Payroll & Retirement

CalSTRS - AB 1997 Changes

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What is a “Class of Employees”?

A class of employees is a group of positions with similar job duties used to determine how compensation is reported.

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Employees may be grouped because they:

• Perform similar duties
• Work in the same type of program
• Share similar job characteristics

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A class cannot be based on:

• Retirement formula
• Age
• Years of service in the Defined Benefit program
• Retirement eligibility
• Date of hire

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You cannot create different classes simply because employees have different retirement rules

Examples:

• Nurses
• Teachers
• Counselors

Pay Types

Salary

• Paid for being employed in a position subject to membership
• Paid accordance with a PAPS
• Paid to everyone in the class of employees

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Special Pay

• Ongoing Pay
• Must be documented in a PAA
• Available to everyone in the class who meets the requirements

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Supplemental Pay

• Other creditable pay that is not salary, special pay, or part of the excluded types of pay
• Does not require a PAPS or PAA
• Does not have to be paid to everyone in the class

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Pay Types

Excluded Types of Pay

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• Fringe Benefits
• Relinquishment of unused sick leave
• Expenses paid or reimbursed
• Severance Pay
• Employer-provided allowances
• Compensatory damages or compromise settlements paid in excess of base pay
• Compensation determined to have been paid to enhance a member’s benefit
• Compensation paid in lieu of benefits provided by the employer

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Creditable Compensation

Salary

• Regular annualized pay listed on the PAPS

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Special Pay – 3 Categories

Additional Pay for:

• Education
• Experience/Longevity
• Classification

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Supplemental Pay

Other creditable compensation, such as:

• Hiring Bonus
• Yearbook advisor stipend
• Extra-period pay
• Lottery pay
• Coaching

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Important:

Supplemental pay is not used to calculate compensation earnable or final compensation.

Benefits of Compensation Changes

• All creditable compensation fits into one of the three categories
• Salary
• Special Pay
• Supplemental Pay

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• Rules are generally the same for both CalSTRS 2% at 60 (Classic) and 2% at 62 members (PEPRA).
• Easier for everyone to understand how pay will be treated for retirement purposes

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• Eliminates “paid each pay period” requirement for 2% at 62 members (PEPRA).
• Helps ensure compensation is treated consistently for all members.

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What Must Be on the PAPS?

A PAPS is the district’s publicly available salary/pay schedule.

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It must:

• Be approved by the governing body
• Include the date of board approval
• Be publicly available on the district’s website or upon request
• Include an effective date and the date of any revisions
• Identify each class of employees
• Show the annualized pay rate
• Include enough information to calculate the annualized pay rate when hourly, daily, or monthly rates are used

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Important: The PAPS cannot reference another document to determine the annualized pay rate.

Salary Schedule - Class of Employees - One

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Salary Schedule with Multiple Classes of Employees

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• Effective date of the Pay Schedule

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• Days per year for each class of employees

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• Board approved date

Salary Schedule with Multiple Classes of Employees

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• Effective date of the Pay Schedule

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• Days per year for each class of employees

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• Board approved date

Salary Schedule – Community College

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• Effective date of the Pay Schedule

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• Full-time hours for each class of employees

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• Board approved date

Superintendent Contract - Example

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• Effective date of the Contract
• Base Days
• Annualized Salary
• Board Approval Date

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Note: The contract does not have to be posted on the website. It must be readily available upon request.

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Ammendments:

• Need the annualized salary not just the percentage of the increase

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What is a PAA?

A Publicly Available Agreement (PAA) documents information that is not included on the salary schedule, including Special Pay.

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A PAA must:

• Be approved by the governing body
• Include the board approval date
• Be publicly available on the district’s website or upon request
• Include an effective date and the date of any revisions

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Examples include:

• Collective bargaining agreement
• Board policy
• Employment agreement
• Board resolution
• Board minutes

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What Must the PAA Tell Us?

For Special Pay, we need to know:

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Who gets it?

• Identify which class of employees is eligible for the Special Pay
• List the requirements they must meet to receive the Special Pay

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How much do they get?

• Dollar amount or percentage
• Must be ongoing, not a one-time payment

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The PAA must also identify:

• Base days
• Position titles that are subject to CalSTRS membership

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Special Pay: Education

Additional pay for an employee who has specific education, credentials, licenses, certificates, or degrees.

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Everyone in the same class who meets the requirement must be eligible for the pay.

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Examples:

• Masters Degree/PHD
• National Board Certification
• Bilingual Certification
• 16 units toward Masters Degree

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Special Pay: Experience

Additional pay based on an employee’s years of experience or service.

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Examples:

• 15 years of service with the district
• 20 years of experience as a teacher
• 25 years of experience in education

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Everyone in the same class who meets the requirement must be eligible.

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PAA - Special Pay: Classification

Additional pay an employee receives because they belong to a specific class of employees.

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Examples:

• Counselors receive a $2,000 stipend.
• Agriculture teachers receive an additional 2%.

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Special Pay: Classification

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Special Pay: Classification

• If all positions have the same base days, they can be listed together.

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• The additional percentage of for Classification pay can also be listed in the PAPS.

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Special Pay: Classification

• If base days differ, list the base days for each position.

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• Include the additional percentage of Special Pay in the PAPS.

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PAA - Base Days

• Must show the required days or hours of work the class of employees must work to earn the annualized pay rate.

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• Used to verify that the annualized pay rate meets CalSTRS full-time requirements.

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Base Days Example:

Collective Bargaining Agreement Between XYZ Unified School District and XYZ Teachers Association Effective July 1, 2027 – June 30, 2029.

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Article 8:

8.01 Length of Work Year

8.01.01 The length of the work year for members of the unit shall be 186 days, of which 180 shall be teaching days, two (2) shall be workdays, two (2) shall be professional development days, and two (2) shall be for teacher collaboration as determined by the Site Leadership Team.

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Approved at XYZ USD Education Committee Meeting: June 30, 2026

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Which Positions Can Be Reported to CalSTRS?

Under AB 1997, the employer’s documentation must identify the positions that are subject to CalSTRS membership.

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Only compensation earned in a position subject to membership can be reported as creditable compensation to CalSTRS.

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For this purpose, the acceptable documentation is limited to:

• Certificated Collective Bargaining Agreement (CBA)
• Public Employment Relations Board (PERB) decision
• Governing body resolution (COEs and PreK-12 employers only)

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Why This is Important

If a position is not properly identified as subject to CalSTRS membership, compensation for that position may not be reportable to CalSTRS.

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For classified employees who elect CalSTRS membership:

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• The ES372 will document the position subject to membership.

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Documentation by Employer Type

The documentation used to identify positions subject to CalSTRS membership depends on the employer type.

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TK- 12 Districts & COEs

• CBA
• Certificated per governing body resolution

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Charter Schools

• CBA
• Position requires CTC credential under Charter School Act

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Community Colleges

• Based on minimum standards

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Management / Administrators: These positions must be established as subject to membership through a board resolution.

PAA – Resolution Example

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When is a Position Excluded from CalSTRS Membership?

• The employee elected to remain in another retirement system, such as CalPERS.

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• The person is not employed by a CalSTRS employer, such as a temporary agency employee.

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• The position is covered by a noncertificated collective bargaining agreement that was in effect on the employee’s date of hire.

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• PERB has determined the position is noncertificated.

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Key Takeaways

• All creditable compensation will fall into one of three categories: Salary, Special Pay, or Supplemental Pay.

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• Salary must be supported by a PAPS that includes the annualized pay rate.

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• Special Pay must be documented in a PAA, including who is eligible and the dollar amount or percentage.

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• Supplemental Pay is other creditable pay that is not Salary, Special Pay, or an excluded type of pay.

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• Base days and position titles subject to CalSTRS membership must be documented in a PAA.

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• If a position is not properly identified as subject to CalSTRS membership, compensation for that position may not be reportable to CalSTRS.

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Bottom line: Review your salary schedules, agreements, base days, and position titles to make sure the required documentation is in place.

Thank you!

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