CalSTRS recently issued new guidance that applies when a CalSTRS member changes to a new position that may not be eligible for participation in the retirement system. The guidance, found in Employer Information Circular, Volume 29, Issue 3, provides CalSTRS members extra time to elect to have their service in a new position credited to the CalSTRS system. The new guidance was issued as a result of the substantial confusion caused by the 2012 Employer Information Circular, Volume 28, Issue 1, which specified the types of positions that are not eligible for CalSTRS.
That 2012 employer guidance specifies that the position must be an academic one performing duties involved in instruction, curriculum or material development, school health professionals, counselors, librarians or superintendents, in order for it to be “creditable” to CalSTRS. Examples of positions that are not reportable include Chief Financial Officer, Director of Human Resources, Chief of Police, Director of Buildings, Grounds, and Maintenance, Chief Information Technology Officer, and Director of Payroll Services. Service of individuals employed in these positions is at risk of not being considered “creditable service” for CalSTRS retirement and instead be subject to coverage by a different public retirement plan, such as PERS. For example, in smaller districts the “Director of Human Resources” position does include evaluation and supervisory authority over certificated personnel. Traditionally such as HR Director positions have been considered CalSTRS creditable service.
An individual who moves from a position included in CalSTRS to a new position that requires membership in another public retirement system is allowed to elect to continue membership in CalSTRS. Election to continue with CalSTRS requires submitting a Retirement System Election form (ES 372). Ordinarily, the election must be made within 60 days of hire into the new position. However, CalSTRS acknowledges in its new guidance that last year’s guidance on positions not covered by CalSTRS caused significant confusion and that many employees may not have been provided the election form. As a result, CalSTRS is allowing employees who moved to new positions additional time to make an election to have their service count towards CalSTRS retirement. The guidance extends the time to make the election to 180 days from the November 25, 2013 date of the new guidance, which is May 23, 2014.
The election is made bysubmitting the election form (ES 372) to STRS. The form must be accompanied by a justification letter that explains the circumstances of the late election, such as explaining that the member was not given an opportunity to timely complete the form. This letter must also identify:
The member’s name and CalSTRS identification number or social security number.
Previous position: Title, position end date, employer name and report unit code.
Current position: Title, position effective date, employer name and report unit code.
When completing the form, the effective date of the election should be the date of hire into the new position. As noted, the form and justification letter must be submitted to CalSTRS by May 23, 2014.
What This Means To You
The CalSTRS Employer Circular does not provide any additional guidance or clarity regarding when a position is credible service. However,if there is any doubt about whether the position is credible service and covered by the CalSTRS Defined Benefit Program, you should carefully review the form ES 372 and consider submitting it and a justification letter to CalSTRS by the May 23, 2014 deadline.