WSR 98-21-064

PROPOSED RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[Filed October 20, 1998, 1:43 p.m.]



Original Notice.

Exempt from preproposal statement of inquiry under RCW 34.05.310(4).

Title of Rule: Assessment of interest charges on overdue receivables.

Purpose: To amend the department's rules implementing RCW 41.50.120 Payment of moneys due department by employers--Interest and RCW 41.50.125 Interest on contributions--Department may charge.

Other Identifying Information: The current title of chapter 415-114 WAC is "Assessment of interest charges on employers' payments."

Statutory Authority for Adoption: RCW 41.50.050.

Statute Being Implemented: RCW 41.50.120, 41.50.125.

Summary: The proposed rules amend the department's policy on interest to include all receivables. RCW 41.50.125 requires the department to charge interest on overdue receivables when its systems are capable of doing so.

Reasons Supporting Proposal: The department is implementing a new receivables management computer system which makes it possible to fully implement the referenced statutes.

Name of Agency Personnel Responsible for Drafting: Elyette Weinstein, 1025 East Union Avenue, Olympia, WA 98504-8380, (360) 709-4747; Implementation and Enforcement: Jenice Thompson, 404 Legion, Olympia, WA 98405 [98504], (360) 753-5246.

Name of Proponent: Department of Retirement Systems, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rule expands the types of receivables subject to interest when payment is overdue. All types of overdue receivables, except those excluded by law or contract, will be subject to interest charges. The proposed rule defines terms, simplifies how interest will be charged, identifies the basis for interest rates, and sets a time frame for reporting and correcting interest errors. The proposed rule is revised for clarity, and outdated sections are repealed.

The purpose of the proposed rule is to clarify policy changes associated with the implementation of the receivables management system. The anticipated effects of the rules include:

Better compensation to retirement trust funds for investment revenue lost when receivables are not paid in a timely manner.

Interest penalties on overdue receivables.



Proposal Changes the Following Existing Rules: The proposal changes the following WACs:

WAC 415-114-100 is expanded to include all types of receivables.

WAC 415-114-200 adds definitions for receivable, overdue receivable, employer receivable, member receivable, and administrative receivable, and deletes former definitions for employers and obligations.

WAC 415-114-300 is repealed because the definition has been moved to WAC 415-114-200.

WAC 415-114-400 simplifies the definition of how interest will be charged, clarifies the basis on which interest will be charged, and deletes the minimum charge for interest.

WAC 415-114-500 and 415-114-550 are repealed because the conditions addressed by these sections no longer exist.

WAC 415-114-600 is repealed because it is added to WAC 415-114-400 to improve readability of the WAC. As part of WAC 415-114-400 it is expanded to cover all receivables.

WAC 415-114-700 is expanded to cover all receivables, and establishes a time frame of ninety days for claims of erroneous interest to be submitted to the department.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The rules apply to public employers and employees participating in the retirement systems administered by the Department of Retirement Systems. No private business is affected by the rules, therefore, no small business impact statement is required.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. The Department of Retirement Systems is not one of the agencies that RCW 34.05.328 applies to. The Department of Retirement Systems does not opt to voluntarily bring itself within the coverage of that statute.

Hearing Location: Boardroom, 2nd Floor, 1025 East Union Avenue, Olympia, WA 98504-8380, on November 24, 1998, at 1:30 p.m.

Assistance for Persons with Disabilities: Contact Shirley Corbett by November 24, 1998, TDD (360) 586-5450, or (360) 709-5331.

Submit Written Comments to: Elyette Weinstein, P.O. Box 48380, Olympia, WA 98504-8380, fax (360) 753-3166, by November 23, 1998.

Date of Intended Adoption: December 1, 1998.

October 20, 1998

Elyette M. Weinstein

Rules Coordinator

OTS-2586.1

Chapter 415-114 WAC



ASSESSMENT OF INTEREST CHARGES ON ((EMPLOYERS')) OVERDUE ((PAYMENTS)) RECEIVABLES



AMENDATORY SECTION (Amending WSR 91-19-062, filed 9/16/91, effective 10/17/91)



WAC 415-114-100  Purpose. These rules relate to the implementation of RCW 41.50.120 and 41.50.125 which provide((s)) the department of retirement systems the authority to assess interest ((charges)) on ((employers' overdue payments of obligations)) the overdue unpaid balance of a receivable owed to the department. These rules are intended to encourage ((employers to pay obligations)) payment in a timely manner.



[Statutory Authority: RCW 41.50.050, 41.50.120 and chapter 34.05 RCW. 91-19-062, 415-114-100, filed 9/16/91, effective 10/17/91.]



AMENDATORY SECTION (Amending WSR 91-19-062, filed 9/16/91, effective 10/17/91)



WAC 415-114-200  Definitions. As used in this chapter, unless a different meaning is plainly required by the context:

(1) "Department" - refers to the department of retirement systems established pursuant to chapter 41.50 RCW as now existing or hereafter amended;

(2) (("Employers" - refers to all employers within the retirement systems administered by the department as defined in RCW 41.50.030;

(3) "Obligations owed to the department" - include, but are not limited to, employer and employee contributions;

(4))) "Receivable" - an amount owed to DRS, where there is a legal obligation to pay DRS and DRS has a legal obligation to collect the amount owed. That includes, but is not limited to, amounts owed to trust funds administered by the department of retirement systems;

(3) "Close of business day" - refers to 5:00 p.m. of a business day;

(4) "Overdue receivable" - a receivable with an unpaid balance at the close of business three business days after the due date;

(5) "Employer receivable" - a receivable which is owed by any one of the employers within the retirement systems and programs administered by the department as defined in RCW 41.50.030;

(6) "Member receivable" - a receivable which is owed by any one of the current or previous members of the retirement systems and programs administered by the department as defined in RCW 41.50.030, or is owed by a member's beneficiary, legal owner payee, or other agent in conjunction with the member's account;

(7) "Administrative receivable" - any receivable owed the department which is not considered an employer receivable or a member receivable.



[Statutory Authority: RCW 41.50.050, 41.50.120 and chapter 34.05 RCW. 91-19-062, 415-114-200, filed 9/16/91, effective 10/17/91.]



AMENDATORY SECTION (Amending WSR 91-19-062, filed 9/16/91, effective 10/17/91)



WAC 415-114-400  Assessment of interest charge. (((1) When a payment is overdue, interest will be charged in the following manner:

A 1% simple interest charge will be assessed against the employer's balance due on account multiplied by the number of the days past due divided by 30.40 (annual average number of days in a month). The balance due on the account is the total of the obligations owed to the department, less payments received. The interest obligation shall not be compounded.

(2) Interest charges of less than five dollars will not be billed.

(3) Interest charges will be based upon the employer's monthly contribution report as received by the department. If the employer's contributions have not been received in a timely manner as stated in WAC 415-114-300, interest charges will be based on an average of contribution reports processed from the prior six months. Such interest charges will then be adjusted when the late contribution report is received and processed.

(4) Interest will be charged for overdue obligations owed to the department for reports and current obligations which are due on or before June 15, 1991. Current obligations are all obligations except debit balance forwards as defined in WAC 415-114-550.)) The first calendar day that the receivable is overdue, interest will be charged, based on the due date.

A 1% per month simple interest charge will be assessed against an employer's overdue balance. Interest charges for other receivables will be determined by the director of the department of retirement systems. For member receivables, interest will be based on the long-term investment return assumption adopted under RCW 41.45.030. These rates approximate interest lost to trust funds if the receivable had been paid in a timely manner.

Assessed interest will appear on the monthly accounts receivable statement issued by the department.



[Statutory Authority: RCW 41.50.050, 41.50.120 and chapter 34.05 RCW. 91-19-062, 415-114-400, filed 9/16/91, effective 10/17/91.]



AMENDATORY SECTION (Amending WSR 91-19-062, filed 9/16/91, effective 10/17/91)



WAC 415-114-700  Erroneous charges of interest. If the department erroneously charges interest ((against an employer)), the department will credit the ((employer's)) account ((an)) by the amount equal to the erroneous interest that was charged. ((Employers who believe that they have been erroneously charged interest must submit to the department written proof prior to the department making a determination regarding the cancellation of the interest charge.)) Those who believe they have been charged interest in error must submit written justification of their claim within ninety days of the interest charge.



[Statutory Authority: RCW 41.50.050, 41.50.120 and chapter 34.05 RCW. 91-19-062, 415-114-700, filed 9/16/91, effective 10/17/91.]



REPEALER



The following sections of the Washington Administrative Code are repealed:



WAC 415-114-300 What is considered an overdue payment of an obligation owed to the department.

WAC 415-114-500 Assessment of interest charge on accrued obligations.

WAC 415-114-550 Assessment of interest charge on debit balance forward.

WAC 415-114-600 Billing of interest charges.