of compensation or other payment that is paid directly or indirectly by a public employer to the participant, even if not in cash, either before or after retirement, if the participant 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. The system shall liberally interpret this subdivision to further the Legislature' s intent to make subdivision (e) inapplicable to participants if the participant received a financial incentive from any public employer to retire or otherwise terminate employment with a public employer. (h) The superintendent, the county superintendent of schools, or the chief executive officer of a community college shall submit all documentation required by the system to substantiate the eligibility of the retired participant for application of subdivision (e), including, but not limited to, the resolution adopted pursuant to that subdivision. (i) The documentation required by this section shall be received by the system prior to the retired participant's performance of retired participant activities. (j) Within 30 calendar days of the receipt of all documentation required by the system pursuant to this section, the system shall inform the entity seeking application of the exemption specified in subdivision (e) and the retired participant whether the compensation paid to the participant will be subject to the limitation specified in subdivision (d). SEC. 24. Section 26906.6 of the Education Code is amended to read: 26906.6. (a) A participant who is disabled and elected an annuity pursuant to Section 26906 may elect to change annuities, subject to all of the following: (1) A participant who elected a single life annuity with or without a cash refund feature or a period certain annuity may not change his or her annuity. (2) A participant who elected an annuity under paragraph (3) or (4) of subdivision (b) of Section 26906 may elect an annuity under paragraph (3) of subdivision (a) of Section 26906.5. (3) The election by the participant under this section is made on or after January 1, 2007, and prior to July 1, 2007. (4) The participant designates the same annuity beneficiary that was designated under the prior annuity elected by the participant, if the annuity and the annuity beneficiary designation were effective on December 31, 2006. (5) The annuity beneficiary is not afflicted with a known terminal illness and the participant declares, under penalty of perjury under the laws of this state, that to the best of his or her knowledge, the annuity beneficiary is not afflicted with a known terminal illness. (6) The annuity beneficiary has not predeceased the participant as of the effective date of the change in the annuity by the participant. (b) The change in the annuity by the participant shall be effective on the date the election is signed, provided that the election is on a properly executed form provided by the system and that election is received at the system's headquarters office  as described in Section 22375  within 30 days after the date the election is signed. (c) After receipt of a participant's election document, the system shall mail an acknowledgment notice to the participant that sets forth the new annuity elected by the participant. (d) If the participant and the annuity beneficiary are alive and not afflicted with a known terminal illness, a participant may cancel the election to change annuities and elect to receive the benefit according to the preexisting annuity election. After cancellation, the participant may elect to make a one-time change from the preexisting annuity to any other annuity provided by and subject to the restrictions of paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation or the cancellation and one-time change shall be made on a properly executed form provided by the system and shall be received at the system's headquarters office  as described in Section 22375  no later than 30 calendar days following the date of mailing of the acknowledgment notice. If the participant elects to make the one-time change provided by this subdivision, the change shall be effective as of the participant's signature date on the initial election to change. (e) If the system is unable to mail an acknowledgment notice to the participant on or before June 1, 2007, or prior to the end of the election period, provided that the participant and the annuity beneficiary are alive and not afflicted with a known terminal illness, the system shall allow a participant to cancel the election to change annuities and elect to receive the benefit according to the preexisting annuity election. After cancellation, the participant may elect to make a one-time change from the preexisting annuity to any other annuity provided by and subject to the restrictions of paragraph (1), (2), (3), or (4) of subdivision (a). The cancellation or the cancellation and one-time change may be made after the end of the election period if it is made on a properly executed form provided by the system and is received at the system's headquarters office  as described in Section 22375  no later than 30 calendar days following the date of mailing of the acknowledgment notice. If the participant elects to make the one-time change provided by this subdivision, the change shall be effective as of the participant's signature date on the initial election to change. (f) If the participant elects to change his or her annuity as described in subdivision (a) or (d), the participant's annuity shall be modified in a manner determined by the board to prevent any additional liability to the plan. (g) The participant shall not change annuities in derogation of a spouse's or former spouse's community property rights as specified in a court order. SEC. 25. Section 27100 of the Education Code is amended to read: 27100. A participant may at any time designate or change the designation of one or more primary beneficiaries and one or more contingent beneficiaries to receive any lump-sum death benefit that may be payable under the plan. The beneficiary for the lump-sum death benefit under this part may be a person, trust, or the estate of the participant. The beneficiary shall be designated on a form prescribed by the system that is received in the system's headquarters  office, as established pursuant to Section 22375,   office  before the participant's death.