Z-0506

AN ACT Relating to reorganizing the statutes governing the state's retirement system; amending RCW 41.26.005, 41.26.030, 41.26.035, 41.26.040, 41.26.060, 41.26.080, 41.26.090, 41.26.120, 41.26.130, 41.26.140, 41.26.150, 41.26.160, 41.26.170, 41.26.180, 41.26.190, 41.26.240, 41.26.280, 41.26.410, 41.32.005, 41.32.010, 41.32.030, 41.32.120, 41.32.130, 41.32.160, 41.32.190, 41.32.230, 41.32.240, 41.32.242, 41.32.260, 41.32.300, 41.32.310, 41.32.330, 41.32.340, 41.32.350, 41.32.360, 41.32.366, 41.32.390, 41.32.405, 41.32.420, 41.32.430, 41.32.480, 41.32.4945, 41.32.498, 41.32.499, 41.32.500, 41.32.520, 41.32.522, 41.32.523, 41.32.540, 41.32.550, 41.32.590, 41.32.610, 41.32.620, 41.32.630, 41.32.780, 41.32.790, 41.40.005, 41.40.010, 41.40.020, 41.40.080, 41.40.083, 41.40.100, 41.40.110, 41.40.130, 41.40.160, 41.40.170, 41.40.195, 41.40.200, 41.40.220, 41.40.230, 41.40.235, 41.40.250, 41.40.260, 41.40.280, 41.40.310, 41.40.320, 41.40.340, 41.40.350, 41.40.363, 41.40.380, 41.40.410, 41.40.412, 41.40.440, 41.40.450, 41.40.610, 41.40.625, 41.40.670, and 41.40.710; amending 1990 c 274 s 19 (uncodified); reenacting and amending RCW 41.40.005; adding new sections to chapter 41.26 RCW; adding new sections to chapter 41.32 RCW; adding new sections to chapter 41.40 RCW; adding new sections to chapter 41.50 RCW; creating new sections; recodifying RCW 41.26.060, 41.32.030, 41.32.120, 41.32.130, 41.32.190, 41.32.230, 41.32.405, 41.32.420, 41.32.430, 41.32.830, 41.40.080, 41.40.083, 41.40.100, 41.40.110, 41.40.350, 41.26.900, 41.26.910, 41.26.920, 41.26.901, 41.26.921, 41.32.011, 41.40.005, 41.40.010, 41.40.020, 41.40.120, 41.40.123, 41.40.130, 41.40.165, 41.40.223, 41.40.340, 41.40.361, 41.40.370, 41.40.380, 41.40.400, 41.40.403, 41.40.410, 41.40.412, 41.40.414, 41.40.420, 41.40.440, 41.40.450, 41.40.530, 41.40.540, 41.40.542, 41.40.800, 41.40.810, 41.40.150, 41.40.160, 41.40.170, 41.40.180, 41.40.185, 41.40.188, 41.40.190, 41.40.193, 41.40.195, 41.40.198, 41.40.1981, 41.40.200, 41.40.210, 41.40.220, 41.40.230, 41.40.235, 41.40.250, 41.40.260, 41.40.270, 41.40.280, 41.40.300, 41.40.310, 41.40.320, 41.40.325, 41.40.330, 41.40.363, 41.40.610, 41.40.620, 41.40.625, 41.40.630, 41.40.640, 41.40.650, 41.40.660, 41.40.670, 41.40.680, 41.40.690, 41.40.700, 41.40.710, 41.40.720, 41.40.730, 41.40.740, 41.40.900, and 41.40.920; decodifying RCW 41.26.043, 41.26.051, 41.26.310, 41.26.400, 41.26.475, 41.26.560, 41.32.015, 41.32.243, 41.32.2431, 41.32.2432, 41.32.245, 41.32.250, 41.32.265, 41.32.280, 41.32.290, 41.32.310, 41.32.365, 41.32.486, 41.32.491, 41.32.492, 41.32.494, 41.32.4943, 41.32.560, 41.32.561, 41.32.567, 41.32.583, 41.32.750, 41.40.011, 41.40.022, 41.40.135, 41.40.138, 41.40.1982, 41.40.199, 41.40.225, 41.40.405, 41.40.406, 41.40.407, 41.40.411, 41.40.500, 41.40.501, 41.40.502, 41.40.503, 41.40.504, 41.40.505, 41.40.506, 41.40.507, 41.40.509, 41.40.515, 41.40.516, 41.40.517, 41.40.518, 41.40.519, 41.40.520, 41.40.521, 41.40.522, 41.40.527, 41.40.535, and 41.40.600; and repealing RCW 2.10.095, 2.12.070, 2.12.080, 41.04.065, 41.26.065, 41.26.070, 41.26.320, 41.26.330, 41.26.600, 41.32.045, 41.32.140, 41.32.170, 41.32.180, 41.32.201, 41.32.202, 41.32.203, 41.32.207, 41.32.220, 41.32.320, 41.32.401, 41.32.440, 41.32.4944, 41.32.565, 41.32.600, 41.32.610, 41.32.620, 41.32.630, 41.32.650, 41.40.072, 41.40.075, 41.40.077, 41.40.090, 41.40.155, 43.43.170, 43.43.175, 43.43.180, 43.43.190, and 43.43.225.

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

NEW SECTION. Sec. 1. (1) The legislature intends to reorganize chapter 41.26 RCW. The goals of this reorganization are to: (a) Arrange provisions relating to the Washington law enforcement officers' and fire fighters' retirement system plan I, the Washington law enforcement officers' and fire fighters' retirement system plan II, and those provisions relating to both plan I and plan II into three separate subchapters within chapter 41.26 RCW; (b) decodify or repeal obsolete statutes; (c) update references to the retirement board to refer to either the department of retirement systems or the director of that department, as appropriate; (d) make all references gender neutral; and (e) recodify administrative provisions. The legislature does not intend to make substantive changes in the meaning, interpretation, court construction, or constitutionality of any provision of chapter 41.26 RCW or other statutory provisions or rules adopted under those provisions.

(2) The legislature intends to reorganize chapter 41.32 RCW. The goals of this reorganization are to: (a) Arrange provisions relating to the Washington teachers' retirement system plan I, the Washington teachers' retirement system plan II, and both plan I and plan II into three separate subchapters within chapter 41.32 RCW; (b) decodify or repeal obsolete statutes; (c) update references to the retirement board to refer to either the department of retirement systems or the director of that department, as appropriate; (d) make all references gender neutral; and (e) recodify administrative provisions. The legislature does not intend to make substantive changes in the meaning, interpretation, court construction, or constitutionality of any provision of chapter 41.32 RCW or other statutory provisions or rules adopted under those provisions.

(3) The legislature intends to reorganize chapter 41.40 RCW. The goals of this reorganization are to: (a) Arrange provisions relating to the public employees' retirement system plan I, the public employees' retirement system plan II, and both plan I and plan II into three separate subchapters within chapter 41.40 RCW; (b) decodify obsolete statutes; (c) update references to the retirement board to refer to either the department of retirement systems or the director of that department, as appropriate; (d) make all references gender neutral; and (e) recodify administrative provisions. The legislature does not intend to make substantive changes in the meaning, interpretation, court construction, or constitutionality of any provision of chapter 41.40 RCW or other statutory provisions or rules adopted under those provisions.

(4) This act is technical in nature and shall not have the effect of terminating or in any way modifying any rights, proceedings, or liabilities, civil or criminal, which exist on the effective date of this section.

NEW SECTION. Sec. 2. The code reviser shall correct all statutory references recodified or decodified by this act.

NEW SECTION. Sec. 3. The following acts or parts of acts are each repealed:

(1) RCW 2.10.095 and 1984 c 184 s 3;

(2) RCW 2.12.070 and 1981 c 3 s 23, 1955 c 221 s 1, & 1937 c 229 s 8;

(3) RCW 2.12.080 and 1984 c 184 s 4;

(4) RCW 41.04.065 and 1988 c 59 s 2;

(5) RCW 41.26.065 and 1984 c 184 s 5;

(6) RCW 41.26.070 and 1989 c 273 s 12, 1981 c 3 s 28, 1973 1st ex.s. c 103 s 2, 1971 ex.s. c 216 s 2, & 1969 ex.s. c 209 s 7;

(7) RCW 41.26.320 and 1977 ex.s. c 294 s 19;

(8) RCW 41.26.330 and 1977 ex.s. c 251 s 8; and

(9) RCW 41.26.600 and 1983 c 283 s 2;

(10) RCW 41.32.045 and 1984 c 184 s 6;

(11) RCW 41.32.140 and 1947 c 80 s 14;

(12) RCW 41.32.170 and 1955 c 274 s 4 & 1947 c 80 s 17;

(13) RCW 41.32.180 and 1969 ex.s. c 150 s 5 & 1947 c 80 s 18;

(14) RCW 41.32.201 and 1973 1st ex.s. c 103 s 3 & 1961 c 297 s 2;

(15) RCW 41.32.202 and 1973 1st ex.s. c 103 s 4 & 1961 c 297 s 3;

(16) RCW 41.32.203 and 1969 ex.s. c 150 s 7 & 1961 c 297 s 4;

(17) RCW 41.32.207 and 1981 c 3 s 29 & 1973 1st ex.s. c 103 s 15;

(18) RCW 41.32.220 and 1969 ex.s. c 150 s 8 & 1947 c 80 s 22;

(19) RCW 41.32.320 and 1963 ex.s. c 14 s 6, 1955 c 274 s 13, & 1947 c 80 s 32;

(20) RCW 41.32.401 and 1989 c 273 s 17, 1984 c 236 s 1, 1982 1st ex.s. c 52 s 9, 1980 c 87 s 15, & 1963 ex.s. c 14 s 11;

(21) RCW 41.32.440 and 1947 c 80 s 44;

(22) RCW 41.32.4944 and 1973 1st ex.s. c 189 s 5;

(23) RCW 41.32.565 and 1973 1st ex.s. c 190 s 1;

(24) RCW 41.32.600 and 1947 c 80 s 60;

(25) RCW 41.32.610 and 1947 c 80 s 61;

(26) RCW 41.32.620 and 1947 c 80 s 62;

(27) RCW 41.32.630 and 1947 c 80 s 63;

(28) RCW 41.32.650 and 1971 c 81 s 104 & 1947 c 80 s 65;

(29) RCW 41.40.072 and 1981 c 3 s 30 & 1973 1st ex.s. c 103 s 16;

(30) RCW 41.40.075 and 1981 c 3 s 31 & 1959 c 91 s 2;

(31) RCW 41.40.077 and 1977 ex.s. c 251 s 9;

(32) RCW 41.40.090 and 1947 c 274 s 10;

(33) RCW 41.40.155 and 1951 c 50 s 17;

(34) RCW 43.43.170 and 1981 c 3 s 36, 1969 c 12 s 2, & 1965 c 8 s 43.43.170;

(35) RCW 43.43.175 and 1981 c 3 s 37 & 1965 c 8 s 43.43.175;

(36) RCW 43.43.180 and 1965 c 8 s 43.43.180;

(37) RCW 43.43.190 and 1965 c 8 s 43.43.190; and

(38) RCW 43.43.225 and 1984 c 184 s 8.

NEW SECTION. Sec. 4. The following sections are each decodified:

RCW 41.26.043;

RCW 41.26.051;

RCW 41.26.310;

RCW 41.26.400;

RCW 41.26.475;

RCW 41.26.560;

RCW 41.32.015;

RCW 41.32.243;

RCW 41.32.2431;

RCW 41.32.2432;

RCW 41.32.245;

RCW 41.32.250;

RCW 41.32.265;

RCW 41.32.280;

RCW 41.32.290;

RCW 41.32.310;

RCW 41.32.365;

RCW 41.32.486;

RCW 41.32.491;

RCW 41.32.492;

RCW 41.32.494;

RCW 41.32.4943;

RCW 41.32.560;

RCW 41.32.561;

RCW 41.32.567;

RCW 41.32.583;

RCW 41.32.750;

RCW 41.40.011;

RCW 41.40.022;

RCW 41.40.135;

RCW 41.40.138;

RCW 41.40.1982;

RCW 41.40.199;

RCW 41.40.225;

RCW 41.40.405;

RCW 41.40.406;

RCW 41.40.407;

RCW 41.40.411;

RCW 41.40.500;

RCW 41.40.501;

RCW 41.40.502;

RCW 41.40.503;

RCW 41.40.504;

RCW 41.40.505;

RCW 41.40.506;

RCW 41.40.507;

RCW 41.40.509;

RCW 41.40.515;

RCW 41.40.516;

RCW 41.40.517;

RCW 41.40.518;

RCW 41.40.519;

RCW 41.40.520;

RCW 41.40.521;

RCW 41.40.522;

RCW 41.40.527;

RCW 41.40.535; and

RCW 41.40.600.

NEW SECTION. Sec. 5. RCW 41.26.060 is recodified as a section in chapter 41.50 RCW.

NEW SECTION. Sec. 6. The following sections are each recodified as sections in chapter 41.50 RCW:

RCW 41.32.030, 41.32.120, 41.32.130, 41.32.190, 41.32.230, 41.32.405, 41.32.420, 41.32.430, and 41.32.830.

NEW SECTION. Sec. 7. The following sections are each recodified as sections in chapter 41.50 RCW:

RCW 41.40.080;

RCW 41.40.083;

RCW 41.40.100;

RCW 41.40.110; and

RCW 41.40.350.

NEW SECTION. Sec. 8. (1) The following sections are designated as a subchapter within chapter 41.26 RCW with the subchapter heading: "Provisions Applicable to Plan I and Plan II":

RCW 41.26.005;

RCW 41.26.010;

RCW 41.26.020;

RCW 41.26.030;

RCW 41.26.035;

RCW 41.26.040;

RCW 41.26.045;

RCW 41.26.046;

RCW 41.26.047;

RCW 41.26.210;

RCW 41.26.220;

RCW 41.26.230;

RCW 41.26.280; and

RCW 41.26.300.

(2)(a) The following sections are designated as a subchapter of chapter 41.26 RCW under the subchapter designation "Plan I":

RCW 41.26.080;

RCW 41.26.090;

RCW 41.26.100;

RCW 41.26.110;

RCW 41.26.115;

RCW 41.26.120;

RCW 41.26.125;

RCW 41.26.130;

RCW 41.26.135;

RCW 41.26.140;

RCW 41.26.150;

RCW 41.26.160;

RCW 41.26.170;

RCW 41.26.180;

RCW 41.26.190;

RCW 41.26.200;

RCW 41.26.240;

RCW 41.26.250;

RCW 41.26.260; and

RCW 41.26.270.

(b) RCW 41.26.900, 41.26.910, and 41.26.920 are each recodified within the subchapter defined by (a) of this subsection.

(3)(a) The following sections are designated as a subchapter of chapter 41.26 RCW under the subchapter designation "Plan II":

RCW 41.26.410;

RCW 41.26.420;

RCW 41.26.425;

RCW 41.26.430;

RCW 41.26.440;

RCW 41.26.450;

RCW 41.26.460;

RCW 41.26.470;

RCW 41.26.480;

RCW 41.26.490;

RCW 41.26.500;

RCW 41.26.510;

RCW 41.26.520;

RCW 41.26.530;

RCW 41.26.540; and

RCW 41.26.550.

(b) The following sections are recodified within chapter 41.26 RCW such that the sections fall within the subchapter designation created by (a) of this subsection:

RCW 41.26.901; and

RCW 41.26.921.

NEW SECTION. Sec. 9. (1) The following sections are designated as a subchapter within chapter 41.32 RCW with the subchapter heading: "Provisions Applicable to Plan I and Plan II":

RCW 41.32.005;

RCW 41.32.010;

RCW 41.32.020;

RCW 41.32.160;

RCW 41.32.242;

RCW 41.32.403;

RCW 41.32.460;

RCW 41.32.580;

RCW 41.32.590;

RCW 41.32.670;

RCW 41.32.850; and

RCW 41.32.013.

These sections shall be designated by statute numbers greater than RCW 41.32.004 and less than RCW 41.32.070.

(2)(a) The following sections are designated as a subchapter of chapter 41.32 RCW under the subchapter designation "Plan I":

RCW 41.32.240;

RCW 41.32.300;

RCW 41.32.310;

RCW 41.32.260;

RCW 41.32.270;

RCW 41.32.330;

RCW 41.32.340;

RCW 41.32.350;

RCW 41.32.360;

RCW 41.32.366;

RCW 41.32.380;

RCW 41.32.390;

RCW 41.32.470;

RCW 41.32.480;

RCW 41.32.485;

RCW 41.32.487;

RCW 41.32.488;

RCW 41.32.4931;

RCW 41.32.4945;

RCW 41.32.497;

RCW 41.32.498;

RCW 41.32.499;

RCW 41.32.500;

RCW 41.32.510;

RCW 41.32.520;

RCW 41.32.522;

RCW 41.32.523;

RCW 41.32.530;

RCW 41.32.540;

RCW 41.32.550;

RCW 41.32.570; and

RCW 41.32.575.

(b) RCW 41.32.011 is recodified within chapter 41.32 RCW such that it falls within the subchapter created under (a) of this section.

(3) The following sections are designated as a subchapter of chapter 41.32 RCW under the subchapter designation "Plan II":

RCW 41.32.755;

RCW 41.32.760;

RCW 41.32.762;

RCW 41.32.765;

RCW 41.32.770;

RCW 41.32.775;

RCW 41.32.780;

RCW 41.32.785;

RCW 41.32.790;

RCW 41.32.795;

RCW 41.32.800;

RCW 41.32.805;

RCW 41.32.810;

RCW 41.32.815;

RCW 41.32.820; and

RCW 41.32.825.

NEW SECTION. Sec. 10. (1) The following sections are recodified and designated as a subchapter within chapter 41.40 RCW with the subchapter heading of "Provisions Applicable to Plan I and Plan II":

RCW 41.40.005;

RCW 41.40.010;

RCW 41.40.020;

RCW 41.40.120;

RCW 41.40.123; and

RCW 41.40.130.

(2) The following sections are recodified within chapter 41.40 RCW such that the sections fall within the subchapter created under subsection (1) of this section and are designated by statute numbers greater than RCW 41.40.004 and less than RCW 41.40.126:

RCW 41.40.165;

RCW 41.40.223;

RCW 41.40.340;

RCW 41.40.361;

RCW 41.40.370;

RCW 41.40.380;

RCW 41.40.400;

RCW 41.40.403;

RCW 41.40.410;

RCW 41.40.412;

RCW 41.40.414;

RCW 41.40.420;

RCW 41.40.440;

RCW 41.40.450;

RCW 41.40.530;

RCW 41.40.540;

RCW 41.40.542;

RCW 41.40.800;

RCW 41.40.810; and

section 101 of this act.

(3) The following sections are recodified and designated as a subchapter of chapter 41.40 RCW under the subchapter designation "Plan I":

RCW 41.40.150;

RCW 41.40.160;

RCW 41.40.170;

RCW 41.40.180;

RCW 41.40.185;

RCW 41.40.188;

RCW 41.40.190;

RCW 41.40.193;

RCW 41.40.195;

RCW 41.40.198;

RCW 41.40.1981;

RCW 41.40.200;

RCW 41.40.210;

RCW 41.40.220;

RCW 41.40.230;

RCW 41.40.235;

RCW 41.40.250;

RCW 41.40.260;

RCW 41.40.270;

RCW 41.40.280;

RCW 41.40.300;

RCW 41.40.310;

RCW 41.40.320;

RCW 41.40.325;

RCW 41.40.330; and

RCW 41.40.363.

(4) The following sections are recodified and designated as a subchapter of chapter 41.40 RCW under the subchapter designation "Plan II":

RCW 41.40.610;

RCW 41.40.620;

RCW 41.40.625;

RCW 41.40.630;

RCW 41.40.640;

RCW 41.40.650;

RCW 41.40.660;

RCW 41.40.670;

RCW 41.40.680;

RCW 41.40.690;

RCW 41.40.700;

RCW 41.40.710;

RCW 41.40.720;

RCW 41.40.730;

RCW 41.40.740;

RCW 41.40.900; and

RCW 41.40.920.

Sec. 11. 1990 c 274 s 19 (uncodified) is amended to read as follows:

Beginning on June 7, 1990, the 1990 amendments to RCW 41.40.690, 41.26.500, ((~~41.32.780~~)) 41.32.800, and 2.10.155 regarding postretirement employment are available prospectively to all members of the retirement systems defined in RCW 2.10.040, 41.26.005(2), 41.32.005(2), and 41.40.005(2), regardless of the member's date of retirement. The legislature reserves the right to revoke or amend the 1990 amendments to RCW 41.40.690, 41.26.500, ((~~41.32.780~~)) 41.32.800, and 2.10.155. The 1990 amendments to RCW 41.40.690, 41.26.500, ((~~41.32.780~~)) 41.32.800, and 2.10.155 do not grant a contractual right to the members or retirees of the affected systems.

Sec. 12. RCW 41.26.005 and 1989 c 273 s 10 are each amended to read as follows:

(((1) "Law enforcement officers' and fire fighters' retirement system plan I" or "plan I" means the benefits and funding provisions covering persons who first became members of the law enforcement officers' and fire fighters' retirement system prior to October 1, 1977.)) The provisions of the following sections of this chapter shall apply ((~~only~~)) to members of plan I and plan II: ((~~RCW 41.26.080, 41.26.090, 41.26.100, 41.26.110, 41.26.120, 41.26.125, 41.26.130, 41.26.140, 41.26.150, 41.26.160, 41.26.170, 41.26.190, 41.26.200, 41.26.240, 41.26.250, 41.26.260, and 41.26.270.~~

(2) "Law enforcement officers' and fire fighters' retirement system plan II" or "plan II" means the benefits and funding provisions covering persons who first became members of the law enforcement officers' and fire fighters' retirement system on or after October 1, 1977. The provisions of RCW 41.26.400 through 41.26.550 shall apply only to members of plan II)) RCW 41.26.010; 41.26.020; 41.26.030; 41.26.035; 41.26.040; 41.26.043; 41.26.045; 41.26.046; 41.26.047; 41.26.210; 41.26.220; 41.26.230; 41.26.280; and 41.26.300.

Sec. 13. RCW 41.26.030 and 1987 c 418 s 1 are each amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1) "Retirement system" means the "Washington law enforcement officers' and fire fighters' retirement system" provided herein.

(2) (a) "Employer" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means the legislative authority of any city, town, county, or district or the elected officials of any municipal corporation that employs any law enforcement officer and/or fire fighter, any authorized association of such municipalities, and, except for the purposes of RCW 41.26.150, any labor guild, association, or organization, which represents the fire fighters or law enforcement officers of at least seven cities of over 20,000 population and the membership of each local lodge or division of which is composed of at least sixty percent law enforcement officers or fire fighters as defined in this chapter.

(b) "Employer" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means the legislative authority of any city, town, county, or district or the elected officials of any municipal corporation that employs any law enforcement officer and/or fire fighter.

(3) "Law enforcement officer" means any person who is serving on a full time, fully compensated basis as a county sheriff or deputy sheriff, including sheriffs or deputy sheriffs serving under a different title pursuant to a county charter, city police officer, or town marshal or deputy marshal, with the following qualifications:

(a) No person who is serving in a position that is basically clerical or secretarial in nature, and who is not commissioned shall be considered a law enforcement officer;

(b) Only those deputy sheriffs, including those serving under a different title pursuant to county charter, who have successfully completed a civil service examination for deputy sheriff or the equivalent position, where a different title is used, and those persons serving in unclassified positions authorized by RCW 41.14.070 except a private secretary will be considered law enforcement officers;

(c) Only such full time commissioned law enforcement personnel as have been appointed to offices, positions, or ranks in the police department which have been specifically created or otherwise expressly provided for and designated by city charter provision or by ordinance enacted by the legislative body of the city shall be considered city police officers; and

(d) The term "law enforcement officer" also includes the executive secretary of a labor guild, association or organization (which is an employer under RCW 41.26.030(2) as now or hereafter amended) if ((~~such~~)) that individual has five years previous membership in the retirement system established in chapter 41.20 RCW((~~: PROVIDED, That for persons who establish membership in the retirement system on or after October 1, 1977,~~)). The provisions of this ((~~subparagraph~~)) subsection shall not apply((~~; and~~

(e) The term "law enforcement officer" also includes any person employed on or after November 1, 1975, and prior to December 1, 1975, as a director of public safety so long as the duties of the director substantially involve only police and/or fire duties and no other duties)) to plan II members.

(4) "Fire fighter" means:

(a) Any person who is serving on a full time, fully compensated basis as a member of a fire department of an employer and who is serving in a position which requires passing a civil service examination for fire fighter, ((~~or fireman if this title is used by the department,~~)) and who is actively employed as such;

(b) Anyone who is actively employed as a full time fire fighter where the fire department does not have a civil service examination;

(d) Any full time executive secretary of an association of fire protection districts authorized under RCW 52.12.031((~~: PROVIDED, That for persons who establish membership in the retirement system on or after October 1, 1977,~~)). The provisions of this ((~~subparagraph~~)) subsection shall not apply to plan II members;

(e) The executive secretary of a labor guild, association or organization (which is an employer under RCW 41.26.030(2) as now or hereafter amended), if such individual has five years previous membership in a retirement system established in chapter 41.16 or 41.18 RCW((~~: PROVIDED, That for persons who establish membership in the retirement system on or after October 1, 1977,~~)). The provisions of this ((~~subparagraph~~)) subsection shall not apply to plan II members;

(f) Any person who is serving on a full time, fully compensated basis for an employer, as a fire dispatcher, in a department in which, on March 1, 1970, a dispatcher was required to have passed a civil service examination for ((~~fireman or~~)) fire fighter; and

(g) Any person who on March 1, 1970, was employed on a full time, fully compensated basis by an employer, and who on May 21, 1971 was making retirement contributions under the provisions of chapter 41.16 or 41.18 RCW((~~; and~~

(h) the term "fire fighter" also includes any person employed on or after November [1,] 1975, and prior to December 1, 1975, as a director of public safety so long as the duties of the director substantially involve only police and/or fire duties and no other duties.

(5) "Retirement board" means the Washington public employees' retirement system board established in chapter 41.40 RCW, including two members of the retirement system and two employer representatives as provided for in RCW 41.26.050. The retirement board shall be called the Washington law enforcement officers' and fire fighters' retirement board and may enter in legal relationships in that name. Any legal relationships entered into in that name prior to the adoption of this 1972 amendatory act are hereby ratified)).

(5) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(6) "Surviving spouse" means the surviving widow or widower of a member. The word shall not include the divorced spouse of a member.

(7) (a) "Child" or "children" ((~~whenever used in this chapter means every~~)) means an unmarried person who is under the age of eighteen or mentally or physically handicapped as determined by the department, except a handicapped person in the full time care of a state institution, who is:

(i) A natural born child ((~~and~~));

(ii) A stepchild where that relationship was in existence prior to the date benefits are payable under this chapter((,));

(iii) A posthumous child((,));

(iv) A child legally adopted or made a legal ward of a member prior to the date benefits are payable under this chapter((~~, and~~)); or

(v) An illegitimate child legitimized prior to the date any benefits are payable under this chapter((, all while unmarried, and either under the age of eighteen years or mentally or physically handicapped as determined by the retirement board except a handicapped person in the full time care of a state institution)).

(b) A person shall also be deemed to be a child up to and including the age of twenty years and eleven months while attending any high school, college, or vocational or other educational institution accredited, licensed, or approved by the state, in which it is located, including the summer vacation months and all other normal and regular vacation periods at the particular educational institution after which the child returns to school.

(8) "Member" means any fire fighter, law enforcement officer, or other person as would apply under subsections (3) or (4) of this section whose membership is transferred to the Washington law enforcement officers' and fire fighters' retirement system on or after March 1, 1970, and every law enforcement officer and fire fighter who is employed in that capacity on or after such date.

(9) "Retirement fund" means the "Washington law enforcement officers' and fire fighters' retirement system fund" as provided for herein.

(10) "Employee" means any law enforcement officer or fire fighter as defined in subsections (3) and (4) ((~~above~~)) of this section.

(11) (a) "Beneficiary" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means any person in receipt of a retirement allowance, disability allowance, death benefit, or any other benefit described herein.

(b) "Beneficiary" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by another person.

(12) (a) "Final average salary" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means (i) for a member holding the same position or rank for a minimum of twelve months preceding the date of retirement, the basic salary attached to such same position or rank at time of retirement; (ii) for any other member, including a civil service member who has not served a minimum of twelve months in the same position or rank preceding the date of retirement, the average of the greatest basic salaries payable to such member during any consecutive twenty-four month period within such member's last ten years of service for which service credit is allowed, computed by dividing the total basic salaries

payable to such member during the selected twenty-four month period by twenty-four; (iii) in the case of disability of any member, the basic salary payable to such member at the time of disability retirement; (iv) in the case of a member who hereafter vests pursuant to RCW 41.26.090, the basic salary payable to such member at the time of vesting.

(b) "Final average salary" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means the monthly average of the member's basic salary for the highest consecutive sixty months of service prior to such member's retirement, termination, or death. Periods constituting authorized unpaid leaves of absence may not be used in the calculation of final average salary.

(13) (a) "Basic salary" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means the basic monthly rate of salary or wages, including longevity pay but not including overtime earnings or special salary or wages, upon which pension or retirement benefits will be computed and upon which employer contributions and salary deductions will be based.

(b) "Basic salary" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, and shall include 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 lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay: PROVIDED, That in any year in which a member serves in the legislature the member shall have the option of having such member's basic salary be the greater of:

(i) The basic salary the member would have received had such member not served in the legislature; or

(ii) Such member's actual basic salary received for nonlegislative public employment and legislative service combined. Any additional contributions to the retirement system required because basic salary under ((~~subparagraph~~)) (b) (i) of this subsection is greater than basic salary under ((~~subparagraph~~)) (b) (ii) of this subsection shall be paid by the member for both member and employer contributions.

(14) (a) "Service" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means all periods of employment for an employer as a fire fighter or law enforcement officer, for which compensation is paid, together with periods of suspension not exceeding thirty days in duration. For the purposes of this chapter service shall also include service in the armed forces of the United States as provided in RCW 41.26.190. Credit shall be allowed for all months of service rendered by a member from and after the member's initial commencement of employment as a fire fighter or law enforcement officer, during which the member worked for seventy or more hours, or was on disability leave or disability retirement. Only months of service shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter. ((~~In addition to the foregoing,~~))

(i) For members retiring after May 21, 1971 who were employed under the coverage of a prior pension act before March 1, 1970, "service" shall also include ((~~(i)~~)) (A) such military service not exceeding five years as was creditable to the member as of March 1, 1970, under the member's particular prior pension act, and ((~~(ii)~~)) (B) such other periods of service as were then creditable to a particular member under the provisions of RCW 41.18.165, 41.20.160 or 41.20.170. However, in no event shall credit be allowed for any service rendered prior to March 1, 1970, where the member at the time of rendition of such service was employed in a position covered by a prior pension act, unless such service, at the time credit is claimed therefor, is also creditable under the provisions of such prior act((: PROVIDED, That if such member's prior service is not creditable due to the withdrawal of his contributions plus accrued interest thereon from a prior pension system, such member shall be credited with such prior service, as a law enforcement officer or fire fighter, by paying to the Washington law enforcement officers' and fire fighters' retirement system, on or before March 1, 1975, an amount which is equal to that which was withdrawn from the prior system by such member, as a law enforcement officer or fire fighter: PROVIDED FURTHER, That if such member's prior service is not creditable because, although employed in a position covered by a prior pension act, such member had not yet become a member of the pension system governed by such act, such member shall be credited with such prior service as a law enforcement officer or fire fighter, by paying to the Washington law enforcement officers' and fire fighters' retirement system, on or before March 1, 1975, an amount which is equal to the employer's contributions which would have been required under the prior act when such service was rendered if the member had been a member of such system during such period: AND PROVIDED FURTHER, That where)).

(ii) A member who is employed by two employers at the same time((~~, he~~)) shall only be credited with service to one such employer for any month during which ((he)) the member rendered such dual service.

(b) "Service" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means periods of employment by a member for one or more employers for which basic salary is earned for ninety or more hours per calendar month.

Members of the retirement system who are elected or appointed to a state elective position may elect to continue to be members of this retirement system.

Years of service shall be determined by dividing the total number of months of service by twelve. Any fraction of a year of service as so determined shall be taken into account in the computation of such retirement allowance or benefits.

If a member receives basic salary from two or more employers during any calendar month, the individual shall receive one month's service credit during any calendar month in which multiple service for ninety or more hours is rendered.

(15) "Accumulated contributions" means the employee's contributions made by a member plus accrued interest credited thereon.

(16) "Actuarial reserve" means a method of financing a pension or retirement plan wherein reserves are accumulated as the liabilities for benefit payments are incurred in order that sufficient funds will be available on the date of retirement of each member to pay the member's future benefits during the period of retirement.

(17) "Actuarial valuation" means a mathematical determination of the financial condition of a retirement plan. It includes the computation of the present monetary value of benefits payable to present members, and the present monetary value of future employer and employee contributions, giving effect to mortality among active and retired members and also to the rates of disability, retirement, withdrawal from service, salary and interest earned on investments.

(18) "Disability board" for plan I members means either the county disability board or the city disability board established in RCW 41.26.110 ((~~for persons who establish membership in the retirement system on or before September 30, 1977~~)).

(19) "Disability leave" means the period of six months or any portion thereof during which a member is on leave at an allowance equal to the member's full salary prior to the commencement of disability retirement. The definition contained in this subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(20) "Disability retirement" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means the period following termination of a member's disability leave, during which the member is in receipt of a disability retirement allowance.

(21) "Position" means the employment held at any particular time, which may or may not be the same as civil service rank.

(22) "Medical services" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, shall include the following as minimum services to be provided. Reasonable charges for these services shall be paid in accordance with RCW 41.26.150.

(a) Hospital expenses: These are the charges made by a hospital, in its own behalf, for

(i) Board and room not to exceed semiprivate room rate unless private room is required by the attending physician due to the condition of the patient.

(ii) Necessary hospital services, other than board and room, furnished by the hospital.

(b) Other medical expenses: The following charges are considered "other medical expenses", provided that they have not been considered as "hospital expenses".

(i) The fees of the following:

(A) A physician or surgeon licensed under the provisions of chapter 18.71 RCW;

(B) An osteopath licensed under the provisions of chapter 18.57 RCW;

(ii) The charges of a registered graduate nurse other than a nurse who ordinarily resides in the member's home, or is a member of the family of either the member or the member's spouse.

(iii) The charges for the following medical services and supplies:

(A) Drugs and medicines upon a physician's prescription;

(B) Diagnostic x-ray and laboratory examinations;

(D) Anesthesia and oxygen;

(E) Rental of iron lung and other durable medical and surgical equipment;

(F) Artificial limbs and eyes, and casts, splints, and trusses;

(G) Professional ambulance service when used to transport the member to or from a hospital when ((~~he is~~)) injured by an accident or stricken by a disease;

(H) Dental charges incurred by a member who sustains an accidental injury to his or her teeth and who commences treatment by a legally licensed dentist within ninety days after the accident;

(I) Nursing home confinement or hospital extended care facility;

(J) Physical therapy by a registered physical therapist;

(K) Blood transfusions, including the cost of blood and blood plasma not replaced by voluntary donors;

(L) An optometrist licensed under the provisions of chapter 18.53 RCW.

(23) "Regular interest" means such rate as the director may determine.

(24) "Retiree" for persons who establish membership in the retirement system on or after October 1, 1977, means any member in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by such member.

(25) ((~~"Department" means the department of retirement systems created in chapter 41.50 RCW.~~

~~(26)~~)) "Director" means the director of the department.

((~~(27)~~)) (26) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

((~~(28)~~)) (27) "State elective position" means any position held by any person elected or appointed to state-wide office or elected or appointed as a member of the legislature.

(28) "Plan I" means the law enforcement officers' and fire fighters' retirement system, plan I providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977.

(29) "Plan II" means the law enforcement officers' and fire fighters' retirement system, plan II providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977.

Sec. 14. RCW 41.26.035 and 1971 ex.s. c 257 s 2 are each amended to read as follows:

The term "minimum medical and health standards" means minimum medical and health standards adopted by the ((~~retirement board pursuant to~~)) department under this chapter.

Sec. 15. RCW 41.26.040 and 1989 c 273 s 11 are each amended to read as follows:

The Washington law enforcement officers' and fire fighters' retirement system is hereby created for fire fighters and law enforcement officers.

(1) ((~~(a)~~)) Notwithstanding RCW 41.26.030(8) ((~~and except as provided in subsection (1)(b) of this section~~)), all fire fighters and law enforcement officers employed as such on or after March 1, 1970, on a full time fully compensated basis in this state shall be members of the retirement system established by this chapter with respect to all periods of service as such, to the exclusion of any pension system existing under any prior act ((~~except as provided in subsection (2) of this section.~~

(b) No fire fighter or law enforcement officer who commences a period of employment on or after July 1, 1979, as a participant under the federal comprehensive employment and training act of 1973 (CETA) (29 U.S.C. Sec. 801 et seq.), as amended, shall be a member of this system during the period of such participation unless, at the commencement of the participation under CETA, the fire fighter or law enforcement officer either:

~~(i) Has at least five years of service and the full amount of the employee's contributions for such service remains on deposit in the system; or~~

~~(ii) Has previously been retired from this system~~)).

(2) Any employee serving as a law enforcement officer or fire fighter on March 1, 1970, who is then making retirement contributions under any prior act shall have his membership transferred to the system established by this chapter as of such date. Upon retirement for service or for disability, or death, of any such employee, his retirement benefits earned under this chapter shall be computed and paid. In addition, his benefits under the prior retirement act to which he was making contributions at the time of this transfer shall be computed as if he had not transferred. For the purpose of such computations, the employee's creditability of service and eligibility for service or disability retirement and survivor and all other benefits shall continue to be as provided in such prior retirement act, as if transfer of membership had not occurred. The excess, if any, of the benefits so computed, giving full value to survivor benefits, over the benefits payable under this chapter shall be paid whether or not the employee has made application under the prior act. If the employee's prior retirement system was the Washington public employees' retirement system, payment of such excess shall be made by that system; if the employee's prior retirement system was the state-wide city employees' retirement system, payment of such excess shall be made by the employer which was the member's employer when his transfer of membership occurred: PROVIDED, That any death in line of duty lump sum benefit payment shall continue to be the obligation of that system as provided in RCW 41.44.210; in the case of all other prior retirement systems, payment of such excess shall be made by the employer which was the member's employer when his transfer of membership occurred.

(3) All funds held by any firemen's or policemen's relief and pension fund shall remain in that fund for the purpose of paying the obligations of the fund. The municipality shall continue to

levy the dollar rate as provided in RCW 41.16.060, and this dollar rate shall be used for the purpose of paying the benefits provided in chapters 41.16 and 41.18 RCW. The obligations of chapter 41.20 RCW shall continue to be paid from whatever financial sources the city has been using for this purpose.

(((4) Any member transferring from the Washington public employees' retirement system or the state-wide city employees' retirement system shall have transferred from the appropriate fund of the prior system of membership, a sum sufficient to pay into the Washington law enforcement officers' and fire fighters' retirement system fund the amount of the employees' and employers' contributions plus credited interest in the prior system for all service, as defined in this chapter, from the date of the employee's entrance therein until March 1, 1970. Except as provided for in subsection (2), such transfer of funds shall discharge said state retirement systems from any further obligation to pay benefits to such transferring members with respect to such service.))

Sec. 16. RCW 41.26.060 and 1982 c 163 s 6 are each amended to read as follows:

The administration of ((~~this~~)) the Washington law enforcement officers' and fire fighters' retirement system is hereby vested in the director of retirement systems, and the director shall:

(1) Keep in convenient form such data as shall be deemed necessary for actuarial evaluation purposes;

(2) As of March 1, 1970, and at least every two years thereafter, through ((~~its~~)) the state actuary, make an actuarial valuation as to the mortality and service experience of the beneficiaries under this chapter and the various accounts created for the purpose of showing the financial status of the retirement fund;

(3) Adopt for the Washington law enforcement officers' and fire fighters' retirement system the mortality tables and such other tables as shall be deemed necessary;

(4) Keep a record of all its proceedings, which shall be open to inspection by the public;

(5) From time to time adopt such rules and regulations not inconsistent with ((~~this~~)) chapter 41.26 RCW, for the administration of the provisions of this chapter, for the administration of the fund created by this chapter and the several accounts thereof, and for the transaction of the business of the system;

(6) Prepare and publish annually a financial statement showing the condition of the Washington law enforcement officers' and fire fighters' fund and the various accounts thereof, and setting forth such other facts, recommendations and data as may be of use in the advancement of knowledge concerning the Washington law enforcement officers' and fire fighters' retirement system, and furnish a copy thereof to each employer, and to such members as may request copies thereof;

(7) Perform such other functions as are required for the execution of the provisions of ((~~this~~)) chapter 41.26 RCW;

(8) Fix the amount of interest to be credited at a rate which shall be based upon the net annual earnings of the Washington law enforcement officers' and fire fighters' fund for the preceding twelve-month period and from time to time make any necessary changes in such rate;

(9) Pay from the department of retirement systems expense fund the expenses incurred in administration of the Washington law enforcement officers' and fire fighters' retirement system from those funds appropriated for that purpose;

(10) Perform any other duties prescribed elsewhere in ((~~this~~)) chapter 41.26 RCW;

(11) Issue decisions relating to appeals initiated pursuant to RCW 41.16.145 and 41.18.104 as now or hereafter amended and shall be authorized to order increased benefits pursuant to RCW 41.16.145 and 41.18.104 as now or hereafter amended.

Sec. 17. RCW 41.26.080 and 1989 c 273 s 13 are each amended to read as follows:

The total liability of the plan I system shall be funded as follows:

(1) Every plan I member shall have deducted from each payroll a sum equal to six percent of his or her basic salary for each pay period.

(2) Every employer shall contribute monthly a sum equal to six percent of the basic salary of each plan I employee who is a member of this retirement system. The employer shall transmit the employee and employer contributions with a copy of the payroll to the retirement system monthly.

(3) The remaining liabilities of the plan I system shall be funded as provided in chapter 41.45 RCW.

(4) Every member shall be deemed to consent and agree to the contribution made and provided for herein, and shall receipt in full for his or her salary or compensation. Payment less said contributions shall be a complete discharge of all claims and demands whatsoever for the services rendered by such person during the period covered by such payments, except his or her claim to the benefits to which he or she may be entitled under the provisions of this chapter.

Sec. 18. RCW 41.26.090 and 1977 ex.s. c 294 s 22 are each amended to read as follows:

Retirement of a member for service shall be made by the ((~~board~~)) department as follows:

(1) Any member having five or more years of service and having attained the age of fifty years shall be eligible for a service retirement allowance and shall be retired upon ((~~his~~)) the member's written request effective the first day following the date upon which the member is separated from service.

(2) Any member having five or more years of service, who terminates his or her employment with any employer, may leave his or her contributions in the fund. Any employee who so elects, upon attaining age fifty, shall be eligible to apply for and receive a service retirement allowance based on his or her years of service, commencing on the first day following his or her attainment of age fifty. ((This section shall also apply to a person who rendered service as a law enforcement officer or fire fighter, as those terms are defined in RCW 41.26.030, on or after July 1, 1969, but who was not employed as a law enforcement officer or fire fighter on March 1, 1970, by reason of his having been elected to a public office.))

(3) Any member selecting ((~~this~~)) optional vesting under subsection (2) of this section with less than twenty years of service shall not be covered by the provisions of RCW 41.26.150, and ((~~his~~)) the member's survivors shall not be entitled to the benefits of RCW 41.26.160 unless his or her death occurs after he or she has attained the age of fifty years. Those members selecting this optional vesting with twenty or more years service shall not be covered by the provisions of RCW 41.26.150 until the attainment of the age of fifty years((~~: PROVIDED, That~~)). A member selecting this ((~~option~~)) optional vesting, with less than twenty years of service credit, who ((~~shall~~)) dies prior to attaining the age of fifty years, shall have paid from the Washington law enforcement officers' and fire fighters' retirement fund, to such member's surviving spouse, if any, otherwise to such beneficiary as the member shall have designated in writing, or if no such designation has been made, to the personal representative of his or her estate, a lump sum which is equal to the amount of such member's accumulated contributions plus accrued interest((~~: PROVIDED FURTHER, That~~)). If the vested member has twenty or more years of service credit the surviving spouse or children shall then become eligible for the benefits of RCW 41.26.160 regardless of ((~~his~~)) the member's age at the time of his or her death, to the exclusion of the lump sum amount provided by this subsection.

((~~(3)~~)) (4) Any member who has attained the age of sixty years shall be retired on the first day of the calendar month next succeeding that in which said member shall have attained the age of sixty and may not thereafter be employed as a law enforcement officer or fire fighter: PROVIDED, That for any member who is elected or appointed to the office of sheriff, chief of police, or fire chief, his or her election or appointment shall be considered as a waiver of the age sixty provision for retirement and nonemployment for whatever number of years remain in his or her present term of office and any succeeding periods for which he or she may be so elected or appointed((~~: PROVIDED FURTHER, That~~)). The provisions of this subsection shall not apply to any member who is employed as a law enforcement officer or fire fighter on March 1, 1970.

Sec. 19. RCW 41.26.120 and 1986 c 176 s 5 are each amended to read as follows:

Any member, regardless of ((~~his~~)) age or years of service may be retired by the disability board, subject to approval by the director as hereinafter provided, for any disability incurred in the line of duty which has been continuous since his or her discontinuance of service and which renders ((~~him~~)) the member unable to continue ((~~his~~)) service. No disability retirement allowance shall be paid until the expiration of a period of six months after the discontinuance of service during which period the member, if found to be physically or mentally unfit for duty by the disability board following receipt of his or her application for disability retirement, shall be granted a disability leave by the disability board and shall receive an allowance equal to ((~~his~~)) the full monthly salary and shall continue to receive all other benefits provided to active employees from ((~~his~~)) the employer for such period. However, if, at any time during the initial six-month period, the disability board finds the beneficiary is no longer disabled, ((~~his~~)) the disability leave allowance shall be canceled and ((he)) the member shall be restored to duty in the same rank or position, if any, held by the beneficiary at the time ((he)) the member became disabled. Applications for disability retirement shall be processed in accordance with the following procedures:

(1) Any member who believes he or she is or is believed to be physically or mentally disabled shall be examined by such medical authority as the disability board shall employ, upon application of said member, or a person acting in his or her behalf, stating that said member is disabled, either physically or mentally: PROVIDED, That no such application shall be considered unless said member or someone in his or her behalf, in case of the incapacity of a member, shall have filed the application within a period of one year from and after the discontinuance of service of said member.

(2) If the examination shows, to the satisfaction of the disability board, that the member is physically or mentally disabled from the further performance of duty, that such disability was incurred in the line of duty, and that such disability has been continuous from the discontinuance of service, the disability board shall enter its written decision and order, accompanied by appropriate findings of fact and by conclusions evidencing compliance with this chapter as now or hereafter amended, granting the member a disability retirement allowance; otherwise, if the member is not found by the disability board to be so disabled, the application shall be denied pursuant to a similar written decision and order, subject to appeal to the director in accordance with RCW 41.26.200: PROVIDED, That in any order granting a duty disability retirement allowance, the disability board shall make a finding that the disability was incurred in line of duty.

(3) Every order of a disability board granting a duty disability retirement allowance shall forthwith be reviewed by the director except the finding that the disability was incurred in the line of duty. The director may affirm the decision of the disability board or remand the case for further proceedings, or the director may reverse the decision of the disability board if the director finds the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions; or

(b) In excess of the statutory authority or jurisdiction of the disability board; or

(d) Affected by other error of law; or

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

(4) Every member who can establish, to the disability board, that he or she is physically or mentally disabled from the further performance of duty, that such disability was incurred in the line of duty, and that such disability will be in existence for a period of at least six months may waive the six-month period of disability leave and be immediately granted a duty disability retirement allowance, subject to the approval of the director as provided in subsection (3) ((~~above~~)) of this section.

Sec. 20. RCW 41.26.130 and 1987 c 185 s 11 are each amended to read as follows:

(1) Upon retirement for disability a member shall be entitled to receive a monthly retirement allowance computed as follows: (a) A basic amount of fifty percent of final average salary at time of disability retirement, and (b) an additional five percent of final average salary for each child as defined in RCW 41.26.030(7), (c) the combined total of ((~~subsections (1)~~))(a) and ((~~(1)~~))(b) of this ((~~section~~)) subsection shall not exceed a maximum of sixty percent of final average salary.

(2) A disabled member shall begin receiving ((~~his~~)) the disability retirement allowance as of the expiration of his or her six month period of disability leave or, if his or her application was filed after the sixth month of discontinuance of service but prior to the one year time limit, the member's disability retirement allowance shall be retroactive to the end of the sixth month.

(3) Benefits under this section will be payable until the member recovers from the disability or dies. If at the time that the disability ceases the member is over the age of fifty, he or she shall then receive either ((~~his~~)) disability retirement allowance or ((~~his~~)) retirement for service allowance, whichever is greater.

(4) Benefits under this section for a disability that is incurred while in other employment will be reduced by any amount the member receives or is entitled to receive from workers' compensation, social security, group insurance, other pension plan, or any other similar source provided by another employer on account of the same disability.

(5) A member retired for disability shall be subject to periodic examinations by a physician approved by the disability board prior to ((~~his~~)) attainment of age fifty, pursuant to rules adopted by the director under RCW 41.26.115. Examinations of members who retired for disability prior to July 26, 1981, shall not exceed two medical examinations per year.

Sec. 21. RCW 41.26.140 and 1985 c 103 s 2 are each amended to read as follows:

(1) Upon the basis of reexaminations of members on disability retirement as provided in RCW 41.26.130, the disability board shall determine whether such disability beneficiary is still unable to perform his or her duties either physically or mentally for service in the department where he or she was employed.

(2) If the disability board shall determine that the beneficiary is not so incapacitated ((~~his~~)) the retirement allowance shall be canceled and ((he)) the member shall be restored to duty in the same civil service rank, if any, held by the beneficiary at the time of his or her retirement or if unable to perform the duties of said rank, then, at his or her request, in such other like or lesser rank as may be or become open and available, the duties of which he or she is then able to perform. In no event, shall a beneficiary previously drawing a disability allowance be returned or be restored to duty at a salary or rate of pay less than the current salary attached to the rank or position held by the said beneficiary at the date of ((~~his~~)) retirement for disability. If the disability board determines that the beneficiary is able to return to service he or she shall be entitled to notice and a hearing, both the notice and the hearing shall comply with the requirements of chapter 34.05 RCW, as now or hereafter amended.

(3) Should a disability beneficiary reenter service and be eligible for membership in the retirement system, ((~~his~~)) the retirement allowance shall be canceled and he or she shall immediately become a member of the retirement system.

(4) Should any disability beneficiary under age fifty refuse to submit to examination, ((~~his~~)) the retirement allowance shall be discontinued until ((~~his~~)) withdrawal of such refusal, and should such refusal continue for one year or more, ((~~his~~)) the retirement allowance shall be canceled.

(5) Should the disability retirement allowance of any disability beneficiary be canceled for any cause other than reentrance into service or retirement for service, he or she shall be paid the excess, if any, of ((~~his~~)) the accumulated contributions at the time of ((~~his~~)) retirement over all payments made on his or her behalf under this chapter.

(6) Any person feeling aggrieved by an order of a disability board determining that a beneficiary's disability has not ceased, pursuant to RCW 41.26.130(3) has the right to appeal the order or determination to the director. The director shall have no jurisdiction to entertain the appeal unless a notice of appeal is filed with the director within thirty days following the rendition of the order by the disability board. A copy of the notice of appeal shall be served upon the director and the applicable disability board and, within ninety days thereof, the disability board shall certify its decision and order which shall include findings of fact and conclusions of law, together with a transcript of all proceedings in connection therewith, to the director for review. Upon review of the record, the director may affirm the order of the disability board or may remand the case for further proceedings if the director finds that the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions; or

(b) In excess of the statutory authority or jurisdiction of the disability board; or

(d) Affected by other error of law; or

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

Sec. 22. RCW 41.26.150 and 1987 c 185 s 12 are each amended to read as follows:

(1) Whenever any active member, or any member hereafter retired, on account of service, sickness or disability, not caused or brought on by dissipation or abuse, of which the disability board shall be judge, is confined in any hospital or in ((~~his~~)) home, and whether or not so confined, requires medical services, the employer shall pay for such active or retired member the necessary medical services not payable from some other source as provided for in subsection (2) of this section. In the case of active or retired fire fighters the employer may make the payments provided for in this section from the firemen's pension fund established pursuant to RCW 41.16.050 where such fund had been established prior to March 1, 1970((~~: PROVIDED, That in the event the~~)). If this pension fund is depleted, the employer shall have the obligation to pay all benefits payable under chapters 41.16 and 41.18 RCW((~~: PROVIDED FURTHER, That~~)).

(a) The disability board in all cases may have the active or retired member suffering from such sickness or disability examined at any time by a licensed physician or physicians, to be appointed by the disability board, for the purpose of ascertaining the nature and extent of the sickness or disability, the physician or physicians to report to the disability board the result of the examination within three days thereafter. Any active or retired member who refuses to submit to such examination or examinations shall forfeit all ((~~his~~)) rights to benefits under this section for the period of such refusal((~~: AND PROVIDED FURTHER, That~~)).

(b) The disability board shall designate the medical services available to any sick or disabled member.

(2) The medical services payable under this section will be reduced by any amount received or eligible to be received by the member under workers' compensation, social security including the changes incorporated under Public Law 89-97 as now or hereafter amended, insurance provided by another employer, other pension plan, or any other similar source. Failure to apply for coverage if otherwise eligible under the provisions of Public Law 89-97 as now or hereafter amended shall not be deemed a refusal of payment of benefits thereby enabling collection of charges under the provisions of this chapter.

(3) Upon making such payments as are provided for in subsection (1) of this section, the employer shall be subrogated to all rights of the member against any third party who may be held liable for the member's injuries or for the payment of the cost of medical services in connection with a member's sickness or disability to the extent necessary to recover the amount of payments made by the employer.

(4) Any employer under this chapter, either singly, or jointly with any other such employer or employers through an association thereof as provided for in chapter 48.21 RCW, may provide for all or part of one or more plans of group hospitalization and medical aid insurance to cover any of its employees who are members of the Washington law enforcement officers' and fire fighters' retirement system, and/or retired former employees who were, before retirement, members of said retirement system, through contracts with regularly constituted insurance carriers, with health maintenance organizations as defined in chapter 48.46 RCW, or with health care service contractors as defined in chapter 48.44 RCW. Benefits payable under any such plan or plans shall be deemed to be amounts received or eligible to be received by the active or retired member under subsection (2) of this section.

Sec. 23. RCW 41.26.160 and 1986 c 176 s 7 are each amended to read as follows:

(1) In the event of the death of any member who is in active service, or who has vested under the provisions of RCW 41.26.090 with twenty or more years of service, or who is on disability leave or retired, whether for disability or service, ((~~his~~)) the surviving spouse shall become entitled to receive a monthly allowance equal to fifty percent of ((~~his~~)) the final average salary at the date of death if active, or the amount of retirement allowance the vested member would have received at age fifty, or the amount of the retirement allowance such retired member was receiving at the time of ((~~his~~)) death if retired for service or disability. The amount of this allowance will be increased five percent of final average salary for each child as defined in RCW 41.26.030(7), as now or hereafter amended, subject to a maximum combined allowance of sixty percent of final average salary: PROVIDED, That if the child or children is or are in the care of a legal guardian, payment of the increase attributable to each child will be made to the child's legal guardian or, in the absence of a legal guardian and if the member has created a trust for the benefit of the child or children, payment of the increase attributable to each child will be made to the trust.

(2) If at the time of the death of a vested member with twenty or more years service as provided ((~~above~~)) in subsection (1) of this section or a member retired for service or disability, the surviving spouse has not been lawfully married to such member for one year prior to ((~~his~~)) retirement or separation from service if a vested member, the surviving spouse shall not be eligible to receive the benefits under this section: PROVIDED, That if a member dies as a result of a disability incurred in the line of duty, then if he or she was married at the time he or she was disabled, ((~~his~~)) a surviving spouse shall be eligible to receive the benefits under this section.

(3) If there be no surviving spouse eligible to receive benefits at the time of such member's death, then the child or children of such member shall receive a monthly allowance equal to thirty percent of final average salary for one child and an additional ten percent for each additional child subject to a maximum combined payment, under this subsection, of sixty percent of final average salary. When there cease to be any eligible children as defined in RCW 41.26.030(7), as now or hereafter amended, there shall be paid to the legal heirs of said member the excess, if any, of accumulated contributions of said member at the time of ((~~his~~)) death over all payments made to ((~~his~~)) survivors on his or her behalf under this chapter: PROVIDED, That payments under this subsection to children shall be prorated equally among the children, if more than one. If the member has created a trust for the benefit of the child or children, the payment shall be made to the trust.

(4) In the event that there is no surviving spouse eligible to receive benefits under this section, and that there be no child or children eligible to receive benefits under this section, then the accumulated contributions shall be paid to the estate of said member.

(5) If a surviving spouse receiving benefits under the provisions of this section thereafter dies and there are children as defined in RCW 41.26.030(7), as now or hereafter amended, payment to the spouse shall cease and the child or children shall receive the benefits as provided in subsection (3) ((~~above~~)) of this section.

(6) The payment provided by this section shall become due the day following the date of death and payments shall be retroactive to that date.

Sec. 24. RCW 41.26.170 and 1970 ex.s. c 6 s 14 are each amended to read as follows:

(1) Should service of a member be discontinued except by death, disability, or retirement, ((he)) the member shall, upon application therefor, be paid ((~~his~~)) the accumulated contributions within sixty days after the day of application and ((~~his~~)) the rights to all benefits as a member shall cease: PROVIDED, That any member with at least five years' service may elect the provisions of RCW 41.26.090(2).

(2) Any member whose contributions have been paid ((~~to him~~)) in accordance with subsection (1) of this section and who reenters the service of an employer within ten years of the date of ((~~his~~)) separation shall upon the restoration of all withdrawn contributions, which restoration must be completed within a total period of five years of service following resumption of employment, then receive credit toward retirement for the period of previous service which these contributions are to cover.

Sec. 25. RCW 41.26.180 and 1989 c 360 s 24 are each amended to read as follows:

(1) Subject to subsections (2) and (3) of this section, the right of a person to a retirement allowance, disability allowance, or death benefit, to the return of accumulated contributions, the retirement, disability or death allowance itself, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, and the moneys in the fund created under this chapter, are hereby exempt from any state, county, municipal, or other local tax and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or any other process of law whatsoever, and shall be unassignable.

(2) On the written request of any person eligible to receive benefits under this section, the department ((~~of retirement systems~~)) may deduct from such payments the premiums for life, health, or other insurance. The request on behalf of any child or children shall be made by the legal guardian of such child or children. The department ((~~of retirement systems~~)) may provide for such persons one or more plans of group insurance, through contracts with regularly constituted insurance carriers or health care service contractors.

(3) Subsection (1) of this section shall not prohibit the department ((~~of retirement systems~~)) from complying with (a) a wage assignment order for child support issued pursuant to chapter 26.18 RCW, (b) an order to withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order issued ((~~pursuant to chapter 41.50 RCW~~)) by the department, or (e) any administrative or court order expressly authorized by federal law.

Sec. 26. RCW 41.26.190 and 1970 ex.s. c 6 s 13 are each amended to read as follows:

Each person affected by this chapter who at the time of entering the armed services was a member of this system, and has honorably served in the armed services of the United States, shall have added to ((~~his~~)) the period of service as computed under this chapter, ((~~his~~)) the period of service in the armed forces: PROVIDED, That such credited service shall not exceed five years.

Sec. 27. RCW 41.26.240 and 1974 ex.s. c 120 s 13 are each amended to read as follows:

For purposes of this section ((~~of this chapter~~)):

(1) "Index" shall mean, for any calendar year, that year's average Consumer Price Index--Seattle, Washington area for urban wage earners and clerical workers, all items (1957-1959=100), compiled by the Bureau of Labor Statistics, United States Department of Labor;

(2) "Retirement allowance" shall mean the retirement allowance provided for in RCW 41.26.100 and 41.26.130, and the monthly allowance provided for in RCW 41.26.160.

Effective April 1 of 1971, and of each succeeding year, every retirement allowance which has been in effect for more than one year shall be adjusted to that dollar amount which exceeds its original dollar amount by the percentage difference which the ((~~board~~)) department finds to exist between the index for the previous calendar year and the index for the calendar year prior to the effective retirement date of the person to whom, or on behalf of whom, such retirement allowance is being paid.

For the purposes of this section, basic allowance shall mean that portion of a total retirement allowance, and any cost of living adjustment thereon, attributable to a member (individually) and shall not include the increased amounts attributable to the existence of a child or children. In those cases where a child ceases to be qualified as an eligible child, so as to lessen the total allowance, the allowance shall, at that time, be reduced to the basic allowance plus the amount attributable for the appropriate number of eligible children. In those cases where a child qualifies as an eligible child subsequent to the retirement of a member so as to increase the total allowance payable, such increased allowance shall at the time of the next and appropriate subsequent cost of living adjustments, be considered the original dollar amount of the allowance.

Sec. 28. RCW 41.26.280 and 1971 ex.s. c 257 s 15 are each amended to read as follows:

If injury or death results to a member from the intentional or negligent act or omission of ((~~his~~)) a member's governmental

employer, the member, the widow, widower, child, or dependent of the member shall have the privilege to benefit under this chapter and also have cause of action against the governmental employer as otherwise provided by law, for any excess of damages over the amount received or receivable under this chapter.

Sec. 29. RCW 41.26.410 and 1977 ex.s. c 294 s 2 are each amended to read as follows:

RCW 41.26.420 through 41.26.550 shall apply only to ((~~those persons who are initially employed by an employer on or after October 1, 1977~~)) plan II members.

Sec. 30. RCW 41.32.005 and 1990 c 274 s 16 are each amended to read as follows:

(1) ((~~"Teachers' retirement system plan I" or "plan I" means the benefits and funding provisions covering persons who first became members of the teachers' retirement system prior to July 1, 1977.~~)) The provisions of the following sections of this chapter shall apply ((~~only~~)) to members of plan I and plan II: ((RCW 41.32.240, 41.32.250, 41.32.260, 41.32.270, 41.32.280, 41.32.290, 41.32.300, 41.32.310, 41.32.320, 41.32.330, 41.32.340, 41.32.350, 41.32.360, 41.32.365, 41.32.366, 41.32.380, 41.32.390, 41.32.430, 41.32.440, 41.32.470, 41.32.480, 41.32.491, 41.32.492, 41.32.493, 41.32.4931, 41.32.4932, 41.32.494, 41.32.4943, 41.32.4944, 41.32.4945, 41.32.497, 41.32.498, 41.32.499, 41.32.500, 41.32.510, 41.32.520, 41.32.522, 41.32.523, 41.32.530, 41.32.540, 41.32.550, 41.32.560, 41.32.561, 41.32.565, 41.32.567, 41.32.570, 41.32.575, and 41.32.583.

(2) "Teachers' retirement system plan II" or "plan II" means the benefits and funding provisions covering persons who first became members of the teachers' retirement system on or after July 1, 1977. The provisions of RCW 41.32.760 through 41.32.830 shall apply only to the members of plan II)) RCW 41.32.010; 41.32.011; 41.32.020; 41.32.160; 41.32.242; 41.32.460; 41.32.580; 41.32.670; 41.32.850; and 41.32.013.

Sec. 31. RCW 41.32.010 and 1990 c 274 s 2 are each amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1) (a) "Accumulated contributions" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means the sum of all regular annuity contributions with regular interest thereon.

(b) "Accumulated contributions" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means the sum of all contributions standing to the credit of a member in the member's individual account together with the regular interest thereon.

(2) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of such mortality tables and regulations as shall be adopted by the director and regular interest.

(3) "Annuity" means the moneys payable per year during life by reason of accumulated contributions of a member.

(4) "Annuity fund" means the fund in which all of the accumulated contributions of members are held.

(5) "Annuity reserve fund" means the fund to which all accumulated contributions are transferred upon retirement.

(6) (a) "Beneficiary" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means any person in receipt of a retirement allowance or other benefit provided by this chapter.

(7) "Contract" means any agreement for service and compensation between a member and an employer.

(8) "Creditable service" means membership service plus prior service for which credit is allowable. This subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(9) "Dependent" means receiving one-half or more of support from a member.

(10) "Disability allowance" means monthly payments during disability. This subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(11) (a) ((~~(i)~~)) "Earnable compensation" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means:

(i) All salaries and wages paid by an employer to an employee member of the retirement system for personal services rendered during a fiscal year. In all cases where compensation includes maintenance the employer shall fix the value of that part of the compensation not paid in money((~~: PROVIDED, That~~)).

(A) Retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wages which the individual would have earned during a payroll period shall be considered earnable compensation and the individual shall receive the equivalent service credit((~~: PROVIDED FURTHER, That~~)).

(B) If a leave of absence, without pay, is taken by a member for the purpose of serving as a member of the state legislature, and such member has served in the legislature five or more years, the salary which would have been received for the position from which the leave of absence was taken shall be considered as compensation earnable if the employee's contribution thereon is paid by the employee. In addition, where a member has been a member of the state legislature for five or more years, earnable compensation for the member's two highest compensated consecutive years of service shall include a sum not to exceed thirty-six hundred dollars for each of such two consecutive years, regardless of whether or not legislative service was rendered during those two years.

(ii) For members employed less than full time under written contract with a school district, or community college district, in an instructional position, for which the member receives service credit of less than one year in all of the years used to determine the earnable compensation used for computing benefits due under RCW 41.32.497, 41.32.498, and 41.32.520, the member may elect to have earnable compensation defined as provided in RCW 41.32.011. For the purposes of this subsection, the term "instructional position" means a position in which more than seventy-five percent of the member's time is spent as a classroom instructor (including office hours), a librarian, or a counselor. Earnable compensation shall be so defined only for the purpose of the calculation of retirement benefits and only as necessary to insure that members who receive fractional service credit under RCW 41.32.270 receive benefits proportional to those received by members who have received full-time service credit.

(b) "Earnable compensation" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, and shall include 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 lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay((~~: PROVIDED, That~~)).

(i) Retroactive payments to an individual by an employer on reinstatement of the employee in a position or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wages which the individual would have earned during a payroll period shall be considered earnable compensation, to the extent provided above, and the individual shall receive the equivalent service credit((~~: PROVIDED FURTHER, That~~)).

(ii) In any year in which a member serves in the legislature the member shall have the option of having such member's earnable compensation be the greater of:

((~~(i)~~)) (A) The earnable compensation the member would have received had such member not served in the legislature; or

((~~(ii)~~)) (B) Such member's actual earnable compensation received for teaching and legislative service combined. Any additional contributions to the retirement system required because compensation earnable under ((~~subparagraph (i)~~)) (b)(ii)(A) of this subsection is greater than compensation earnable under ((~~subparagraph (ii)~~)) (b)(ii)(B) of this subsection shall be paid by the member for both member and employer contributions.

(12) "Employer" means the state of Washington, the school district, or any agency of the state of Washington by which the member is paid.

(13) "Fiscal year" means a year which begins July 1st and ends June 30th of the following year.

(14) "Former state fund" means the state retirement fund in operation for teachers under chapter 187, Laws of 1923, as amended.

(15) "Local fund" means any of the local retirement funds for teachers operated in any school district in accordance with the provisions of chapter 163, Laws of 1917 as amended.

(16) "Member" means any teacher included in the membership of the retirement system. Also, any other employee of the public schools who, on July 1, 1947, had not elected to be exempt from membership and who, prior to that date, had by an authorized payroll

deduction, contributed to the annuity fund.

(17) "Membership service" means service rendered subsequent to the first day of eligibility of a person to membership in the retirement system: PROVIDED, That where a member is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service is rendered. The provisions of this subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(18) "Pension" means the moneys payable per year during life from the pension reserve fund.

(19) "Pension reserve fund" is a fund in which shall be accumulated an actuarial reserve adequate to meet present and future pension liabilities of the system and from which all pension obligations are to be paid.

(20) "Prior service" means service rendered prior to the first date of eligibility to membership in the retirement system for which credit is allowable. The provisions of this subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(21) "Prior service contributions" means contributions made by a member to secure credit for prior service. The provisions of this subsection shall apply only to ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members.

(22) "Public school" means any institution or activity operated by the state of Washington or any instrumentality or political subdivision thereof employing teachers, except the University of Washington and Washington State University.

(23) "Regular contributions" means the amounts required to be deducted from the compensation of a member and credited to the member's individual account in the annuity fund. This subsection shall apply only to ((~~persons establishing membership in the retirement system on or before September 30, 1977~~)) plan I members.

(24) "Regular interest" means such rate as the director may determine.

(25) (a) "Retirement allowance" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means monthly payments based on the sum of annuity and pension, or any optional benefits payable in lieu thereof.

(b) "Retirement allowance" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means monthly payments to a retiree or beneficiary as provided in this chapter.

(26) "Retirement system" means the Washington state teachers' retirement system.

(27) (a) "Service" means the time during which a member has been employed by an employer for compensation: PROVIDED, That where a member is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service is rendered.

(b) "Service" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means periods of employment by a member for one or more employers for which earnable compensation is earned subject to the following conditions:

(i) A member employed in an eligible position or as a substitute shall receive service credit for each month of September through August of the following year if he or she earns earnable compensation for eight hundred ten or more hours during that period and is employed during nine of those months, except that a member may not receive credit for any period prior to the member's employment in an eligible position;

(ii) If a member in an eligible position does not meet the requirements of (b)(i) of this subsection, he or she will receive service credit only for those calendar months during which he or she has received compensation for ninety or more hours.

Any person who is a member of the teachers' retirement system and who is elected or appointed to a state elective position may continue to be a member of the retirement system and continue to receive service credit for the time spent in a state elective position by making the required member contributions.

When an individual is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service for ninety or more hours is rendered.

((Notwithstanding RCW 41.32.240, teachers covered by RCW 41.32.755 through 41.32.825, who render service need not serve for ninety days to obtain membership so long as the required contribution is submitted for such ninety-day period. Where a member did not receive service credit under RCW 41.32.775 through 41.32.825 due to the ninety-day period in RCW 41.32.240 the member may receive service credit for that period so long as the required contribution is submitted for the period. Anyone entering membership on or after October 1, 1977, and prior to July 1, 1979, shall have until June 30, 1980, to make the required contribution in one lump sum.))

The department shall adopt rules implementing this subsection (27)(b).

(28) "Survivors' benefit fund" means the fund from which survivor benefits are paid to dependents of deceased members. This subsection shall apply only to ((~~persons establishing membership in the retirement system on or before September 30, 1977~~)) plan I members.

(29) "Teacher" means any person qualified to teach who is engaged by a public school in an instructional, administrative, or supervisory capacity. The term includes state, educational service district, and school district superintendents and their assistants and all employees certificated by the superintendent of public instruction; and in addition thereto any full time school doctor who is employed by a public school and renders service of an instructional or educational nature.

(30) "Average final compensation" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means the member's average earnable compensation of the highest consecutive sixty months of service prior to such member's retirement, termination, or death. Periods constituting authorized leaves of absence may not be used in the calculation of average final compensation.

(31) "Retiree" means any member in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by such member.

(32) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(33) "Director" means the director of the department.

(34) "State elective position" means any position held by any person elected or appointed to state-wide office or elected or appointed as a member of the legislature.

(35) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

(36) ((~~"Retirement board" means the director of retirement systems.~~

~~(37)~~)) "Substitute teacher" means:

(a) A teacher who is hired by a school district to work as a temporary teacher, except for teachers who are contract employees of a school district and are guaranteed a minimum number of hours; or

(b) Persons who work in ineligible positions in more than one school district.

((~~(38)~~)) (37) "Eligible position" in plan II means a position which normally requires two or more uninterrupted months of creditable service during September through August of the following year.

(38) "Plan I" means the teachers' retirement system, plan I providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977.

(39) "Plan II" means the teachers' retirement system, plan II providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977.

Sec. 32. RCW 41.32.030 and 1989 c 273 s 16 are each amended to read as follows:

((All of the assets of the retirement system shall be credited according to the purposes for which they are held, to two funds to be maintained in the state treasury, namely, the teachers' retirement system plan I fund and the teachers' retirement system plan II fund. The plan I fund shall consist of all moneys paid to finance the benefits provided to members of plan I, and the plan II fund shall consist of all moneys paid to finance the benefits provided to members of plan II.))

In the records of the teachers' retirement system the teachers' retirement fund plan I fund shall be subdivided into the annuity fund, the annuity reserve fund, the survivors' benefit fund, the pension reserve fund, the disability reserve fund, the death benefit fund, the income fund, the expense fund, and ((~~such~~)) other funds as may from time to time be created by the director for the purpose of the internal accounting record.

Sec. 33. RCW 41.32.120 and 1969 ex.s. c 150 s 4 are each amended to read as follows:

The ((~~board of trustees~~)) department shall keep a record of all its proceedings, which shall be open to public inspection. It shall publish annually a report showing the fiscal transactions of the Washington state teachers' retirement system for the preceding school year; the amount of the accumulated cash and securities of the system, and the last balance sheet showing the financial condition of the system by means of an actuarial valuation of the assets and liabilities of the retirement system.

Sec. 34. RCW 41.32.130 and 1947 c 80 s 13 are each amended to read as follows:

The ((~~board of trustees~~)) director shall designate a medical director. If required, other physicians may be employed to report on special cases. The medical director shall arrange for and pass upon all medical examinations required under the provisions of this chapter((~~; he shall~~)), investigate all essential statements and certificates by or on behalf of a member in connection with an application for a disability allowance, and ((~~shall~~)) report in writing to the board of trustees ((~~his~~)) the conclusions and recommendations upon all matters ((~~referred to him~~)) under referral.

Sec. 35. RCW 41.32.160 and 1955 c 274 s 3 are each amended to read as follows:

((The board of trustees shall, from time to time, establish rules and regulations for the administration of the funds created by this chapter and for the transaction of its business. The board of trustees shall be)) The department is empowered within the limits of this chapter to decide on all questions of eligibility covering membership, service credit, and benefits.

Sec. 36. RCW 41.32.190 and 1973 1st ex.s. c 189 s 7 are each amended to read as follows:

From interest and other earnings on the moneys of the Washington state teachers' retirement system, and except as otherwise provided in RCW 41.32.405 and 41.32.499, at the close of each fiscal year the ((~~board of trustees~~)) department shall make ((~~such~~)) an allowance of regular interest on the balance which was on hand at the beginning of the fiscal year in each of the teachers' retirement system funds as they may deem advisable; however, no interest shall be credited to the expense fund or the pension fund.

Sec. 37. RCW 41.32.230 and 1947 c 80 s 23 are each amended to read as follows:

No trustee or employee of the ((~~board of trustees~~)) department shall become an endorser or surety or an obligor for moneys loaned by the ((~~board of trustees~~)) department.

Sec. 38. RCW 41.32.240 and 1979 ex.s. c 45 s 3 are each amended to read as follows:

All teachers employed full time in the public schools shall be members of the system except ((~~those who have previously exempted themselves from membership and~~)) alien teachers who have been granted a temporary permit to teach as exchange teachers.

((No teacher who commences a period of employment on or after July 1, 1979, as a participant under the federal comprehensive employment and training act of 1973 (CETA) (29 U.S.C. Sec. 801 et seq.), as amended, shall be a member of this system during the period of such participation unless, at the commencement of the participation under CETA, the teacher either:

~~(1) Has at least five years of service and the full amount of the employee's contributions for such service remains on deposit in the system; or~~

~~(2) Has previously been retired from this system.~~))

A minimum of ninety days or the equivalent of ninety days of employment during a fiscal year shall be required to establish membership. A teacher shall be considered as employed full time if serving regularly for four-fifths or more of a school day or if assigned to duties which are the equivalent of four-fifths or more of a full time assignment. A teacher who is employed for less than full time service may become a member by filing an application with the retirement system, submitting satisfactory proof of teaching service and making the necessary payment before June 30 of the school year immediately following the one during which the service was rendered. ((If an exempted teacher desires membership he must file with the department a written request, duly executed, that his exemption certificate be canceled, present proof of service, and make the necessary payment before June 30 of the school year immediately following the one in which his request for cancellation of the exemption was filed. Any teacher who is still exempt from membership in the teachers' retirement system after July 1, 1965 and chooses not to become a member of the teachers' retirement system may continue his exemption and shall not become a member of the state employees' retirement system while employed as a teacher. All service rendered in this state subsequent to his exemption from membership must be established by proper proof and paid for, with interest at three percent, upon the same basis as he would have paid had he been a member during the period covered by his exemption. Twenty percent of the total amount due must be paid before membership can be established. Payment of the remainder, including interest, must be completed before June 30th of the fourth school year following that in which membership was established. A minimum of five years of membership in the present system and/or the former state fund or a local fund shall be required of a member who was formerly exempt from membership before such member may qualify for a retirement allowance.))

Sec. 39. RCW 41.32.242 and 1984 c 256 s 2 are each amended to read as follows:

(1) Any teacher, as defined under RCW 41.32.010(29), who is first employed by a public school on or after June 7, 1984, shall become a member of the retirement system as directed under RCW ((~~41.32.240~~)) 41.32.780 if otherwise eligible.

(2) Any person who before June 7, 1984, has established service credit under chapter 41.40 RCW while employed in an educational staff associate position and who is employed in such a position on or after June 7, 1984 has the following options:

(a) To remain a member of the public employees' retirement system notwithstanding the provisions of RCW 41.32.240 or 41.32.780; or

(b) To irrevocably elect to join the retirement system under this chapter and to receive service credit for previous periods of employment in any position included under RCW 41.32.010(29). ((~~Such~~)) This service credit and corresponding employee contribution shall be computed as though the person had then been a member of the retirement system under this chapter. All employee contributions credited to a member under chapter 41.40 RCW for service now to be credited to the retirement system under this chapter shall be transferred to the system and the member shall not receive any credit nor enjoy any rights under chapter 41.40 RCW for those periods of service. The member shall pay any difference between the employee contributions made under chapter 41.40 RCW and transferred under this subsection and what would have been required under this chapter, including interest as set by the director. The member shall be given until July 1, 1989, to make the irrevocable election permitted under this section. The election shall be made by submitting written notification as required by the department requesting credit under this section and by remitting any necessary proof of service or payments within the time set by the department.

Any person, not employed as an educational staff associate on June 7, 1984, may, before June 30 of the fifth school year after that person's return to employment as a teacher, request and establish membership and credit under this subsection.

Sec. 40. RCW 41.32.260 and 1974 ex.s. c 199 s 2 are each amended to read as follows:

Any member whose public school service is interrupted by active service to the United States as a member of its military, naval or air service, or to the state of Washington, as a member of the legislature, may upon becoming reemployed in the public schools, receive credit for ((~~such~~)) that service upon presenting satisfactory proof, and contributing to the annuity fund, either in a lump sum or installments, ((~~such~~)) amounts ((~~as shall be~~)) determined by the ((~~board of trustees: PROVIDED (1),~~)) director. Except that no ((~~such~~)) military service credit in excess of five years shall be established or reestablished after July 1, 1961, unless the service was actually rendered during time of war((~~: PROVIDED FURTHER~~

(2), That a member of the retirement system who is a member of the state legislature or a state official eligible for the combined pension and annuity provided by RCW 41.32.497, or 41.32.498, as now or hereafter amended shall have deductions taken from his salary in the amount of seven and one-half percent of earnable compensation and that service credit shall be established with the retirement system while such deductions are reported to the retirement system, unless he has by reason of his employment become a contributing member of another public retirement system in the state of Washington: AND PROVIDED FURTHER (3), That such elected official who has retired or otherwise terminated his public school service may then elect to terminate his membership in the retirement system and receive retirement benefits while continuing to serve as an elected official: AND, PROVIDED FURTHER (4), That a member of the retirement system who had previous service as an elected or appointed official, for which he did not contribute to the retirement system, may receive credit for such legislative service unless he has received credit for that service in another state retirement system, upon making contributions in such amounts as shall be determined by the board of trustees)).

NEW SECTION. Sec. 41. A new section is added to chapter 41.32 RCW to read as follows:

A member of the retirement system who is a member of the state legislature or a state official eligible for the combined pension and annuity provided by RCW 41.32.497, or 41.32.498, as now or hereafter amended shall have deductions taken from his or her salary in the amount of six percent of earnable compensation and that service credit shall be established with the retirement system while such deductions are reported to the retirement system, unless he or she has by reason of his or her employment become a contributing member of another public retirement system in the state of Washington. Such elected official who has retired or otherwise terminated his or her public school service may then elect to terminate his or her membership in the retirement system and receive retirement benefits while continuing to serve as an elected official. A member of the retirement system who had previous service as an elected or appointed official, for which he or she did not contribute to the retirement system, may receive credit for such legislative service unless he or she has received credit for that service in another state retirement system, upon making contributions in such amounts as shall be determined by the board of trustees.

Sec. 42. RCW 41.32.300 and 1963 ex.s. c 14 s 5 are each amended to read as follows:

(1) Henceforth a total of not more than four years of service outside of the state shall be credited to a member who establishes or reestablishes credit for out-of-state public school employment in this state subsequent to July 1, 1961. Foreign public school teaching service shall be creditable as out-of-state service((~~: PROVIDED, That~~)).

(2) No out-of-state service credit shall be established or reestablished subsequent to July 1, 1964, except that a member who has been granted official leave of absence by his or her employer may, upon ((~~his~~)) return to public school service in this state, establish out-of-state membership service credit, within the limitations of this section and conditioned upon satisfactory proof and upon contributions to the annuity fund, for public school service rendered in another state or in another country.

(3) No member who establishes out-of-state service credit after July 1, 1947, shall at retirement for pension payment purposes be allowed credit for out-of-state service in excess of the number of years credit which he or she shall have earned in the public schools of the state of Washington.

Sec. 43. RCW 41.32.310 and 1974 ex.s. c 193 s 1 are each amended to read as follows:

(1) Any member desiring to establish credit for services previously rendered, must present proof and make the necessary payments on or before June 30 of the fifth school year of ((~~his~~)) membership. Payments covering all types of membership service credit must be made in a lump sum when due, or in annual installments. The first annual installment of at least twenty percent of the amount due must be paid before the above deadline date, and the final payment must be made by June 30th of the fourth school year following that in which the first installment was made. The amount of payment and the interest thereon, whether lump sum or installments, shall be made by a method and in an amount established by the ((~~board of trustees: PROVIDED, That~~)) department.

(2) A member who had the opportunity under chapter 41.32 RCW prior to July 1, 1969, to establish credit for active United States military service or credit for professional preparation and failed to do so shall be permitted to establish ((~~such~~)) additional credit within the provisions of RCW 41.32.260 and 41.32.330((~~: PROVIDED FURTHER, That~~)). A member who was not permitted to establish credit pursuant to section 2, chapter 32, Laws of 1973 2nd ex. sess., for Washington teaching service previously rendered, must present proof and make the necessary payment to establish such credit as membership service credit. Payment for such credit must be made in a lump sum on or before June 30, 1974. Any member desiring to establish credit under the provisions of this 1969 amendment must present proof and make the necessary payment before June 30, 1974; or, if not employed on the effective date of this amendment, before June 30th of the fifth school year upon returning to public school employment in this state.

Sec. 44. RCW 41.32.330 and 1969 ex.s. c 150 s 10 are each amended to read as follows:

The ((~~board of trustees~~)) department may allow credit for professional preparation to a member for attendance at institutions of higher learning, or for a scholarship or grant under an established foundation, subsequent to becoming a public school teacher; but not more than two years of such credit may be granted to any member.

Sec. 45. RCW 41.32.340 and 1969 ex.s. c 150 s 11 are each amended to read as follows:

Creditable service of a member at retirement shall consist of the membership service rendered ((~~by him~~)) for which credit has been allowed, and also, if ((~~he has~~)) a prior service certificate ((~~that~~)) is in full force and effect, the amount of the service certified on ((~~his~~)) the prior service certificate. No pension payments shall be made for service credits established or reestablished after July 1, 1955, if such credits entitle the member to retirement benefits from any other public state or local retirement system or fund. No pension payments shall be made for service credits established or reestablished after July 1, 1961, if such credits entitle the member to retirement benefits from a public federal retirement system or fund for services rendered under a civilian program: PROVIDED, That no pension payments shall be made for service credits established or reestablished after July 1, 1969, if credit for the same service is retained for benefits under any other retirement system or fund.

Sec. 46. RCW 41.32.350 and 1990 c 274 s 7 are each amended to read as follows:

((~~Member contributions shall be placed in the annuity fund, the disability reserve fund and the death benefit fund.~~)) A member may make an additional lump sum payment at date of retirement, not to exceed ((~~his~~)) the member's accumulated contributions, to purchase additional annuity. A contribution of six percent of earnable compensation is required from each member, except as provided under RCW 41.32.013.

Sec. 47. RCW 41.32.360 and 1963 ex.s. c 14 s 8 are each amended to read as follows:

For each year ((~~during which he is employed~~)) of employment, each member who is employed on a full time basis shall have transferred from his or her contributions ((~~such~~)) a sum ((~~as the board of trustees shall determine necessary~~)) determined by the director, in accordance with the recommendations of the state actuary ((~~appointed by the board of trustees~~)), to ((~~create~~)) maintain a fund sufficient, with regular interest, to provide temporary disability benefits for the members whose claims will be approved by the ((~~board of trustees~~)) department in accordance with the provisions of RCW 41.32.540. These transfers shall be placed in the disability reserve fund.

Sec. 48. RCW 41.32.366 and 1963 ex.s. c 14 s 10 are each amended to read as follows:

((~~Each fiscal year~~)) During ((~~which~~)) each fiscal year that a member is employed on a full time basis, ((~~there shall be transferred from his~~)) the department shall transfer from the member's contributions ((~~such~~)) a sum ((as)) that will, with regular interest, ((~~create~~)) maintain a fund sufficient according to actuarial rates adopted by the ((~~board of trustees,~~)) department to pay the death benefits as provided for in this chapter.

Sec. 49. RCW 41.32.390 and 1955 c 274 s 18 are each amended to read as follows:

At least twenty percent of the total amount due for prior service credit must be paid before an application for ((~~such~~)) credit may be presented to the ((~~board of trustees~~)) department for approval. The balance is not due until date of retirement and may be paid at that time without additional charge. Any unpaid installments at the time the member is retired for service or disability shall constitute a first, paramount, and prior lien against his or her retirement allowance.

Sec. 50. RCW 41.32.405 and 1984 c 236 s 2 are each amended to read as follows:

((An)) The teachers' retirement system income fund is hereby created for the purpose of crediting regular interest and ((~~such~~)) other income as may be derived from the deposits and investments of the various funds of the teachers' retirement fund. All accumulated contributions in the account of a terminated employee who is a member of the Washington teachers' retirement system, except as provided for in RCW 41.32.500 (1) through (3), 41.32.510, 41.32.810, and 41.32.815, shall be transferred to the teachers' retirement system income fund. If the former employee, the former employee's beneficiary, or the former employee's estate at a future date requests the unclaimed contributions or reinstatement of the rights previously provided thereunder, the former employee's contributions shall be transferred from the teachers' retirement system income fund to the teachers' retirement system annuity fund and the former employee's account reestablished with all the rights which would have been due the former employee, the former employee's beneficiary, or the former employee's estate as if in fact the transfer to the teachers' retirement system income fund had not occurred. Any moneys that may come into the possession of the Washington teachers' retirement system in the form of gifts or bequests which are not allocated to a specific fund, or any other moneys the disposition of which is not otherwise provided herein, shall be credited to the teachers' retirement system income fund. The moneys accumulated in the teachers' retirement system income fund shall be available for transfer, upon the director's authorization, to the various funds of the teachers' retirement fund; however, no interest may be credited to the teachers' retirement system pension fund: PROVIDED, That from such accumulated moneys the director shall have sole discretion to determine an amount thereof to be credited to the teachers' retirement system annuity fund which will thereupon be credited as regular interest to the individual members' accounts except that any accrued interest shall be credited at least annually to the individual members' accounts.

Sec. 51. RCW 41.32.420 and 1983 c 56 s 14 are each amended to read as follows:

On or before a date specified by the ((~~board of trustees~~)) department in each month every employer shall file a report with the ((~~board of trustees of the retirement system~~)) department on a form provided, stating the name of the employer and with respect to each employee who is a member or who is required to become a member of the Washington state teachers' retirement system: (1) The full name, (2) the earnable compensation paid, (3) the employee's contribution to the retirement system, and (4) ((~~such~~)) other information as the ((~~board~~)) department shall require((, and at the same time notify each new employee in writing with reference to the Washington state teachers' retirement system and that an application for prior service credit may be filed with the board of trustees thereof on a form furnished by the board)).

Sec. 52. RCW 41.32.430 and 1967 c 50 s 5 are each amended to read as follows:

Every officer authorized to issue salary warrants to teachers shall deduct from ((~~such~~)) the salary payments to any member of the Washington state teachers' retirement system plan I regularly employed an amount which will result in total deductions of ((~~five~~)) six percent of the amount of earnable compensation paid in any fiscal year. ((~~Such~~)) These deductions shall be transmitted and reported to the retirement system as directed by the ((~~board of trustees~~)) department.

Sec. 53. RCW 41.32.480 and 1974 ex.s. c 193 s 2 are each amended to read as follows:

(1) Any member who has left public school service after having completed thirty years of creditable service may retire upon the approval by the ((~~board of trustees~~)) department of an application for retirement filed on the prescribed form. Upon retirement ((~~such~~)) the member shall receive a retirement allowance consisting of an annuity which shall be the actuarial equivalent of his or her accumulated

contributions at his or her age of retirement and a pension as provided in RCW 41.32.497 ((~~as now or hereafter amended~~)). Effective July 1, 1967, anyone then receiving a retirement allowance or a survivor retirement allowance under this chapter, based on thirty-five years of creditable service, and who has established more than thirty-five years of service credit with the retirement system, shall thereafter receive a retirement allowance based on the total years of service credit established.

(2) Any member who has attained age sixty years, but who has completed less than thirty years of creditable service, upon leaving public school service, may retire upon the approval by the ((~~board of trustees~~)) department of an application for retirement filed on the prescribed form. Upon retirement ((~~such~~)) the member shall receive a retirement allowance consisting of an annuity which shall be the actuarial equivalent of his or her accumulated contributions at his or her age of retirement and a pension as provided in RCW 41.32.497 ((~~as now or hereafter amended~~)).

(3) Any member who has attained age fifty-five years and who has completed not less than twenty-five years of creditable service, upon leaving public school service, may retire upon the approval by the ((~~board of trustees~~)) department of an application for retirement filed on the prescribed form. Upon retirement ((~~such~~)) the member shall receive a retirement allowance which shall be the actuarial equivalent of his or her accumulated contributions at his or her age of retirement and a pension as provided in RCW 41.32.497 ((~~as now or hereafter amended: PROVIDED, That no~~)). An individual who has retired pursuant to this subsection, on or after July 1, 1969, shall not suffer an actuarial reduction in his or her retirement allowance, except as ((~~such~~)) the allowance may be actuarially reduced pursuant to the options contained in RCW 41.32.530((~~: PROVIDED FURTHER, That~~)). This 1974 amendment shall be retroactive to July 1, 1969.

Sec. 54. RCW 41.32.4945 and 1974 ex.s. c 199 s 6 are each amended to read as follows:

Notwithstanding any other provision of RCW 41.32.010, 41.32.260, 41.32.497, 41.32.498 and this section, when the salary of any member as a member of the legislature is increased beyond the amount provided for in Initiative Measure No. 282 then earnable compensation for the purposes of this chapter shall be based solely on the sum of (1) the compensation actually received from the salary for the job from which such leave of absence may have been taken and (2) such member's salary as a legislator during ((~~his~~)) the two highest compensated consecutive years.

Sec. 55. RCW 41.32.498 and 1990 c 249 s 4 are each amended to read as follows:

Any person who becomes a member subsequent to April 25, 1973 or who has made the election, provided by RCW 41.32.497, to receive the benefit provided by this section, shall receive a retirement allowance consisting of:

(1) An annuity which shall be the actuarial equivalent of his or her additional contributions on full salary as provided by chapter 274, Laws of 1955 and his or her lump sum payment in excess of the required contribution rate made at date of retirement, pursuant to RCW 41.32.350, if any; and

(2) A combined pension and annuity service retirement allowance which shall be equal to two percent of his or her average earnable compensation for his or her two highest compensated consecutive years of service times the total years of creditable service established with the retirement system, to a maximum of sixty percent of such average earnable compensation: PROVIDED, That any member may irrevocably elect, at time of retirement, to withdraw all or a part of his accumulated contributions and to receive, in lieu of the full retirement allowance provided by this subsection, a reduction in the standard two percent allowance, of the actuarially determined amount of monthly annuity which would have been purchased by said contributions: PROVIDED FURTHER, That no member may withdraw an amount of accumulated contributions which would lower his or her retirement allowance below the minimum allowance provided by RCW 41.32.497 as now or hereafter amended: AND PROVIDED FURTHER, That said reduced amount may be reduced even further pursuant to the options provided in RCW 41.32.530;

(3) Notwithstanding the provisions of subsections (1) and (2) of this section, the retirement allowance payable for service of a member who was state superintendent of public instruction on January 1, 1973 shall be equal to three percent of the average earnable compensation of his two highest consecutive years of service for each year of such service.

Sec. 56. RCW 41.32.499 and 1973 2nd ex.s. c 32 s 1 are each amended to read as follows:

(1) "Index" for the purposes of this section shall mean, for any calendar year, that year's annual average consumer price index for urban wage earners and clerical workers, all items (1957-1959 equal one hundred)‑-compiled by the Bureau of Labor Statistics, United States Department of Labor;

(2) "Cost-of-living factor" for the purposes of this section for any year shall mean the ratio of the index for the previous year to the index for the year preceding the initial date of payment of the retirement allowance, except that, in no event, shall the cost-of-living factor, for any year subsequent to 1971, be

(a) less than 1.000;

(b) more than one hundred three percent or less than ninety-seven percent of the previous year's cost-of-living factor; or

(3) The "initial date of payment" for the purposes of adjusting the annuity portion of a retirement allowance for the purposes of this section shall mean the date of retirement of a member.

(4) The "initial date of payment" for the purposes of adjusting the pension portion of a retirement allowance for the purposes of this section shall mean the date of retirement of a member or July 1, 1972, whichever is later: PROVIDED, That this 1973 amendment to this subsection shall be retroactive to July 1, 1973.

(5) Each service retirement allowance payable from July 1, 1973, until any subsequent adjustment pursuant to subsection (6) of this section shall be adjusted so as to equal the product of the cost-of-living factor for 1973 and the amount of ((~~said~~)) the retirement allowance on the initial date of payment.

(6) Each service retirement allowance payable from July 1st of any year after 1973 until any subsequent adjustment pursuant to this subsection shall be adjusted so as to equal the product of the cost-of-living factor for ((~~such~~)) the year and the amount of ((~~said~~)) the retirement allowance on the initial date of payment: PROVIDED, That the ((~~board~~)) director finds, at ((~~its~~)) his or her sole discretion, that the cost of ((~~such~~)) the adjustments shall have been met by the excess of the growth in the assets of the system over that required for meeting the actuarial liabilities of the system at that time.

Sec. 57. RCW 41.32.500 and 1986 c 317 s 2 are each amended to read as follows:

(1) Membership in the retirement system is terminated when a member retires for service or disability, dies, withdraws ((~~his~~)) the accumulated contributions or does not establish service credit with the retirement system for five consecutive years; however, a member may retain membership in the teachers' retirement system by leaving ((~~his~~)) the accumulated contributions in the teachers' retirement fund under one of the following conditions:

(a) If he or she is eligible for retirement;

(b) If he or she is a member of another public retirement system in the state of Washington by reason of change in employment and has arranged to have membership extended during the period of such employment;

(c) If he or she is not eligible for retirement but has established five or more years of Washington membership service credit.

The prior service certificate becomes void when a member dies, withdraws ((~~his~~)) the accumulated contributions or does not establish service credit with the retirement system for five consecutive years, and any prior administrative interpretation of the board of trustees, consistent with this section, is hereby ratified, affirmed and approved.

(2) Any member, except an elected official, who reentered service and who failed to restore withdrawn contributions, shall now have from April 4, 1986, through June 30, 1987, to restore the contributions, with interest as determined by the director.

(3) Within the ninety days following the employee's resumption of employment, the employer shall notify the department of the resumption and the department shall then return to the employer a statement of the potential service credit to be restored, the amount of funds required for restoration, and the date when the restoration must be accomplished. The employee shall be given a copy of the statement and shall sign a copy of the statement which signed copy shall be placed in the employee's personnel file.

Sec. 58. RCW 41.32.520 and 1990 c 249 s 15 are each amended to read as follows:

(1) Upon receipt of proper proofs of death of any member before retirement or before the first installment of his or her retirement allowance shall become due his or her accumulated contributions and/or other benefits payable upon his or her death shall be paid to his or her estate or to such persons as he or she shall have nominated by written designation duly executed and filed with the ((~~board of trustees~~)) department. If a member fails to file a new beneficiary designation subsequent to marriage, divorce, or reestablishment of membership following termination by withdrawal, lapsation, or retirement, payment of his or her accumulated contributions and/or other benefits upon death before retirement shall be made to the surviving spouse, if any; otherwise, to his or her estate. If a member had established ten or more years of Washington membership service credit or was eligible for retirement, the beneficiary or the surviving spouse if otherwise eligible may elect, in lieu of a cash refund of the member's accumulated contributions, the following survivor benefit plan:

(a) A widow or widower, without a child or children under eighteen years of age, may elect a monthly payment of fifty dollars to become effective at age fifty, provided the member had fifteen or more years of Washington membership service credit.

(b) The beneficiary, if a surviving spouse or a dependent (as that term is used in computing the dependent exemption for federal internal revenue purposes) may elect to receive a joint and one hundred percent retirement allowance under RCW 41.32.530.

(i) In the case of a dependent child the allowance shall continue until attainment of majority or so long as the ((~~board~~)) department judges that the circumstances which created his or her dependent status continue to exist. In any case, if at the time dependent status ceases, an amount equal to the amount of accumulated contributions of the deceased member has not been paid to the beneficiary, the remainder shall then be paid in a lump sum to the beneficiary.

(ii) If at the time of death, the member was not then qualified for a service retirement allowance, the benefit shall be based upon the actuarial equivalent of the sum necessary to pay the accrued regular retirement allowance commencing when the deceased member would have first qualified for a service retirement allowance.

(2) If no qualified beneficiary survives a member, at his or her death his or her accumulated contributions shall be paid to his or her estate, or his or her dependents may qualify for survivor benefits under benefit plan (1)(b) in lieu of a cash refund of the members accumulated contributions in the following order: Widow or widower, guardian of a dependent child or children under age eighteen, or dependent parent or parents.

(3) Under survivors' benefit plan (1)(a) the ((~~board of trustees~~)) department shall transfer to the survivors' benefit fund the accumulated contributions of the deceased member together with an amount from the pension fund determined by actuarial tables to be sufficient to fully fund the liability. Benefits shall be paid from the survivors' benefit fund monthly and terminated at the marriage of the beneficiary.

Sec. 59. RCW 41.32.522 and 1974 ex.s. c 193 s 4 are each amended to read as follows:

(1) A death benefit of six hundred dollars shall be paid from the death benefit fund to a member's estate or to the persons the member nominates by written designation duly executed and filed with the department or to the persons as may otherwise qualify as the beneficiary pursuant to RCW 41.32.520 upon receipt of proper proof of death of ((~~a member who~~)) the member if he or she:

(a) Was employed on a full time basis and who contributed to the death benefit fund during the fiscal year in which his or her death occurs((~~, or who~~));

(b) Was under contract for full time employment in a Washington public school for the fiscal year immediately following the year in which such contribution to the death fund was made((~~, or who~~));

(c) Submits an application for a retirement allowance to be approved ((~~at the next regular meeting of the board of trustees~~)) by the department immediately following termination of his or her full-time Washington public school service and who dies before the first installment of his or her retirement allowance becomes due((~~, or who~~));

(d) Is receiving or is entitled to receive temporary disability payments((~~, or who~~)); or

(e) Upon becoming eligible for a disability retirement allowance submits an application for ((~~such~~)) an allowance to be approved ((~~at the next regular meeting of the board of trustees~~)) by the department immediately following the date of his or her eligibility for a disability retirement allowance and dies before the first installment of such allowance becomes due((, a death benefit of six hundred dollars shall be paid from the death benefit fund to his estate or to such persons as he shall have nominated by written designation duly executed and filed with the board of trustees or to such persons as may otherwise qualify as the beneficiary pursuant to RCW 41.32.520, as now or hereafter amended: PROVIDED, That the)).

(2) In order to receive a death benefit under this section a deceased member ((~~had~~)):

(a) Must have established at least one year of credit with the retirement system for full time Washington membership service ((~~and that his~~)). A member's contribution to the death benefit fund for a given fiscal year ((~~shall qualify him~~)) qualifies the member for the death benefit in the event his or her death occurs before the beginning of the ensuing school year((~~: AND PROVIDED FURTHER, That a deceased member~~));

(b) Who was not employed full time in Washington public school service during the fiscal year immediately preceding the year of his or her death ((~~shall~~)) must have been employed full time in Washington public school service for at least fifty consecutive days during the fiscal year of his or her death.

Sec. 60. RCW 41.32.523 and 1974 ex.s. c 193 s 6 are each amended to read as follows:

Upon receipt of proper proof of death of a member who does not qualify for the death benefit of six hundred dollars under RCW 41.32.522 ((~~as now or hereafter amended~~)), or a former member who was retired for age, service, or disability, a death benefit of four hundred dollars shall be paid from the death benefit fund to ((~~his~~)) the member's estate or to ((~~such~~)) the persons as he or she shall have nominated by written designation duly executed and filed with the ((~~board of trustees~~)) department or to ((~~such~~)) the persons as may otherwise qualify as the beneficiary pursuant to RCW 41.32.520((~~, as now or hereafter amended~~)): PROVIDED, That the member or the retired former member had established not less than ten years of credit with the retirement system for full time Washington membership service.

Sec. 61. RCW 41.32.540 and 1974 ex.s. c 193 s 7 are each amended to read as follows:

Upon application of a member in service or of his or her employer or of his or her legal guardian or of the legal representative of a deceased member who was eligible to apply for a temporary disability allowance based on ((~~his~~)) the final illness a member shall be granted a temporary disability allowance by the ((~~board of trustees~~)) department if the medical director, after a medical examination of ((~~such~~)) the member, ((~~shall certify~~)) certifies that ((~~such~~)) the member is mentally or physically incapacitated for the further performance of duty. Any member receiving a temporary disability allowance on July 1, 1964 or who qualifies for a temporary disability allowance effective on or after July 1, 1964 shall receive a temporary disability allowance of one hundred eighty dollars per month payable from the disability reserve fund for a period not to exceed two years, but no payments shall be made for a disability period of less than sixty days: PROVIDED, That a member who is not employed full time in Washington public school service for consecutive fiscal years shall have been employed for at least fifty consecutive days during the fiscal year in which he or she returns to full time Washington public school service before he or she may qualify for temporary disability benefits: PROVIDED FURTHER, That no temporary disability benefits shall be paid on the basis of an application received more than four calendar years after a member became eligible to apply for such benefits.

Sec. 62. RCW 41.32.550 and 1970 ex.s. c 35 s 4 are each amended to read as follows:

(1) Should the ((~~board~~)) department determine from the report of the medical director that a member in full time service has become permanently disabled for the performance of his or her duties or at any time while a member is receiving temporary disability benefits that a member's disability will be permanent, a member shall have the option of then receiving ((~~(1)~~)) (a) all of ((~~his~~)) the accumulated contributions in a lump sum payment and canceling his or her membership, or ((~~(2)~~)) (b) of accepting a retirement allowance based on service or age, if eligible under RCW 41.32.480, or ((~~(3)~~)) (c) if ((he)) the member had five or more years of Washington membership service credit established with the retirement system, a retirement allowance because of disability((~~: PROVIDED, That~~)).

(2) Any member applying for a retirement allowance who is eligible for benefits on the basis of service or age shall receive a retirement allowance based on the provision of law governing retirement for service or age. If the member qualifies to receive a retirement allowance because of disability he or she shall be paid the maximum annuity which shall be the actuarial equivalent of ((~~his~~)) the accumulated contributions at his or her age of retirement and a pension equal to the service pension to which he or she would be entitled under RCW 41.32.497 ((~~as now or hereafter amended~~)). If the member dies before he or she has received in annuity payments the present value of ((~~his~~)) the accumulated contributions at the time of ((~~his~~)) retirement, the unpaid balance shall be paid to ((~~his~~)) the estate or to ((~~such~~)) the persons ((~~as he shall have~~)) nominated by written designation executed and filed with the ((~~board of trustees~~)) department.

(3) A member retired for disability may be required at any time to submit to reexamination. If medical findings reveal that the individual is no longer disabled for the performance of public school service, the retirement allowance granted because of disability may be terminated by action of the ((~~board of trustees~~)) department or upon written request of the member. In case of ((~~such~~)) termination, the individual shall be restored to full membership in the retirement system.

Sec. 63. RCW 41.32.590 and 1989 c 360 s 25 are each amended to read as follows:

(1) Subject to subsections (2) and (3) of this section, the right of a person to a pension, an annuity, a retirement allowance, or disability allowance, to the return of contributions, any optional benefit or death benefit, any other right accrued or accruing to any person under the provisions of this chapter and the moneys in the various funds created by this chapter shall be unassignable, and are hereby exempt from any state, county, municipal or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever.

(2) This section shall not be deemed to prohibit a beneficiary of a retirement allowance who is eligible:

(a) Under RCW 41.05.080 from authorizing monthly deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of public employees of the state of Washington or its political subdivisions;

(b) Under a group health care benefit plan approved pursuant to RCW 28A.400.350 or 41.05.065 from authorizing monthly deductions therefrom, of the amount or amounts of subscription payments, premiums, or contributions to any person, firm, or corporation furnishing or providing medical, surgical, and hospital care or other health care insurance; or

(c) Under ((~~the Washington state teachers' retirement~~)) this system from authorizing monthly deductions therefrom for payment of dues and other membership fees to any retirement association composed of retired teachers and/or public employees pursuant to a written agreement between the director and the retirement association.

Deductions under (a) and (b) of this subsection shall be made in accordance with rules ((~~and regulations~~)) that may be ((~~promulgated~~)) adopted by the director ((~~of retirement systems~~)).

Sec. 64. RCW 41.32.610 and 1947 c 80 s 61 are each amended to read as follows:

Any claimant feeling aggrieved by the action of the ((~~board~~)) department may take an appeal to the superior court of Thurston county within ten days from the day he or she receives written notice of the ((~~board's~~)) department's action by filing with the ((~~secretary-manager of the system~~)) director a written notice of appeal and giving bond to the retirement system in the sum of two hundred and fifty dollars conditioned to pay all costs which may be adjudged against the applicant in the superior court. Sureties on the bond must be such as are approved by the court.

Sec. 65. RCW 41.32.620 and 1947 c 80 s 62 are each amended to read as follows:

Any five members feeling aggrieved by any action of the ((~~board~~)) department may take an appeal to the superior court of Thurston county within ten days from the date of such action by filing ((~~with the secretary-manager of the system~~)) a written notice of appeal with the director and giving bond to the retirement system in the sum of two hundred and fifty dollars conditioned to pay all costs which may be adjudged against appellants in the superior court, with sureties on the bond approved by the court. In case the appeal involves a claim, service of a copy of the notice of appeal on the claimant is a necessary step in perfecting the appeal.

Sec. 66. RCW 41.32.630 and 1947 c 80 s 63 are each amended to read as follows:

If an appeal involves a claimant, the ((~~secretary-manager of the retirement system shall forthwith~~)) director shall certify to the clerk of the superior court for Thurston county all matter filed with respect to the claim, together with a transcript of the record of the board upon the claim, together with the notice of appeal and appeal bond.

Sec. 67. RCW 41.32.780 and 1990 c 274 s 15 are each amended to read as follows:

((~~(1) Except as provided in subsection (2) of this section,~~)) All teachers who become employed by an employer in an eligible position on or after October 1, 1977, shall be members of the retirement system and shall be governed by the provisions of RCW 41.32.755 through 41.32.825.

(((2) No teacher who commences a period of employment on or after July 1, 1979, as a participant under the federal comprehensive employment and training act of 1973 (CETA) (29 U.S.C. Sec. 801 et seq.), as amended, shall be a member of this system during the period of such participation unless, at the commencement of the participation under CETA, the teacher either:

~~(a) Has at least five years of service and the full amount of the employee's contributions for such service remains on deposit in the system; or~~

~~(b) Has previously been retired from this system.~~))

Sec. 68. RCW 41.32.790 and 1990 c 249 s 20 are each amended to read as follows:

(1) A member of the retirement system who becomes totally incapacitated for continued employment by an employer as determined by the department upon recommendation of the ((~~retirement board~~)) department shall be eligible to receive an allowance under the provisions of RCW 41.32.755 through 41.32.825. ((~~Such~~)) The member shall receive a monthly disability allowance computed as provided for in RCW 41.32.760 and shall have ((~~such~~)) the allowance actuarially reduced to reflect the difference in the number of years between age at disability and the attainment of age sixty-five.

Any member who receives an allowance under the provisions of this section shall be subject to ((~~such~~)) comprehensive medical examinations as required by the department. If ((~~such~~)) medical examinations reveal that ((~~such~~)) a member has recovered from the incapacitating disability and the member is offered reemployment by an employer at a comparable compensation, ((~~such~~)) the member shall cease to be eligible for ((~~such~~)) the allowance.

(2) (a) If the recipient of a monthly retirement allowance under this section dies before the total of the retirement allowance paid to the recipient equals the amount of the accumulated contributions at the date of retirement, then the balance shall be paid to ((~~such~~)) the person or persons having an insurable interest in his or her life as the recipient has nominated by written designation duly executed and filed with the director, or, if there is no ((~~such~~)) designated person or persons still living at the time of the recipient's death, then to the surviving spouse, or, if there is neither ((~~such~~)) a designated person or persons still living at the time of his or her death nor a surviving spouse, then to his or her legal representative.

(b) If a recipient of a monthly retirement allowance under this section died before April 27, 1989, and before the total of the retirement allowance paid to the recipient equaled the amount of his or her accumulated contributions at the date of retirement, then the department shall pay the balance of the accumulated contributions to the member's surviving spouse or, if there is no surviving spouse, then in equal shares to the member's children. If there is no surviving spouse or children, the department shall retain the contributions.

Sec. 69. RCW 41.40.005 and 1989 c 273 s 20 and 1989 c 272 s 7 are each reenacted and amended to read as follows:

(((1) "Public employees' retirement system plan I" or "plan I" means the benefits and funding provisions covering persons who first became members of the public employees' retirement system prior to October 1, 1977.)) The provisions of the following sections of this chapter shall apply ((~~only~~)) to members of plan I and plan II: ((RCW 41.40.150, 41.40.160, 41.40.170, 41.40.180, 41.40.185, 41.40.190, 41.40.193, 41.40.195, 41.40.200, 41.40.210, 41.40.220, 41.40.230, 41.40.235, 41.40.250, 41.40.260, 41.40.270, 41.40.280, 41.40.300, 41.40.310, 41.40.320, 41.40.325, and 41.40.330.

(2) "Public employees' retirement system plan II" or "plan II" means the benefits and funding provisions covering persons who first became members of the public employees' retirement system on or after October 1, 1977. The provisions of RCW 41.40.600 through 41.40.740 apply only to members of plan II)) RCW 41.40.010; 41.40.020; 41.40.123; 41.40.130; 41.40.165; 41.40.223; 41.40.340; 41.40.361; 41.40.370; 41.40.380; 41.40.400; 41.40.403; 41.40.410; 41.40.412; 41.40.414; 41.40.420; 41.40.440; 41.40.450; 41.40.530; 41.40.540; 41.40.542; 41.40.800; and 41.40.810.

Sec. 70. RCW 41.40.010 and 1990 c 274 s 3 are each amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1) "Retirement system" means the public employees' retirement system provided for in this chapter.

(2) ((~~"Retirement board" means the board provided for in this chapter and chapter 41.26 RCW~~)) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(3) "State treasurer" means the treasurer of the state of Washington.

(4) (a) "Employer" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means every branch, department, agency, commission, board, and office of the state, any political subdivision or association of political subdivisions of the state admitted into the retirement system, and legal entities authorized by RCW 35.63.070 and 36.70.060 or chapter 39.34 RCW as now or hereafter amended; and the term shall also include any labor guild, association, or organization the membership of a local lodge or division of which is comprised of at least forty percent employees of an employer (other than such labor guild, association, or organization) within this chapter. The term may also include any city of the first class that has its own retirement system.

(b) "Employer" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means every branch, department, agency, commission, board, and office of the state, and any political subdivision and municipal corporation of the state admitted into the retirement system, including public agencies created pursuant to RCW 35.63.070, 36.70.060, and 39.34.030.

(5) "Member" means any employee included in the membership of the retirement system, as provided for in RCW 41.40.120.

(6) "Original member" of this retirement system means:

(a) Any person who became a member of the system prior to April 1, 1949;

(b) Any person who becomes a member through the admission of an employer into the retirement system on and after April 1, 1949, and prior to April 1, 1951;

(c) Any person who first becomes a member by securing employment with an employer prior to April 1, 1951, provided the member has rendered at least one or more years of service to any employer prior to October 1, 1947;

(d) Any person who first becomes a member through the admission of an employer into the retirement system on or after April 1, 1951, provided, such person has been in the regular employ of the employer for at least six months of the twelve-month period preceding the said admission date;

(e) Any member who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement becomes entitled to be credited with ten years or more of membership service except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member;

(f) Any member who has been a contributor under the system for two or more years and who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement has rendered five or more years of service for the state or any political subdivision prior to the time of the admission of the employer into the system; except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member.

(7) "New member" means a person who becomes a member on or after April 1, 1949, except as otherwise provided in this section.

(8) (a) "Compensation earnable" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means salaries or wages earned during a payroll period for personal services and where the compensation is not all paid in money, maintenance compensation shall be included upon the basis of the schedules established by the member's employer: PROVIDED, That retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable and the individual shall receive the equivalent service credit: PROVIDED FURTHER, That if a leave of absence is taken by an individual for the purpose of serving in the state legislature, the salary which would have been received for the position from which the leave of absence was taken, shall be considered as compensation earnable if the employee's contribution is paid by the employee and the employer's contribution is paid by the employer or employee.

(b) "Compensation earnable" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, and shall include 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 nonmoney maintenance compensation and lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay: PROVIDED, That retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable to the extent provided above, and the individual shall receive the equivalent service credit: PROVIDED FURTHER, That in any year in which a member serves in the legislature, the member shall have the option of having such member's compensation earnable be the greater of:

(i) the compensation earnable the member would have received had such member not served in the legislature; or

(ii) such member's actual compensation earnable received for nonlegislative public employment and legislative service combined. Any additional contributions to the retirement system required because compensation earnable under subparagraph (i) of this subsection is greater than compensation earnable under subparagraph (ii) of this subsection shall be paid by the member for both member and employer contributions.

(9) (a) "Service" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means periods of employment rendered to any employer for which compensation is paid, and includes time spent in office as an elected or appointed official of an employer. Full time work for seventy hours or more in any given calendar month shall constitute one month of service except as provided in RCW 41.40.450. Only months of service shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter. Years of service shall be determined by dividing the total number of months of service by twelve. Any fraction of a year of service as so determined shall be taken into account in the computation of such retirement allowance or benefits.

Service by a state employee officially assigned by the state on a temporary basis to assist another public agency, shall be considered as service as a state employee: PROVIDED, That service to any other public agency shall not be considered service as a state employee if such service has been used to establish benefits in any other public retirement system: PROVIDED FURTHER, That an individual shall receive no more than a total of twelve months of service credit during any calendar year: PROVIDED FURTHER, That where an individual is employed by two or more employers the individual shall only receive one months service credit during any calendar month in which multiple service for seventy or more hours is rendered.

(b) "Service" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means periods of employment by a member for one or more employers for which compensation earnable is earned for ninety or more hours per calendar month except as provided in RCW 41.40.450.

Service in any state elective position shall be deemed to be full time service, except that persons serving in state elective positions who are members of the teachers' retirement system or law enforcement officers' and fire fighters' retirement system at the time of election or appointment to such position may elect to continue membership in the teachers' retirement system or law enforcement officers' and fire fighters' retirement system.

A member shall receive a total of not more than twelve months of service for such calendar year: PROVIDED, That when an individual is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service for ninety or more hours is rendered.

(10) "Prior service" means all service of an original member rendered to any employer prior to October 1, 1947.

(11) "Membership service" means:

(a) All service rendered, as a member, after October 1, 1947;

(b) All service after October 1, 1947, to any employer prior to the time of its admission into the retirement system: PROVIDED, That an amount equal to the employer and employee contributions which would have been paid to the retirement system on account of such service shall have been paid to the retirement system with interest (as computed by the department) on the employee's portion prior to retirement of such person, by the employee or his employer, except as qualified by RCW 41.40.120: PROVIDED FURTHER, That employer contributions plus employee contributions with interest submitted by the employee under this subsection shall be placed in the employee's individual account in the employees' savings fund and be treated as any other contribution made by the employee, with the exception that the contributions submitted by the employee in payment of the employer's obligation, together with the interest the director may apply to the employer's contribution, shall be excluded from the calculation of the member's annuity in the event the member selects a benefit with an annuity option;

(c) Service not to exceed six consecutive months of probationary service rendered after April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of the total amount of the employer's contribution to the retirement fund which would have been required under the law in effect when such probationary service was rendered if the member had been a member during such period, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member;

(d) Service not to exceed six consecutive months of probationary service, rendered after October 1, 1947, and before April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of five percent of such member's salary during said period of probationary service, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member.

(12) (a) "Beneficiary" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means any person in receipt of a retirement allowance, pension or other benefit provided by this chapter.

(13) "Regular interest" means such rate as the director may determine.

(14) "Accumulated contributions" means the sum of all contributions standing to the credit of a member in the member's individual account together with the regular interest thereon.

(15) (a) "Average final compensation" for ((~~persons who establish membership in the retirement system on or before September 30, 1977~~)) plan I members, means the annual average of the greatest compensation earnable by a member during any consecutive two year period of service for which service credit is allowed; or if the member has less than two years of service then the annual average compensation earnable during the total years of service for which service credit is allowed.

(b) "Average final compensation" for ((~~persons who establish membership in the retirement system on or after October 1, 1977~~)) plan II members, means the member's average compensation earnable of the highest consecutive sixty months of service prior to such member's retirement, termination, or death. Periods constituting authorized leaves of absence may not be used in the calculation of average final compensation.

(16) "Final compensation" means the annual rate of compensation earnable by a member at the time of termination of employment.

(17) "Annuity" means payments for life derived from accumulated contributions of a member. All annuities shall be paid in monthly installments.

(18) "Pension" means payments for life derived from contributions made by the employer. All pensions shall be paid in monthly installments.

(19) "Retirement allowance" means the sum of the annuity and the pension.

(20) "Employee" means any person who may become eligible for membership under this chapter, as set forth in RCW 41.40.120.

(21) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of such mortality and other tables as may be adopted by the director.

(22) "Retirement" means withdrawal from active service with a retirement allowance as provided by this chapter.

(23) "Eligible position" means:

(a) Any position which normally requires five or more months of service a year for which regular compensation is paid to the occupant thereof. For purposes of this chapter an employer shall not define "position" in such a manner that an employee's work for that employer is divided into more than one position;

(b) Any position occupied by an elected official or person appointed directly by the governor for which compensation is paid.

(24) "Ineligible position" means any position which does not conform with the requirements set forth in subdivision (23).

(25) "Leave of absence" means the period of time a member is authorized by the employer to be absent from service without being separated from membership.

(26) "Totally incapacitated for duty" means total inability to perform the duties of a member's employment or office or any other work for which the member is qualified by training or experience.

(27) "Retiree" means any member in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by such member.

(28) ((~~"Department" means the department of retirement systems created in chapter 41.50 RCW.~~

~~(29)~~)) "Director" means the director of the department.

((~~(30)~~)) (29) "State elective position" means any position held by any person elected or appointed to state-wide office or elected or appointed as a member of the legislature.

((~~(31)~~)) (30) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

(31) "Plan I" means the teachers' retirement system, plan I providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977.

(32) "Plan II" means the teachers' retirement system, plan II providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977.

Sec. 71. RCW 41.40.020 and 1969 c 128 s 2 are each amended to read as follows:

A state employees' retirement system is hereby created for the employees of the state of Washington and its political subdivisions. The administration and management of the retirement system, the responsibility for making effective the provisions of this chapter, and the authority to make all rules and regulations necessary therefor are hereby vested in ((~~a retirement board~~)) the department. All such rules and regulations shall be governed by the provisions of chapter 34.05 RCW, as now or hereafter amended. The retirement system herein provided for shall be known as the Washington Public Employees' Retirement System.

Sec. 72. RCW 41.40.080 and 1989 c 273 s 21 are each amended to read as follows:

(1) ((All bonds or other obligations purchased according to RCW 43.84.150 shall be forthwith placed in the hands of the state treasurer who is hereby designated as custodian thereof, and it shall be his duty to collect the principal thereof and the interest thereon as the same becomes due and payable, and place the same when so collected into the retirement system's funds.

(2) The state treasurer shall be the custodian of all other funds of the retirement system and all disbursements therefrom shall be paid by the state treasurer upon vouchers duly authorized by the department and bearing the signature of the duly authorized officer of the department.

(3) The state treasurer is hereby authorized and directed to deposit any portion of the funds of the retirement system not needed for immediate use in the same manner and subject to all the provisions of law with respect to the deposit of state funds by such treasurer, and all interest earned by such portion of the retirement system's funds as may be deposited by the state treasurer in pursuance of authority herewith given shall be collected by him and placed to the credit of the retirement fund or the department of retirement systems expense fund.

~~(4)~~)) There is hereby established in the state treasury ((~~three separate funds, namely:~~

(a) The public employees' retirement system plan I fund and the public employees' plan II fund, into which shall be paid all moneys received by the department and from which shall be paid all refunds, adjustments, retirement allowances and other benefits provided for herein. The plan I fund shall consist of all moneys paid to finance the benefits, provided to members of plan I, and the plan II fund shall consist of all moneys paid to finance the benefits provided to members of plan II. All contributions by members to the department of retirement systems expense fund as provided in RCW 41.40.330 and contributions by employers for the expense of operating the retirement system as provided for herein shall be transferred by the state treasurer from the retirement system fund to the department of retirement systems expense fund upon authorization of the department;

~~(b)~~)) the department of retirement systems expense fund, from which shall be paid the expenses of the administration of the retirement systems established in chapters 41.26, 41.32, and 41.40 RCW.

((~~(5)~~)) (2) In order to reimburse the department of retirement systems expense fund on an equitable basis the department shall((~~, after crediting the estimated amount to be collected as employees' contributions,~~)) ascertain and report to each employer, as defined in RCW 41.26.030, 41.32.010, or 41.40.010, the sum necessary to defray its proportional share of the entire expense of the administration of ((~~this chapter~~)) the retirement system that the employer participates in during the ensuing biennium or fiscal year whichever may be required. Such sum is to be computed in an amount directly proportional to the estimated entire expense of the said administration as the ratio of monthly salaries of the employer's members bears to the total salaries of all members in the entire system. It shall then be the duty of all such employers to include in their budgets or otherwise provide the amounts so required.

((~~(6)~~)) (3) The department shall compute and bill each employer, as defined in RCW 41.26.030, 41.32.010, or 41.40.010, at the end of each month for the amount due for that month to the department of retirement systems expense fund and the same shall be paid as are its other obligations. Such computation as to each such employer shall be made on a percentage rate of salary established by the department: PROVIDED, That the department may at its discretion establish a system of billing based upon calendar year quarters in which event the said billing shall be at the end of each such quarter.

((~~(7)~~)) (4) For the purpose of providing amounts to be used to defray the cost of such administration, the department shall ascertain at the beginning of each biennium and request from the legislature an appropriation from the department of retirement systems expense fund sufficient to cover estimated expenses for the said biennium.

Sec. 73. RCW 41.40.083 and 1984 c 184 s 7 are each amended to read as follows:

The director is authorized to pay from the interest earnings of the trust funds of the public employees' retirement system, the teachers' retirement system, the Washington state patrol retirement system, the Washington judicial retirement system, the judges' retirement system, or the law enforcement officers' and fire fighters' retirement system lawful obligations of the appropriate system for legal expenses and medical expenses which expenses are primarily incurred for the purpose of protecting the appropriate trust fund or are incurred in compliance with statutes governing such funds.

The term "legal expense" includes, but is not limited to, legal services provided through the legal services revolving fund, fees for expert witnesses, travel expenses, fees for court reporters, cost of transcript preparation, and reproduction of documents.

The term "medical costs" includes, but is not limited to, expenses

for the medical examination or reexamination of members or retirees, the costs of preparation of medical reports, and fees charged by medical professionals for attendance at discovery proceedings or hearings.

Sec. 74. RCW 41.40.100 and 1982 1st ex.s. c 52 s 18 are each amended to read as follows:

For the purpose of the internal accounting record of the public employees' retirement system and not the segregation of moneys on deposit with the state treasurer there are hereby created the employees' savings fund, the benefit account fund, the public employees' income fund and such other funds as may from time to time be required.

(1) The employees' savings fund shall be the fund in which shall be accumulated the contributions from the compensation of public employees' retirement system members. The director shall provide for the maintenance of an individual account for each member of the public employees' retirement system showing the amount of the member's contributions together with interest accumulations thereon. The contributions of a member returned to the former employee upon the individual's withdrawal from service, or paid in event of the employee's or former employee's death, as provided in ((~~this~~)) chapter 41.40 RCW, shall be paid from the employees' savings fund. The accumulated contributions of a member, upon the commencement of the individual's retirement, shall be transferred from the employees' savings fund to the benefit account fund.

(2) The benefit account fund shall be the fund in which shall be accumulated the reserves for the payment of all public employees' retirement system retirement allowances and death benefits, if any, in respect of any beneficiary. The amounts contributed by all public employees' retirement system employers to provide pension benefits shall be credited to the benefit account fund. The benefit account fund shall be the fund from which shall be paid all public employees' retirement system retirement allowances, or benefits in lieu thereof because of which reserves have been transferred from the employees' savings fund to the benefit account fund. At the time a recipient of a retirement allowance again becomes a member ((~~there shall be transferred~~)) of the public employees' retirement system, the department shall transfer from the benefit account fund to the employees' savings fund and ((~~credited~~)) credit to the individual account of such a member a sum ((~~that shall be~~)) equal to the excess, if any, of the individual's account at the date of the member's retirement over any service retirement allowance received since that date.

(3) ((An)) A public employees' income fund is hereby created for the purpose of crediting interest on the amounts in the various other public employees' retirement system funds with the exception of the department of retirement systems expense fund, and to provide a contingent fund out of which special requirements of any of the other such funds may be covered. The director shall determine when a distribution of interest and other earnings of the public employees' retirement system shall take place. The amounts to be credited and the methods for distribution to each of the funds enumerated in subsections (1) and (2) of this section and for special requirements previously mentioned in this subsection shall be at the director's discretion.

All accumulated contributions standing to the account of a terminated member of the public employees' retirement system except as provided in RCW 41.40.150 ((~~(3) and (5)~~)) (4), 41.40.170, 41.40.710, and 41.40.720 shall be transferred from the employees' savings fund to the public employees' income fund. If the former employee, the former employee's beneficiary, or the former employee's estate at a future date requests the unclaimed contributions or reinstatement of the rights previously provided thereunder, the former employee's contributions shall be transferred from the public employees' income fund to the savings fund and the former employee's account reestablished with all the rights which would have been due the former employee, the former employee's beneficiary, or the former employee's estate as if in fact the transfer to the public employees' income fund had not occurred. All income, interest, and dividends derived from the deposits and investments authorized by ((~~this~~)) chapter 41.40 RCW shall be paid into the public employees' income fund with the exception of interest derived from sums deposited in the department of retirement systems expense fund. The director on behalf of the retirement system is hereby authorized to accept gifts and bequests. Any funds that may come into the possession of the public employees' retirement system in such manner, or any funds which may be transferred from the employees' savings fund by reason of lack of claimant, or because of a surplus in any fund created by ((~~this~~)) chapter 41.40 RCW, or any other moneys the disposition of which is not otherwise provided for, shall be credited to the public employees' income fund.

Sec. 75. RCW 41.40.110 and 1947 c 274 s 12 are each amended to read as follows:

The state treasurer shall furnish annually to the ((~~retirement board~~)) department a statement of the amount of the funds in ((~~his~~)) the treasurer's custody belonging to the public employees' retirement system. Copies of this annual report shall be available to public employees' retirement system members upon request. The records of the ((~~retirement board~~)) department shall be open to public inspection. Any member of the public employees' retirement system shall be furnished with a statement of the amount to the credit of his or her individual account in the employees' savings fund upon his or her written request, provided that the ((~~retirement board~~)) department shall not be required to answer more than one such request of any member in any one year.

Sec. 76. RCW 41.40.130 and 1949 c 240 s 8 are each amended to read as follows:

Within thirty days after his or her employment or his or her acceptance into membership ((~~by action of the retirement board~~)) each employee((,)) or appointive or elective official shall submit to the ((~~retirement board~~)) department a statement of his or her name, sex, title, compensation, duties, date of birth, and length of service as an employee or appointive or elective official, and such other information as the ((~~retirement board~~)) department shall require. Each employee ((~~becoming an original~~)) who becomes a member shall file a detailed statement of all his or her prior service as an employee and shall furnish such other facts as the ((~~retirement board~~)) department may require for the proper operation of the retirement system. Compliance with the provisions set forth in this section shall be considered to be a condition of employment and failure by an employee to comply may result in separation from service.

Sec. 77. RCW 41.40.160 and 1989 c 273 s 27 are each amended to read as follows:

(1) Subject to the provisions of RCW 41.40.150, at retirement the total service credited to a member shall consist of all ((~~his~~)) membership service and, if he or she is an original member, all of ((~~his~~)) the certified prior service.

(2) Employees of a public utility or other private enterprise all or any portion of which has been heretofore or may be hereafter acquired by a public agency as a matter of public convenience and necessity, where it is in the public interest to retain the trained personnel of such enterprise, all service to that enterprise shall, upon the acquiring public agency becoming an employer as defined in RCW 41.40.010(4) be credited on the same basis as if rendered to the said employer: PROVIDED, That this shall apply only to those employees who were in the service of the enterprise at or prior to the time of acquisition by the public agency and who remain in the service of the acquiring agency until they attain membership in the state employees' retirement system; and to those employees who were in the service of the enterprise at the time of acquisition by the public agency and subsequently attain membership through employment with any participating agency: PROVIDED FURTHER, In the event that the acquiring agency is an employer at the time of the acquisition, employer's contributions in connection with members achieving service credit hereunder shall be made on the same basis as set forth in RCW 41.40.361 and 41.40.370 for an employer admitted after April 1, 1949.

Sec. 78. RCW 41.40.170 and 1981 c 294 s 12 are each amended to read as follows:

(1) A member who has served or shall serve on active federal service in the military or naval forces of the United States and who left or shall leave an employer to enter such service shall be deemed to be on military leave of absence if he or she has resumed or shall resume employment as an employee within one year from termination thereof.

(2) If he or she has applied or shall apply for reinstatement of employment, within one year from termination of the military service, and is refused employment for reasons beyond his or her control, he or she shall, upon resumption of service within ten years have such service credited to him or her.

(3) In any event, after completing twenty-five years of creditable service, any member may have ((~~his~~)) service in the armed forces credited to him or her as a member whether or not he or she left the employ of an employer to enter ((~~such~~)) the armed service: PROVIDED, That in no instance, described in ((~~subsections (1), (2), and (3) of~~)) this section, shall military service in excess of five years be credited: AND PROVIDED FURTHER, That in each instance the member must restore all withdrawn accumulated contributions, which restoration must be completed within five years of membership service following ((~~his~~)) the first resumption of employment or complete twenty-five years of creditable service: AND PROVIDED FURTHER, That this section will not apply to any individual, not a veteran within the meaning of RCW 41.04.005, as now or hereafter amended: AND PROVIDED FURTHER, That in no instance, described in ((~~subsections (1), (2), and (3) of~~)) this section, shall military service be credited to any member who is receiving full military retirement benefits pursuant to Title 10 United States Code.

Sec. 79. RCW 41.40.195 and 1973 2nd ex.s. c 14 s 1 are each amended to read as follows:

(1) "Index" for the purposes of this section, shall mean, for any calendar year, that year's annual average consumer price index for urban wage earners and clerical workers, all items (1957-1959 equal one hundred)‑-compiled by the Bureau of Labor Statistics, United States Department of Labor;

(2) "Cost-of-living factor", for any year shall mean the ratio of the index for the previous year to the index for the year preceding the initial date of payment of the retirement allowance, except that, in no event, shall the cost-of-living factor, for any year subsequent to 1971, be

(a) less than 1.000;

(b) more than one hundred three percent or less than ninety-seven percent of the previous year's cost-of-living factor; or

(3) "Initial date of payment" shall mean:

(a) The date of retirement of a member, or

(b) In the case of beneficiary receiving an allowance pursuant to the automatic application of option II pursuant to RCW 41.40.270(2), the first day of the month following the date of death;

(4) Each service retirement allowance payable from July 1, 1973 until any subsequent adjustment pursuant to subsection (5) of this section shall be adjusted so as to equal the product of the cost-of-living factor for 1973 and the amount of said retirement allowance on the initial date of payment.

(5) Each service retirement allowance payable from July 1st of any year after 1973 until any subsequent adjustment pursuant to this subsection shall be adjusted so as to equal the product of the cost-of-living factor for such year and the amount of said retirement allowance on the initial date of payment: PROVIDED, That the ((~~board~~)) department finds, at its sole discretion, that the cost of such adjustments shall have been met by the excess of the growth in the assets of the system over that required for meeting the actuarial liabilities of the system at that time.

(6) The cost-of-living increases provided by this section shall be applicable to those individuals receiving benefits calculated pursuant to chapter 41.44 RCW and paid by the public employees' retirement system pursuant to RCW 41.40.407.

Sec. 80. RCW 41.40.200 and 1986 c 207 s 1 are each amended to read as follows:

(1) Subject to the provisions of RCW 41.40.310 and 41.40.320, upon application of a member, or his or her employer, a member who becomes totally incapacitated for duty as the natural and proximate result of an accident occurring in the actual performance of duty or who becomes totally incapacitated for duty and qualifies to receive benefits under Title 51 RCW as a result of an occupational disease, as now or hereafter defined in RCW 51.08.140, while in the service of an employer, without willful negligence on his or her part, shall be retired subject to the following conditions: ((~~PROVIDED,~~))

(a) That the medical adviser, after a medical examination of such member made by or under the direction of the ((~~said~~)) medical adviser, shall certify in writing that ((~~such~~)) the member is mentally or physically totally incapacitated for the further performance of his or her duty and that such member should be retired((~~: PROVIDED FURTHER,~~));

(b) That the director concurs in the recommendation of the medical adviser((~~: AND PROVIDED FURTHER,~~));

(c) That no application shall be valid or a claim thereunder enforceable unless, in the case of an accident, the claim is filed within two years after the date upon which the injury occurred or, in the case of an occupational disease, the claim is filed within two years after the member separated from service with the employer((.)); and

(d) That the coverage provided for occupational disease under this section may be restricted in the future by the legislature for all current and future members.

(2) The retirement for disability of a judge, who is a member of the retirement system, by the supreme court under Article IV, section 31 of the Constitution of the state of Washington ((~~(House Joint Resolution No. 37, approved by the voters November 4, 1980)~~)) (Amendment 71), with the concurrence of the director, shall be considered a retirement under subsection (1) of this section.

Sec. 81. RCW 41.40.220 and 1972 ex.s. c 151 s 9 are each amended to read as follows:

Upon retirement for disability, as provided in RCW 41.40.200, a member who has not attained age sixty shall receive the following benefits, subject to the provisions of RCW 41.40.310 and 41.40.320:

(1) A disability retirement pension of two-thirds of his or her average final compensation to his or her attainment of age sixty, subject to the provisions of RCW 41.40.310. The disability retirement pension provided by the employer shall not exceed forty-two hundred dollars per annum, and

(2) Upon attainment of age sixty, the disabled member shall receive a service retirement allowance as provided in RCW 41.40.210. ((~~Such~~)) The department shall grant the disabled member ((~~shall be given~~)) membership service for the period of time prior to age sixty he or she was out of such service due to ((~~such~~)) disability.

(3) During the period a disabled member is receiving a disability pension, as provided for in ((~~subdivision~~)) subsection (1) of this section, his or her contributions to the employees' savings fund shall be suspended and his or her balance in the employees' savings fund, standing to his or her credit as of the date his or her disability pension is to begin, shall remain in the employees' savings fund((~~: PROVIDED, That~~)). If the disabled member should die before attaining age sixty, while a disability beneficiary, upon receipt by the ((~~retirement board~~)) department of proper proof of death, ((~~his~~)) the member's accumulated contributions standing to his or her credit in the employees' savings fund, shall be paid to such person or persons, having an insurable interest in his or her life, as he or she shall have nominated by written designation duly executed and filed with the ((~~retirement board: PROVIDED, HOWEVER, That~~)) department. If there ((~~be no such~~)) is no designated person or persons still living at the time of the member's death, ((~~his~~)) the accumulated contributions standing to ((~~his~~)) the member's credit in the employees' savings fund shall be paid to his or her surviving spouse ((~~as if in fact such spouse had been nominated by written designation as aforesaid~~)), or if there ((~~be no such~~)) is no surviving spouse, then to ((~~his~~)) the member's legal representative.

Sec. 82. RCW 41.40.230 and 1982 c 18 s 4 are each amended to read as follows:

(1) Subject to the provisions of RCW 41.40.310 and 41.40.320, upon application of a member, or his or her employer, a member who has been an employee at least five years, and who becomes totally and permanently incapacitated for duty as the result of causes occurring not in the performance of his or her duty, may be retired by the ((~~retirement board: PROVIDED,~~)) department, subject to the following conditions:

(a) That the medical adviser, after a medical examination of ((~~such~~)) the member((,)) made by or under the direction of the ((~~said~~)) medical adviser, shall certify in writing that ((~~such~~)) the member is mentally or physically incapacitated for the further performance of duty, ((~~and such~~)) that the incapacity is likely to be permanent, and that ((~~such~~)) the member should be retired((~~: PROVIDED FURTHER,~~)); and

(b) That the ((~~retirement board~~)) department concurs in the recommendation of the medical adviser.

(2) The retirement for disability of a judge, who is a member of the retirement system and who has been an employee at least five years, by the supreme court under Article IV, section 31 of the Constitution of the state of Washington ((~~(House Joint Resolution No. 37, approved by the voters November 4, 1980)~~)) (Amendment 71), with the concurrence of the ((~~retirement board~~)) department, shall be considered a retirement under subsection (1) of this section.

Sec. 83. RCW 41.40.235 and 1986 c 176 s 4 are each amended to read as follows:

(1) Upon retirement, a member shall receive a nonduty disability retirement allowance equal to two percent of average final compensation for each year of service: PROVIDED, That ((~~such~~)) this allowance shall be reduced by two percent of itself for each year or fraction thereof that his or her age is less than fifty-five years: PROVIDED FURTHER, That in no case may the allowance provided by this section exceed sixty percent of average final compensation.

(2) If the recipient of a retirement allowance under this section dies before the total of the retirement allowance paid to the recipient equals the amount of the accumulated contributions at the date of retirement, then the balance shall be paid to ((~~such~~)) the person or persons having an insurable interest in his or her life as the recipient has nominated by written designation duly executed and filed with the director or, if there is no ((~~such~~)) designated person or persons still living at the time of the recipient's death, then to the surviving spouse or, if there is neither ((~~such~~)) a designated person or persons still living at the time of his or her death nor a surviving spouse, then to his or her legal representative.

Sec. 84. RCW 41.40.250 and 1972 ex.s. c 151 s 11 are each amended to read as follows:

((~~In lieu of the nonduty disability retirement allowance provided in RCW 41.40.240,~~)) An individual who was a member((,)) on February 25, 1972, may upon qualifying pursuant to RCW 41.40.230, make an irrevocable election to receive the nonduty disability retirement allowance provided in subsections (1) and (2) of this section subject to the provisions of RCW 41.40.310 and 41.40.320. Upon attaining or becoming disabled after age sixty ((he)) the member shall receive a service retirement allowance as provided for in RCW 41.40.190 except that the annuity portion thereof shall consist of a continuation of the cash refund annuity previously provided to him or her. ((~~His~~)) The disability retirement allowance prior to age sixty shall consist of:

(1) A cash refund annuity which shall be the actuarial equivalent of ((~~his~~)) the member's accumulated contributions at the time of his or her retirement; and

(2) A pension, in addition to the annuity, equal to one one-hundredth of ((~~his~~)) the member's average final compensation for each year of service. If the recipient of a retirement allowance under this section ((~~shall~~)) dies before the total of the annuity portions of the retirement allowance paid to him or her equals the amount of his or her accumulated contributions at the date of retirement, then the balance shall be paid to ((~~such~~)) the person or persons having an insurable interest in his or her life as he or she shall have nominated by written designation duly executed and filed with the ((~~retirement board~~)) department, or if there ((~~be no such~~)) is no designated person or persons, still living at the time of his or her death, then to his or her surviving spouse, or if there ((~~be neither such~~)) is no designated person or persons still living at the time of his or her death nor a surviving spouse, then to his or her legal representatives.

Sec. 85. RCW 41.40.260 and 1983 c 3 s 95 are each amended to read as follows:

Subject to the provisions of RCW 41.40.280, should a member cease to be an employee, he or she may request upon a form provided by the ((~~retirement board~~)) department a refund of all or part of the funds standing to his or her credit in the employees' savings fund and this amount shall be paid to him((~~: PROVIDED, That~~)) or her. Withdrawal of all or part of the funds, other than additional contributions under RCW 41.40.330(2) by a member who is eligible for a service retirement allowance in RCW 41.40.180 or a disability retirement allowance in RCW 41.40.200, 41.40.210, 41.40.220, 41.40.230, or 41.40.250 shall constitute a waiver of any service or disability retirement allowance((~~: PROVIDED FURTHER, That the withdrawal of all or part of additional contributions made pursuant to RCW 41.40.330(2) shall not constitute a waiver~~)).

Sec. 86. RCW 41.40.280 and 1973 2nd ex.s. c 14 s 2 are each amended to read as follows:

The ((~~retirement board~~)) department may, in its discretion, withhold payment of all or part of a member's contributions for not more than six months after a member has ceased to be an employee((~~: PROVIDED, That~~)). Termination of employment with one employer for the purpose of accepting employment with another employer or termination with one employer and reemployment with the same employer within a period of thirty days shall not qualify a member for a refund of his or her accumulated contributions. In addition, a member who files an application for a refund of his or her accumulated contributions and subsequently becomes employed in an eligible position before the expiration of thirty days or before a refund payment has been made, shall not be eligible for ((~~such~~)) the refund payment.

Sec. 87. RCW 41.40.310 and 1984 c 184 s 14 are each amended to read as follows:

Once each year during the first five years following the retirement of a member on a disability pension or retirement allowance, and at least once in every three year period thereafter the ((~~retirement board~~)) department may, and upon the member's application shall, require any disability beneficiary, who has not attained age sixty years, to undergo a medical examination; such examination to be made by or under the direction of the medical adviser at the place of residence of ((~~said~~)) the beneficiary, or other place mutually agreed upon. Should any disability beneficiary, who has not attained age sixty years, refuse to submit to ((~~such~~)) a medical examination in any ((~~such~~)) period, his or her disability pension or retirement allowance may be discontinued until his or her withdrawal of ((~~such~~)) the refusal, and should ((~~such~~)) the refusal continue for one year, all his or her rights in and to his or her disability pension, or retirement allowance, may be revoked by the ((~~retirement board~~)) department. If upon ((~~such~~)) a medical examination of a disability beneficiary, the medical adviser reports and his or her report is concurred in by the ((~~retirement board~~)) department, that the disability beneficiary is no longer totally incapacitated for duty as the result of the injury or illness for which the disability was granted, or that he or she is engaged in a gainful occupation, his or her disability pension or retirement allowance shall cease((~~: PROVIDED, That~~)).

If the disability beneficiary resumes a gainful occupation and his or her compensation is less than his or her compensation earnable at the date of disability, the ((~~board~~)) department shall continue the disability benefits in an amount which when added to his or her compensation does not exceed his or her compensation earnable at the date of separation, but the disability benefit shall in no event exceed the disability benefit originally awarded((~~: PROVIDED FURTHER, That~~)). The compensation earnable at the date of separation ((is)) shall be adjusted July 1 of each year by the ratio of the average consumer price index (Seattle, Washington area) for urban consumers, compiled by the United States department of labor, bureau of labor statistics, for the calendar year prior to the adjustment to the average consumer price index for the calendar year in which separation from service occurred but in no event shall the adjustment result in an amount lower than the original compensation earnable at the date of separation.

Sec. 88. RCW 41.40.320 and 1953 c 200 s 16 are each amended to read as follows:

A disability beneficiary who has been or shall be reinstated to active service shall from the date of ((~~such~~)) restoration again become a member of the retirement system; and ((he)) shall contribute to the retirement system in the same manner as prior to ((~~his~~)) the disability retirement. Any prior service and membership service, on the basis of which ((~~his~~)) retirement allowances were computed at the time of ((~~his~~)) retirement, shall be restored to full force and effect, and, except in the case of retirement for nonduty disability as provided in RCW 41.40.230, he or she shall be given membership service for the period of time ((~~he was~~)) out of service due to ((~~such~~)) the disability.

Sec. 89. RCW 41.40.340 and 1977 ex.s. c 295 s 18 are each amended to read as follows:

The deductions from the compensation of members, provided for in RCW 41.40.330 or 41.40.650, shall be made notwithstanding that the minimum compensation provided for by law for any member shall be reduced thereby. Every member shall be deemed to consent and agree to the deductions made and provided for in this chapter and ((~~shall~~)) receipt in full for his or her salary or compensation, and payment less ((~~said~~)) the deductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by ((~~such~~)) the person during the period covered by ((~~such~~)) the payment, except as to benefits provided for under this chapter.

Sec. 90. RCW 41.40.350 and 1977 ex.s. c 295 s 19 are each amended to read as follows:

The person responsible for making up the payroll shall transmit promptly to the department at the end of each and every payroll period a copy of the original payroll voucher or ((~~such~~)) any other payroll report as the department may require showing thereon all deductions for the public employees' retirement system made from the compensation earnable of each member, together with warrants or checks covering the total of ((~~such~~)) the deductions. The department after making a record of all ((~~such~~)) receipts shall pay them to the state treasurer for use according to the provisions of ((~~this~~)) chapter 41.40 RCW.

Sec. 91. RCW 41.40.363 and 1963 c 225 s 3 are each amended to read as follows:

Any labor guild, association, or organization qualifying as an employer under this chapter and which is required to make contributions for an elective official qualifying for membership under RCW ((~~41.40.120(10) [(11)]~~)) 41.40.120(11) shall make contributions as any other employer within this chapter: PROVIDED, That the ((~~retirement board~~)) department shall cause an actuarial computation to be made of all prior service liability for which contributions are required from ((~~such~~)) the employer to be computed on an actual dollar basis, and if the ((~~board~~)) department determines that the contributions being made therefor under this chapter are insufficient to defray any cost to the state, the ((~~board~~)) department shall require additional contributions from ((~~such~~)) the employer in ((~~such~~)) amounts and at ((~~such~~)) times as will defray all costs to the state, ((~~such~~)) the additional contributions to be completed within ten years from the date the elective official is accepted by the ((~~board~~)) department.

Sec. 92. RCW 41.40.380 and 1989 c 360 s 27 are each amended to read as follows:

(1) Subject to subsections (2) and (3) of this section, the right of a person to a pension, an annuity, or retirement allowance, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, the various funds created by this chapter, and all moneys and investments and income thereof, are hereby exempt from any state, county, municipal, or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever, and shall be unassignable.

(2) This section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of public employees of the state of Washington or its political subdivisions and which has been approved for deduction in accordance with rules ((~~and regulations~~)) that may be ((~~promulgated~~)) adopted by the state health care authority and/or the department ((~~of retirement systems~~)), and this section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of dues and other membership fees to any retirement association or organization the membership of which is composed of retired public employees, if a total of three hundred or more of such retired employees have authorized such deduction for payment to the same retirement association or organization.

Sec. 93. RCW 41.40.410 and 1971 ex.s. c 271 s 12 are each amended to read as follows:

(1) The employees and appointive and elective officials of any political subdivision or association of political subdivisions of the state may become members of the retirement system by the approval of the local legislative authority((~~: PROVIDED, That~~)).

(2) On and after September 1, 1965, every school district of the state of Washington shall be an employer under this chapter ((~~and~~)). Every employee of ((~~the~~)) each school district who is eligible for membership under RCW 41.40.120 shall be a member of the retirement system and participate on the same basis as a person who first becomes a member through the admission of any employer into the retirement system on and after April 1, 1949.

(3) Each ((~~such~~)) political subdivision becoming an employer under the meaning of this chapter shall make contributions to the funds of the retirement system as provided in RCW 41.40.080, 41.40.361, and 41.40.370 and its employees shall contribute to the employees' savings fund at the rate established under the provisions of RCW 41.40.330. In addition to the foregoing requirement, where the political subdivision becoming an employer ((~~hereunder~~)) under this section has its own retirement plan, any of the employee members thereof who may elect to transfer to this retirement system may, if permitted by ((~~said~~)) the plan, withdraw all or any part of their employees' contributions to the former plan and transfer ((~~such~~)) the funds to the employees' savings fund at the time of their transfer of membership. Any portion of the employees' savings fund not withdrawn shall be transferred by the employer to the retirement system over a period not to exceed fifteen years. The length of the transfer period and the method of payment to be utilized during that period shall be established by agreement between the ((~~retirement board~~)) department and the political subdivision. Employers making deferred payments of employee funds under this section shall transfer an additional amount equal to the interest that would have been credited to each employee's savings fund had his or her contributions been transferred to the state retirement system's employee savings fund on the date the political subdivision became an employer ((~~hereunder~~)) under this section. Any funds remaining in the employer's former retirement plan after all obligations of ((~~such~~)) the plan have been provided for, as evidenced by appropriate actuarial study, shall be disposed of by the governing body of the political subdivision in such manner as it deems appropriate. For the purpose of administering and interpreting this chapter the ((~~board~~)) department may substitute the names of political subdivisions of the state for the "state" and employees of the subdivisions for "state employees" wherever ((~~such~~)) those terms appear in this chapter. The ((~~board~~)) department may also alter any dates mentioned in this chapter for the purpose of making the provisions of the chapter applicable to the entry of any political subdivisions into the system. Any member transferring employment to another employer which is covered by the retirement system may continue as a member without loss of previously earned pension and annuity benefits. The ((~~board~~)) department shall keep ((~~such~~)) accounts as are necessary to show the contributions of each political subdivision to the benefit account fund and shall have the power to debit and credit the various accounts in accordance with the transfer of the members from one employer to another.

(4) Employees of a political subdivision, maintaining its own retirement system, who have been transferred to a health district formed pursuant to chapter 70.46 RCW, but who have been allowed to remain members of the political subdivision's retirement system may be transferred as a group to the Washington public employees' retirement system. ((~~Such~~)) This transfer may be made by the action of the legislative authority of ((~~such~~)) the political subdivision maintaining its own retirement system. ((~~Such~~)) This transfer shall include employer's and member's funds in the transferring municipalities' retirement system.

(5) Employees of a political subdivision, maintaining its own retirement system, heretofore transferred to a joint airport operation of two municipalities pursuant to chapter ((~~182, Laws of 1945~~)) 14.08 RCW, may be transferred as a group to the Washington public employees' retirement system. ((~~Such~~)) This transfer may be made by the action of the legislative authority of ((~~such~~)) the political subdivision maintaining its own retirement system. ((~~Such~~)) This transfer shall include employer's and member's funds in the transferring municipalities' retirement system.

Sec. 94. RCW 41.40.412 and 1969 c 128 s 14 are each amended to read as follows:

Any person aggrieved by any decision of the ((~~retirement board~~)) department affecting his or her legal rights, duties, or privileges must before he or she appeals to the courts, file with the director ((~~of the retirement system~~)) by mail or personally within sixty days from the day ((~~such~~)) the decision was communicated to ((~~such~~)) the person, a notice for a hearing before the ((~~retirement board~~)) director's designee. The notice of hearing shall set forth in full detail the grounds upon which ((~~such~~)) the person considers ((~~such~~)) the decision unjust or unlawful and shall include every issue to be considered by the ((~~retirement board~~)) department, and it must contain a detailed statement of facts upon which ((~~such~~)) the person relies in support ((~~thereof~~)) of the appeal. ((~~Such~~)) These persons shall be deemed to have waived all objections or irregularities concerning the matter on which ((~~such~~)) the appeal is taken, other than those specifically set forth in the notice of hearing or appearing in the records of the retirement system.

Sec. 95. RCW 41.40.440 and 1971 c 81 s 105 are each amended to read as follows:

No bond of any kind shall be required of a claimant appealing to the superior court, the court of appeals, or the supreme court from a finding of the ((~~retirement board effecting such~~)) department affecting the claimant's right to retirement or disability benefits.

Sec. 96. RCW 41.40.450 and 1990 c 274 s 4 are each amended to read as follows:

(1) A plan I member who is employed by a school district or districts, an educational ((~~school~~)) service district, the state school for the deaf, the state school for the blind, institutions of higher education, or community colleges:

(a) Shall receive service credit for each month of the period from September through August of the following year if he or she is employed in an eligible position, earns compensation earnable for six hundred thirty hours or more during that period, and is employed during nine months of that period, except that a member may not receive credit for any period prior to the member's employment in an eligible position;

(b) If a member in an eligible position does not meet the requirements of (a) of this subsection, the member is entitled to service credit only for those calendar months during which he or she received compensation for seventy or more hours.

(2) A plan II member who is employed by a school district or districts, an educational ((~~school~~)) service district, the state school for the blind, the state school for the deaf, institutions of higher education, or community colleges:

(a) Shall receive service credit for each month of the period from September through August of the following year if he or she is employed in an eligible position, earns compensation earnable for eight hundred ten hours or more during that period, and is employed during nine months of that period, except that a member may not receive credit for any period prior to the member's employment in an eligible position;

(3) The department shall adopt rules implementing this section.

Sec. 97. RCW 41.40.610 and 1977 ex.s. c 295 s 2 are each amended to read as follows:

RCW 41.40.620 through 41.40.740 shall apply only to ((~~those persons who are initially employed by an employer on or after October 1, 1977~~)) plan II members.

Sec. 98. RCW 41.40.625 and 1982 c 144 s 3 are each amended to read as follows:

(1) On or after June 10, 1982, the director may pay a member eligible to receive a retirement allowance or the member's beneficiary, ((~~as defined in RCW 41.04.040(3),~~)) subject to the provisions of subsection (4) of this section, a lump sum payment in lieu of a monthly benefit if the initial monthly benefit computed in accordance with RCW 41.40.620 would be less than fifty dollars. The lump sum payment shall be the greater of the actuarial equivalent of ((~~such~~)) the monthly benefits or an amount equal to the individual's accumulated contributions plus accrued interest.

(2) A retiree or a beneficiary, ((~~as defined in RCW 41.04.040(3),~~)) subject to the provisions of subsection (4) of this section, who is receiving a regular monthly benefit of less than fifty dollars may request, in writing, to convert from a monthly benefit to a lump sum payment. If the director approves the conversion, the calculation of the actuarial equivalent of the total estimated regular benefit will be computed based on the beneficiary's age at the time the benefit initially accrued. The lump sum payment will be reduced to reflect any payments received on or after the initial benefit accrual date.

(3) Persons covered under the provisions of subsection (1) of this section may upon returning to member status ((~~as defined in RCW 41.04.040(2)~~)) reinstate all previous service by depositing the lump sum payment received, with interest as computed by the director, within two years of returning to service or prior to re-retiring, whichever comes first. In computing the amount due, the director shall exclude the accumulated value of the normal payments the member would have received while in beneficiary status if the lump sum payment had not occurred.

(4) Only persons entitled to or receiving a service retirement allowance under RCW 41.40.620 or an earned disability allowance under RCW 41.40.670 qualify for participation under this section.

(5) It is the intent of the legislature that any member who receives a settlement under this section shall be deemed to be retired from this system.

Sec. 99. RCW 41.40.670 and 1990 c 249 s 21 are each amended to read as follows:

(1) A member of the retirement system who becomes totally incapacitated for continued employment by an employer as determined by the department upon recommendation of the ((~~retirement board~~)) department shall be eligible to receive an allowance under the provisions of RCW 41.40.610 through 41.40.740. ((~~Such~~)) The member shall receive a monthly disability allowance computed as provided for in RCW 41.40.620 and shall have ((~~such~~)) this allowance actuarially reduced to reflect the difference in the number of years between age at disability and the attainment of age sixty-five.

Any member who receives an allowance under the provisions of this section shall be subject to ((~~such~~)) comprehensive medical examinations as required by the department. If ((~~such~~)) these medical examinations reveal that ((~~such~~)) a member has recovered from the incapacitating disability and the member is offered reemployment by an employer at a comparable compensation, ((~~such~~)) the member shall cease to be eligible for ((~~such~~)) the allowance.

(2) The retirement for disability of a judge, who is a member of the retirement system, by the supreme court under Article IV, section 31 of the Constitution of the state of Washington ((~~(House Joint Resolution No. 37, approved by the voters November 4, 1980)~~)) (Amendment 71), with the concurrence of the ((~~retirement board~~)) department, shall be considered a retirement under subsection (1) of this section.

(3) (a) If the recipient of a monthly retirement allowance under this section dies before the total of the retirement allowance paid to the recipient equals the amount of the accumulated contributions at the date of retirement, then the balance shall be paid to ((~~such~~)) the person or persons having an insurable interest in his or her life as the recipient has nominated by written designation duly executed and filed with the director, or, if there is no ((~~such~~)) designated person or persons still living at the time of the recipient's death, then to the surviving spouse, or, if there is ((~~neither such~~)) no designated person or persons still living at the time of his or her death nor a surviving spouse, then to his or her legal representative.

Sec. 100. RCW 41.40.710 and 1977 ex.s. c 295 s 12 are each amended to read as follows:

A member who is on a paid leave of absence authorized by a member's employer shall continue to receive service credit as provided for under the provisions of RCW 41.40.610 through 41.40.740.

A member shall be eligible to receive a maximum of two years service credit during a member's entire working career for those periods when a member is on an unpaid leave of absence authorized by an employer. Such credit may be obtained only if the member makes both the plan II employer and member contributions plus interest as determined by the department for the period of the authorized leave of absence within five years of resumption of service or prior to retirement whichever comes sooner((~~: PROVIDED, That for the purpose of this subsection [section] the contribution shall not include the contribution for the unfunded supplemental present value as required by RCW 41.40.650~~)). The contributions required shall be based on the average of the member's compensation earnable at both the time the authorized leave of absence was granted and the time the member resumed employment.

A member who is inducted into the armed forces of the United States shall be deemed to be on an unpaid, authorized leave of absence.

NEW SECTION. Sec. 101. A new section is added to chapter 41.26 RCW under the subchapter heading "Provisions Applicable to Plan I" to

read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan I: RCW 41.26.080; 41.26.090; 41.26.100; 41.26.110; 41.26.115; 41.26.120; 41.26.125; 41.26.130; 41.26.135; 41.26.140; 41.26.150; 41.26.160; 41.26.170; 41.26.180; 41.26.190; 41.26.200; 41.26.240; 41.26.250; 41.26.260; 41.26.270; 41.26.900; 41.26.910; and 41.26.920.

NEW SECTION. Sec. 102. A new section is added to chapter 41.26 RCW under the subchapter heading "Provisions Applicable to Plan II" to read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan II: RCW 41.26.400; 41.26.410; 41.26.420; 41.26.425; 41.26.430; 41.26.440; 41.26.450; 41.26.460; 41.26.470; 41.26.480; 41.26.490; 41.26.500; 41.26.510; 41.26.520; 41.26.530; 41.26.540; 41.26.550; 41.26.901; and 41.26.921.

NEW SECTION. Sec. 103. A new section is added to chapter 41.32 RCW under the subchapter heading "Provisions Applicable to Plan I" to read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan I: RCW 41.32.240; 41.32.260; 41.32.270; 41.32.300; 41.32.330; 41.32.340; 41.32.350; 41.32.360; 41.32.366; 41.32.380; 41.32.390; 41.32.470; 41.32.480; 41.32.485; 41.32.487; 41.32.488; 41.32.4931; 41.32.4945; 41.32.497; 41.32.498; 41.32.499; 41.32.500; 41.32.510; 41.32.520; 41.32.522; 41.32.523; 41.32.530; 41.32.540; 41.32.550; 41.32.570; and 41.32.575.

NEW SECTION. Sec. 104. A new section is added to chapter 41.32 RCW under the subchapter heading "Provisions Applicable to Plan II" to read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan II: RCW 41.32.755; 41.32.760; 41.32.762; 41.32.765; 41.32.770; 41.32.775; 41.32.780; 41.32.785; 41.32.790; 41.32.795; 41.32.800; 41.32.805; 41.32.810; 41.32.815; 41.32.820; and 41.32.825.

NEW SECTION. Sec. 105. A new section is added to chapter 41.40 RCW under the subchapter heading "Provisions Applicable to Plan I" to read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan I: RCW 41.40.150; 41.40.160; 41.40.170; 41.40.180; 41.40.185; 41.40.188; 41.40.190; 41.40.193; 41.40.195; 41.40.198; 41.40.1981; 41.40.200; 41.40.210; 41.40.220; 41.40.230; 41.40.235; 41.40.250; 41.40.260; 41.40.270; 41.40.280; 41.40.300; 41.40.310; 41.40.320; 41.40.325; 41.40.330; and 41.40.363.

NEW SECTION. Sec. 106. A new section is added to chapter 41.40 RCW under the subchapter heading "Provisions Applicable to Plan II" to read as follows:

The provisions of the following sections of this subchapter shall apply only to members of plan II: RCW 41.40.610; 41.40.620; 41.40.625; 41.40.630; 41.40.640; 41.40.650; 41.40.660; 41.40.670; 41.40.680; 41.40.690; 41.40.700; 41.40.710; 41.40.720; 41.40.730; 41.40.740; 41.40.900; and 41.40.920.

NEW SECTION. Sec. 107. A new section is added to chapter 41.40 RCW under the subchapter heading "Provisions Applicable to Plan I and Plan II" to read as follows:

(1) All classified employees employed by Washington State University on and after April 24, 1973, and otherwise eligible shall become members of the Washington public employees' retirement system to the exclusion of any other retirement benefit system at the institution unless otherwise provided by law.

(2) All classified employees employed by the University of Washington or each of the regional universities or The Evergreen State College on and after May 6, 1974, and otherwise eligible shall become members of the Washington public employees' retirement system at the institution unless otherwise provided by law: PROVIDED, That persons who, immediately prior to the date of their hiring as classified employees, have for at least two consecutive years held membership in a retirement plan underwritten by the private insurer of the retirement plan of their respective educational institution may irrevocably elect to continue their membership in the retirement plan notwithstanding the provisions of this chapter, if the election is made within thirty days from the date of their hiring as classified employees. If these persons elect to become members of the public employees' retirement system, contributions by them and their employers shall be required from their first day of employment.

NEW SECTION. Sec. 108. A new section is added to chapter 41.50 RCW to read as follows:

(1) Two funds are hereby created and established in the state treasury to be known as the Washington law enforcement officers' and fire fighters' system plan I retirement fund, and the Washington law enforcement officers' and fire fighters' system plan II retirement fund which shall consist of all moneys paid into them in accordance with the provisions of this chapter and chapter 41.26 RCW, whether such moneys take the form of cash, securities, or other assets. The plan I fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan I, and the plan II fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan II.

(2) All of the assets of the Washington state teachers' retirement system shall be credited according to the purposes for which they are held, to two funds to be maintained in the state treasury, namely, the teachers' retirement system plan I fund and the teachers' retirement system plan II fund. The plan I fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan I, and the plan II fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan II.

(3) There is hereby established in the state treasury two separate funds, namely the public employees' retirement system plan I fund and the public employees' plan II fund. The plan I fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plan I, and the plan II fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plan II.

NEW SECTION. Sec. 109. A new section is added to chapter 41.50 RCW to read as follows:

The state treasurer is the custodian of, and accountant for, all funds and holdings of the retirement systems listed in RCW 41.50.030.