AB 1667 – Establishes New Requirements And Duties In Connection With Audits By The Teachers’ Retirement Board Of Public Agencies And Recovery Of Overpayments

CATEGORY: Public Education Matters
CLIENT TYPE: Public Education
DATE: Oct 28, 2022

Existing law authorizes the Teachers’ Retirement Board (the Board) to audit, or cause to be audited, the records of any public agency as often as it deems necessary. The Teachers’ Retirement Law establishes the State Teachers’ Retirement

AB 1667 imposes various requirements and duties in connection with audits of public agencies by the Board. The bill also imposes additional requirements for the State Teachers’ Retirement System (STRS).

The bill requires that the Board comply with the following requirements when auditing public agencies:

  • Provide written notice of an intended audit to the affected public agency and to the exclusive representative of the members affected by the audit.
  • The notice must identify the purpose and scope of the intended audit.
  • Must provide the public agency and the exclusive representative of the affected members with the preliminary audit findings, statutes being addressed by the audit, and a list of every member known to be affected.
  • Establish a time period for the public agency to provide the Board and the exclusive representatives with a list of the names of members affected by the audit not included in the list provided by the board.
  • Must consider any information provided by the public agency or the exclusive representative in preparing its audit findings.
  • Must establish a time period for the public agency or the exclusive representatives to provide the Board with their written responses to the preliminary audit report before the Board issues its final audit report.
  • The final audit report must be provided to the public agency, to the exclusive representative or representatives of members affected by the audit, and to the affected members, with an explanation of their appeal rights.
  • All final audit reports must be made available on the Board’s website.

In addition to the above requirements, STRS is also required to provide resources that interpret and clarify the applicability of credible compensation and credible service laws and promulgated regulations on an annual basis.

The bill also establishes new requirements for the audited public agency and an exclusive representative:

  • The public agency must provide the Board with any information requested in a timely manner and at the same time, provide the same information to the exclusive representative of the members affected by the audit.
  • The public agency has the right to request an administrative hearing within 90 days of the Board’s transmission of the final audit report if it disagrees with the report. A member affected by the audit has the same appeal rights as a public agency.

The bill also provides that for purposes of audits or any other actions by STRS, employers are only responsible for the rules in effect at the time the compensation is reported, except when expressly superseded by state or federal law or executive order of the Governor. The bill explicitly provides that any new or different interpretation, including those that would modify the application of prior interpretation, whether in resources, regulations, employer information circular, or similar means, shall not take effect until after notice is issued to the employer and exclusive representatives. Furthermore, any change shall not be applied retroactively to compensation reported prior to the notice, unless a retroactive interpretation is expressly required by state or federal law or an exclusive order of the Governor.

Effective July 1, 2023, the bill authorizes an employer or an exclusive representative to submit to STRS a request for an advisory letter. STRS must issue a response within 30 days of receipt of all information requested by STRS. The period of time to issue the advisory letter may be extended if necessary for a good cause. The advisory letter may only be relied upon or used by the employer or exclusive representative requesting the advisory letter.

The bill also establishes new rules regarding the recovery of overpayments. STRS must recover overpayments as follows:

  • From the participant, former member, former participant, or beneficiary all amounts overpaid due to inaccurate information, untimely submission, non-submission of information, or on the basis of fraud or internal misrepresentation by, or on behalf of, a receipt of a benefit, annuity, or refund.
  • Directly from the employer all amounts that have been overpaid due to inaccurate information, untimely submission, or non-submission of information by an employer that reports directly to STRS;
  • From the county superintendent of schools any overpayment due to inaccurate information, untimely submission, or non-submission of information, if the county superintendent of schools reports directly on behalf of the employer. However, if the overpayment resulted from an employer’s errors, the county superintendent of schools may recover the amounts from the employer by drawing requisitions from against the county school service fund and the funds of the county’s respective agencies on an annual basis;
  • All payments are due to STRS within 30 days of receipt of notice of the overpayment. Failure to timely submit payment will result in the recalculation of the amount due to include regular interest from the date of the overpayment to the date of recovery.

(AB 1667 amends Sections 24616 and 24617 of, and adds Sections 22132.5 22206.1, 22206.2, 22206.3, 22206.4, 22206.5, 22325, 22326, 23012, and 24616.2 to, and to repeal Section 24616.5 of, the Education Code.)

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