AN ACT Relating to the portability of public employment retirement benefits; amending RCW 41.04.270; adding a new chapter to Title 41 RCW; adding a new section to chapter 41.04 RCW; making an appropriation; declaring an emergency; and providing effective dates.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Actuary" means the state actuary as established under chapter 44.44 RCW.

(2) "Base salary" means salaries or wages earned by a member of a system during a payroll period for personal services and includes wages and salaries deferred under provisions established pursuant to sections 403(b), 414(h), and 457 of the United States internal revenue code, but shall exclude overtime payments, nonmoney maintenance compensation, and lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, any form of severance pay, any bonus for voluntary retirement, any other form of leave, or any similar lump sum payment.

(3) "Average compensation" means, respectively, "final average salary" as defined in RCW 2.10.030, "final average salary" as defined in RCW 41.26.030, "final compensation" as defined in RCW 41.28.010, "average final compensation" as defined in RCW 41.32.010 and 41.40.010, "average earnable compensation" as used in RCW 41.32.498, and "average final salary" as defined in RCW 43.43.120.

(4) "Service retirement allowance" means, respectively, "retirement allowance" as used or defined in RCW 2.10.110, 41.26.100, 41.28.130, 41.32.010, 41.40.010, and 43.43.260, "pension" as used in RCW 41.16.080, 41.18.040, and 41.20.050, and "an amount" as used in RCW 2.12.030.

(5) "Current system average final compensation" means that compensation or average compensation used in the service retirement benefit calculation of the current system, with compensation being either that earned in the current system or the base salary earned in a prior system, whichever produces the greater benefit.

(6) "Prior system average final compensation" means the compensation or average compensation used in the service retirement benefit calculation of the prior system, with compensation being either that earned in the prior system or the base salary earned in any system in which dual membership is held, whichever produces the greater benefit.

(7) "Compensation" means, respectively, "monthly salary" as defined in RCW 2.10.010, "salary" as used in RCW 2.12.015, "salary" as used in RCW 41.16.080, "basic salary" as defined in RCW 41.18.010, "salary" as used in RCW 41.20.050, "basic salary" as defined in RCW 41.26.010, "compensation earnable" as defined in RCW 41.28.010, "earnable compensation" as defined in RCW 41.32.010, "compensation earnable" as defined in RCW 41.40.010, "compensation earnable" as defined in RCW 41.44.030, and "average final salary" as used in RCW 43.43.120(15).

(8) "Current system" means the system in which a member is currently making contributions and accruing service credit.

(9) "Department" means the department of retirement systems.

(10) "Director" means the director of retirement systems.

(11) "Dual member" means a person who (a) is or becomes a member of a system on or after January 1, 1988, (b) has been a member of one or more other systems, and (c) has never been retired for service from a retirement system and is not receiving a disability retirement or disability leave benefit from a prior system.

(12) "Prior system" means a system in which a person had previous membership but is no longer making member contributions.

(13) "Service" means the same as it may be defined in each respective system.

(14) "System" means the retirement systems established under chapters 2.10, 2.12, 41.16, 41.18, 41.20, 41.26, 41.28, 41.32, 41.40, 41.44, and 43.43 RCW. The inclusion of an individual first class city system is subject to the procedure set forth in section 5 of this act. For the sole purpose of using service in a prior system to establish eligibility to retire, the retirement systems established under RCW 28B.10.400 shall be included in this definition.

NEW SECTION. Sec. 2. (1) Those persons who are dual members on or after January 1, 1988, shall not receive a retirement benefit from any prior system, based on service, while dual members without the loss of all benefits under this chapter and RCW 41.04.270. Retroactive retirement in any prior system will cancel membership in any subsequent systems under the provisions of section 7 of this act and will result in the refund of all employee and employer contributions made to such systems.

(2) When such dual member terminates employment under the current system, the member, if eligible under the current system, may commence receiving the benefit to which the member is entitled and calculated according to section 3 of this act.

(3) If a member has withdrawn contributions from a prior system, the member may restore the contributions, together with interest since the date of withdrawal as determined by the system, and recover the service represented by the contributions. Such restoration must be completed within two years of establishing dual membership or prior to retirement, whichever occurs first.

(4) Any service accrued in one system by the member shall not accrue in any other system.

NEW SECTION. Sec. 3. (1) As used in this section, the percentage factor to be used in calculating a benefit under chapter 2.10, 41.26, or 41.28 RCW shall be determined by service earned in the respective systems.

(2) Except as provided in subsection (3) of this section, the benefit to be paid to a dual member upon retiring from the current system because of service shall be the sum of:

(a) The service retirement allowance received under the current system as a result of multiplying the current system average final compensation by the percentage factor of the current system and the service earned under the current system, except that military service granted under RCW 41.40.170(3) or 43.43.260(3) must result from service totally accrued under chapter 41.40 or 43.43 RCW, respectively; and

(b) The sum of the respective retirement allowances received under prior systems as a result of multiplying the prior system average final compensation by the percentage factor of the prior systems and the service earned under the prior systems.

(3) For those who had rendered judicial service under chapter 2.10 or 2.12 RCW, or service under chapter 41.40 RCW as an official elected or appointed under Article II or III of the state Constitution or RCW 48.02.010, the service retirement allowance to be paid to a dual member upon retiring from the current system shall be the sum of:

(a) The product of:

(i) The aggregate of the member's service as a judge under chapter 2.10 or 2.12 RCW or either as an official elected or appointed under Article II or III of the state Constitution or RCW 48.02.010, used to determine the eligibility for a benefit under chapter 2.10, 2.12, or 41.40 RCW in such a position, except that no service from any other system other than allowed under RCW 2.10.220 and 2.12.100 shall be used to establish eligibility for service retirement allowances in the systems governed by chapters 2.10 and 2.12 RCW, respectively;

(ii) The average final compensation derived from the base salary or current system average final compensation, whichever is the greater; and

(iii) The appropriate percentage factor of chapter 2.10, 2.12, or 41.40 RCW, respectively; and

(b) The sum of:

(i) The service retirement allowance received under the current system as a result of multiplying the current system average final compensation by the percentage factor of the current system and the service earned under the current system, including any concurrent service associated to service used in (a)(i) of this subsection; and

(ii) The sum of the respective service retirement allowances received under prior systems, including any concurrent service used in (a)(i) of this subsection, as a result of multiplying the prior system average final compensation by the percentage factor of the prior systems and the service earned under the prior systems. Military service granted under RCW 41.40.170(3) or 43.43.260(3), however, must result from service totally accrued under chapter 41.40 or 43.43 RCW, respectively.

(4) Eligibility to receive a service benefit under this chapter shall be based on (a) the criteria of any system in which dual membership is held, and (b) the dual member's combined systems' service. The service retirement allowances from a system which, but for this chapter, would not be allowed to be paid at this date based on the dual member's age shall be either actuarially adjusted from the earliest age upon which the combined service would have made such dual member eligible in each respective system, or the dual member may choose to defer the benefit until fully eligible.

NEW SECTION. Sec. 4. (1) The retirement allowances calculated under section 3 of this act shall be paid separately by each respective current and prior system. Any deductions from such separate payments shall be according to the provisions of the respective systems.

(2) Postretirement adjustments, if any, shall be applied by the respective systems based on the payments made under subsection (1) of this section.

(3) If a dual member dies in service in any system, the surviving spouse shall receive the same benefit from each system that would have been received if the member were active in the system at the time of death based on service actually established in that system.

NEW SECTION. Sec. 5. A system authorized under chapter 41.28 RCW may choose to be included in the provisions of this chapter by the adoption of a resolution by majority vote of those elected or appointed to the legislative body of the respective first class city. This resolution may not be adopted until a public hearing has been held on the proposed entry into coverage under this chapter. If adopted, the resolution shall be immediately transmitted to the director and inclusion shall become effective on the first day of the month following adoption.

NEW SECTION. Sec. 6. The benefit granted by this chapter shall not result in a total benefit less than would have been received absent such benefit. The total sum of the retirement allowances received under this chapter shall not exceed the amount the dual member could receive if all the service had been rendered in any one system.

NEW SECTION. Sec. 7. The benefits provided under sections 1 through 6 of this act are not to be construed as establishing a contractual right and the legislature shall retain the right to deny the establishment of any new dual membership status at any time. This section shall expire on June 30, 1992.

Sec. 8. Section 1, chapter 105, Laws of 1975-'76 2nd ex. sess. as amended by section 1, chapter 29, Laws of 1980 and RCW 41.04.270 are each amended to read as follows:

(1) Notwithstanding any ((~~other~~)) provision of ((~~law~~)) chapter 2.10, 2.12, 41.26, 41.28, 41.32, 41.40, or 43.43 RCW to the contrary, on and after March 19, 1976, any member or former member who ((~~(1)~~)) (a) receives a retirement allowance earned by said former member as deferred compensation from any public retirement system authorized by the general laws of this state, or ((~~(2)~~)) (b) is eligible to receive a retirement allowance from any public retirement system listed in RCW 41.50.030, but chooses not to apply, or ((~~(3)~~)) (c) is the beneficiary of a disability allowance from any public retirement system listed in RCW 41.50.030 shall be estopped from becoming a member of or accruing any contractual rights whatsoever in any other public retirement system listed in RCW 41.50.030: PROVIDED, That (a) and (b) of this subsection((~~s (1) and (2) of this section~~)) shall not apply to persons who have accumulated less than fifteen years service credit in any such system.

(2) Nothing in this section is intended to apply to (a) any retirement system except those listed in RCW 41.50.030 and ((~~the retirement systems of first class cities~~)) chapter 41.28 RCW, or (b) a dual member as defined in section 1 of this 1987 act.

NEW SECTION. Sec. 9. Sections 1 through 7 of this act shall constitute a new chapter in Title 41 RCW.

NEW SECTION. Sec. 10. A new section is added to chapter 41.04 RCW to read as follows:

There is created a sixteen-member joint committee on public retirement as follows:

(1) The president of the senate shall appoint eight members, with four members to be appointed from each caucus; and

(2) The speaker of the house of representatives shall appoint eight members, with four members to be appointed from each caucus.

During the period of July 1, 1987, through June 30, 1989, the committee shall, among its other monitoring, study, and recommendation activity regarding past and future legislative actions or proposals, periodically review the implementation and effect of chapter 41.--!sc ,1RCW (sections 1 through 7 of this act).

NEW SECTION. Sec. 11. This 1987 act shall be null and void in its entirety unless the legislature, in the 1987-1989 biennial budget, appropriates the sum of six million, three hundred fifty-four thousand dollars to the department of retirement systems, including a transfer of five hundred fifty-four thousand dollars from the department of retirement systems expense fund for the fiscal biennium ending June 30, 1989, to initiate and administer the implementation of this act.

NEW SECTION. Sec. 12. (1) Sections 10 and 11 of this act are necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect on July 1, 1987.

(2) The remainder of this act shall take effect on January 1, 1988.

(3) The legislative body of a first class city may follow the procedure set forth in section 5 of this act prior to January 1, 1988.