SB 765 Provides More Compensation and Allows for an Exception to the Temporary Waiting Period for School Districts to Hire Retired Teachers

05.22.2024

Beginning July 1, 2024, Senate Bill 765 (“SB 765”) will allow a limited-time exception to the waiting period for school districts to hire retired members of the California State Teachers’ Retirement System (“CalSTRS”). This bill also provides greater incentives for retired teachers to accept work with school districts.

SB 765 is part of the Legislature’s effort to address the educational workforce shortage in California. While employee shortages have been ongoing since before the COVID-19 pandemic, the pandemic has significantly exacerbated the problem. This hiring crisis is further compounded by the vast increase in teacher retirements since the pandemic. California ranks third among all states in the nation in severity of teacher shortages, with more than 10,000 teacher vacancies during the 2021-2022 school year.

Under existing law, CalSTRS members could perform “retired member activities,” which include employment by a school district. These retirees, however, were limited, prior to SB 765, on the compensation they could receive for such activities, and when they could receive it. Education Code sections 24214.5 and 26812 require retirees to wait 180 days before performing “retired member activities.” Section 24214.5 also imposes a postretirement compensation limit of $0 for the first 180 days of retirement. In the same vein, Section 26812 provides that a retiree’s annuity shall be reduced by the amount of compensation they receive for retired member activities performed within 180 days of retirement. Even after the first 180 days following retirement, Section 24214 limited the compensation that may be paid to a retiree.

SB 765 temporarily amends both Sections to allow retirees to return to work before the 180-day waiting period and allows them to receive more compensation for their services. SB 765 increases the limit of the median final compensation of all members who retired the previous fiscal year from 50 to 70 percent.

To take advantage of SB 765, a district superintendent, county superintendent, or chief executive officer of a community college must submit a request for an exemption to CalSTRS. Submissions are made under penalty of perjury, and must include documentation to substantiate the following:

The nature of the retiree’s employment.
That the appointment is necessary to fill a critically needed position before 180 days have passed.
That the retiree is not ineligible under Section 24214.5, subdivision (d).
That the termination of the retiree is not the basis of the need to acquire the retiree’s services.
That the employing district did not have a reduction-in-force layoff within the last 18 months.

Please note that under the amendments to Sections 24214.5 and 26812, a retiree is ineligible for an exemption if they have not attained normal retirement age at the time compensation is earned, if their termination of employment is the basis of the need to acquire their services, or if they received any financial inducement to retire.

Any documentation submitted to CalSTRS in a request for an exemption must also be submitted to the employee representative before an exempted retiree can perform any retired member activities. Within 30 days of receiving a request for an exemption, CalSTRS will inform the requesting district and the retiree if the exemption will be granted.

By removing barriers preventing newly retired CalSTRS members from participating in retired member activities, SB 765 increases the number of candidates school districts can draw from to fill teacher vacancies. Moreover, by increasing the amount of compensation retirees can receive for retired member activities, districts are given more latitude to incentivize retirees to accept their offers of employment.

The widespread nature of the workforce shortage can make it difficult for a district to fill vacancies because potential teachers may seek employment with another district if they are unsatisfied with a particular assignment. The options provided by SB 765 may help to deal with this problem, as they enable districts to reach out to teachers with whom they already have connections.

That said, the Legislature has declared that the provisions of SB 765 are only temporary. They go into effect on July 1, 2024, and will become inoperative on July 1, 2026, after which the previous versions of Sections 24214, 24214.5, and 26812 will take effect again. SB 765 is intended to help alleviate the workforce shortage in the short-term while other policies and measures are implemented in the time before July 1, 2026.

School districts struggling with teacher vacancies should consider consulting with legal counsel about SB 765’s applicability to their hiring circumstances, and assistance with submitting requests for exemptions. Please do not hesitate to contact the authors of this alert or your AALRR counsel for clarification and guidance.