WSR 05-12-108

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed May 27, 2005, 3:38 p.m. , effective June 27, 2005 ]


Purpose: This is the second phase of a three-phase project to update teachers' retirement system rules to reflect current policy and the Department of Retirement Systems clear-writing standards.

Citation of Existing Rules Affected by this Order: Repealing WAC 415-112-4605, 415-112-483, 415-112-491, 415-112-550, 415-112-710, 415-112-725, 415-112-800, 415-112-850 and 415-112-920; and amending WAC 415-112-41301, 415-112-415, 415-112-4601, 415-112-4603, 415-112-4604, 415-112-4607, 415-112-4608, 415-112-4609, 415-112-471, 415-112-473, 415-112-475, 415-112-477, 415-112-480, 415-112-482, 415-112-485, 415-112-487, 415-112-489, 415-112-490, 415-112-500, 415-112-610, 415-112-620, 415-112-630, and 415-112-700.

Statutory Authority for Adoption: RCW 41.50.050(5).

Other Authority: WAC 415-112-41301, 415-112-415, 415-112-417, 415-112-4601, 415-112-4602, 415-112-4603, 415-112-4604, 415-112-4607, 415-112-4608, 415-112-4609, 415-112-471, 415-112-477, 415-112-480, 415-112-482, 415-112-485, 415-112-487, 415-112-489 and 415-112-490 implement RCW 41.32.010(10); WAC 415-112-473 and 415-112-475 implement RCW 41.32.267, 41.32.810, 41.32.856; WAC 415-112-500 implements RCW 41.32.480; WAC 415-112-501 implements RCW 41.32.765; WAC 415-112-502 implements RCW 41.32.875; WAC 415-112-507, 415-112-523, 415-112-610 and 415-112-620 implement chapter 41.32 RCW; WAC 415-112-630 implements RCW 41.32.570; and WAC 415-112-700 implements RCW 41.32.520.

Adopted under notice filed as WSR 05-09-055 on April 19, 2005.

Changes Other than Editing from Proposed to Adopted Version: Changed a WAC citation in WAC 415-112-401.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 6, Amended 23, Repealed 9.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 6, Amended 23, Repealed 9.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 6, Amended 23, Repealed 9.

Date Adopted: May 27, 2005.

S. J. Matheson

Director

OTS-8015.2


AMENDATORY SECTION(Amending WSR 99-14-008, filed 6/24/99, effective 7/25/99)

WAC 415-112-41301   ((Vehicle allowances -- ))Are vehicle allowances earnable compensation?   (((1) If your employer provides you any payment or allowance in lieu of a reimbursement for expenses you incur or expect to incur in performing services for your employer, the payment or allowance is not earnable compensation. Your vehicle allowance does not qualify as earnable compensation if you receive the allowance in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes.

(2) The department presumes that any vehicle allowance provided to you by your employer is a payment in lieu of reimbursement for expenses and is not earnable compensation. If the contract authorizing your vehicle allowance states that it is provided solely in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes, the department's presumption is not rebuttable.

(3) Your vehicle allowance may qualify as earnable compensation to the extent that it exceeds your actual expenses. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in driving your own vehicle for business purposes, the excess amount is earnable compensation. Your employer must maintain monthly contemporaneous records documenting the following:

(a) The dates, if any, on which you used a privately owned vehicle in performing services for your employer;

(b) The miles you drove the vehicle on each of these trips; and

(c) Your itinerary for each of these trips.

(4) How to determine what amount of your vehicle allowance, if any, is reportable as earnable compensation. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in using your own vehicle for business purposes, your employer must report to the department as earnable compensation:))


Your Vehicle Allowance LESS (Miles x IRS Rate)

(a) "Miles" above means the number of miles you drove a privately owned vehicle for business purposes during the month.

(b) "IRS rate" above means the Internal Revenue Service mileage rate for use by taxpayers computing the value of the use of a vehicle.

(5) Your vehicle allowance qualifies as earnable compensation if you also receive a separate reimbursement for each occasion you use your own vehicle for business purposes. If, in addition to your vehicle allowance, you receive a separate reimbursement for vehicle expenses for each occasion that you use a privately owned vehicle for business purposes, your vehicle allowance is earnable compensation.

(6) Any part of your vehicle allowance that qualifies as earnable compensation is excess compensation. If any part of your vehicle allowance is included in the calculation of your retirement allowance, your employer will be billed for excess compensation under RCW 41.50.150. Your employer's bill will equal the total estimated cost of the portion of your retirement allowance payment attributable to your vehicle allowance.)) (1)(a) Plan 1. Vehicle allowances may be earnable compensation for Plan 1 members according to this section.

(b) Plans 2 and 3. Vehicle allowances are not earnable compensation for members of Plans 2 and 3. Subsections (2) through (5) of this section apply to Plan 1 members only.

(2) For TRS Plan 1:

(a) A vehicle allowance is not earnable compensation if it is received in lieu of expenses you incur or expect to incur in using your own vehicle for business purposes.

(b) A vehicle allowance qualifies as earnable compensation to the extent that it exceeds your actual expenses. For instance, if you receive both a vehicle allowance and separate reimbursement for vehicle expenses each time you use a privately owned vehicle for business purposes, the vehicle allowance is earnable compensation.

(3) To prove that your vehicle allowance exceeded your actual expenses, your employer must maintain ongoing monthly records, documenting:

(a) The dates, if any, on which you used a privately owned vehicle in performing services for your employer;

(b) The miles you drove the vehicle on each of these trips;

(c) Your itinerary for each of these trips; and

(d) The amount of the allowance LESS the actual expenses, using IRS methodology. Under the IRS methodology, your actual expenses are the miles you drove multiplied by the IRS rate.

(i) The miles you drove are the number of miles you drove a privately owned vehicle for business purposes during the month.

(ii) "IRS rate" means the Internal Revenue Service mileage rate for use by taxpayers computing the value of the use of a vehicle.

(4) If a vehicle allowance exceeds your actual expenses, your employer must report the excess, calculated in subsection (3)(d) of this section.

(5) If any part of a vehicle allowance is included in the calculation of your retirement allowance, your employer will be billed for excess compensation under RCW 41.50.150.

[Statutory Authority: RCW 41.50.050. 99-14-008, 415-112-41301, filed 6/24/99, effective 7/25/99; 95-22-006, 415-112-41301, filed 10/18/95, effective 11/18/95.]


AMENDATORY SECTION(Amending WSR 00-13-001, filed 6/7/00, effective 7/8/00)

WAC 415-112-415   ((Treatment of cash payments made in lieu of unused leave -- First-in-first-out accounting method for determining when leave earned -- Forms of leave deemed excess compensation -- Conversions.)) Are cash-outs for annual leave and personal leave included in earnable compensation and/or average final compensation?   (((1) Cash compensation in lieu of unused annual leave may be considered earnable compensation for Plan I members subject to the provisions of RCW 41.32.010 (10)(a) and WAC 415-112-4605. Employers may not limit the inclusion of cash compensation paid in lieu of unused annual leave as compensation earnable in conflict with RCW 41.32.010 (10)(a). Provisions of collective bargaining agreements, employment and administrative policies or other rules applied by an employer that conflict with RCW 41.32.010 (10)(a) and rules adopted thereunder are without legal effect.

(2) When an employer provides cash compensation in lieu of unused annual leave, the department applies a first-in-first-out accounting method to determine when the compensated leave was earned and when or whether the leave was used or cashed out, unless the employer has in place a regulation, charter provision, ordinance, collective bargaining agreement, or other comparable written policy statement which clearly delineates when the cashed out leave was accrued, or a different method of accounting for the accrual and use of leave, and, if applicable, compensation for unused leave and the same such method is consistently applied in each instance and for all purposes.

Any employer's policy which is not consistent for all purposes which is contained in a regularly negotiated labor agreement in effect on the effective date of this section will be honored until the expiration date of the agreement not including any extensions at which time it will be brought into compliance with this section. Any employer's policy which is not consistent for all purposes which is established by the employer shall be brought into compliance within sixty days of the effective date of this section. In the event an employer fails to come into full compliance with this section by the dates established herein, the department will treat cashed out leave on the same basis as the employer has established for using leave.

(3) A cash out of leave which is not annual leave as defined under WAC 415-112-015, shall be treated by the department as "any other form of leave" under RCW 41.50.150(2). The department shall bill the employer for any such leave cash out as excess compensation under RCW 41.50.150.

(4) For purposes of determining average final compensation and excess compensation, hours of leave earned by a member shall be considered for all purposes in the form in which it was earned. The department shall disregard any conversion of leave by an employer of one form to another and bill the employer for the amount converted as excess compensation pursuant to RCW 41.50.150.)) (1)(a) Plan 1. Under RCW 41.32.010 (10)(a), cash-outs for up to two hundred forty hours of unused annual leave are included in earnable compensation1 for Plan 1 members according to this section.

(b) Plans 2 and 3. Under RCW 41.32.010 (10)(b), cash-outs for unused annual leave and personal leave are not earnable compensation in Plans 2 and 3, and are not includable in average final compensation. Subsections (2) through (4) of this section apply to Plan 1 members only.

(2) For Plan 1 members, cash-outs for unused annual leave and personal leave may be included in average final compensation only if the leave was earned during the two fiscal years used to calculate your average final compensation under WAC 415-112-430.

(3) The department determines when your cashed-out leave was earned as follows:

(a) You accrue annual leave and personal leave at a prescribed rate, often a certain number of hours per month. Your accrued leave is stored until you use it.

(b) Except as provided in (c) of this subsection, the department applies a "first-in-first-out (FIFO)" methodology to determine what personal leave and annual leave you have used.


Example: John has accrued ten days of annual leave. He earned five days in 2000 and five days in 2001. In 2002, John uses five days of annual leave. He is deemed to have used the five days earned in 2000. The five days earned in 2001 remain unused.

(c) If the employer has a different methodology in place, the department will use the employer's methodology, rather than the FIFO methodology; provided that:

(i) The employer's methodology was clearly documented by a collective bargaining agreement, regulation, charter provision, ordinance, or other comparable written policy statement; and

(ii) The employer's methodology was applied consistently to all employees for all purposes.

(4) For purposes of determining average final compensation and excess compensation, the department will consider the hours of leave in the form in which the leave was earned. If an employer converts one form of leave to another form of leave, the department will disregard the conversion and bill the employer for the amount converted if it meets the definition of excess compensation in RCW 41.50.150.


1In certain cases, an employee may cash out personal leave and/or more than two hundred forty hours of annual leave. Although this cash-out is not earnable compensation, it may be used in the calculation of the employee's retirement allowance and the employer will be billed for the excess compensation. See WAC 415-02-140.

[Statutory Authority: RCW 41.50.050 and 41.32.010(10). 00-13-001, 415-112-415, filed 6/7/00, effective 7/8/00. Statutory Authority: RCW 41.50.050. 94-23-049, 415-112-415, filed 11/10/94, effective 12/11/94. Statutory Authority: RCW 41.50.050 and Bowles v. Retirement Systems, 121 Wn.2d 52 (1993). 94-11-009, 415-112-415, filed 5/5/94, effective 6/5/94. Statutory Authority: RCW 41.32.010(11) and 41.32.160. 87-17-060 (Order DRS 87-07), 415-112-415, filed 8/19/87.]


NEW SECTION
WAC 415-112-417   Are cash-outs for sick leave included in earnable compensation and/or average final compensation?   Cash-outs for unused sick leave are not earnable compensation in TRS Plans 1, 2, or 3, and are not includable in average final compensation.

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AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-4601   Are contract salary payments((.)) earnable compensation?   (1) Base contract. ((The base contract establishes the payment for teaching or administrative services provided during each day of the district's school year. For classroom teachers, the base contract authorizes the salary for providing basic education services per RCW 28A.405.200. For administrators and principals, other items may be included. Because services are rendered in exchange for this payment, it is reportable compensation. This does not mean that a payment is reportable compensation solely because it is authorized in an employee's base contract. Rather than relying on the name of a payment or the document where it is authorized, you must evaluate whether services were rendered in exchange for the payment.

(2) Evening or summer school contracts. Evening or summer school payments are for additional time worked. These payments are often authorized in a supplemental contract. These payments are for services rendered and are reportable compensation.

(3) Supplemental or TRI contracts under RCW 28A.400.200. A school district may compensate an employee for additional time, responsibility or incentives with a supplemental contract.

(a) If the payment is for additional time, then it is for services rendered and qualifies as reportable compensation.

(b) If the payment is for additional responsibility (i.e., additional service which does not specifically require more time) within the regularly scheduled working day, then it is also for services rendered and is reportable. Examples of additional responsibility include payments linked to extra enrollment or additional duties outside the scope of the base contract.

(c) If the payment is made as an incentive, then it is also for services rendered and is reportable compensation. Incentive payments include payments for meeting performance goals specified by the employer.

(4) Longevity or educational attainment. Salaries for all teachers and most administrators are determined by looking at the individual's teaching experience and educational attainment.

(a) A member who receives a salary increase based upon longevity or educational attainment receives a higher salary without working more hours. The higher salary indicates a higher level of service due to greater experience or more education. The payment is therefore a payment for additional service and is reportable compensation.

(b) Simply attaching the label "longevity" to a payment does not guarantee that it will be reportable compensation. If a payment described as a longevity payment is actually based upon some other criteria, such as retirement or notification of intent to retire, the payment may not be reportable.)) Payments authorized under a base contract may be earnable compensation.

(a) Payments made to classroom teachers for the provision of educational services are earnable compensation.

(b) Payments made to administrators and principals for the provision of administrative services are earnable compensation.

(c) Even though salaries are derived from a salary schedule that incorporates experience and educational attainment, to the extent that the salaries are paid for services provided, they are earnable compensation. Both experience and educational attainment are deemed to increase the quality of the service performed. See RCW 28A.405.200.

(d) Payments pursuant to the base contract that are not made in exchange for services performed are not earnable compensation.

(2) Supplemental contract. Payments authorized under a supplemental time, responsibility or incentives (TRI) contract may be earnable compensation. RCW 28A.400.200 allows the use of supplemental TRI contracts to compensate an employee for additional time, additional responsibility, or the achievement of stated incentives.

(a) Payments authorized by a supplemental contract for services requiring additional time are earnable compensation. Examples include payments for the provision of educational services during evening or summer school.

(b) Payments authorized by a supplemental contract for services requiring additional responsibility within the regularly scheduled working day are earnable compensation. Examples include payments linked to over enrollment or additional duties.

(c) Payments authorized by a supplemental contract for the achievement of stated incentives are earnable compensation. Examples include meeting performance goals specified by the employer.

(3) Longevity or educational attainment. Payments for longevity or educational attainment must be analyzed to determine whether they are paid for services provided. Salaries for all teachers and most administrators are determined by looking at the individual's teaching experience and educational attainment.

(a) A member who receives a salary increase based upon longevity or educational attainment receives a higher salary without working more hours. The higher salary indicates a higher level of service due to greater experience or more education. The payment is therefore a payment for additional service and is earnable compensation.

(b) Simply attaching the label "longevity" to a payment does not guarantee that it will be earnable compensation. If a payment described as a longevity payment is actually based upon some other criteria, such as retirement or notification of intent to retire, the payment may not be reportable.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-4601, filed 1/6/97, effective 2/6/97.]


NEW SECTION
WAC 415-112-4602   Are bonuses for National Board for Professional Teaching Standards certification earnable compensation?   Bonuses you receive for attaining National Board for Professional Teaching Standards certification are not earnable compensation.

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AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-4603   Are performance bonuses((.)) earnable compensation?   ((Bonuses that are based upon meeting certain performance goals or having to work under unusual conditions, such as over enrollment, are earned for services rendered and are reportable compensation.)) Bonuses for meeting certain performance goals or working under unusual conditions, such as over enrollment, are earnable compensation because they are paid for services provided.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-4603, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-4604   ((Cafeteria plans.)) Is compensation applied toward cafeteria plans earnable compensation?   ((Compensation received in any form under the provisions of a "cafeteria plan," "flexible benefits plan," or similar arrangement pursuant to section 125 of the United States Internal Revenue Code is reportable compensation if the employee has an absolute right to receive cash or deferred cash payments in lieu of the fringe benefits offered. In such an instance, the fringe benefits are being provided in lieu of cash and are considered reportable compensation, just as the cash would be. If there is no cash option, the value of the fringe benefit is not a salary or wage and is not reportable compensation, see WAC 415-112-480.)) Compensation you receive and apply toward a benefit plan under I.R.C. Section 125 may be earnable compensation. If you have an absolute right to receive cash or deferred cash payments instead of the fringe benefit, the payment is earnable compensation. If you have no cash option, the value of the fringe benefit is not earnable compensation. Also see WAC 415-112-480.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-4604, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-4607   Are retroactive salary increases((.)) earnable compensation?   ((A retroactive salary payment to an employee who worked during the covered period is a payment of additional salary for services already rendered.


Note: A retroactive salary increase is not the same as a retroactive payment upon reinstatement or in place of reinstatement of a terminated or suspended employee. For treatment of back payments for periods where services were not rendered, see WAC 415-112-477.
(1) To qualify as reportable compensation under this section, the payment must be a bona fide retroactive salary increase. To ensure that is the case, the retroactive payment must be made pursuant to:

(a) An order or conciliation agreement of a court or administrative agency charged with enforcing federal, state, or local statutes, ordinances, or regulations protecting employment rights;

(b) A bona fide settlement of such a claim before a court or administrative agency; or

(c) A collective bargaining agreement.

(2) The payments will be deemed earned in the period in which the work was done.)) (1) A retroactive salary increase occurs when your rate of pay is increased and made retroactive to a prior date. You receive a lump sum payment for the increased amount earned during the earlier period.


Example: John's salary is $2000 per month. On April 10, his salary is increased to $2200 per month. The increase is made retroactive to January 1. On April 25, he receives a lump sum payment of $600, i.e., the $200 increase for January, February, and March. In April he also receives a paycheck at the new rate of $2200.


(2) A lump sum payment received pursuant to certain retroactive salary increases is earnable compensation. See subsection (3) of this section. The payment will be deemed to be earned in the period in which the work was done.


Example: When the $600 payment is reported to the department, John will receive an additional $200 of earnable compensation for each of January, February, and March.


(3) To qualify as earnable compensation, the retroactive salary increase must be made pursuant to:

(a) An order or conciliation agreement of a court or administrative agency charged with enforcing federal, state, or local statutes, ordinances, or regulations protecting employment rights;

(b) A bona fide settlement of a claim before a court or administrative agency for a retroactive salary increase;

(c) A collective bargaining agreement; or

(d) A legislative enactment.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-4607, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-112-4608   Is severance pay ((earned over time.)) earnable compensation?   (1) Severance pay earned over time.

(a) Plan 1. Severance pay must be earned over time in the same manner as annual leave or sick leave in order to be deferred compensation for services previously ((rendered)) provided and to be reportable in Plan 1. Severance pay is earned over time if the employment contract(s) entered into at the beginning of the period of employment specify that a certain amount of severance pay will be earned in the coming year in consideration for services ((rendered)) provided.


Example: Mr. Jones is a TRS Plan 1 member employed as a school administrator. Since the beginning of his term of employment with the district, his contract has specified that he will earn one week of severance pay for every year of his employment. The earned severance pay will be paid at the time of his separation. His severance pay is ((reportable)) earnable compensation. When Mr. Jones retires, the two weeks severance pay that he earned during his two highest paid years (i.e., one week per year for two years) will be included in his TRS Plan 1 retirement calculation.


(((2))) (b) Plans 2 and 3. All forms of severance pay are excluded from earnable compensation for Plans 2 and 3 by RCW 41.32.010(10).

(((3))) (2) Severance pay that is not earned over time ((is not earned for services rendered and is not reportable in Plan 1, 2, or 3, see WAC 415-112-491)). Severance pay that is not earned over time is not earned for services provided and is not earnable compensation for Plan 1, 2 or 3.


Example: A school administrator and a school district negotiate a termination agreement. In the agreement, the school district agrees to pay the administrator a lump sum payment equal to two months salary as severance pay. The severance payment was not accrued over time in exchange for services provided, and therefore is not earnable compensation.

[Statutory Authority: RCW 41.50.050. 00-10-015, 415-112-4608, filed 4/21/00, effective 5/22/00; 98-09-059, 415-112-4608, filed 4/17/98, effective 5/18/98; 97-03-016, 415-112-4608, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-112-4609   Are payroll deductions((.)) earnable compensation?   ((Salary or wages for services rendered that are withheld from a member's pay still qualify as reportable compensation.

(1) Retirement contributions. Payments deducted from employee compensation for employee retirement contributions are reportable. Employer contributions are a fringe benefit and are not reportable, see WAC 415-112-480.

(2) Tax withholding. Payments withheld to satisfy federal tax obligations qualify as reportable compensation.

(3) Voluntary deductions. Payments deducted voluntarily, such as 403(b) plan contributions or other authorized deductions, are reportable.)) Amounts withheld from your salary or wages are earnable compensation. Examples include:

(1) Your employee contributions to TRS (compare WAC 415-112-480 regarding employer contributions);

(2) Amounts withheld for federal income tax purposes; and

(3) Other authorized voluntary deductions, such as the deferred compensation plan or 403(b) plan deferrals.

[Statutory Authority: RCW 41.50.050. 98-09-059, 415-112-4609, filed 4/17/98, effective 5/18/98; 97-03-016, 415-112-4609, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-112-471   Is compensation reported for legislative leave((.))?   If ((an employee)) you take((s)) a leave without pay to serve in the legislature, ((the member is)) you are entitled to service and ((reportable)) earnable compensation credit ((for the period)) according to this section.

(1) Plan 1. The salary ((the employee)) you would have earned in the position from which you took leave of absence is ((reportable)) earnable compensation if ((the employee)) you serve((s)) at least five years in the legislature. Employer contributions are not required on this imputed payment. Employee contributions are required.

(2) Plans 2 and ((Plan)) 3. ((The employee)) You may choose between:

(a) The ((reportable)) earnable compensation ((he or she)) you would have earned had ((the member)) you not served in the legislature; or

(b) The actual ((reportable)) earnable compensation received for ((teaching)) service plus the legislative ((reportable)) earnable compensation.

If ((the employee)) you select((s)) option (a), ((he or she is)) you are responsible for paying the additional employer and employee contributions to the extent the ((reportable)) earnable compensation reported is higher than it would have been under (b) of this subsection.

[Statutory Authority: RCW 41.50.050. 00-10-015, 415-112-471, filed 4/21/00, effective 5/22/00; 97-03-016, 415-112-471, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-112-473   Is paid leave, which is not earned over time((.)), earnable compensation?   If paid leave is not based upon earned leave accumulated over time, the payment is not ((a deferred payment)) for services previously ((rendered)) provided and is generally not earnable compensation. ((Further, the member on leave is not currently rendering services in exchange for the payment. However,)) Exceptions identified in RCW 41.32.267, 41.32.810 and 41.32.865 ((identify payments received from the employer while on paid leave as)) are reportable ((for TRS.)), and contributions are due on these payments to the extent they meet both of the following conditions:

(1) The ((payment)) compensation reported is equal to the salary for the position ((that the person is)) from which you are on leave ((from)); and

(2) The payment is ((actually from the employer. Payments from an employer that are conditioned upon reimbursement from a third party are payments from the third party. Because the payments are not from the employer, they are not reportable compensation. The only exception is union leave paid by the employer subject to reimbursement from the union under the conditions specified in RCW 41.32.267 (Plan 1), 41.32.810 (Plan 2), 41.32.865 (Plan 3), and WAC 415-112-475)) received from your employer, not from a third party. Except as provided in WAC 415-112-475, if you receive payment from your employer but your employer is reimbursed for the payment by a third party, the payment is not earnable compensation.

[Statutory Authority: RCW 41.50.050. 00-10-015, 415-112-473, filed 4/21/00, effective 5/22/00; 97-03-016, 415-112-473, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-112-475   ((Union leave.)) Is the pay I receive from my employer when I am on union leave earnable compensation?   If ((a member)) you take((s)) an authorized leave of absence to serve as an elected official of a labor organization ((and the employer pays the member on leave subject to reimbursement from the union, the person's pay qualifies as reportable compensation provided that all the conditions of)) and you receive payment from your employer during your leave, the payments may be earnable compensation, even if the union reimburses your employer. To qualify as earnable compensation, the payments must meet the specific conditions in RCW 41.32.267 (Plan 1), RCW 41.32.810 (Plan 2), or RCW 41.32.865 (Plan 3)((, as appropriate, are met)).

[Statutory Authority: RCW 41.50.050. 00-10-015, 415-112-475, filed 4/21/00, effective 5/22/00; 97-03-016, 415-112-475, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-112-477   Are payments for reinstatement or payment instead of reinstatement((.)) earnable compensation?   (1) ((Payments to an employee are not earned for services rendered if an employer makes them for periods during which the employee was not employed and the payments are made either upon reinstatement or instead of reinstatement. Nonetheless, RCW 41.32.010(10) specifically designates these payments as reportable compensation. The payments are only reportable to the extent that they are equivalent to the salary the employee would have earned had he or she been working.)) When you receive payments upon reinstatement or instead of reinstatement, such payments are earnable compensation to the extent they are equivalent to the salary you would have earned by working in your position. RCW 41.32.010 defines these payments as earnable compensation even though they are not payments for services you provided to your employer. The payment will be prorated over the entire period that ((the employee was)) you were suspended, terminated, or otherwise absent from work.

(2) For purposes of subsection (1) of this section, "reinstatement" means that the employee is entitled to return to full employment rights by action of ((either)):

(a) The employer; ((or))

(b) ((A personnel board, personnel appeals board)) A school district; or

(c) A court of law ((following a hearing)).

[Statutory Authority: RCW 41.50.050. 00-10-015, 415-112-477, filed 4/21/00, effective 5/22/00; 97-03-016, 415-112-477, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 03-06-042, filed 2/27/03, effective 4/1/03)

WAC 415-112-480   Are fringe benefits((.)) earnable compensation?   Fringe benefits provided by an employer are not a salary or wage, and ((therefore)) are not ((reportable)) earnable compensation. Fringe benefits include, but are not limited to:

(1) Employer retirement contributions;

(2) Any type of insurance such as medical, dental or life insurance; and any employer contribution to meet the premium or charge for the insurance; or

(3) Any employer payments into a private fund to provide health or welfare benefits for ((the member (or the member and the member's)) you or your dependents(())), with the exception of compensation paid pursuant to a bona fide cafeteria plan, flexible benefit plan or similar arrangement as described in WAC 415-112-4604.

[Statutory Authority: RCW 41.50.050(5) and chapter 41.32 RCW. 03-06-042, 415-112-480, filed 2/27/03, effective 4/1/03. Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-480, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-482   ((Disability insurance.)) Are disability insurance or workers' compensation payments earnable compensation?   (1) Disability insurance payments ((are paid to persons for periods when they are unable to work. Because no services are rendered in exchange for these payments, they)) are not ((reportable)) earnable compensation((. This is true)), whether the payments come directly from the employer or from an insurance company.

(2) Workers' compensation payments are not earnable compensation.


Example: Susan, an employee on unpaid disability leave, submits her workers' compensation payments to her employer. The employer then issues Susan a check for the same amount through the payroll system. Even though the payment may have the appearance of compensation from the employer, it is not a payment for services provided and it is not earnable compensation.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-482, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-485   ((Illegal payments.)) Are payments that are outside my employer's legal authority earnable compensation?   Payments made by an employer ((in excess of)) that are outside the employer's legal authority are not ((reportable)) earnable compensation.


Example: School districts are prohibited by RCW 28A.400.220 from increasing an employee's salary ((to include a payment in lieu)) instead of providing a fringe benefit ((per RCW 28A.400.220)). If a district increased a person's salary instead of providing a district car, the ((payment would be illegal and could not be reported)) teacher's increased salary payments would not be earnable compensation.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-485, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-487   Are optional payments((.)) considered earnable compensation?   If ((an employee can)) you receive an additional payment only on the condition of taking an action other than providing service to ((the)) your employer, the payment is not ((for services rendered and is not reportable)) earnable compensation.


Example: An employer offers to make a contribution to ((a)) Joe's deferred compensation plan ((on behalf of an employee)) only if ((the employee)) Joe agrees to have a portion of his ((or her)) salary deferred. Because ((the employee)) Joe does not have a right to receive the contribution based solely on ((the rendering of)) providing service, the payment is not ((reportable)) earnable compensation.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-487, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-489   Are reimbursements for business expenses((.)) earnable compensation?   Reimbursements are not ((earned for services rendered and thus are not reportable)) earnable compensation. Typical reimbursement payments include mileage reimbursements for use of a private car on employer business, ((see WAC 415-112-41301,)) or meal and lodging reimbursements for business trips.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-489, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending WSR 97-03-016, filed 1/6/97, effective 2/6/97)

WAC 415-112-490   Is a retirement bonus or incentive((.)) earnable compensation?   A payment made ((to an employee as a bonus or)) as an incentive ((when retiring or terminating)) to retire or terminate is not a payment for services ((rendered. Rather, the payment is made in exchange for an employee's promise or notification of intent to retire or terminate. A retirement or termination bonus or incentive)) provided, and is not ((reportable)) earnable compensation.


Example: A collective bargaining agreement authorizes a school district to pay employees a higher salary during the last two years of employment if the employee gives written notice of his or her intent to retire. Because the payment is in exchange for the agreement to retire and not for services, the payment is not ((reportable)) earnable compensation.

[Statutory Authority: RCW 41.50.050. 97-03-016, 415-112-490, filed 1/6/97, effective 2/6/97.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-500   ((Minimum service required for retirement.)) Do I qualify for retirement from Plan 1?   ((In qualifying a member for a retirement allowance the minimum service requirement of "five years of credit for public school service in this state" as set forth in RCW 41.32.470 shall not include credit for professional preparation or credit for military service, but shall be limited to credit for Washington public school service.)) You may retire from Plan 1:

(1) At age sixty with a minimum of five years of service. You may not use service credit you purchased for professional preparation or military service to meet the five-year minimum;

(2) At age fifty-five with a minimum of twenty-five years of service; or

(3) At any age with a minimum of thirty years of service.

See RCW 41.32.480.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-500, filed 2/15/78. Formerly WAC 462-28-005.]


NEW SECTION
WAC 415-112-501   Do I qualify for retirement from Plan 2?   You may retire from Plan 2:

(1) At age sixty-five with a minimum of five years of service;

(2) At age fifty-five with a minimum of twenty years of service, however, your retirement allowance will be actuarially reduced to reflect the difference in the number of years between your age at retirement and age sixty-five; or

(3) At age fifty-five with a minimum of thirty years of service credit. Your defined benefit will be reduced by three percent per year to reflect the difference in the number of years between your age at retirement and age sixty-five.

See RCW 41.32.765.

[]


NEW SECTION
WAC 415-112-502   Do I qualify for retirement from Plan 3?   You may retire from Plan 3:

(1) At age sixty-five with the following amounts of service credit to retire with an unreduced defined benefit:

(a) Ten years of service credit; or

(b) Five years of service credit, including at least twelve service credit months after attaining age fifty-four; or

(c) Five years of TRS Plan 2 service credit earned prior to July 1, 1996, before transferring to Plan 3 under RCW 41.40.750.

(2) At age fifty-five with a minimum of ten years of service credit, however, your defined benefit will be actuarially reduced to reflect the difference in the number of years between your age at retirement and age sixty-five.

(3) At age fifty-five with a minimum of thirty years of service credit. Your defined benefit will be reduced by three percent per year to reflect the difference in the number of years between your age at retirement and age sixty-five.

See RCW 41.32.875.

[]


NEW SECTION
WAC 415-112-507   How do I apply for retirement benefits?   To apply for retirement benefits, you must submit the following to the department:

(1) A completed, signed, and notarized retirement application, including:

(a) Your selection of one of the benefit options described in WAC 415-112-493.

(b) Designation of a survivor beneficiary if you selected a benefit option with a survivor feature.

(c) If you are married, your spouse's notarized signature indicating consent to the retirement option you selected. See WAC 415-112-015(10).

(i) If you are married and you do not provide spousal consent, the department will pay you a joint and one-half survivor benefit allowance and record your spouse as the survivor beneficiary as required by RCW 41.32.530(2), 41.32.785(2), and 41.32.851(2).

(ii) If you are married, but have had a prior dissolution decree on file with the department designating a survivor beneficiary under RCW 41.50.790, spousal consent is not required. The dissolution decree must have been filed at least thirty days prior to your retirement;

(2) Evidence of your birth date, such as a certified copy of your birth certificate, passport, naturalization certificate, certificate of armed services record U.S. DD 214, or other documentation acceptable to the department; and

(3) If you selected a benefit option with a survivor feature, acceptable evidence of your designated survivor beneficiary's birth date.

[]


NEW SECTION
WAC 415-112-523   How does the department calculate my retirement allowance?   (1) When you apply for retirement, you will begin to receive a provisional retirement allowance.

(a) The department will calculate the provisional allowance based on:

(i) The data for service credit and earnable compensation in the department's system at the time it is calculated;

(ii) Projections of your salary for periods that have not yet been reported by your employer.

(b) The department will pay you the provisional allowance until your actual retirement allowance has been calculated.

(2) To compute your actual allowance, the department must receive a final compensation report from your employer.

The department may also require any of the following from your employer:

(a) Cash-out information (Plan 1 only).

(b) Earnings history.

(c) Copies of your employment contract(s).

(d) Copies of your employer's compensation policies.

(3) The department will make a final calculation of your actual retirement allowance by making a final determination of your service credit and average final compensation and by applying the correct formula to these values. Your actual retirement allowance may be higher or lower than your provisional allowance.

(4) If the amount of your actual allowance is different from your provisional allowance, the department will make the necessary adjustments.

(a) If you were underpaid, the department will pay you a lump sum payment equal to the difference of the total provisional payments you received and the total you would have received based on your actual allowance.

(b) If you were overpaid, the department will recover the overpayment either through a lump sum payment, monthly installment payments, or through an actuarial reduction of your actual allowance.

[]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-610   ((Payment of)) What temporary disability benefits are due upon death of a member((.))?   ((Any disability benefits which have accrued and are payable upon the death of a member who had applied for or who had qualified for a temporary disability allowance, shall be paid to the deceased member's designated beneficiary as recorded and filed with the department in connection with his application for temporary disability benefits, or to his estate.)) When a member applies for temporary disability benefits, the member may designate a beneficiary. Any temporary disability benefits that have accrued and are payable upon the death of the member will be paid to the deceased member's designated beneficiary or to the member's estate if there is no designated beneficiary.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-610, filed 2/15/78. Formerly WAC 462-32-020.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-620   ((Date from which)) When will my disability retirement allowances begin to accrue((.))?   (1) ((A member who qualifies directly)) If you qualify for a disability retirement allowance without first qualifying for temporary disability benefits ((shall receive a)), your retirement allowance ((to be effective in accordance with WAC 415-112-520 governing service retirement)) will start according to the provisions governing service retirement in WAC 415-112-520.

(2) If ((a member qualifies)) you qualify for a disability retirement allowance after having first qualified for TRS Plan 1 temporary disability benefits, ((the effective date of his)) your disability retirement allowance ((shall be)) will start the first of the month following termination of ((his)) your temporary disability allowance, and ((shall)) will otherwise be consistent with WAC 415-112-520, which governs service retirement.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-620, filed 2/15/78. Formerly WAC 462-32-050.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-630   ((Employment of persons retired for disability.)) How will returning to work affect my Plan 1 disability retirement benefits?   The provisions of RCW 41.32.570 with regard to service in public education by a retired teacher ((shall apply)) applies equally to ((teachers)) TRS Plan 1 members retired for disability.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-630, filed 2/15/78. Formerly WAC 462-32-060.]


AMENDATORY SECTION(Amending WSR 99-14-008, filed 6/24/99, effective 7/25/99)

WAC 415-112-700   ((Determining dependency under RCW 41.32.520.)) How is "dependent" defined for determining Plan 1 beneficiary rights?   ((To qualify as a dependent of a deceased member under the authority of RCW 41.32.520 the individual must provide proof of the following conditions:

(1) The beneficiary must receive one-half or more of their financial support from the deceased member. Such support must have been continuous prior to death and in effect at the time of the member's death.

(2) The term "financial support" shall include the cost of food, clothing, shelter, education, medical and dental expenses, and other similar expenses.)) (1) For purposes of TRS Plan 1 death benefits under RCW 41.32.520, a dependent must be a dependent as defined in 26 U.S.C. 152.

(2) The department must receive proof that the beneficiary stands in the necessary relationship to the member, and that either:

(a) The member had provided over half of the beneficiary's financial support continuously prior to death and at the time of the member's death; or

(b) The beneficiary otherwise meets the definition of beneficiary set forth in 26 U.S.C. 152.

(3) Financial support includes the cost of food, clothing, shelter, education, medical and dental expenses, and other similar expenses.

[Statutory Authority: RCW 41.50.050. 99-14-008, 415-112-700, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-700, filed 2/15/78. Formerly WAC 462-36-010.]


REPEALER

     The following sections of the Washington Administrative Code are repealed:
WAC 415-112-4605 Leave payments earned over time.
WAC 415-112-483 Workers' compensation.
WAC 415-112-491 Severance pay not earned over time -- Contract buy out.
WAC 415-112-550 Peace Corps volunteers not employed in public education.
WAC 415-112-710 When are survivor benefits payable?
WAC 415-112-725 Married member's benefit selection -- Spousal consent required.
WAC 415-112-800 Scope.
WAC 415-112-850 Interim retirement allowance -- Employer final compensation report -- Final computation of retirement allowance -- Adjustment of retirement allowance for errors.
WAC 415-112-920 TRS Plan 3 defined benefit retirement eligibility.

Washington State Code Reviser's Office