SB 432: Retired Teachers are now Protected from Penalties due to Errors made by CalSTRS and SB 765: Temporary Increase to Allowable Pay for Retired Teachers who Return to Work

The California Governor signed two bills affecting retired public school teachers: Senate Bill (“SB”) 432 and SB 765.

The California State Teachers’ Retirement System (“CalSTRS”) provides a defined benefit to its members (prekindergarten through community college educators), based on final compensation, credited service, and age at retirement, subject to certain variations. Senate Bill 432 guarantees legal protections for retired teachers against penalties arising from errors made by CalSTRS.

CalSTRS is required to annually provide resources that interpret and clarify the applicability of creditable compensation and service pursuant to its laws and regulations. Under SB 432, such resources must be identified and provided on CalSTRS’s website and such resources can be relied upon and used for purposes of audits and other actions related to compliance by employers. SB 432 also ensures that retired teachers are notified about any errors and protects their monthly retirement payments from penalties when the mistake is not their fault.

Senate Bill 765 temporarily increases the amount retired teachers can earn in education positions while still collecting their retirement benefits from CalSTRS. This change is intended to encourage and allow teachers to take teaching positions that districts otherwise have been unable fill. SB 765 increases CalSTRS annual postretirement earnings limit from 50% to 70% of the median final compensation of all CalSTRS members who retired during the previous year.

Also, currently, during the first 180-calendar days after retirement, CalSTRS prohibits any postretirement compensation, with only one narrow exemption. Under SB 765, the process for obtaining an exemption to the 180-calendar day separation-from-service requirement is modified to remove the requirement that the exemption be approved by the employer’s governing body in a public meeting. The bill also adds requirements that the employer certify it did not have a reduction-in-force layoff within the prior 18 months and that the employer provide the exclusive representative with copies of completed documentation submitted to CalSTRS.

This temporary measure starts on July 1, 2024, and ends on July 1, 2026.

For more information, please contact your labor law counsel.