Substitute Senate Bill 342 Summary

• Increases employee contribution rates: Teacher contributions to STRS defined benefit plan increase incrementally from 10% to 14% by July 1, 2016, with board authority to reduce rates after July 1, 2017 if fiscal integrity is maintained.

• Modifies retirement eligibility: Gradually increases service credit requirements for early retirement without age restrictions, starting August 1, 2015, and introduces new age and service combinations (e.g., 35+ years service credit at any age becoming 35+ years with age 60 requirement by August 1, 2026).

• Changes cost-of-living adjustments: Reduces annual COLA from 3% to 2% for benefits beginning August 1, 2013, and allows board to adjust COLA if necessary to preserve system fiscal integrity.

• Extends final average salary calculation: For benefits beginning August 1, 2015, changes calculation from highest 3 years to highest 5 years of compensation to reduce benefit amounts.

• Allows plan switching: Permits members who elected defined contribution plans within four years to switch to STRS defined benefit plan or another defined contribution plan, with system transfers to equalize accounts if necessary.