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Bill

AB 2780

Public employees' retirement.

2025-2026 Regular Session

Expands STRS membership to more education positions and broadens retired-member activities, with key changes effective July 1, 2027 for eligibility, benefits, and governance.

Read second time. Ordered to Consent Calendar.
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Bill Summary · AB 2780

Summary of AB 2780 (2025-2026) — Public Employees’ Retirement (California)

  • This bill, introduced by the Assembly Committee on Public Employment and Retirement, seeks broad changes to the California public employee retirement framework, with a focus on the State Teachers’ Retirement System (STRS) and related education-sector retirement provisions, and to align several rules with broader policy goals. It includes amendments to Education Code provisions governing STRS, and to Government Code provisions concerning retirement boards and related processes. It also makes targeted conforming changes and includes an appropriation element.

  • The bill includes a combination of substantive reforms, implementation timing changes, and administrative provisions. Many provisions are interconnected and become operative on July 1, 2027, or in related sections, with some provisions specifically phased in by 2027 or 2028.

1) Main purpose and intent

  • Align and modernize STRS-related definitions, eligibility, and administration to improve consistency, transparency, and actuarial soundness.
  • Expand and redefine which positions are subject to STRS membership, including certain credentialed and certificated roles across schools, community colleges, charter schools, and related education employers.
  • Clarify and adjust rules around retired-member activities, sick leave credit, service credit, and the calculation of retirement benefits to ensure consistency with current employment conditions and public pension law.
  • Update investment principles for STRS to prioritize risk minimization and return maximization, subject to prudence.
  • Reconfigure governance and eligibility criteria for retirement boards and related entities, including “active member” definitions and representation.

2) Key provisions and changes

  • Education Code changes (STRS membership, retired member activities, sick leave, and definitions)

    • Position subject to membership – expands to include positions requiring certain credentialing permits or certificates (in addition to credentials/licenses) and certain charter school and community college roles. The operative date for the expanded definition is July 1, 2027.
    • Retired member activities – starting July 1, 2027, broadens to cover all service within the California public school system performed by a member retired for service, including employment with a third party or as an independent contractor (subject to limitations for third-party workers and 24-month assignments, etc.).
    • Sick leave credit – replaces the prior hour-based conversion rule with a day-based rule: one day equals the number of hours of creditable service in a full-time day, with a minimum of 6 hours.
    • Investment duties – STRS board and staff must diversify investments to minimize loss and maximize return, with prudence considerations.
    • Employer notification for membership – shortened notification window for part-time and substitute employees to within 10 working days of hire (instead of a longer prior timeline).
    • Disability/retirement interaction – adds new rules for service retirement allowances in disability-related scenarios; deletes a previously required post-date posting deadline for board decisions; and makes related adjustments to timing and eligibility in certain disability-retirement interactions.

  • Defined Benefit Program and related areas

    • Certain changes to service retirement eligibility, timing, and option rights, including changes to how applications for service retirement must be submitted and processed (with specific signature and timing requirements).
    • Provisions for changing retirement forms (e.g., moving from defined benefit to lump-sum options) remain subject to existing rules, with added requirements and irrevocability in some instances.
    • Modifications to benefit calculations for reinstatement and disability intersections, including adjustments to how benefits after reinstatement are computed and indexed.
    • Introduction of new or adjusted limits related to federal tax rules (e.g., Section 415 limits) and CPI-based adjustments.

  • Cash Balance Benefit Program and Defined Benefit Supplement Program

    • Aligns salary and compensation definitions and ties them to plan amendments; allows or contemplates adjustments to earnings credits and to how balance credits influence lump-sum or annuity options.
    • Revisions to actuarial assumptions, eligible distributions, direct rollovers, and related payment timing.

  • Governance and limitations

    • Revisions to provisions governing the composition and election of retirement boards and investment boards, including how “active members” are defined within certain counties.
    • Establishes or clarifies limitations on corrections/claims timing for erroneous payments, including longer limitation periods in certain cases (e.g., death, remarriage, fraud).

  • Fiscal and appropriation implications

    • The bill would require an appropriation tied to expanding STRS membership categories and to the associated administrative and actuarial changes.

3) Who would be affected

  • Teachers and school staff covered by STRS (including those in county offices of education, school districts excluding some charter schools from certain categories, and certain community college staff).
  • Charter schools, community colleges, and other local education agencies that participate in STRS or are affected by the expanded definitions of positions subject to STRS membership.
  • Retired STRS members and those considering disability or service retirement eligibility, timing, and benefit calculations.
  • Employers (school districts, county offices of education, community colleges, and related entities) due to altered notification duties, new salary/compensation definitions, and potential contributions to the STRS fund.
  • The STRS Board and related governance structures, given changes to investment duties, benefit administration, and member eligibility.
  • Employees and contractors in the public school system who are employed by third-party entities or as independent contractors under the broader definition of “retired member activities” in the future.

4) Procedural and timeline aspects

  • Operative dates:

    • July 1, 2027: Expanded definitions of positions subject to STRS membership take effect; broadened scope for “retired member activities” becomes operative for covered service; revised sick leave day calculation applies.
    • July 1, 2027 (and subsequent annual CPI adjustments): Limits and salary definitions for the Cash Balance and Defined Benefit Supplement become operative and subject to adjustments.
    • Certain sections reference later dates (e.g., 2028 for some operative provisions in salary definitions and related rules).

  • Implementation and reporting:

    • The bill contemplates annual plan amendments, actuarial valuations, and board adoption of earnings credits or other plan changes, subject to statutory timelines and CPI-based adjustments.
    • Some provisions involve the system’s ability to implement changes, but the bill moves away from explicit post-date determinations for several changes, setting firm operative dates instead.

  • Repeals and inoperative sections:

    • Several sections specify that certain provisions become inoperative or are repealed on July 1, 2027 or January 1, 2028, aligning with the phased implementation plan.

  • Funding and appropriations:

    • The bill would require an appropriation associated with its expanded membership categories and the related administrative, actuarial, and investment changes.

Note: This summary focuses on the substantive changes and their practical impact. For exact statutory language, cross-references, and the full scope of amendments, please consult the bill text and Legislative Counsel’s Digest.

Compiled from official sources — confirm details with the bill’s official record.

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