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C a l i f o r n i a S t a t e Te a c h e r s ’
                                                 Retirement System




Member Handbook
  YOUR GUIDE TO CalSTRS BENEFITS



                                                 2007 – 2008
CalSTRS Resources                                                 Dial 800-228-5453
                                                           then press the numbers to access
  Web sites
          www.CalSTRS.com                               1                      2                        3
          Click Contact Us to e-mail               Account Data             Teletalk           Statement of Account
                                                                                              Order Forms/Brochures
          www.403bCompare.com

  Call    800-228-5453
          7 a.m. to 6 p.m.                       4                     5                       6                      0
          Monday through Friday           Survivor/Disability      Cash Balance        Benefits Counseling/     Customer
          TTY 916-229-3541               Benefits Caseworker      Benefit Program         Workshops              Service
          866-384-4457
          Home Loan Program
          800-699-4032                      The summarized data pertain to the Teachers’ Retirement Law
          Voluntary Investment Program   (California Education code 22000 et. seq.) and procedures effec-
  Write   CalSTRS                        tive January 1, 2007. The Member Handbook is intended as a ready
          P Box 15275
           .O.                           source of information about CalSTRS and not as a legal document or
          Sacramento, CA 95851-0275      a substitute for the law. If differences appear between the law and the
  Fax     916-229-3879                   handbook, the law must prevail.
                                            Permission is hereby granted to reproduce, copy, or duplicate the
  Visit   Member Services                information in this handbook, provided credit is given to CalSTRS.
          7919 Folsom Boulevard
          Sacramento, CA 95826
www.CalSTRS.com
                                                                                   800-228-5453




Dear Member,

Welcome to the California State Teachers’ Retirement System. I am
pleased to present the latest edition of the Member Handbook. Whether
you are just beginning your career in education or are an experienced
educator, this handbook will answer many of the questions you have
about your benefit coverage. The information in it can help you make
informed decisions during your active career and prepare fully for
your retirement.

CalSTRS is the nation’s largest teachers’ pension fund and our
dedicated, professional and conscientious staff work hard to improve
service and responsiveness to your needs. Although we serve nearly
800,000 California educators and their families, we are committed
to providing exemplary service to each and every person who calls,
writes or visits CalSTRS.

Service to CalSTRS members and the security of the Teachers’
Retirement Fund remain our highest priorities. We look forward to
assisting you throughout your career and retirement.



Sincerely,




Jack Ehnes
Chief Executive Officer




                                                                        Member Handbook 2007 • i
A Brief History of CalSTRS
                                    The California State Teachers’ Retirement System was established by law in 1913 to provide
                                retirement benefits to California’s public school teachers. Membership in the CalSTRS Defined
                                Benefit Program includes all employees in California public schools from kindergarten through
                                community college in positions performing creditable service under the Defined Benefit Program.

                                Teachers’ Retirement Board
                                   The Teachers’ Retirement Board sets policies, makes rules for, and administers the California
                                State Teachers’ Retirement System. The board is also responsible for ensuring benefits are paid by
                                the system in accordance with law.
                                   Our 12-member Teachers’ Retirement Board is made up of:
                                • Three member-elected positions representing current educators.
                                • A retired CalSTRS member appointed by the Governor and confirmed by the Senate.
                                • Three public representatives appointed by the Governor and confirmed by the Senate.
                                • A school board representative appointed by the Governor and confirmed by the Senate.
                                • Four board members who serve in an ex-officio capacity by virtue of their office: Director of
                                   Finance, State Controller, State Superintendent of Public Instruction and State Treasurer.
                                   The board appoints a Chief Executive Officer to administer the system consistent with the
                                board’s policies and rules. The board also selects a Chief Investment Officer to direct the invest-
                                ment of the Teachers’ Retirement Fund in accordance with board policy.
                                   The board has seven standing committees: Audits and Risk Management, Benefits and
                                Services, Board Governance, Investments, Compensation, Legislation and Appeals.

                                Teachers’ Retirement Fund
                                    The Teachers’ Retirement Fund is a special trust fund established by law that holds the assets
                                of the CalSTRS Defined Benefit, Defined Benefit Supplement and Cash Balance Benefit programs.
                                The assets come from contributions by employees, employers and the state of California. The
                                fund’s investments create a stream of income to add to those assets.
                                    When selecting investments, the Teachers’ Retirement Board applies standards of safety,
                                diversification, liquidity and structure for a complete and profitable investment portfolio. The
                                portfolio includes stocks, bonds, real estate and short-term investments. Within these catego-
                                ries, CalSTRS further diversifies by holding a variety of issues within each segment.
                                    The Teachers’ Retirement Fund portfolio market value was $157.9 billion as of December 31,
                                2006. CalSTRS ranks as the nation’s second-largest public pension fund.
                                    For further information about Teachers’ Retirement Fund investments, visit www.CalSTRS.com.




ii • A Brief History of CalSTRS • CalSTRS
www.CalSTRS.com
                                                                                                                                                           800-228-5453




ContentsFront and back covers are in a separate document ............................................. a
        A Brief History of CalSTRS ..................................................................................ii
        Teachers’ Retirement Board ...............................................................................ii
        Teachers’ Retirement Fund .................................................................................ii
1. Introduction ..........................................................................................................................1
        Quick Start Guide to CalSTRS Benefits and Services .......................................... 1
        Where You Can Find Information ........................................................................ 2
        Recent Legislative Changes to CalSTRS Benefits................................................ 4
2. Your Membership and Benefits.........................................................................................5
        Membership in the CalSTRS Defined Benefit Program......................................... 5
        Membership for Part-Time Employees ............................................................... 6
        Contributions to Your DB and DBS Accounts....................................................... 7
        Borrowing Against Your Accounts ....................................................................... 8
        Retirement Progress Report .............................................................................. 8
        What if You Become Disabled? .......................................................................... 9
        What Happens When You Die? .......................................................................... 9
        If You Terminate Your CalSTRS-Covered Employment ........................................... 9
        Refunding Your CalSTRS Contributions ............................................................. 10
        Redeposits – Restoring Service Credit ............................................................. 11
        Defined Benefit Supplement Program ............................................................... 11
        Changing Employment to a Different Public Retirement System ......................... 12
3. Benefits for Part-Time Educators....................................................................................15
        Retirement Plans for Public School Employees ................................................. 15
        Retirement Options for Public School Educators ............................................... 15
        Social Security Program................................................................................... 18
        Cash Balance Benefit Program ........................................................................ 18
        Choosing Between Defined Benefit and an Alternative Retirement Program ........ 19
        Consolidating Your Cash Balance and Defined Benefit Coverages ...................... 20
4. Building Your Financial Future ........................................................................................21
        Step One – Determine How Much You Will Need in Retirement.......................... 21
        Step Two – Attend a Workshop ........................................................................ 21
        Step Three – Use CalSTRS Programs to
        Build Supplemental Income and Achieve Home Ownership ............................... 22
        Comparing 403(b) Plans .................................................................................. 23
        CalSTRS Home Loan Program.......................................................................... 24
        Step Four – Meet With a Benefits Counselor
        to Get an Estimate of Your Retirement Benefit ................................................. 24
        Benefits Counseling Offices by County/City ...................................................... 25
        How Much Will You Need to Retire? ................................................................. 25
5. Approaching Retirement ..................................................................................................27
        One-Time Death Benefit Recipient .................................................................... 27
        Protecting Your Loved Ones Before You Retire ................................................. 27
        About Social Security ...................................................................................... 29
        Health Insurance............................................................................................. 31
        Reduced Workload Program ............................................................................. 32
        Retiring From Other Public Retirement Systems ................................................ 32


                                                                                                                                              Member Handbook 2007 • iii
6. Your Retirement Benefit ...................................................................................................33
                                  Deciding When to Retire .................................................................................. 33
                                  Retiring From More Than One Public Retirement System .................................. 34
                                  How to Calculate Your Defined Benefit Retirement ............................................ 34
                                  Ways to Increase Your Benefit.......................................................................... 34
                                  Partial Lump Sum ........................................................................................... 38
                                  Member-Only Benefit ....................................................................................... 39
                                  Protecting Your Survivor with an Ongoing Benefit .............................................. 39
                                  Defined Benefit Supplement Program .............................................................. 42
                                  Guidelines for the Retirement Application Process ........................................... 44
                                  Signing Up for Direct Deposit ........................................................................... 46
                                  Benefit Estimate Worksheet ............................................................................ 47
                                  Age Factor Table.............................................................................................. 48
                                  Option Worksheets ......................................................................................... 49
                                  Defined Benefit Supplement Annuity Calculation Estimates ............................... 54
                          7. After You Retire..................................................................................................................57
                                  Annual Benefit Adjustment .............................................................................. 57
                                  Purchasing Power Protection ............................................................................ 57
                                  Medicare Premium Payment Program ............................................................... 57
                                  Post-Retirement Employment ........................................................................... 57
                                  Reinstatement to Active Member Status .......................................................... 58
                                  Keeping You Informed ..................................................................................... 59
                          8. Disability Benefits ..............................................................................................................61
                                  Before Filing a Disability Application ................................................................. 61
                                  Reasonable Accommodation............................................................................ 61
                                  Steps in the Disability Application Process ....................................................... 61
                                  Filing a Disability Benefit Application ................................................................ 62
                                  Coverage A or Coverage B ............................................................................... 64
                                  Coverage A – Disability Allowance Program ....................................................... 64
                                  Coverage B – Disability Retirement Program ..................................................... 68
                          9. Survivor Benefits................................................................................................................71
                                  Coverage A or Coverage B – Family or Survivor Benefits .................................... 71
                                  Coverage A – If You Die Before Retirement ....................................................... 72
                                  Coverage B – If You Die Before Retirement ....................................................... 74
                                  Defined Benefit Supplement Distribution .......................................................... 77
                                  Coverage A or B – When You Die After Retirement ........................................... 77
                          10. Tax Information and Legal Matters..............................................................................79
                                  Income Tax Withholding ................................................................................... 79
                                  Internal Revenue Codes Affecting Benefits ....................................................... 80
                                  Legal Matters ................................................................................................. 81
                                  Members’ Rights – The Appeal Process ........................................................... 81
                                  Community Property Information ...................................................................... 82
                          11. Teletalk Message Codes ................................................................................................83
                          Glossary of Terms ..................................................................................................................87
                          Index .........................................................................................................................................95
                          Checklist for a Secure Financial Future ............................................................. Back Cover




iv • Contents • CalSTRS
1. Introduction

T   he CalSTRS Member Handbook is for full-
    time and part-time California public
educators, their beneficiaries, retirees and others
                                                      day of employment. You contribute 8 percent of
                                                      your pay as a CalSTRS member.
                                                         For an overview of your Defined Benefit
interested in the many benefits and services          Program membership and benefits, see Section
offered through the California State Teachers’        2, Your Membership and Benefits.
Retirement System. This guide is designed to
focus on the Defined Benefit Program and to           Defined Benefit Supplement Program
explain its many components that can help                Your Defined Benefit Supplement account
you to a secure financial future including retire-    will provide you additional retirement
ment, disability and survivor benefits as well        income based on the amount in the account.
as the Defined Benefit Supplement account.            One-fourth of your CalSTRS 8 percent
From program descriptions to retirement benefit       payroll contribution will be allocated to
formulas, examples and worksheets, this hand-         your DBS account through 2010. If you
book can be used as a reference for retirement        earn more than one year of service credit in
benefits, eligibility and planning. This guide        a school year, contributions from both you
also includes a Checklist for a Secure Financial      and your employer will also go into this
Future on the back cover and a Retirement             supplemental account until you retire.
Application Timeline in Section 6, Your                  For information on this account, see
Retirement Benefit.                                   Section 2, Your Membership and Benefits.
                                                      For information on how benefit choices affect
Quick Start Guide to CalSTRS                          the Defined Benefit Supplement account, see
Benefits and Services                                 Section 6, Your Retirement Benefit.

    The following briefly introduces the main         Disability Benefits
CalSTRS program benefits and indicates where              Once you are vested and meet the eligi-
to look in this handbook for more information         bility requirements, disability benefits may be
on each topic.                                        half your highest average annual salary, plus
                                                      another 10 percent for each eligible child,
Defined Benefit Program                               up to a total of 90 percent, until the child
    As a Defined Benefit Program member,              reaches age 21 or 22, depending on coverage.
your retirement is guaranteed for life once           The member’s portion of the disability benefit
you become vested with five years of service          continues for life, as long as you are disabled
credit and are eligible to retire. Your retire-       under Coverage B. Under Coverage A, the
ment benefit is a steady source of income and         benefit may change at age 60.
is based on your age, final compensation and              See Section 8, Disability Benefits.
years of service credit at retirement, not on how
much is in your account. If you are employed          Survivor Benefits
full time to perform creditable service in a Cali-       Depending on your amount of service
fornia public school or community college, your       credit and if you die before or after retirement,
membership in CalSTRS begins on your first            your survivor could receive a refund of the
                                                      balance in your retirement account, a one-
                                                      time amount and/or a monthly benefit.
                                                         See Section 9, Survivor Benefits.




                                                                                                          Member Handbook 2007 • 1
Medicare Premium Payment Program                   Where You Can Find Information
                                   CalSTRS does not provide health insur-
                                                                                       Throughout your career in California’s
                                ance coverage; however, CalSTRS will pay the
                                                                                   public school system, and the years to
                                Medicare Part A premium for Defined Benefit
                                                                                   follow, you and your dependents can rely on
                                members who retire before July 1, 2012,
                                                                                   CalSTRS as a trusted resource. Our customer
                                depending on eligibility. All benefit recipients
                                                                                   service representatives are available to answer
                                may authorize CalSTRS to deduct Medicare
                                                                                   your questions online or by calling our toll-
                                Part B and other group insurance premiums
                                                                                   free number at 800-228-5453. Our benefits
                                from their monthly benefit check.
                                                                                   counselors can help you build a CalSTRS
                                   See Section 5, Approaching Retirement.
                                                                                   retirement plan to meet your specific needs.
                                Cash Balance Benefit Program                       See Section 4, Building Your Financial
                                   The Cash Balance Benefit Program is             Future, for details on setting up an appoint-
                                CalSTRS’ alternative retirement program            ment with a counselor.
                                that employers may choose to offer part-               You can contact us in the following ways:
                                time educators. With the Cash Balance
                                                                                   Visit Our Web Site
                                Benefit Program, employers must contribute
                                                                                       The CalSTRS Web site at www.CalSTRS.com
                                4 percent of the salary you earn as a part-
                                                                                   provides current information for members,
                                time employee. You usually pay 4 percent;
                                                                                   employers and anyone interested in CalSTRS.
                                however, your contribution rate may be
                                                                                   The CalSTRS site includes such useful features
                                collectively bargained with your employer.
                                                                                   as the Retirement Benefit Calculator, which
                                   See Section 3, Benefits for Part-Time
                                                                                   allows you to estimate your retirement benefit.
                                Educators.
                                                                                   You can also order and download forms and
                                Voluntary Investment Program                       publications. To send an e-mail, go to www.
                                   If your district participates in this 403(b)    CalSTRS.com/ContactUs.
                                program, you can set aside even more retire-
                                                                                   myCalSTRS
                                ment funds through tax-deferred savings.
                                                                                      Registered myCalSTRS users can access
                                CalSTRS oversees the Voluntary Investment
                                                                                   certain personal account information online
                                Program’s competitively priced services and
                                                                                   in a secure environment. Defined Benefit
                                investment options.
                                                                                   members have access to Form 1099-Rs begin-
                                   See Section 4, Building Your Financial
                                                                                   ning with 2000, and annual statements and
                                Future.
                                                                                   benefit payment stubs beginning with 2002.
                                Home Loan Program                                  Cash Balance Benefit Program participants
                                   The CalSTRS Home Loan Program is                have access to Form 1099-Rs and benefit
                                open to active, inactive and retired CalSTRS       payment stubs beginning with 2003 and
                                members and Cash Balance Benefit Program           annual statements beginning with 2004.
                                participants. Several options are available           You can also review your tax withholding
                                for a conventional home purchase or refi-          and beneficiary choices or update your
                                nance loan.                                        mailing address and telephone number. The
                                   See Section 4, Building Your Financial          Online Messaging feature allows you to send
                                Future.                                            and receive confidential information. Go to
                                                                                   www.CalSTRS.com and log in or register to
                                CalPERS Long-Term Care Program                     access myCalSTRS.
                                   You and some members of your family
                                are eligible for the CalPERS Long-Term
                                Care Program.
                                   See Section 5, Approaching Retirement.



2 • 1. Introduction • CalSTRS
www.CalSTRS.com
                                                                                                                                  800-228-5453


Call Us                                                       Teletalk – Automated Information                                    1
   Call us at 800-228-5453 and select an                      Service via Your Telephone
option as follows:                                               The CalSTRS Teletalk information
                                                              system provides recorded messages giving
Press   For:                                                  general information on a variety of CalSTRS
1       Account Data.                                         subjects. To access the Teletalk system, call
                                                              800-228-5453 and then press 2. Teletalk
2       Teletalk, a recorded message system.
                                                              calls are answered electronically and you
        Then press the three-digit code for information
        on a variety of topics. A partial list follows; see
                                                              can choose topics easily via your telephone
        the complete Teletalk call list in Section 12.        keypad, for example:
3       Ordering forms, brochures and duplicate               Enter:   For this key topic:
        annual statements of accounts or 1099s.
                                                              100      General Information
4       Survivor/Disability caseworkers.
                                                              150      Membership, Service Credit and Contributions
5       Cash Balance Benefit Program information.
                                                              200      Benefits Counseling
6       Benefits Counselors/Workshops.
                                                              250      Purchase of Additional Service Credit
0       Member Services representatives –
                                                                       and Redeposits
        7 a.m. to 6 p.m. Monday – Friday.
                                                              300      Pre-Retirement Election of an Option
                                                              350      Service Retirement
Publications and Newsletters
                                                              400      Disability Benefits
   For additional information, you can order
                                                              420      Coverage A, Disability Allowance and
the following publications. To order publi-                            Rehabilitation Program
cations go to www.CalSTRS.com or call
800-228-5453 and press 3.                                     450      Coverage B, Disability Retirement and
                                                                       Rehabilitation Program
   CalSTRS Connections newsletter for
   active members                                             500      Death Benefits

   Cash Balance Benefit Program Information                   520      Coverage A, Family Allowance Program
   Packet                                                     550      Coverage B, Family Allowance Program
   Community Property Information                             600      Increases in Benefits
   Comprehensive Annual Financial Report                      650      Tax Liability
   Home Loan Program Fact Sheet                               700      Refund of Contributions
   Join CalSTRS? Join CalPERS?
                                                              750      Voluntary Investment Program
   Member Handbook
                                                              900      Cash Balance Benefit Program
   Purchase Additional Service Credit
   Refund: Consider the Consequences                             You can find a complete list of Teletalk
                                                              message codes and topics at the end of
   Retired Educator newsletter for retired                    this guide.
   members and other benefit recipients
   Social Security, CalSTRS and You
   Tax Considerations for Rollovers
   Your Retirement Guide (Service Retirement
   Application)
   Retirement: Your Next Journey (A
   Benefits Overview CD)



                                                                                                                      Member Handbook 2007 • 3
Recent Legislative Changes to CalSTRS Benefits
                                • Pension Protection Act of 2006 - The PPA allows for eligible rollover
                                  distributions to Roth IRAs, non-taxable amounts to be paid into
                                  qualified plans and direct rollovers to be made to any designated
                                  beneficiary. Therefore, CalSTRS will allow any designated benefi-
                                  ciary of a member to make a direct rollover of eligible payments,
                                  including registered domestic partners, who were previously
                                  prohibited from making direct rollovers.
                                • Effective Janaury 1, 2007, a monthly benefit will be provided to
                                  dependent children who become eligible on or after January 1,
                                  2007, under Coverage B Survivor Benefits when there is no
                                  surviving spouse or partner at the time of the active member’s death.
                                    The Governor and Legislature occasionally make statutory changes
                                that may affect your CalSTRS benefits and that may affect any decision
                                you make concerning your career or retirement. CalSTRS makes every
                                effort to communicate these changes to our members, but legislation
                                can undergo rapid change.
                                    To stay informed about any possible legislative benefit
                                changes, consult a variety of sources including the California State
                                Legislative Counsel Web site at www.leginfo.ca.gov or your union
                                or elected legislative representatives. You may also call CalSTRS at
                                800-228-5453 or visit www.CalSTRS.com.




4 • 1. Introduction • CalSTRS
2. Your Membership and Benefits

W      hether you are a full-time or part-
       time educator, the California State
Teachers’ Retirement System provides you
                                                       Employees performing creditable service in a
                                                   charter school are subject to coverage only if the
                                                   charter of the school provides for participation
benefits and services to build a strong,           in the CalSTRS Defined Benefit Program.
stable financial future.
    This section includes an explanation of        Mandatory Membership
membership and the basic benefits in the               If you are employed to perform creditable
Defined Benefit Program and describes the          service on a full-time basis, you will auto-
Defined Benefit Supplement Program. These          matically become a Defined Benefit Program
programs are two of three components that          member on the first day of employment.
can help you achieve the lifestyle you desire          Full time is defined as the number of days
at the end of your working career. The third       or hours in a school year that the employer
component is your own optional retire-             requires a class of employees to work. For
ment savings, such as a 403(b) tax-deferred        example, under a collective bargaining or
savings plan. CalSTRS offers such a plan, the      employment agreement, an employer might
Voluntary Investment Program, which you            require guidance counselors in a high school
can read about in Section 4, Building Your         to work a specific number of days each school
Financial Future.                                  year. Therefore, guidance counselors would
    This section also explains the Cash Balance    constitute a class of employees. For more
Benefit Program, an alternative retirement         information about what constitutes full time
plan for part-time educators.                      and class of employees, see the glossary.
                                                       Many teachers and others who perform
Membership in the CalSTRS                          creditable service are not hired to work full
Defined Benefit Program                            time. For those educators hired to work
                                                   on a part-time, substitute or hourly basis,
    The CalSTRS Defined Benefit Program            CalSTRS offers an alternative retirement plan
is available to employees of the California        called the Cash Balance Benefit Program.
public school system, kindergarten through         However, providing the program is optional
community college, in positions that require       for employers.
a credential, certificate, or permit or require        Mandatory Defined Benefit Program
the employee to meet minimum standards             membership requirements vary, depending on
adopted by the Board of Governors of the           an individual’s employment status and whether
California Community Colleges.                     or not the employer offers the Cash Balance
    Only activities identified as creditable       Benefit Program to their part-time employees.
service are subject to Defined Benefit Program         For details on the Cash Balance Benefit
coverage, that is, count toward years of service   Program and part-time educators, see Section 3,
for CalSTRS retirement purposes. These activi-     Benefits for Part-Time Educators.
ties include teaching, vocational or guidance
counseling, services related to school curric-     Benefit Eligibility
ulum and a variety of administrative duties.           You will be eligible for or vested with a
    If you are a classroom teacher or are          right to a lifetime retirement benefit when you
performing other activities that are creditable    have accumulated five years of service credit
service, you may be a Defined Benefit Program      under the Defined Benefit Program. You can
member as mandated by law or you may be            retire as early as age 50 if you have at least
eligible to elect membership.                      30 years of service credit. You can retire at

                                                                                                        Member Handbook 2007 • 5
age 55 with five years of service credit. For           Calculating Your Defined
                                information on the eligibility requirements             Benefit Retirement
                                for disability and survivor benefits available
                                to active members, see Section 8, Disability            Benefit Formula:
                                Benefits, and Section 9, Survivor Benefits.             Service Credit x Age Factor x Final Compensation
                                                                                        = Retirement Benefit (Member-Only)
                                                                                           The formula for calculating a Member-Only
                                                                                        Defined Benefit retirement includes three
 Membership When Cash Balance Is Offered                                                elements: service credit, age factor and final
 In school districts, county offices of education or community college districts that   compensation. For details on calculating your
 offer the Cash Balance Benefit Program, the following mandatory Defined Benefit        Defined Benefit, see Section 6, Your Retire-
 Program membership requirements apply:                                                 ment Benefit.
 Employment Status               Mandatory DB Membership Begins
                                                                                        Membership for
 K-12 and/or county office       First day of the pay period following employment to    Part-Time Employees
 of education on a part-         perform creditable service for 50 percent or more of
 time, hourly or daily basis     the full time position.                                   As long as your basis of employment
 or contracted for more                                                                 remains part-time, substitute or temporary, you
 than 50 percent of full                                                                have the choice of participating either in the
 time position:                                                                         Defined Benefit Program or the Cash Balance
 Community college district      First day of the pay period following employment       Benefit Program — if you are employed in a
 hired on a part-time basis:     to perform creditable service. Mandatory DB            district that offers the CB Benefit Program. If
                                 membership does not apply to temporary employees       you choose the CB Benefit Program and your
                                 of adult education or community college districts.     basis of employment changes, you may auto-
                                                                                        matically become a member of the Defined
                                                                                        Benefit Program (see charts at left for noted
                                                                                        exceptions). For details on benefits for part-
 Membership When Cash Balance Is Not Offered                                            time employees, see Section 3, Benefits for
 In school districts, county offices of education or community colleges that do not     Part-Time Educators.
 offer the Cash Balance Program, the following mandatory Defined Benefit Program
                                                                                        Part-Time or Substitute
 membership requirements apply:
                                                                                        Employees Electing Defined
 Employment Status               Mandatory DB Membership Begins                         Benefit Program Membership
 K-12/county office of           First day of the pay period following the pay period       Anyone who performs creditable service
 education – part-time           in which at least 60 hours of creditable service was   in the California public school system is
 hourly:                         performed.                                             eligible to elect membership in the Defined
                                                                                        Benefit Program.
 K-12/county office of           First day of the pay period following the pay
 education - part-time daily:    period in which 10 days of creditable service was
                                                                                            If you are hired as a substitute or on a
                                 performed.                                             part-time basis and your basis of employ-
                                                                                        ment does not qualify you for mandatory
 K-12/superintendent’s           Same as above except for 100 or more complete          membership, you may still elect to become
 office/community college        days during the school year
                                                                                        a member of the Defined Benefit Program.
 district substitute:
                                                                                        Your employer must formally notify you
 Community college district      First day of the pay period following employment       of your right to elect membership in the
 hired on a part-time basis:     to perform creditable service. Mandatory DB            program within 30 days of hire.
                                 membership does not apply to temporary employees
                                 of adult education or community college districts.




6 • 2. Your Membership and Benefits • CalSTRS
www.CalSTRS.com
                                                                                                               800-228-5453


   You can elect membership only during a        Employer Contributions
pay period in which you actually performed           The employing school district, community
creditable service, and you must elect           college district or county superintendent of
membership on the appropriate form               schools contributes to CalSTRS an amount
provided by your employer. The effective         equal to 8.25 percent of the creditable                       2
date of membership is the first day of the pay   compensation paid to every employee who
period in which the election is made.            is a member of the Defined Benefit Program.
                                                 Employer contributions are not credited
Contributions to Your                            to individual member DB accounts but are
DB and DBS Accounts                              deposited in the Teachers’ Retirement Fund to
                                                 help fund the benefits payable to all members
Member Contributions                             and their beneficiaries.
    As a member of the Defined Benefit
Program, you contribute 8 percent of your        State Contributions
creditable compensation as identified in the         The state of California contributes 2.017
Teachers’ Retirement Law. Your employer can      percent of the creditable earnings from the
pay all or a portion of member contributions.    fiscal year ending in the prior calendar year.
    Contributions are withheld from your cred-   Additionally, the state contributes an amount
itable compensation by payroll deduction and     equal to 2.5 percent of the total credit-
credited to your Defined Benefit and Defined     able compensation paid to all CalSTRS DB
Benefit Supplement accounts. For details on      Program members during the fiscal year
your DBS account see Defined Benefit Supple-     ending in the prior calendar year for the
ment Program later in this section.              Supplemental Benefit Maintenance Account.
                                                 This is used to maintain the purchasing power
“Employer Pick-Up”                               of benefits at prescribed levels.
of Member Contributions
   Most employers participate in the             How Interest is Credited
“Employer Pick-Up” Program under a provi-        to Your Accounts
sion of the Internal Revenue Code (Section          At the end of each fiscal year, interest is
414[h][2]). The member’s contributions to        credited to the accumulated contributions and
CalSTRS are “picked-up” by the employer          interest in each member’s Defined Benefit and
for the sole purpose of deferring income         Defined Benefit Supplement accounts at the
taxes on that portion of compensation. The       credited interest rate. Each credited interest
contributions must be deducted from your         rate is adopted annually by the Teachers’
compensation and are considered creditable       Retirement Board and is currently set at a rate
compensation for retirement purposes.            that approximates the yield on two-year Trea-
   These tax-deferred member contributions       sury notes for the Defined Benefit Program
are credited to your account as “Employer-       and the 30-year Treasury rate for the Defined
Paid Member Contributions.” Those                Benefit Supplement Program. The current
contributions are taxable when returned          rates, compounded daily, are 4.25 percent for
to you or a beneficiary in a lump sum or         Defined Benefit and 4.75 percent for Defined
monthly benefit. For more information on         Benefit Supplement accounts. These interest
taxes, see Section 10, Tax Information and       rates are valid through June 30, 2007. The
Legal Matters.                                   rates for July 1, 2007-June 30, 2008 are 5.25
                                                 percent for both Defined Benefit and Defined
                                                 Benefit Supplement accounts.

                                                 Defined Benefit Account
                                                    Interest is credited to your Defined Benefit
                                                 account primarily to provide a lump-sum


                                                                                                   Member Handbook 2007 • 7
benefit to you if you terminate all creditable         If you do not receive a Retirement Progress
                              service and withdraw your contributions or to       Report in the mail, you can view and print your
                              your beneficiaries if you die without survivors     DB and DBS statements of account online. Go
                              who are eligible for monthly benefits.              to www.CalSTRS.com and log in or register to
                                  As a Defined Benefit Program member,            use myCalSTRS. You can also call us at
                              your retirement benefit will be calculated          800-228-5453 to request a statement.
                              using a formula established by law based               Note: Retired members and benefit recipients
                              on your age, years of service credit and final      do not receive a Retirement Progress Report.
                              compensation. The amount of total contri-
                              butions and interest in your Defined Benefit        What’s on Your Annual
                              account is not used to calculate either your or     Statement of Account
                              your beneficiary’s future monthly benefit. This         Examine your annual statement carefully
                              is a lifetime benefit regardless of the funds you   each year for accuracy and file it with your
                              have contributed to your account.                   important employment or financial records.
                                                                                  Your annual statement includes:
                              Defined Benefit Supplement Account                  • Beginning balances of your service credit
                                 The credited interest rate for the Defined           and contributions and interest credited
                              Benefit Supplement Program is not necessarily           on member contributions as of July 1 of
                              the same as for the Defined Benefit Program.            the previous school year.
                              The rate cannot be less than the rate for           • Ending balances of your service credit
                              the Defined Benefit account. The interest is            and contributions and interest earned on
                              included in the amount payable to you.                  member contributions as of June 30 of the
                                                                                      just-completed school year.
                              Borrowing Against Your Accounts                     • Information about the just-completed
                                 State law does not permit you to borrow              school year, July 1 through June 30, which
                              against your accumulated contributions and              also includes:
                              interest on account with CalSTRS.                       – Interest credited on your accumulated
                                                                                          contributions.
                              Retirement Progress Report                              – Service credit you earned.
                                                                                      – Contributions credited to your Defined
                                 Every year you receive a Retirement Prog-                Benefit and Defined Benefit Supplement
                              ress Report that contains an annual statement               accounts.
                              of account for your Defined Benefit and                 The service credit shown on your annual
                              Defined Benefit Supplement accounts and             statement of account is based on the credit-
                              a retirement planning guide. The annual             able compensation earned and annual earnable
                              statement of account is one of your most            compensation for the full-time position as
                              important CalSTRS records and should be             reported by your employer(s) to CalSTRS. The
                              reviewed carefully.                                 member contributions are the contributions
                                 The Retirement Progress Report is mailed to      that your employer(s) reported to CalSTRS.
                              you, usually in late December. It gives your            If you believe there is a discrepancy on
                              account status as of June 30 of that school year.   your annual statement, contact your employer’s
                                 The report is sent to the mailing address        department that reports your time to CalSTRS.
                              on file with CalSTRS. You can update your               Adjustments made to service credit
                              mailing address through your employer or            and contribution data after June 30 will be
                              online at myCalSTRS. In addition to current         included in your next annual statement of
                              members, Retirement Progress Reports are also       account included in your Retirement Progress
                              sent to inactive members, that is, members          Report. If you have purchased additional
                              who have a balance remaining in their               service credit or redeposited contributions
                              Defined Benefit account, but did not perform        that were previously refunded, the changes
                              creditable service during the prior school year.    will first appear on your annual statement of

8 • 2. Your Membership and Benefits • CalSTRS
www.CalSTRS.com
                                                                                                                 800-228-5453


account for the school year during which the      Less than One Year of Service Credit
final payment was made.                              If you have earned less than one year of
   In addition to your DB and DBS statements      service credit at the time of your death, a
of account, the annual statement included in      refund of your accumulated contributions
the Retirement Progress Report provides:          plus interest is paid to your death benefit                    2
• An explanation of your Coverage A or            recipient(s) or to your spouse or registered
   Coverage B for disability and survivor         domestic partner, if appropriate.
   benefits.
• The name of your one-time death benefit         One or More Years of Service Credit
   recipient or recipients, formerly called           If you have earned one or more years of
   “designated beneficiary.”                      service credit at the time of your death, your
• The name of your option beneficiary             named death benefit recipient(s) may be
   or beneficiaries.                              eligible to receive a one-time death benefit
• Two estimates of your pension based on          in addition to the refund of the accumulated
   your age and account balance at the end of     contributions and interest.
   the previous school year if you are age 45     One-Time Death Benefit
   or older.                                         A one-time death benefit is payable to your
                                                  designated recipient or recipients under both
What if You Become Disabled?                      disability and survivor benefits, Coverage A
   As a member of the Defined Benefit             and B. The amount of the benefit depends
Program you have disability protection            on your coverage and whether death occurs
under one of the CalSTRS disability benefit       before or after retirement. If you do not name
programs, Coverage A or Coverage B. Once          a recipient, your estate receives the one-time
you are vested and meet the eligibility           death benefit. For more information, see
requirements, and you have a medically deter-     Section 9, Survivor Benefits.
minable physical or mental impairment that           For information on how dissolution of
prevents you from performing your usual           marriage or termination of a registered domestic
job or comparable duties, you may apply           partnership may affect your one-time death
for disability benefits. The impairment must      benefit recipient designation, see Section 10,
be expected to last at least 12 continuous        Tax Information and Legal Matters.
months. For details, see Section 8, Disability
Benefits.                                         If You Terminate Your
                                                  CalSTRS-Covered Employment
What Happens When You Die?                           Termination of CalSTRS-covered employ-
    The Defined Benefit Program provides          ment and a subsequent refund of your
benefits to your survivors when you die either    accumulated contributions plus interest
before or after retirement. Your survivors        cancel any eligibility for monthly benefits
may be eligible to receive either a lump-sum      from CalSTRS.
payment or monthly benefits with additional
benefits for dependent children. These bene-      Survivor or Disability Benefits
fits provide a basic level of security for your      Termination of CalSTRS-covered employ-
survivors. The benefit depends on the options     ment for four consecutive months or more
you choose and whether you have Coverage          may eliminate your eligibility for survivor or
A, Family Allowance or Coverage B, Survivor       disability benefits. This time limit does not
Benefit. Therefore, it is important to keep       apply to eligibility for service retirement.
a valid and current One-Time-Death Benefit
Recipient form on file at CalSTRS. For details,
see Section 9, Survivor Benefits.


                                                                                                     Member Handbook 2007 • 9
Exceptions to the Four-Month Limit                 Consider a Refund Carefully
                                The four-month limit does not apply if you         If you have fewer than five years of service
                             die during an approved leave of absence of up      credit and do not plan to return to teaching
                             to 12 months for a reason other than disability    and you are not eligible for retirement with
                             or military service.                               any of the California public systems listed
                                Eligible recipients may receive a one-time      under Retiring From More Than One Public
                             death benefit and/or a monthly benefit under       Retirement System in Section 6, you may be
                             the following two circumstances:                   considering a refund. However, if you are a
                             • If medical reports show that you became          career teacher with substantial service credit,
                                incapacitated within four months of your        or you are eligible for retirement with another
                                last day of service — and remained contin-      California public system and are approaching
                                uously incapacitated to the date of death, or   age 55, we highly recommend you learn more
                             • If you were receiving a disability benefit       about the consequences of taking a refund.
                                under Coverage A.
                                                                                Consequences of a Refund
                                                                                • If you withdraw your contributions and
                             Refunding Your CalSTRS                                interest before age 59½, the distribution
                             Contributions                                         may be subject to income tax and a 10
                                                                                   percent federal excise tax as well as a 2.5
                             Defined Benefit Account
                                                                                   percent state excise tax.
                                Your Defined Benefit Program contri-
                                                                                • If you return to membership after taking
                             butions, plus interest, are refundable
                                                                                   a refund and later redeposit contributions
                             upon termination from all employment to
                                                                                   and interest:
                             perform creditable service in any California
                                                                                   – Your membership date changes to your
                             public school.
                                                                                      return date.
                                Upon receipt of a completed refund appli-
                                                                                   – You will be covered under Coverage B
                             cation, CalSTRS will refund all your Defined
                                                                                      for survivor and disability benefits even
                             Benefit member contributions, including
                                                                                      if you had Coverage A before.
                             tax-deferred member contributions under the
                                                                                   – You must accumulate a year of service
                             Employer Pick-Up Program, plus credited
                                                                                      credit before you are eligible for
                             interest on your money. Partial refunds are not
                                                                                      CalSTRS benefits.
                             permitted. Employer and state contributions
                                                                                   Important: If you return to membership
                             are not refundable.
                                                                                and wish to receive full retirement benefits
                                It is important to note that a refund of
                                                                                from your past membership with CalSTRS,
                             your contributions terminates your CalSTRS
                                                                                you must fully buy back the service credit
                             membership and you will not be eligible for
                                                                                represented in the refund.
                             any benefits from CalSTRS, including a life-
                             time monthly retirement benefit.                   More Refund Information
                                                                                   For more refund information, go to
                             Defined Benefit Supplement Account
                                                                                www.CalSTRS.com or call 800-228-5453 and
                                If after termination of employment you have
                                                                                order Refund: Consider the Consequences. You
                             not performed creditable service for six months
                                                                                may also call CalSTRS and select the Teletalk
                             and you have received a refund of your Defined
                                                                                option and then enter 700.
                             Benefit account, CalSTRS will refund your
                             Defined Benefit Supplement account after you
                             respond to CalSTRS correspondence regarding
                             the payout. If you return to CalSTRS-covered
                             employment, you cannot redeposit your DBS
                             funds and only one withdrawal will be allowed
                             in a five-year period.


10 • 2. Your Membership and Benefits • CalSTRS
www.CalSTRS.com
                                                                                                                    800-228-5453



Redeposits – Restoring                              Former Local Service Members
Service Credit                                         Local Service credit listed on a 2005/2006
                                                    annual statement in your Retirement Progress
    Redepositing allows you to restore the
                                                    Report is not fully funded. You will receive
service credit represented by refunded contri-
                                                    only a maximum of $2.40 per year of                             2
butions. If you return to teaching or other
                                                    Local Service credit toward your retirement
CalSTRS-covered employment or become
                                                    benefit. Please contact CalSTRS to fully fund
eligible for retirement with another California
                                                    this service.
public retirement system, you may elect
to buy back past Defined Benefit Program            Cost to Redeposit
refunded service credit by redepositing your            The amount you need to redeposit and the
prior refunded contributions plus regular           benefits from restoring service credit will vary
interest. For a list of these other California      depending on your individual situation.
systems, see Retiring From More Than One                For example, a teacher who withdrew
Public Retirement System in Section 6.              $10,000 (representing three years of service)
    The longer the elapsed time between             in May 1993 and wants to purchase those
refund and redeposit, the higher the redeposit      years of credit in April 2007, would be
amount will be.                                     required to redeposit $23,205.
    You may not redeposit refunded Defined              For more information on purchasing
Benefit Supplement contributions and interest.      service credit, see Section 6, Your Retirement
    Before you are eligible for CalSTRS             Benefit. If you are considering a redeposit,
benefits, you must have earned at least one         order the Purchase Additional Service Credit
year of service credit after you received the       brochure from www.CalSTRS.com or call
most recent refund of accumulated retire-           CalSTRS at 800-228-5453.
ment contributions, unless you are retiring             Any redeposits must be fully paid by
concurrently with another California public         December 31, 2010, if the restored service
retirement system.                                  credit is to be used for longevity bonus
    You may choose to restore a portion, rather     eligibility.
than all, of the service credit you forfeited
when you took a refund.                             Defined Benefit
    Redepositing does not re-establish your         Supplement Program
earlier membership date or benefits that
                                                       Since January 1, 2001, each active
may have been available to you before you
                                                    Defined Benefit member has had established
received a refund.
                                                    for them a Defined Benefit Supplement
    In some community property settlements,
                                                    account. This account will be available
a member’s service credit, contributions and
                                                    to you when you begin to take a Defined
interest are divided to create a separate account
                                                    Benefit monthly benefit or six months after
for the former spouse or registered domestic
                                                    you terminate CalSTRS-covered employ-
partner. If the former spouse or partner takes a
                                                    ment. The account receives funds from three
refund of his or her account, the member can
                                                    sources in addition to interest.
then choose to restore all or a portion of the
                                                       One source is 2 percent of your credit-
service credit awarded to the former spouse
                                                    able compensation, which is one-fourth of
or partner.
                                                    your contribution to CalSTRS. This amount
                                                    will automatically go into your DBS account
                                                    from January 1, 2001, through 2010. There
                                                    will be no change in the 8 percent retire-
                                                    ment contribution currently withheld from
                                                    your paycheck. The redirection of contribu-
                                                    tions to your DBS account will not affect your
                                                    CalSTRS DB retirement benefit.
                                                                                                       Member Handbook 2007 • 11
In addition, since July 1, 2002, if you           The DBS account beneficiaries are the same
                             earn more than one year of service credit in a    as the beneficiaries named on your Defined
                             school year, your contributions and most of       Benefit account. Defined Benefit Supplement
                             the employer contributions from your earn-        account funds can be withdrawn only when
                             ings in excess of one year will be allocated to   you die, become disabled, retire or six months
                             your DBS account. This provision will not end     after terminating CalSTRS-covered service.
                             at the end of 2010, as does the redirection of    Please note that you cannot borrow against
                             the member contribution mentioned earlier.        your Defined Benefit Supplement account.
                                 Lastly, some members receive special              You can choose to receive the balance of
                             limited-term payments or compensation             the contributions and interest in your Defined
                             intended to enhance their Defined Benefit         Benefit Supplement account as a:
                             retirement benefits. Effective July 1, 2002,      • Lump-sum payment – Only choice if you
                             member and employer contributions on these            are receiving a refund or your account is
                             payments are credited to the Defined Benefit          less than $3,500.
                             Supplement accounts.                              • Monthly payment – If the balance is
                                 The funds in the DBS accounts earn                at least $3,500, you may choose one of
                             interest at a rate set at the beginning of each       the following annuity types to distribute
                             plan year, July 1 through June 30, by the             payment over your and your beneficiary’s
                             Teachers’ Retirement Board, based on the 30-          lifetime, based on the option you chose for
                             year Treasury rate. At the end of each year, if       your Defined Benefit payment:
                             actual earnings exceed the board-set interest         – Member-Only Annuity
                             rate, the board may declare an additional             – 100% Beneficiary Annuity
                             earnings credit.                                      – 75% Beneficiary Annuity
                                 Contributions into the Defined Benefit            – 50% Beneficiary Annuity
                             Supplement account will not affect your               – Period-Certain Annuity
                             ability to make contributions into a 403(b) or        – Combination of Lump-Sum Payment
                             similar tax-deferred savings plan.                        and Annuity
                                                                                   For details on the Defined Benefit Supple-
                             Access to DBS Funds                               ment account annuity options, see Section 6,
                                Funds available at retirement or at termina-   Your Retirement Benefit.
                             tion of employment will vary, depending on
                             your salary, overtime compensation and the        Changing Employment to a
                             interest the account has earned. All contri-      Different Public Retirement System
                             butions and interest in your Defined Benefit
                             Supplement account will appear on your               Occasionally, teachers or others who
                             DBS annual statement of account which is          perform CalSTRS creditable service change
                             contained in your Retirement Progress Report.     employment to positions that are subject to
                                Your funds will be available to you when       coverage by another California public retire-
                             you begin to take a Defined Benefit monthly       ment system. For example, a classroom
                             benefit or six months after you terminate         teacher may take a position as a human
                             CalSTRS-covered employment. If you return         resources specialist in the district office, a
                             to CalSTRS-covered employment after               position usually subject to California Public
                             withdrawing your DBS funds, you will              Employees’ Retirement System coverage. On
                             have to wait five years before you can make       the other hand, a human resources specialist
                             another withdrawal.                               may decide to take a teaching position, a
                                                                               position usually subject to CalSTRS coverage.
                                                                               CalSTRS or CalPERS members who change




12 • 2. Your Membership and Benefits • CalSTRS
www.CalSTRS.com
                                                                                                                  800-228-5453


employment subject to coverage by the other       • A school district.
system will have an opportunity to continue       • The Board of Governors of California
coverage or change to the other system.             Community Colleges.
   The two systems are treated differently for    • The state Department of Education as of
Social Security coverage. CalSTRS members           January 1, 2002.                                              2
do not participate in Social Security, but        • A local or state agency not listed above
CalPERS members do. Members of either               (only applies to vested CalPERS members).
system are urged to contact the Social Security
Administration at 800-772-1213 to determine           The election:
how the change will affect any Social Security    •   Must be made within 60 days of the date
benefit due the member.                               of hire into the new position.
                                                  •   Must be done on the appropriate CalSTRS
If You Change to a CalPERS Position                   form provided by the employer.
    If you are a member of the CalSTRS Defined    •   Is effective as of the date of hire into the
Benefit Program and become employed by the            new position.
same or a different school district, commu-       •   Is irrevocable and applies to all service in
nity college district, county superintendent          that position.
of schools or have limited state of California
employment to perform service that requires       Dual Membership
membership in the California Public Employees’       Members of CalPERS who are employed
Retirement System, you may elect, within 60       on a full-time basis and accept part-time
days of the date of your new employment, to       employment to perform creditable service
continue coverage under the CalSTRS Defined       covered by the CalSTRS Defined Benefit
Benefit Program. If you do so, service in your    Program can permissively elect membership
new position, normally subject to coverage by     in CalSTRS and have their part-time service
CalPERS, would be treated as creditable service   reported to CalSTRS.
under the CalSTRS Defined Benefit Program.
    The election:                                 Information on Both Systems
• Must be made within 60 days of the date            To help you compare both systems, review
    of hire into the new position.                the benefit information in this handbook,
• Must be done on the appropriate form            as well as the benefit information booklet
    provided by the employer.                     provided by CalPERS. Both publications are
• Is effective as of the date of hire into the    available from your employer.
    new position.                                    In addition, the CalSTRS brochure Join
• Is irrevocable and applies to all service in    CalSTRS? Join CalPERS? outlines and contrasts
    that position.                                the basic benefits of the two systems. For
                                                  a copy, visit www.CalSTRS.com, ask your
If a CalPERS Member                               employer or call CalSTRS at 800-228-5453.
Changes to a CalSTRS Position
    Certain members of CalPERS who subse-
quently are employed to perform CalSTRS
creditable service can elect within 60 days
of their new hire date to continue coverage
under CalPERS for all subsequent CalSTRS
creditable service. This applies to CalPERS
members employed by:




                                                                                                     Member Handbook 2007 • 13
14 • 2. Your Membership and Benefits • CalSTRS
3. Benefits for
Part-Time Educators
T   his section is for the part-time educator.
    As a part-time educator you have access
to all the benefits that CalSTRS offers.
                                                  • What is the contribution rate for the
                                                    plan and does the employer also make
                                                    contributions?
However, your part-time status presents you       • Is there a minimum requirement to be
with special considerations in retirement           eligible for benefits?
planning. As a part-time educator, you have       • Does the plan charge administrative fees?
additional decisions about which retirement       • Is there a guaranteed annual interest rate?
plan coverage to choose, as well as issues        • Does the plan have a record of sound
to consider that are unique to part-time            investment experience?
employment.                                       • When does the plan permit distribution of
                                                    your account?
Retirement Plans for
Public School Employees                           Retirement Options for
    Federal law requires all employees to be      Public School Educators
covered under a retirement plan. California       Defined Benefit Program
state law requires all public school employers        Members of the CalSTRS Defined Benefit
to provide the CalSTRS Defined Benefit            Program who are employed on a part-time or
Program. For employees in certificated posi-      adjunct basis are a distinctive group within the
tions whose time base is less than half-time,     CalSTRS system. Your retirement benefit calcu-
public school employers must also offer           lation uses the same components as a member
either Social Security or another retirement      who works full time: age factor, final compen-
program as an alternative to Social Security.     sation and service credit, as described earlier in
The CalSTRS Cash Balance Benefit Program,         Section 2, Your Membership and Benefits.
described later in this section, is one example       However, for you, two of those compo-
of an alternative to Social Security. Your        nents, final compensation and service credit,
employer may offer other alternative retire-      are determined differently from full-time
ment programs. See your employer for full         educators. Your final compensation and
details about the specific programs it offers.    service credit depend on the amount you
Choosing the Plan That’s Right for You            would have earned if you were working full
   If your basis of employment is less than 50    time in your position. This amount of work is
percent of full-time, here are some questions     called full-time equivalent and this amount of
that may help you decide which retirement         compensation for the full-time equivalent is
plan coverage is best for you:                    called earnable compensation.
• Do you plan to be a career teacher?             Full-Time Equivalent
• Does teaching provide you supplemental              The full-time equivalent is the time that
   income or is it your primary source of         a member who is employed on a part-time
   income?                                        basis would be required to work in one school
• Prior to teaching, did you have employ-         year if he or she were employed full time
   ment that required you to pay into Social      in that position. For members employed in
   Security?                                      a community college or as an adult educa-
                                                  tion instructor on a part-time basis, the FTE
                                                  must be identified specifically in either the
                                                                                                       Member Handbook 2007 • 15
collective bargaining agreement or in the                     employing district’s established FTE for your
                               employment agreement. The FTE stated in                       type of employment. If you see a discrepancy,
                               the agreement must be at least the minimum                    contact that employer’s office that reports
                               number of days or hours specified by law.                     earnings to CalSTRS.
                                   Note: The FTEs listed below are minimum stan-
                               dards; your individual FTE could be higher if your            Calculating Earnable Compensation
                               employer requires full-time employees to work more                Your earnable compensation (also known as
                               days or hours in that same activity in a school year.         compensation earnable) is not the salary you
                                   It is important to make sure that your                    actually were paid, but what you would have
                               employers determine your FTE properly.                        been paid if you worked full time in that posi-
                               Different assignments, even with the same                     tion. Therefore, you take the hourly or daily
                               employer, may have different FTEs. Refer                      rate for that position and multiply it by the
                               to your employment agreement or collec-                       full-time equivalent for the position to deter-
                               tive bargaining agreement to obtain your                      mine your earnable compensation.

                                                                                             Calculating Final Compensation
 Minimum Full-Time Equivalent                                                                   Another key component of your retirement
                                                                                             calculation is final compensation. Your final
 If you are a:                                  Then the minimum FTE is:
                                                                                             compensation is equal to the highest average
 Part-time community                            525 instructional hours, plus                annual earnable compensation for three
 college instructor                             mandatory office hours, if paid              consecutive years, or 12 consecutive months if
 Community college                              875 instructional hours, plus                you have earned 25 years of service credit.
 adult education instructor                     mandatory office hours, if paid
                                                                                             Calculating Service Credit
 K–12 teacher or any other person who           175 days or 1,050 hours                         For part-time and adjunct faculty, service
 works directly with pupils, including an                                                    credit for one school year is equal to how
 instructor in an adult education program                                                    much you actually earned in an assignment

  Part-time Community College and Adult Education Instructor Service Credit
  In one school year, Juanita teaches as a community college instructor for 262.5 hours, which is half of the FTE in her district. She also works as
  an adult education instructor for 350 hours or 40 percent of the FTE for that position.

                                      Percent Time               Minimum             Actual                 Full-Time           = Service Credit
                                        Worked                      FTE             Earnings                   Rate                  Earned
  Community College Instructor        50% (262.5 hours)           525 hours        $15,000          ÷        $30,000             =       .500
  Adult Education Instructor          40% (350 hours)             875 hours        $10,800          ÷        $27,000             =       .400
                                                                                                   Total Service Credit          =       .900
  Juanita would earn .900 of service credit for the year.


  Part-time K–12 Teacher Service Credit
  During the school year, Janet taught 30 percent of the FTE for K–12 teachers in her district, or 315 hours. The full-time pay rate was $42,000.
  Because she worked every day of her 30 percent teaching contract, she earned $12,600 for the school year.

                                      Percent Time               Minimum             Actual          ÷       Full-Time          = Service Credit
                                        Worked                      FTE             Earnings                    Rate                 Earned
  K–12 Instructor                     30% (315 hours)            1,050 hours       $12,600           ÷       $42,000             =       .300
  Janet would receive .300 of service credit for the year.


16 • 3. Benefits for Part-Time Educators• CalSTRS
www.CalSTRS.com
                                                                                                                            800-228-5453


divided by your earnable compensation for          Working for Multiple Employers
that assignment. When a member works
multiple assignments, service credit is the sum    Kali works part time at two high schools and a community college. He has 8.95
of the service credit earned in each individual    years of service. If he continues to work for all three employers during his last
assignment, up to one year of service credit in    three years before retirement at age 63, here is how his final compensation would
                                                   be calculated:
a school year.
                                                   Employer               Earnings                     Service Credit
Raising Your Defined Benefit                       A                     $ 3,360                           .100
Retirement Amount                                  B                      30,250                           .500
                                                   C                       6,563                           .250
Increasing Service Credit
                                                   Total                $40,173                            .850
with Additional Assignments
   If you work on a part-time or adjunct           Kali’s annual earnable compensation is:               $40,173 ÷ .850 = $47,262
basis, you may wish to consider taking on          Monthly final compensation is:                          $47,262 ÷ 12 = $3,938
additional assignments to earn more service        To increase his retirement benefit, Kali could terminate the employment where he
credit if you are not earning one full year        receives the lowest annual pay rate and his retirement benefit would be higher.
of service credit under your existing assign-      Employer               Earnings                     Service Credit
ment. Service credit can now be earned for         A                     $ 3,360                           .100
activities such as teaching summer school          B                      30,250                           .500
and intersession, paid office hours, attending     Total                $33,610                            .600
staff development days and serving as a
coach, band director, yearbook editor or           Kali’s annual earnable compensation is:               $33,610 ÷ .600 = $56,017
                                                   Monthly final compensation is:                          $56,017 ÷ 12 = $4,668
department chair. Extra service will count
as additional service credit and will be           However, if Kali also terminates the position with the next lowest annual pay rate,
included in calculating your total service         his final compensation would be even higher.
credit for that school year. However, when         Employer              Earnings                      Service Credit
you near retirement, be sure to consider           B                    $30,250                            .500
another factor — final compensation.               Total                $30,250                            .500
Consider Final Compensation                        Kali’s annual earnable compensation is:               $30,250 ÷ .500 = $60,500
If Working for Multiple Employers                  Monthly final compensation is:                          $60,500 ÷ 12 = $5,042
    As a part-time educator, when you              Here’s the impact of the three alternatives on Kali’s retirement benefit calculation:
have more than one employer, your earn-
                                                   Monthly final compensation is calculated by dividing annual earnable
able compensation is the sum of all your           compensation by 12 months.
actual salaries divided by the sum of all
your service credit earned for the school          Works all three jobs:
year. Your final compensation is the average       Service Credit    Age Factor              Monthly Final Compensation
annual earnable compensation during your           11.500      x       2.4%          x        $3,938       =    $1,087 per month
final compensation period, which is gener-
ally your last three years of employment.          Terminates job with Employer C at the lowest annual pay rate:
When salary rates and service credit vary          Service Credit    Age Factor              Monthly Final Compensation
within a school year, your final compensa-         10.750      x       2.4%          x        $4,668       =     $1,204 per month
tion may be lower, which can lower your                                                                       or $117 more per month
retirement benefit. This means it is possible
to earn a larger retirement benefit if you         Terminates all jobs except one with Employer B
reduce the number of employers you work            at the highest annual pay rate:
for during your final compensation period.         Service Credit    Age Factor              Monthly Final Compensation
    The example in the box shows how the           10.450      x        2.4%             x    $5,042        =    $1,265 per month
calculation can affect the retirement benefit of                                                              or $178 more per month
a part-time educator.


                                                                                                            Member Handbook 2007 • 17
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CalSTRS Handbook 08

  • 1. C a l i f o r n i a S t a t e Te a c h e r s ’ Retirement System Member Handbook YOUR GUIDE TO CalSTRS BENEFITS 2007 – 2008
  • 2. CalSTRS Resources Dial 800-228-5453 then press the numbers to access Web sites www.CalSTRS.com 1 2 3 Click Contact Us to e-mail Account Data Teletalk Statement of Account Order Forms/Brochures www.403bCompare.com Call 800-228-5453 7 a.m. to 6 p.m. 4 5 6 0 Monday through Friday Survivor/Disability Cash Balance Benefits Counseling/ Customer TTY 916-229-3541 Benefits Caseworker Benefit Program Workshops Service 866-384-4457 Home Loan Program 800-699-4032 The summarized data pertain to the Teachers’ Retirement Law Voluntary Investment Program (California Education code 22000 et. seq.) and procedures effec- Write CalSTRS tive January 1, 2007. The Member Handbook is intended as a ready P Box 15275 .O. source of information about CalSTRS and not as a legal document or Sacramento, CA 95851-0275 a substitute for the law. If differences appear between the law and the Fax 916-229-3879 handbook, the law must prevail. Permission is hereby granted to reproduce, copy, or duplicate the Visit Member Services information in this handbook, provided credit is given to CalSTRS. 7919 Folsom Boulevard Sacramento, CA 95826
  • 3. www.CalSTRS.com 800-228-5453 Dear Member, Welcome to the California State Teachers’ Retirement System. I am pleased to present the latest edition of the Member Handbook. Whether you are just beginning your career in education or are an experienced educator, this handbook will answer many of the questions you have about your benefit coverage. The information in it can help you make informed decisions during your active career and prepare fully for your retirement. CalSTRS is the nation’s largest teachers’ pension fund and our dedicated, professional and conscientious staff work hard to improve service and responsiveness to your needs. Although we serve nearly 800,000 California educators and their families, we are committed to providing exemplary service to each and every person who calls, writes or visits CalSTRS. Service to CalSTRS members and the security of the Teachers’ Retirement Fund remain our highest priorities. We look forward to assisting you throughout your career and retirement. Sincerely, Jack Ehnes Chief Executive Officer Member Handbook 2007 • i
  • 4. A Brief History of CalSTRS The California State Teachers’ Retirement System was established by law in 1913 to provide retirement benefits to California’s public school teachers. Membership in the CalSTRS Defined Benefit Program includes all employees in California public schools from kindergarten through community college in positions performing creditable service under the Defined Benefit Program. Teachers’ Retirement Board The Teachers’ Retirement Board sets policies, makes rules for, and administers the California State Teachers’ Retirement System. The board is also responsible for ensuring benefits are paid by the system in accordance with law. Our 12-member Teachers’ Retirement Board is made up of: • Three member-elected positions representing current educators. • A retired CalSTRS member appointed by the Governor and confirmed by the Senate. • Three public representatives appointed by the Governor and confirmed by the Senate. • A school board representative appointed by the Governor and confirmed by the Senate. • Four board members who serve in an ex-officio capacity by virtue of their office: Director of Finance, State Controller, State Superintendent of Public Instruction and State Treasurer. The board appoints a Chief Executive Officer to administer the system consistent with the board’s policies and rules. The board also selects a Chief Investment Officer to direct the invest- ment of the Teachers’ Retirement Fund in accordance with board policy. The board has seven standing committees: Audits and Risk Management, Benefits and Services, Board Governance, Investments, Compensation, Legislation and Appeals. Teachers’ Retirement Fund The Teachers’ Retirement Fund is a special trust fund established by law that holds the assets of the CalSTRS Defined Benefit, Defined Benefit Supplement and Cash Balance Benefit programs. The assets come from contributions by employees, employers and the state of California. The fund’s investments create a stream of income to add to those assets. When selecting investments, the Teachers’ Retirement Board applies standards of safety, diversification, liquidity and structure for a complete and profitable investment portfolio. The portfolio includes stocks, bonds, real estate and short-term investments. Within these catego- ries, CalSTRS further diversifies by holding a variety of issues within each segment. The Teachers’ Retirement Fund portfolio market value was $157.9 billion as of December 31, 2006. CalSTRS ranks as the nation’s second-largest public pension fund. For further information about Teachers’ Retirement Fund investments, visit www.CalSTRS.com. ii • A Brief History of CalSTRS • CalSTRS
  • 5. www.CalSTRS.com 800-228-5453 ContentsFront and back covers are in a separate document ............................................. a A Brief History of CalSTRS ..................................................................................ii Teachers’ Retirement Board ...............................................................................ii Teachers’ Retirement Fund .................................................................................ii 1. Introduction ..........................................................................................................................1 Quick Start Guide to CalSTRS Benefits and Services .......................................... 1 Where You Can Find Information ........................................................................ 2 Recent Legislative Changes to CalSTRS Benefits................................................ 4 2. Your Membership and Benefits.........................................................................................5 Membership in the CalSTRS Defined Benefit Program......................................... 5 Membership for Part-Time Employees ............................................................... 6 Contributions to Your DB and DBS Accounts....................................................... 7 Borrowing Against Your Accounts ....................................................................... 8 Retirement Progress Report .............................................................................. 8 What if You Become Disabled? .......................................................................... 9 What Happens When You Die? .......................................................................... 9 If You Terminate Your CalSTRS-Covered Employment ........................................... 9 Refunding Your CalSTRS Contributions ............................................................. 10 Redeposits – Restoring Service Credit ............................................................. 11 Defined Benefit Supplement Program ............................................................... 11 Changing Employment to a Different Public Retirement System ......................... 12 3. Benefits for Part-Time Educators....................................................................................15 Retirement Plans for Public School Employees ................................................. 15 Retirement Options for Public School Educators ............................................... 15 Social Security Program................................................................................... 18 Cash Balance Benefit Program ........................................................................ 18 Choosing Between Defined Benefit and an Alternative Retirement Program ........ 19 Consolidating Your Cash Balance and Defined Benefit Coverages ...................... 20 4. Building Your Financial Future ........................................................................................21 Step One – Determine How Much You Will Need in Retirement.......................... 21 Step Two – Attend a Workshop ........................................................................ 21 Step Three – Use CalSTRS Programs to Build Supplemental Income and Achieve Home Ownership ............................... 22 Comparing 403(b) Plans .................................................................................. 23 CalSTRS Home Loan Program.......................................................................... 24 Step Four – Meet With a Benefits Counselor to Get an Estimate of Your Retirement Benefit ................................................. 24 Benefits Counseling Offices by County/City ...................................................... 25 How Much Will You Need to Retire? ................................................................. 25 5. Approaching Retirement ..................................................................................................27 One-Time Death Benefit Recipient .................................................................... 27 Protecting Your Loved Ones Before You Retire ................................................. 27 About Social Security ...................................................................................... 29 Health Insurance............................................................................................. 31 Reduced Workload Program ............................................................................. 32 Retiring From Other Public Retirement Systems ................................................ 32 Member Handbook 2007 • iii
  • 6. 6. Your Retirement Benefit ...................................................................................................33 Deciding When to Retire .................................................................................. 33 Retiring From More Than One Public Retirement System .................................. 34 How to Calculate Your Defined Benefit Retirement ............................................ 34 Ways to Increase Your Benefit.......................................................................... 34 Partial Lump Sum ........................................................................................... 38 Member-Only Benefit ....................................................................................... 39 Protecting Your Survivor with an Ongoing Benefit .............................................. 39 Defined Benefit Supplement Program .............................................................. 42 Guidelines for the Retirement Application Process ........................................... 44 Signing Up for Direct Deposit ........................................................................... 46 Benefit Estimate Worksheet ............................................................................ 47 Age Factor Table.............................................................................................. 48 Option Worksheets ......................................................................................... 49 Defined Benefit Supplement Annuity Calculation Estimates ............................... 54 7. After You Retire..................................................................................................................57 Annual Benefit Adjustment .............................................................................. 57 Purchasing Power Protection ............................................................................ 57 Medicare Premium Payment Program ............................................................... 57 Post-Retirement Employment ........................................................................... 57 Reinstatement to Active Member Status .......................................................... 58 Keeping You Informed ..................................................................................... 59 8. Disability Benefits ..............................................................................................................61 Before Filing a Disability Application ................................................................. 61 Reasonable Accommodation............................................................................ 61 Steps in the Disability Application Process ....................................................... 61 Filing a Disability Benefit Application ................................................................ 62 Coverage A or Coverage B ............................................................................... 64 Coverage A – Disability Allowance Program ....................................................... 64 Coverage B – Disability Retirement Program ..................................................... 68 9. Survivor Benefits................................................................................................................71 Coverage A or Coverage B – Family or Survivor Benefits .................................... 71 Coverage A – If You Die Before Retirement ....................................................... 72 Coverage B – If You Die Before Retirement ....................................................... 74 Defined Benefit Supplement Distribution .......................................................... 77 Coverage A or B – When You Die After Retirement ........................................... 77 10. Tax Information and Legal Matters..............................................................................79 Income Tax Withholding ................................................................................... 79 Internal Revenue Codes Affecting Benefits ....................................................... 80 Legal Matters ................................................................................................. 81 Members’ Rights – The Appeal Process ........................................................... 81 Community Property Information ...................................................................... 82 11. Teletalk Message Codes ................................................................................................83 Glossary of Terms ..................................................................................................................87 Index .........................................................................................................................................95 Checklist for a Secure Financial Future ............................................................. Back Cover iv • Contents • CalSTRS
  • 7. 1. Introduction T he CalSTRS Member Handbook is for full- time and part-time California public educators, their beneficiaries, retirees and others day of employment. You contribute 8 percent of your pay as a CalSTRS member. For an overview of your Defined Benefit interested in the many benefits and services Program membership and benefits, see Section offered through the California State Teachers’ 2, Your Membership and Benefits. Retirement System. This guide is designed to focus on the Defined Benefit Program and to Defined Benefit Supplement Program explain its many components that can help Your Defined Benefit Supplement account you to a secure financial future including retire- will provide you additional retirement ment, disability and survivor benefits as well income based on the amount in the account. as the Defined Benefit Supplement account. One-fourth of your CalSTRS 8 percent From program descriptions to retirement benefit payroll contribution will be allocated to formulas, examples and worksheets, this hand- your DBS account through 2010. If you book can be used as a reference for retirement earn more than one year of service credit in benefits, eligibility and planning. This guide a school year, contributions from both you also includes a Checklist for a Secure Financial and your employer will also go into this Future on the back cover and a Retirement supplemental account until you retire. Application Timeline in Section 6, Your For information on this account, see Retirement Benefit. Section 2, Your Membership and Benefits. For information on how benefit choices affect Quick Start Guide to CalSTRS the Defined Benefit Supplement account, see Benefits and Services Section 6, Your Retirement Benefit. The following briefly introduces the main Disability Benefits CalSTRS program benefits and indicates where Once you are vested and meet the eligi- to look in this handbook for more information bility requirements, disability benefits may be on each topic. half your highest average annual salary, plus another 10 percent for each eligible child, Defined Benefit Program up to a total of 90 percent, until the child As a Defined Benefit Program member, reaches age 21 or 22, depending on coverage. your retirement is guaranteed for life once The member’s portion of the disability benefit you become vested with five years of service continues for life, as long as you are disabled credit and are eligible to retire. Your retire- under Coverage B. Under Coverage A, the ment benefit is a steady source of income and benefit may change at age 60. is based on your age, final compensation and See Section 8, Disability Benefits. years of service credit at retirement, not on how much is in your account. If you are employed Survivor Benefits full time to perform creditable service in a Cali- Depending on your amount of service fornia public school or community college, your credit and if you die before or after retirement, membership in CalSTRS begins on your first your survivor could receive a refund of the balance in your retirement account, a one- time amount and/or a monthly benefit. See Section 9, Survivor Benefits. Member Handbook 2007 • 1
  • 8. Medicare Premium Payment Program Where You Can Find Information CalSTRS does not provide health insur- Throughout your career in California’s ance coverage; however, CalSTRS will pay the public school system, and the years to Medicare Part A premium for Defined Benefit follow, you and your dependents can rely on members who retire before July 1, 2012, CalSTRS as a trusted resource. Our customer depending on eligibility. All benefit recipients service representatives are available to answer may authorize CalSTRS to deduct Medicare your questions online or by calling our toll- Part B and other group insurance premiums free number at 800-228-5453. Our benefits from their monthly benefit check. counselors can help you build a CalSTRS See Section 5, Approaching Retirement. retirement plan to meet your specific needs. Cash Balance Benefit Program See Section 4, Building Your Financial The Cash Balance Benefit Program is Future, for details on setting up an appoint- CalSTRS’ alternative retirement program ment with a counselor. that employers may choose to offer part- You can contact us in the following ways: time educators. With the Cash Balance Visit Our Web Site Benefit Program, employers must contribute The CalSTRS Web site at www.CalSTRS.com 4 percent of the salary you earn as a part- provides current information for members, time employee. You usually pay 4 percent; employers and anyone interested in CalSTRS. however, your contribution rate may be The CalSTRS site includes such useful features collectively bargained with your employer. as the Retirement Benefit Calculator, which See Section 3, Benefits for Part-Time allows you to estimate your retirement benefit. Educators. You can also order and download forms and Voluntary Investment Program publications. To send an e-mail, go to www. If your district participates in this 403(b) CalSTRS.com/ContactUs. program, you can set aside even more retire- myCalSTRS ment funds through tax-deferred savings. Registered myCalSTRS users can access CalSTRS oversees the Voluntary Investment certain personal account information online Program’s competitively priced services and in a secure environment. Defined Benefit investment options. members have access to Form 1099-Rs begin- See Section 4, Building Your Financial ning with 2000, and annual statements and Future. benefit payment stubs beginning with 2002. Home Loan Program Cash Balance Benefit Program participants The CalSTRS Home Loan Program is have access to Form 1099-Rs and benefit open to active, inactive and retired CalSTRS payment stubs beginning with 2003 and members and Cash Balance Benefit Program annual statements beginning with 2004. participants. Several options are available You can also review your tax withholding for a conventional home purchase or refi- and beneficiary choices or update your nance loan. mailing address and telephone number. The See Section 4, Building Your Financial Online Messaging feature allows you to send Future. and receive confidential information. Go to www.CalSTRS.com and log in or register to CalPERS Long-Term Care Program access myCalSTRS. You and some members of your family are eligible for the CalPERS Long-Term Care Program. See Section 5, Approaching Retirement. 2 • 1. Introduction • CalSTRS
  • 9. www.CalSTRS.com 800-228-5453 Call Us Teletalk – Automated Information 1 Call us at 800-228-5453 and select an Service via Your Telephone option as follows: The CalSTRS Teletalk information system provides recorded messages giving Press For: general information on a variety of CalSTRS 1 Account Data. subjects. To access the Teletalk system, call 800-228-5453 and then press 2. Teletalk 2 Teletalk, a recorded message system. calls are answered electronically and you Then press the three-digit code for information on a variety of topics. A partial list follows; see can choose topics easily via your telephone the complete Teletalk call list in Section 12. keypad, for example: 3 Ordering forms, brochures and duplicate Enter: For this key topic: annual statements of accounts or 1099s. 100 General Information 4 Survivor/Disability caseworkers. 150 Membership, Service Credit and Contributions 5 Cash Balance Benefit Program information. 200 Benefits Counseling 6 Benefits Counselors/Workshops. 250 Purchase of Additional Service Credit 0 Member Services representatives – and Redeposits 7 a.m. to 6 p.m. Monday – Friday. 300 Pre-Retirement Election of an Option 350 Service Retirement Publications and Newsletters 400 Disability Benefits For additional information, you can order 420 Coverage A, Disability Allowance and the following publications. To order publi- Rehabilitation Program cations go to www.CalSTRS.com or call 800-228-5453 and press 3. 450 Coverage B, Disability Retirement and Rehabilitation Program CalSTRS Connections newsletter for active members 500 Death Benefits Cash Balance Benefit Program Information 520 Coverage A, Family Allowance Program Packet 550 Coverage B, Family Allowance Program Community Property Information 600 Increases in Benefits Comprehensive Annual Financial Report 650 Tax Liability Home Loan Program Fact Sheet 700 Refund of Contributions Join CalSTRS? Join CalPERS? 750 Voluntary Investment Program Member Handbook 900 Cash Balance Benefit Program Purchase Additional Service Credit Refund: Consider the Consequences You can find a complete list of Teletalk message codes and topics at the end of Retired Educator newsletter for retired this guide. members and other benefit recipients Social Security, CalSTRS and You Tax Considerations for Rollovers Your Retirement Guide (Service Retirement Application) Retirement: Your Next Journey (A Benefits Overview CD) Member Handbook 2007 • 3
  • 10. Recent Legislative Changes to CalSTRS Benefits • Pension Protection Act of 2006 - The PPA allows for eligible rollover distributions to Roth IRAs, non-taxable amounts to be paid into qualified plans and direct rollovers to be made to any designated beneficiary. Therefore, CalSTRS will allow any designated benefi- ciary of a member to make a direct rollover of eligible payments, including registered domestic partners, who were previously prohibited from making direct rollovers. • Effective Janaury 1, 2007, a monthly benefit will be provided to dependent children who become eligible on or after January 1, 2007, under Coverage B Survivor Benefits when there is no surviving spouse or partner at the time of the active member’s death. The Governor and Legislature occasionally make statutory changes that may affect your CalSTRS benefits and that may affect any decision you make concerning your career or retirement. CalSTRS makes every effort to communicate these changes to our members, but legislation can undergo rapid change. To stay informed about any possible legislative benefit changes, consult a variety of sources including the California State Legislative Counsel Web site at www.leginfo.ca.gov or your union or elected legislative representatives. You may also call CalSTRS at 800-228-5453 or visit www.CalSTRS.com. 4 • 1. Introduction • CalSTRS
  • 11. 2. Your Membership and Benefits W hether you are a full-time or part- time educator, the California State Teachers’ Retirement System provides you Employees performing creditable service in a charter school are subject to coverage only if the charter of the school provides for participation benefits and services to build a strong, in the CalSTRS Defined Benefit Program. stable financial future. This section includes an explanation of Mandatory Membership membership and the basic benefits in the If you are employed to perform creditable Defined Benefit Program and describes the service on a full-time basis, you will auto- Defined Benefit Supplement Program. These matically become a Defined Benefit Program programs are two of three components that member on the first day of employment. can help you achieve the lifestyle you desire Full time is defined as the number of days at the end of your working career. The third or hours in a school year that the employer component is your own optional retire- requires a class of employees to work. For ment savings, such as a 403(b) tax-deferred example, under a collective bargaining or savings plan. CalSTRS offers such a plan, the employment agreement, an employer might Voluntary Investment Program, which you require guidance counselors in a high school can read about in Section 4, Building Your to work a specific number of days each school Financial Future. year. Therefore, guidance counselors would This section also explains the Cash Balance constitute a class of employees. For more Benefit Program, an alternative retirement information about what constitutes full time plan for part-time educators. and class of employees, see the glossary. Many teachers and others who perform Membership in the CalSTRS creditable service are not hired to work full Defined Benefit Program time. For those educators hired to work on a part-time, substitute or hourly basis, The CalSTRS Defined Benefit Program CalSTRS offers an alternative retirement plan is available to employees of the California called the Cash Balance Benefit Program. public school system, kindergarten through However, providing the program is optional community college, in positions that require for employers. a credential, certificate, or permit or require Mandatory Defined Benefit Program the employee to meet minimum standards membership requirements vary, depending on adopted by the Board of Governors of the an individual’s employment status and whether California Community Colleges. or not the employer offers the Cash Balance Only activities identified as creditable Benefit Program to their part-time employees. service are subject to Defined Benefit Program For details on the Cash Balance Benefit coverage, that is, count toward years of service Program and part-time educators, see Section 3, for CalSTRS retirement purposes. These activi- Benefits for Part-Time Educators. ties include teaching, vocational or guidance counseling, services related to school curric- Benefit Eligibility ulum and a variety of administrative duties. You will be eligible for or vested with a If you are a classroom teacher or are right to a lifetime retirement benefit when you performing other activities that are creditable have accumulated five years of service credit service, you may be a Defined Benefit Program under the Defined Benefit Program. You can member as mandated by law or you may be retire as early as age 50 if you have at least eligible to elect membership. 30 years of service credit. You can retire at Member Handbook 2007 • 5
  • 12. age 55 with five years of service credit. For Calculating Your Defined information on the eligibility requirements Benefit Retirement for disability and survivor benefits available to active members, see Section 8, Disability Benefit Formula: Benefits, and Section 9, Survivor Benefits. Service Credit x Age Factor x Final Compensation = Retirement Benefit (Member-Only) The formula for calculating a Member-Only Defined Benefit retirement includes three Membership When Cash Balance Is Offered elements: service credit, age factor and final In school districts, county offices of education or community college districts that compensation. For details on calculating your offer the Cash Balance Benefit Program, the following mandatory Defined Benefit Defined Benefit, see Section 6, Your Retire- Program membership requirements apply: ment Benefit. Employment Status Mandatory DB Membership Begins Membership for K-12 and/or county office First day of the pay period following employment to Part-Time Employees of education on a part- perform creditable service for 50 percent or more of time, hourly or daily basis the full time position. As long as your basis of employment or contracted for more remains part-time, substitute or temporary, you than 50 percent of full have the choice of participating either in the time position: Defined Benefit Program or the Cash Balance Community college district First day of the pay period following employment Benefit Program — if you are employed in a hired on a part-time basis: to perform creditable service. Mandatory DB district that offers the CB Benefit Program. If membership does not apply to temporary employees you choose the CB Benefit Program and your of adult education or community college districts. basis of employment changes, you may auto- matically become a member of the Defined Benefit Program (see charts at left for noted exceptions). For details on benefits for part- Membership When Cash Balance Is Not Offered time employees, see Section 3, Benefits for In school districts, county offices of education or community colleges that do not Part-Time Educators. offer the Cash Balance Program, the following mandatory Defined Benefit Program Part-Time or Substitute membership requirements apply: Employees Electing Defined Employment Status Mandatory DB Membership Begins Benefit Program Membership K-12/county office of First day of the pay period following the pay period Anyone who performs creditable service education – part-time in which at least 60 hours of creditable service was in the California public school system is hourly: performed. eligible to elect membership in the Defined Benefit Program. K-12/county office of First day of the pay period following the pay education - part-time daily: period in which 10 days of creditable service was If you are hired as a substitute or on a performed. part-time basis and your basis of employ- ment does not qualify you for mandatory K-12/superintendent’s Same as above except for 100 or more complete membership, you may still elect to become office/community college days during the school year a member of the Defined Benefit Program. district substitute: Your employer must formally notify you Community college district First day of the pay period following employment of your right to elect membership in the hired on a part-time basis: to perform creditable service. Mandatory DB program within 30 days of hire. membership does not apply to temporary employees of adult education or community college districts. 6 • 2. Your Membership and Benefits • CalSTRS
  • 13. www.CalSTRS.com 800-228-5453 You can elect membership only during a Employer Contributions pay period in which you actually performed The employing school district, community creditable service, and you must elect college district or county superintendent of membership on the appropriate form schools contributes to CalSTRS an amount provided by your employer. The effective equal to 8.25 percent of the creditable 2 date of membership is the first day of the pay compensation paid to every employee who period in which the election is made. is a member of the Defined Benefit Program. Employer contributions are not credited Contributions to Your to individual member DB accounts but are DB and DBS Accounts deposited in the Teachers’ Retirement Fund to help fund the benefits payable to all members Member Contributions and their beneficiaries. As a member of the Defined Benefit Program, you contribute 8 percent of your State Contributions creditable compensation as identified in the The state of California contributes 2.017 Teachers’ Retirement Law. Your employer can percent of the creditable earnings from the pay all or a portion of member contributions. fiscal year ending in the prior calendar year. Contributions are withheld from your cred- Additionally, the state contributes an amount itable compensation by payroll deduction and equal to 2.5 percent of the total credit- credited to your Defined Benefit and Defined able compensation paid to all CalSTRS DB Benefit Supplement accounts. For details on Program members during the fiscal year your DBS account see Defined Benefit Supple- ending in the prior calendar year for the ment Program later in this section. Supplemental Benefit Maintenance Account. This is used to maintain the purchasing power “Employer Pick-Up” of benefits at prescribed levels. of Member Contributions Most employers participate in the How Interest is Credited “Employer Pick-Up” Program under a provi- to Your Accounts sion of the Internal Revenue Code (Section At the end of each fiscal year, interest is 414[h][2]). The member’s contributions to credited to the accumulated contributions and CalSTRS are “picked-up” by the employer interest in each member’s Defined Benefit and for the sole purpose of deferring income Defined Benefit Supplement accounts at the taxes on that portion of compensation. The credited interest rate. Each credited interest contributions must be deducted from your rate is adopted annually by the Teachers’ compensation and are considered creditable Retirement Board and is currently set at a rate compensation for retirement purposes. that approximates the yield on two-year Trea- These tax-deferred member contributions sury notes for the Defined Benefit Program are credited to your account as “Employer- and the 30-year Treasury rate for the Defined Paid Member Contributions.” Those Benefit Supplement Program. The current contributions are taxable when returned rates, compounded daily, are 4.25 percent for to you or a beneficiary in a lump sum or Defined Benefit and 4.75 percent for Defined monthly benefit. For more information on Benefit Supplement accounts. These interest taxes, see Section 10, Tax Information and rates are valid through June 30, 2007. The Legal Matters. rates for July 1, 2007-June 30, 2008 are 5.25 percent for both Defined Benefit and Defined Benefit Supplement accounts. Defined Benefit Account Interest is credited to your Defined Benefit account primarily to provide a lump-sum Member Handbook 2007 • 7
  • 14. benefit to you if you terminate all creditable If you do not receive a Retirement Progress service and withdraw your contributions or to Report in the mail, you can view and print your your beneficiaries if you die without survivors DB and DBS statements of account online. Go who are eligible for monthly benefits. to www.CalSTRS.com and log in or register to As a Defined Benefit Program member, use myCalSTRS. You can also call us at your retirement benefit will be calculated 800-228-5453 to request a statement. using a formula established by law based Note: Retired members and benefit recipients on your age, years of service credit and final do not receive a Retirement Progress Report. compensation. The amount of total contri- butions and interest in your Defined Benefit What’s on Your Annual account is not used to calculate either your or Statement of Account your beneficiary’s future monthly benefit. This Examine your annual statement carefully is a lifetime benefit regardless of the funds you each year for accuracy and file it with your have contributed to your account. important employment or financial records. Your annual statement includes: Defined Benefit Supplement Account • Beginning balances of your service credit The credited interest rate for the Defined and contributions and interest credited Benefit Supplement Program is not necessarily on member contributions as of July 1 of the same as for the Defined Benefit Program. the previous school year. The rate cannot be less than the rate for • Ending balances of your service credit the Defined Benefit account. The interest is and contributions and interest earned on included in the amount payable to you. member contributions as of June 30 of the just-completed school year. Borrowing Against Your Accounts • Information about the just-completed State law does not permit you to borrow school year, July 1 through June 30, which against your accumulated contributions and also includes: interest on account with CalSTRS. – Interest credited on your accumulated contributions. Retirement Progress Report – Service credit you earned. – Contributions credited to your Defined Every year you receive a Retirement Prog- Benefit and Defined Benefit Supplement ress Report that contains an annual statement accounts. of account for your Defined Benefit and The service credit shown on your annual Defined Benefit Supplement accounts and statement of account is based on the credit- a retirement planning guide. The annual able compensation earned and annual earnable statement of account is one of your most compensation for the full-time position as important CalSTRS records and should be reported by your employer(s) to CalSTRS. The reviewed carefully. member contributions are the contributions The Retirement Progress Report is mailed to that your employer(s) reported to CalSTRS. you, usually in late December. It gives your If you believe there is a discrepancy on account status as of June 30 of that school year. your annual statement, contact your employer’s The report is sent to the mailing address department that reports your time to CalSTRS. on file with CalSTRS. You can update your Adjustments made to service credit mailing address through your employer or and contribution data after June 30 will be online at myCalSTRS. In addition to current included in your next annual statement of members, Retirement Progress Reports are also account included in your Retirement Progress sent to inactive members, that is, members Report. If you have purchased additional who have a balance remaining in their service credit or redeposited contributions Defined Benefit account, but did not perform that were previously refunded, the changes creditable service during the prior school year. will first appear on your annual statement of 8 • 2. Your Membership and Benefits • CalSTRS
  • 15. www.CalSTRS.com 800-228-5453 account for the school year during which the Less than One Year of Service Credit final payment was made. If you have earned less than one year of In addition to your DB and DBS statements service credit at the time of your death, a of account, the annual statement included in refund of your accumulated contributions the Retirement Progress Report provides: plus interest is paid to your death benefit 2 • An explanation of your Coverage A or recipient(s) or to your spouse or registered Coverage B for disability and survivor domestic partner, if appropriate. benefits. • The name of your one-time death benefit One or More Years of Service Credit recipient or recipients, formerly called If you have earned one or more years of “designated beneficiary.” service credit at the time of your death, your • The name of your option beneficiary named death benefit recipient(s) may be or beneficiaries. eligible to receive a one-time death benefit • Two estimates of your pension based on in addition to the refund of the accumulated your age and account balance at the end of contributions and interest. the previous school year if you are age 45 One-Time Death Benefit or older. A one-time death benefit is payable to your designated recipient or recipients under both What if You Become Disabled? disability and survivor benefits, Coverage A As a member of the Defined Benefit and B. The amount of the benefit depends Program you have disability protection on your coverage and whether death occurs under one of the CalSTRS disability benefit before or after retirement. If you do not name programs, Coverage A or Coverage B. Once a recipient, your estate receives the one-time you are vested and meet the eligibility death benefit. For more information, see requirements, and you have a medically deter- Section 9, Survivor Benefits. minable physical or mental impairment that For information on how dissolution of prevents you from performing your usual marriage or termination of a registered domestic job or comparable duties, you may apply partnership may affect your one-time death for disability benefits. The impairment must benefit recipient designation, see Section 10, be expected to last at least 12 continuous Tax Information and Legal Matters. months. For details, see Section 8, Disability Benefits. If You Terminate Your CalSTRS-Covered Employment What Happens When You Die? Termination of CalSTRS-covered employ- The Defined Benefit Program provides ment and a subsequent refund of your benefits to your survivors when you die either accumulated contributions plus interest before or after retirement. Your survivors cancel any eligibility for monthly benefits may be eligible to receive either a lump-sum from CalSTRS. payment or monthly benefits with additional benefits for dependent children. These bene- Survivor or Disability Benefits fits provide a basic level of security for your Termination of CalSTRS-covered employ- survivors. The benefit depends on the options ment for four consecutive months or more you choose and whether you have Coverage may eliminate your eligibility for survivor or A, Family Allowance or Coverage B, Survivor disability benefits. This time limit does not Benefit. Therefore, it is important to keep apply to eligibility for service retirement. a valid and current One-Time-Death Benefit Recipient form on file at CalSTRS. For details, see Section 9, Survivor Benefits. Member Handbook 2007 • 9
  • 16. Exceptions to the Four-Month Limit Consider a Refund Carefully The four-month limit does not apply if you If you have fewer than five years of service die during an approved leave of absence of up credit and do not plan to return to teaching to 12 months for a reason other than disability and you are not eligible for retirement with or military service. any of the California public systems listed Eligible recipients may receive a one-time under Retiring From More Than One Public death benefit and/or a monthly benefit under Retirement System in Section 6, you may be the following two circumstances: considering a refund. However, if you are a • If medical reports show that you became career teacher with substantial service credit, incapacitated within four months of your or you are eligible for retirement with another last day of service — and remained contin- California public system and are approaching uously incapacitated to the date of death, or age 55, we highly recommend you learn more • If you were receiving a disability benefit about the consequences of taking a refund. under Coverage A. Consequences of a Refund • If you withdraw your contributions and Refunding Your CalSTRS interest before age 59½, the distribution Contributions may be subject to income tax and a 10 percent federal excise tax as well as a 2.5 Defined Benefit Account percent state excise tax. Your Defined Benefit Program contri- • If you return to membership after taking butions, plus interest, are refundable a refund and later redeposit contributions upon termination from all employment to and interest: perform creditable service in any California – Your membership date changes to your public school. return date. Upon receipt of a completed refund appli- – You will be covered under Coverage B cation, CalSTRS will refund all your Defined for survivor and disability benefits even Benefit member contributions, including if you had Coverage A before. tax-deferred member contributions under the – You must accumulate a year of service Employer Pick-Up Program, plus credited credit before you are eligible for interest on your money. Partial refunds are not CalSTRS benefits. permitted. Employer and state contributions Important: If you return to membership are not refundable. and wish to receive full retirement benefits It is important to note that a refund of from your past membership with CalSTRS, your contributions terminates your CalSTRS you must fully buy back the service credit membership and you will not be eligible for represented in the refund. any benefits from CalSTRS, including a life- time monthly retirement benefit. More Refund Information For more refund information, go to Defined Benefit Supplement Account www.CalSTRS.com or call 800-228-5453 and If after termination of employment you have order Refund: Consider the Consequences. You not performed creditable service for six months may also call CalSTRS and select the Teletalk and you have received a refund of your Defined option and then enter 700. Benefit account, CalSTRS will refund your Defined Benefit Supplement account after you respond to CalSTRS correspondence regarding the payout. If you return to CalSTRS-covered employment, you cannot redeposit your DBS funds and only one withdrawal will be allowed in a five-year period. 10 • 2. Your Membership and Benefits • CalSTRS
  • 17. www.CalSTRS.com 800-228-5453 Redeposits – Restoring Former Local Service Members Service Credit Local Service credit listed on a 2005/2006 annual statement in your Retirement Progress Redepositing allows you to restore the Report is not fully funded. You will receive service credit represented by refunded contri- only a maximum of $2.40 per year of 2 butions. If you return to teaching or other Local Service credit toward your retirement CalSTRS-covered employment or become benefit. Please contact CalSTRS to fully fund eligible for retirement with another California this service. public retirement system, you may elect to buy back past Defined Benefit Program Cost to Redeposit refunded service credit by redepositing your The amount you need to redeposit and the prior refunded contributions plus regular benefits from restoring service credit will vary interest. For a list of these other California depending on your individual situation. systems, see Retiring From More Than One For example, a teacher who withdrew Public Retirement System in Section 6. $10,000 (representing three years of service) The longer the elapsed time between in May 1993 and wants to purchase those refund and redeposit, the higher the redeposit years of credit in April 2007, would be amount will be. required to redeposit $23,205. You may not redeposit refunded Defined For more information on purchasing Benefit Supplement contributions and interest. service credit, see Section 6, Your Retirement Before you are eligible for CalSTRS Benefit. If you are considering a redeposit, benefits, you must have earned at least one order the Purchase Additional Service Credit year of service credit after you received the brochure from www.CalSTRS.com or call most recent refund of accumulated retire- CalSTRS at 800-228-5453. ment contributions, unless you are retiring Any redeposits must be fully paid by concurrently with another California public December 31, 2010, if the restored service retirement system. credit is to be used for longevity bonus You may choose to restore a portion, rather eligibility. than all, of the service credit you forfeited when you took a refund. Defined Benefit Redepositing does not re-establish your Supplement Program earlier membership date or benefits that Since January 1, 2001, each active may have been available to you before you Defined Benefit member has had established received a refund. for them a Defined Benefit Supplement In some community property settlements, account. This account will be available a member’s service credit, contributions and to you when you begin to take a Defined interest are divided to create a separate account Benefit monthly benefit or six months after for the former spouse or registered domestic you terminate CalSTRS-covered employ- partner. If the former spouse or partner takes a ment. The account receives funds from three refund of his or her account, the member can sources in addition to interest. then choose to restore all or a portion of the One source is 2 percent of your credit- service credit awarded to the former spouse able compensation, which is one-fourth of or partner. your contribution to CalSTRS. This amount will automatically go into your DBS account from January 1, 2001, through 2010. There will be no change in the 8 percent retire- ment contribution currently withheld from your paycheck. The redirection of contribu- tions to your DBS account will not affect your CalSTRS DB retirement benefit. Member Handbook 2007 • 11
  • 18. In addition, since July 1, 2002, if you The DBS account beneficiaries are the same earn more than one year of service credit in a as the beneficiaries named on your Defined school year, your contributions and most of Benefit account. Defined Benefit Supplement the employer contributions from your earn- account funds can be withdrawn only when ings in excess of one year will be allocated to you die, become disabled, retire or six months your DBS account. This provision will not end after terminating CalSTRS-covered service. at the end of 2010, as does the redirection of Please note that you cannot borrow against the member contribution mentioned earlier. your Defined Benefit Supplement account. Lastly, some members receive special You can choose to receive the balance of limited-term payments or compensation the contributions and interest in your Defined intended to enhance their Defined Benefit Benefit Supplement account as a: retirement benefits. Effective July 1, 2002, • Lump-sum payment – Only choice if you member and employer contributions on these are receiving a refund or your account is payments are credited to the Defined Benefit less than $3,500. Supplement accounts. • Monthly payment – If the balance is The funds in the DBS accounts earn at least $3,500, you may choose one of interest at a rate set at the beginning of each the following annuity types to distribute plan year, July 1 through June 30, by the payment over your and your beneficiary’s Teachers’ Retirement Board, based on the 30- lifetime, based on the option you chose for year Treasury rate. At the end of each year, if your Defined Benefit payment: actual earnings exceed the board-set interest – Member-Only Annuity rate, the board may declare an additional – 100% Beneficiary Annuity earnings credit. – 75% Beneficiary Annuity Contributions into the Defined Benefit – 50% Beneficiary Annuity Supplement account will not affect your – Period-Certain Annuity ability to make contributions into a 403(b) or – Combination of Lump-Sum Payment similar tax-deferred savings plan. and Annuity For details on the Defined Benefit Supple- Access to DBS Funds ment account annuity options, see Section 6, Funds available at retirement or at termina- Your Retirement Benefit. tion of employment will vary, depending on your salary, overtime compensation and the Changing Employment to a interest the account has earned. All contri- Different Public Retirement System butions and interest in your Defined Benefit Supplement account will appear on your Occasionally, teachers or others who DBS annual statement of account which is perform CalSTRS creditable service change contained in your Retirement Progress Report. employment to positions that are subject to Your funds will be available to you when coverage by another California public retire- you begin to take a Defined Benefit monthly ment system. For example, a classroom benefit or six months after you terminate teacher may take a position as a human CalSTRS-covered employment. If you return resources specialist in the district office, a to CalSTRS-covered employment after position usually subject to California Public withdrawing your DBS funds, you will Employees’ Retirement System coverage. On have to wait five years before you can make the other hand, a human resources specialist another withdrawal. may decide to take a teaching position, a position usually subject to CalSTRS coverage. CalSTRS or CalPERS members who change 12 • 2. Your Membership and Benefits • CalSTRS
  • 19. www.CalSTRS.com 800-228-5453 employment subject to coverage by the other • A school district. system will have an opportunity to continue • The Board of Governors of California coverage or change to the other system. Community Colleges. The two systems are treated differently for • The state Department of Education as of Social Security coverage. CalSTRS members January 1, 2002. 2 do not participate in Social Security, but • A local or state agency not listed above CalPERS members do. Members of either (only applies to vested CalPERS members). system are urged to contact the Social Security Administration at 800-772-1213 to determine The election: how the change will affect any Social Security • Must be made within 60 days of the date benefit due the member. of hire into the new position. • Must be done on the appropriate CalSTRS If You Change to a CalPERS Position form provided by the employer. If you are a member of the CalSTRS Defined • Is effective as of the date of hire into the Benefit Program and become employed by the new position. same or a different school district, commu- • Is irrevocable and applies to all service in nity college district, county superintendent that position. of schools or have limited state of California employment to perform service that requires Dual Membership membership in the California Public Employees’ Members of CalPERS who are employed Retirement System, you may elect, within 60 on a full-time basis and accept part-time days of the date of your new employment, to employment to perform creditable service continue coverage under the CalSTRS Defined covered by the CalSTRS Defined Benefit Benefit Program. If you do so, service in your Program can permissively elect membership new position, normally subject to coverage by in CalSTRS and have their part-time service CalPERS, would be treated as creditable service reported to CalSTRS. under the CalSTRS Defined Benefit Program. The election: Information on Both Systems • Must be made within 60 days of the date To help you compare both systems, review of hire into the new position. the benefit information in this handbook, • Must be done on the appropriate form as well as the benefit information booklet provided by the employer. provided by CalPERS. Both publications are • Is effective as of the date of hire into the available from your employer. new position. In addition, the CalSTRS brochure Join • Is irrevocable and applies to all service in CalSTRS? Join CalPERS? outlines and contrasts that position. the basic benefits of the two systems. For a copy, visit www.CalSTRS.com, ask your If a CalPERS Member employer or call CalSTRS at 800-228-5453. Changes to a CalSTRS Position Certain members of CalPERS who subse- quently are employed to perform CalSTRS creditable service can elect within 60 days of their new hire date to continue coverage under CalPERS for all subsequent CalSTRS creditable service. This applies to CalPERS members employed by: Member Handbook 2007 • 13
  • 20. 14 • 2. Your Membership and Benefits • CalSTRS
  • 21. 3. Benefits for Part-Time Educators T his section is for the part-time educator. As a part-time educator you have access to all the benefits that CalSTRS offers. • What is the contribution rate for the plan and does the employer also make contributions? However, your part-time status presents you • Is there a minimum requirement to be with special considerations in retirement eligible for benefits? planning. As a part-time educator, you have • Does the plan charge administrative fees? additional decisions about which retirement • Is there a guaranteed annual interest rate? plan coverage to choose, as well as issues • Does the plan have a record of sound to consider that are unique to part-time investment experience? employment. • When does the plan permit distribution of your account? Retirement Plans for Public School Employees Retirement Options for Federal law requires all employees to be Public School Educators covered under a retirement plan. California Defined Benefit Program state law requires all public school employers Members of the CalSTRS Defined Benefit to provide the CalSTRS Defined Benefit Program who are employed on a part-time or Program. For employees in certificated posi- adjunct basis are a distinctive group within the tions whose time base is less than half-time, CalSTRS system. Your retirement benefit calcu- public school employers must also offer lation uses the same components as a member either Social Security or another retirement who works full time: age factor, final compen- program as an alternative to Social Security. sation and service credit, as described earlier in The CalSTRS Cash Balance Benefit Program, Section 2, Your Membership and Benefits. described later in this section, is one example However, for you, two of those compo- of an alternative to Social Security. Your nents, final compensation and service credit, employer may offer other alternative retire- are determined differently from full-time ment programs. See your employer for full educators. Your final compensation and details about the specific programs it offers. service credit depend on the amount you Choosing the Plan That’s Right for You would have earned if you were working full If your basis of employment is less than 50 time in your position. This amount of work is percent of full-time, here are some questions called full-time equivalent and this amount of that may help you decide which retirement compensation for the full-time equivalent is plan coverage is best for you: called earnable compensation. • Do you plan to be a career teacher? Full-Time Equivalent • Does teaching provide you supplemental The full-time equivalent is the time that income or is it your primary source of a member who is employed on a part-time income? basis would be required to work in one school • Prior to teaching, did you have employ- year if he or she were employed full time ment that required you to pay into Social in that position. For members employed in Security? a community college or as an adult educa- tion instructor on a part-time basis, the FTE must be identified specifically in either the Member Handbook 2007 • 15
  • 22. collective bargaining agreement or in the employing district’s established FTE for your employment agreement. The FTE stated in type of employment. If you see a discrepancy, the agreement must be at least the minimum contact that employer’s office that reports number of days or hours specified by law. earnings to CalSTRS. Note: The FTEs listed below are minimum stan- dards; your individual FTE could be higher if your Calculating Earnable Compensation employer requires full-time employees to work more Your earnable compensation (also known as days or hours in that same activity in a school year. compensation earnable) is not the salary you It is important to make sure that your actually were paid, but what you would have employers determine your FTE properly. been paid if you worked full time in that posi- Different assignments, even with the same tion. Therefore, you take the hourly or daily employer, may have different FTEs. Refer rate for that position and multiply it by the to your employment agreement or collec- full-time equivalent for the position to deter- tive bargaining agreement to obtain your mine your earnable compensation. Calculating Final Compensation Minimum Full-Time Equivalent Another key component of your retirement calculation is final compensation. Your final If you are a: Then the minimum FTE is: compensation is equal to the highest average Part-time community 525 instructional hours, plus annual earnable compensation for three college instructor mandatory office hours, if paid consecutive years, or 12 consecutive months if Community college 875 instructional hours, plus you have earned 25 years of service credit. adult education instructor mandatory office hours, if paid Calculating Service Credit K–12 teacher or any other person who 175 days or 1,050 hours For part-time and adjunct faculty, service works directly with pupils, including an credit for one school year is equal to how instructor in an adult education program much you actually earned in an assignment Part-time Community College and Adult Education Instructor Service Credit In one school year, Juanita teaches as a community college instructor for 262.5 hours, which is half of the FTE in her district. She also works as an adult education instructor for 350 hours or 40 percent of the FTE for that position. Percent Time Minimum Actual Full-Time = Service Credit Worked FTE Earnings Rate Earned Community College Instructor 50% (262.5 hours) 525 hours $15,000 ÷ $30,000 = .500 Adult Education Instructor 40% (350 hours) 875 hours $10,800 ÷ $27,000 = .400 Total Service Credit = .900 Juanita would earn .900 of service credit for the year. Part-time K–12 Teacher Service Credit During the school year, Janet taught 30 percent of the FTE for K–12 teachers in her district, or 315 hours. The full-time pay rate was $42,000. Because she worked every day of her 30 percent teaching contract, she earned $12,600 for the school year. Percent Time Minimum Actual ÷ Full-Time = Service Credit Worked FTE Earnings Rate Earned K–12 Instructor 30% (315 hours) 1,050 hours $12,600 ÷ $42,000 = .300 Janet would receive .300 of service credit for the year. 16 • 3. Benefits for Part-Time Educators• CalSTRS
  • 23. www.CalSTRS.com 800-228-5453 divided by your earnable compensation for Working for Multiple Employers that assignment. When a member works multiple assignments, service credit is the sum Kali works part time at two high schools and a community college. He has 8.95 of the service credit earned in each individual years of service. If he continues to work for all three employers during his last assignment, up to one year of service credit in three years before retirement at age 63, here is how his final compensation would be calculated: a school year. Employer Earnings Service Credit Raising Your Defined Benefit A $ 3,360 .100 Retirement Amount B 30,250 .500 C 6,563 .250 Increasing Service Credit Total $40,173 .850 with Additional Assignments If you work on a part-time or adjunct Kali’s annual earnable compensation is: $40,173 ÷ .850 = $47,262 basis, you may wish to consider taking on Monthly final compensation is: $47,262 ÷ 12 = $3,938 additional assignments to earn more service To increase his retirement benefit, Kali could terminate the employment where he credit if you are not earning one full year receives the lowest annual pay rate and his retirement benefit would be higher. of service credit under your existing assign- Employer Earnings Service Credit ment. Service credit can now be earned for A $ 3,360 .100 activities such as teaching summer school B 30,250 .500 and intersession, paid office hours, attending Total $33,610 .600 staff development days and serving as a coach, band director, yearbook editor or Kali’s annual earnable compensation is: $33,610 ÷ .600 = $56,017 Monthly final compensation is: $56,017 ÷ 12 = $4,668 department chair. Extra service will count as additional service credit and will be However, if Kali also terminates the position with the next lowest annual pay rate, included in calculating your total service his final compensation would be even higher. credit for that school year. However, when Employer Earnings Service Credit you near retirement, be sure to consider B $30,250 .500 another factor — final compensation. Total $30,250 .500 Consider Final Compensation Kali’s annual earnable compensation is: $30,250 ÷ .500 = $60,500 If Working for Multiple Employers Monthly final compensation is: $60,500 ÷ 12 = $5,042 As a part-time educator, when you Here’s the impact of the three alternatives on Kali’s retirement benefit calculation: have more than one employer, your earn- Monthly final compensation is calculated by dividing annual earnable able compensation is the sum of all your compensation by 12 months. actual salaries divided by the sum of all your service credit earned for the school Works all three jobs: year. Your final compensation is the average Service Credit Age Factor Monthly Final Compensation annual earnable compensation during your 11.500 x 2.4% x $3,938 = $1,087 per month final compensation period, which is gener- ally your last three years of employment. Terminates job with Employer C at the lowest annual pay rate: When salary rates and service credit vary Service Credit Age Factor Monthly Final Compensation within a school year, your final compensa- 10.750 x 2.4% x $4,668 = $1,204 per month tion may be lower, which can lower your or $117 more per month retirement benefit. This means it is possible to earn a larger retirement benefit if you Terminates all jobs except one with Employer B reduce the number of employers you work at the highest annual pay rate: for during your final compensation period. Service Credit Age Factor Monthly Final Compensation The example in the box shows how the 10.450 x 2.4% x $5,042 = $1,265 per month calculation can affect the retirement benefit of or $178 more per month a part-time educator. Member Handbook 2007 • 17