(a) “Final compensation” means the highest average annual compensation earnable, as defined by Section 22115, by a member during any period of 36 consecutive months of service while an active member of the Defined Benefit Program or time during which he or she was not a member but for which the member has received credit under the Defined Benefit Program, except time that was so credited for service performed outside this state prior to July 1, 1944.

(b) For purposes of this section, periods of service separated by breaks in service or by periods in which a member’s salary was reduced because of a reduction in school funds as certified by the employer may be aggregated, if the periods of service are consecutive except for the breaks or periods of salary reduction.

(c) The following shall be considered periods of service for the purpose of determining final compensation:

(1) The full pay period if the member earns creditable compensation within that pay period, but not beyond the benefit effective date except as provided in paragraph (3).

(2) The months of the school year preceding the school term if the member earns creditable compensation during the first pay period of that school term.

(3) The months of the school year following the school term if the member earns creditable compensation during the last pay period of that school term.

(4) Any period that is excluded from the school term if a member earns creditable compensation during the pay periods immediately preceding and immediately following the excluded period.

(d) For purposes of determining the final compensation of a member who is eligible for concurrent retirement as defined in Section 22115.5, the compensation a person could earn for services rendered on a full-time basis under a retirement system with which the member has concurrent membership, as defined in Section 22115.2, shall be considered compensation earnable, provided that both of the following exist:

(1) The compensation under the other system was not earned during the periods of service determined pursuant to subdivision (c) under the Defined Benefit Program.

(2) Retirement for service under the Defined Benefit Program is concurrent with the member’s retirement for service under the other system pursuant to Section 22115.5.

(e) The creditable compensation for the first school year in which a member earned creditable compensation shall be used when additional months of creditable compensation are required for the purpose of determining final compensation.

(f) If a member has received service credit for part-time service performed prior to July 1, 1956, the member’s final compensation shall be adjusted for that service in excess of one year by the ratio that part-time service bears to full-time service.

(g) For purposes of calculating a benefit that does not include service credit, final compensation shall be the highest average annual creditable compensation earned by a member during any period of 36 consecutive months of service, excluding compensation for which contributions are credited to the Defined Benefit Supplement Program. Final compensation determined pursuant to this subdivision shall not exceed the amount determined pursuant to subdivision (a).

(h) The amendment of former Section 22127 made by Chapter 782 of the Statutes of 1982 does not constitute a change in, but is declaratory of, the existing law.

(Amended by Stats. 2018, Ch. 416, Sec. 3. (SB 1165) Effective January 1, 2019.)