Z-1276.1 _______________________________________________
SENATE BILL 6020
_______________________________________________
State of Washington 52nd Legislature 1992 Regular Session
By Senators Nelson, Niemi, Bauer, Saling, Rasmussen and Johnson; by request of Joint Committee on Pension Policy
Read first time 01/13/92. Referred to Committee on Ways & Means.
AN ACT Relating to simplification of the designation of funds established for use by the teachers' retirement system and the public employees' retirement system; amending RCW 41.50.200, 41.32.540, 41.32.522, 41.32.523, 41.50.215, 41.32.260, 41.32.042, 41.32.380, 41.50.260, 41.33.020, 41.32.067, 41.32.300, 41.04.445, 41.32.013, 41.32.032, 41.32.345, and 41.32.812; reenacting and amending RCW 41.32.010 and 41.32.520; and repealing RCW 41.50.225.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 41.32.010 and 1991 c 343 s 3 and 1991 c 35 s 31 are each reenacted and 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 plan I members, means the sum of all regular annuity contributions with regular interest thereon.
(b) "Accumulated contributions" for 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)) Member reserve" 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 plan I members, means any person in receipt of a
retirement allowance or other benefit provided by this chapter.
(b) "Beneficiary" for 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.
(((7)))
(6) "Contract" means any agreement for service and
compensation between a member and an employer.
(((8)))
(7) "Creditable service" means membership service plus prior
service for which credit is allowable. This subsection shall apply only to
plan I members.
(((9)))
(8) "Dependent" means receiving one‑half or more of
support from a member.
(((10)))
(9) "Disability allowance" means monthly payments during
disability. This subsection shall apply only to plan I members.
(((11)))
(10)(a) "Earnable compensation" for 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.
(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.
(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)) 41.32.345.
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 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.
(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.
(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:
(A) The earnable compensation the member would have received had such member not served in the legislature; or
(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 (b)(ii)(A) of this subsection is greater than compensation earnable under (b)(ii)(B) of this subsection shall be paid by the member for both member and employer contributions.
(((12)))
(11) "Employer" means the state of Washington, the school
district, or any agency of the state of Washington by which the member is paid.
(((13)))
(12) "Fiscal year" means a year which begins July 1st and ends
June 30th of the following year.
(((14)))
(13) "Former state fund" means the state retirement fund in
operation for teachers under chapter 187, Laws of 1923, as amended.
(((15)))
(14) "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)))
(15) "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)) member reserve.
(((17)))
(16) "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 receive no more than one service credit month during any
calendar month in which multiple service is rendered. The provisions of this
subsection shall apply only to plan I members.
(((18)))
(17) "Pension" means the moneys payable per year during life
from the pension reserve ((fund)).
(((19)))
(18) "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)))
(19) "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 plan I
members.
(((21)))
(20) "Prior service contributions" means contributions made by
a member to secure credit for prior service. The provisions of this subsection
shall apply only to plan I members.
(((22)))
(21) "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)))
(22) "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)) member reserve. This
subsection shall apply only to plan I members.
(((24)))
(23) "Regular interest" means such rate as the director may
determine.
(((25)))
(24)(a) "Retirement allowance" for 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 plan II members, means monthly payments to a retiree or beneficiary as provided in this chapter.
(((26)))
(25) "Retirement system" means the Washington state teachers'
retirement system.
(((27)))
(26)(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 receive no more than
one service credit month during any calendar month in which multiple service is
rendered.
(b) "Service" for 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 one service credit month 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 except as provided in RCW 41.32.812 and 41.50.132;
(ii) If a member is employed either in an eligible position or as a substitute teacher for nine months of the twelve month period between September through August of the following year but earns earnable compensation for less than eight hundred ten hours but for at least six hundred thirty hours, he or she will receive one‑half of a service credit month for each month of the twelve month period;
(iii) All other members in an eligible position or as a substitute teacher shall receive service credit as follows:
(A) A service credit month is earned in those calendar months where earnable compensation is earned for ninety or more hours;
(B) A half-service credit month is earned in those calendar months where earnable compensation is earned for at least seventy hours but less than ninety hours; and
(C) A quarter-service credit month is earned in those calendar months where earnable compensation is earned for less than seventy 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 a service credit month for each of the months 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.
The department shall adopt rules implementing this subsection.
(((28)))
(27) "Service credit year" means an accumulation of months of
service credit which is equal to one when divided by twelve.
(((29)))
(28) "Service credit month" means a full service credit month
or an accumulation of partial service credit months that are equal to one.
(((30)
"Survivors' benefit fund" means the fund from which survivor benefits
are paid to dependents of deceased members. This subsection shall apply only
to plan I members.
(31))) (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.
(((32)))
(30) "Average final compensation" for plan II members, means
the member's average earnable compensation of the highest consecutive sixty
service credit months 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.
(((33)))
(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.
(((34)))
(32) "Department" means the department of retirement systems
created in chapter 41.50 RCW.
(((35)))
(33) "Director" means the director of the department.
(((36)))
(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.
(((37)))
(35) "State actuary" or "actuary" means the person
appointed pursuant to RCW 44.44.010(2).
(((38)))
(36) "Substitute teacher" means:
(a) A teacher who is hired by an employer to work as a temporary teacher, except for teachers who are annual contract employees of an employer and are guaranteed a minimum number of hours; or
(b) Teachers who either (i) work in ineligible positions for more than one employer or (ii) work in an ineligible position or positions together with an eligible position.
(((39)))
(37)(a) "Eligible position" for plan II members from June 7,
1990, through September 1, 1991, means a position which normally requires two
or more uninterrupted months of creditable service during September through
August of the following year.
(b) "Eligible position" for plan II on and after September 1, 1991, means a position that, as defined by the employer, normally requires five or more months of at least seventy hours of earnable compensation during September through August of the following year.
(c) For purposes of this chapter an employer shall not define "position" in such a manner that an employee's monthly work for that employer is divided into more than one position.
(d) The elected position of the superintendent of public instruction is an eligible position.
(((40)))
(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.
(((41)))
(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. 2. RCW 41.50.200 and 1991 c 35 s 32 are each amended to read as follows:
In the
records of the teachers' retirement system the teachers' retirement ((fund))
system plan I fund shall be subdivided into the ((annuity fund, the
annuity reserve fund, the survivors' benefit fund)) member reserve,
the pension reserve ((fund, the disability reserve fund, the death benefit
fund, the income fund, the expense fund)), and other funds as may from time
to time be created by the director for the purpose of the internal accounting
record. The director may adopt rules creating or deleting funds as he or
she deems necessary.
Sec. 3. RCW 41.32.540 and 1991 c 35 s 61 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 the final
illness a member shall be granted a temporary disability allowance by the
department if the medical director, after a medical examination of the member,
certifies that 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. 4. RCW 41.32.522 and 1991 c 35 s 59 are each amended to read as follows:
(1) The
department shall pay 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 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;
(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));
(c) Submits an application for a retirement allowance to be approved 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;
(d) Is receiving or is entitled to receive temporary disability payments; or
(e) Upon becoming eligible for a disability retirement allowance submits an application for an allowance to be approved 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.
(2) In order to receive a death benefit under this section a deceased member:
(a)
Must have established at least one year of credit with the retirement system
for full time Washington membership service((. A member's contribution to
the death benefit fund for a given fiscal year qualifies the member for the
death benefit in the event his or her death occurs before the beginning of the
ensuing school year));
(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 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. 5. RCW 41.32.523 and 1991 c 35 s 60 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, 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 the member's
estate or to the persons as he or she shall have nominated 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: 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. 6. RCW 41.50.215 and 1991 c 35 s 36 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 department shall make 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. 7. RCW 41.32.520 and 1991 c 365 s 29 and 1991 c 35 s 58 are each reenacted and 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, less any amount identified as owing to an obligee upon withdrawal of accumulated contributions pursuant to a court order filed under RCW 41.50.670, 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 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, less any amount identified as owing to an obligee upon withdrawal of accumulated contributions pursuant to a court order filed under RCW 41.50.670, 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 actuarially reduced by the amount of any lump sum benefit identified as owing to an obligee upon withdrawal of accumulated contributions pursuant to a court order filed under RCW 41.50.670:
(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. A benefit paid under this subsection (1)(a) shall terminate at the marriage of the beneficiary.
(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 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, less any amount identified as owing to an obligee upon withdrawal of accumulated contributions pursuant to a court order filed under RCW 41.50.670, 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 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. 8. RCW 41.32.260 and 1991 c 35 s 40 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 that service upon
presenting satisfactory proof, and contributing to the ((annuity fund)) member
reserve, either in a lump sum or installments, amounts determined by the
director. Except that no 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.
Sec. 9. RCW 41.32.042 and 1982 1st ex.s. c 52 s 13 are each amended to read as follows:
The
deductions from salaries of members of the retirement system for their
contributions to the system are not considered diminution of pay and every
member is conclusively presumed to consent thereto as a condition of
employment. All contributions to the ((annuity fund)) member reserve
shall be credited to the individual for whose account the deductions from
salary were made. Regular interest shall be credited to each member's account
at least annually.
Sec. 10. RCW 41.32.380 and 1982 1st ex.s. c 52 s 8 are each amended to read as follows:
There
shall be placed in the pension reserve ((fund)) all appropriations made
by the legislature for the purpose of paying pensions and survivors' benefits
and of establishing and maintaining an actuarial reserve and all gifts and
bequests to the pension reserve ((fund)), and contributions of persons
entering the retirement system who have established prior service credit. Members
establishing prior service credit shall contribute to the pension reserve ((fund))
as follows:
For the first ten years of prior service fifteen dollars per year;
For the second ten years of prior service thirty dollars per year;
For the third ten years of prior service forty-five dollars per year.
Sec. 11. RCW 41.50.260 and 1991 c 35 s 74 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 the director may from time to time ((be required)) create.
(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 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 of the public employees' retirement system, the department shall transfer from the benefit account fund to the employees' savings fund and credit to the individual account of such a member a sum 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)
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(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 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 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. 12. RCW 41.33.020 and 1973 1st ex.s. c 154 s 77 are each amended to read as follows:
The terms and provisions of the plan are as follows:
(1) Each political subdivision of the state employing members of the teachers' retirement system and the members of the teachers' retirement system, after the approval of this plan by the legislature, and by the eligible employees through a referendum as provided in RCW 41.48.030 (3) and (4), shall be deemed to have accepted and agreed to be bound by the following terms and conditions in consideration of extension of the existing agreement between the secretary of health, education and welfare and the governor to make the protection of the federal old age and survivors insurance program available and applicable to such employees.
(2) As used in this plan the terms quoted below shall have the meanings assigned thereto in this section.
"Political subdivision" means any political subdivision, or instrumentality of one or more subdivisions, or proprietary enterprise acquired, purchased or originated by one or more such subdivisions after December, 1950, which employs members of the teachers' retirement system. The state, its agencies, instrumentalities and institutions of higher learning shall be grouped and considered as a single political subdivision.
"Employee" means any person who is a member of the teachers' retirement system and is employed by a political subdivision.
"Wages" shall have the meaning given in RCW 41.48.020(1) and section 209 of the social security act (42 U.S.C.A. Sec. 409).
"State" where not otherwise clearly indicated by the context, means the commissioner of employment security or other officer designated by the governor to administer the plan at the state level for all participating political subdivisions.
(3) The terms and conditions of this plan are intended and shall be construed to be in conformity with the requirements of the federal social security act as amended and with the requirements of chapter 41.48 RCW, and particularly RCW 41.48.050, as amended by chapter 4, Laws of 1955 extraordinary session.
(4) The rights and benefits accruing to employees from membership in the teachers' retirement system shall in no way be altered or impaired by this plan or by the additional and supplementary OASI coverage which such employees may receive hereunder, other than the elimination of (1), (2) and (3) of section 52, chapter 80, Laws of 1947 and RCW 41.32.520 as each are amended, with the exception of that part of (1) which permits a widow or widower without a child or children under age eighteen to receive a monthly payment of fifty dollars at age fifty, provided that the member had fifteen or more years of Washington membership service credit at date of death.
(5) There shall be no additional cost to or involvement of the state or a political subdivision with respect to OASI coverage of members of the teachers' retirement system until this plan has been approved by the legislature.
(6) Each employee to whom OASI coverage is made applicable under this plan pursuant to an extension or modification under RCW 41.48.030 of the existing agreement between the secretary of health, education and welfare and the governor shall be required to pay into the OASI contribution fund established by RCW 41.48.060 during the period of such coverage contributions with respect to his wages in an amount equal to the employee tax imposed by the federal insurance contributions act (section 3101, Internal Revenue Code of 1954), in consideration of the employee's retention in service by the political subdivision. The subdivision shall withhold such contributions from the wages paid to the employee; and shall remit the contributions so withheld in each calendar quarter to the state for deposit in the contribution fund not later than the twentieth calendar day of the month following that quarter.
(7) Each political subdivision shall pay into the contribution fund with respect to the wages of its employees during the period of their OASI coverage pursuant to this plan contributions in an amount equal to the employer tax imposed by the federal insurance contributions act (section 3111, Internal Revenue Code of 1954), from the fund of the subdivision from which such employees' wages are paid. The subdivision shall remit such contributions to the state for deposit in the contribution fund on a quarterly basis, not later than the twentieth calendar day of the month following each calendar quarter.
(8) If any political subdivision other than that comprising the state, its agencies, instrumentalities and institutions of higher learning fails to remit as provided herein employer contributions or employee contributions, or any part of either, such delinquent contributions may be recovered with interest at the rate of six percent per annum by action in a court of competent jurisdiction against the political subdivision; or such delinquent contributions may at the request of the governor be deducted from any moneys payable to such subdivision by the state.
(9) Each political subdivision shall be charged with a share of the cost of administration of this plan by the state, to be computed as that proportion of the overall cost of administration which its total annual contributions bear to the total annual contributions paid by all subdivisions on behalf of employees covered by the plan. The state shall compute the share of cost allocable to each subdivision and bill the subdivision therefor at the end of each fiscal year. The subdivision shall within ninety days thereafter remit its share of the cost to the state for deposit in the general fund of the state.
(10) Each political subdivision shall submit to the state, through the employment security department, P.O. Box 367, Olympia, Washington, or such other officer or agency as the governor may subsequently designate, on forms furnished by the state, not later than the twentieth calendar day of the month following the end of each calendar quarter, the following information:
A. The social security account number of each employee;
B. the name of each employee;
C. the amount of wages subject to contributions as required hereunder paid to each employee during the quarter;
D. the total amount of wages subject to contributions paid to all employees during the quarter;
E. the total amount of employee contributions withheld and remitted for the quarter; and
F. the total amount of employer contributions paid by the subdivision for the quarter.
(11) Each political subdivision shall furnish in the same manner as provided in subsection (10) of this section, upon reasonable notice, such other and further reports or information as the governor may from time to time require. Each subdivision shall comply with such requirements as the secretary of health, education and welfare or the governor may from time to time establish with respect to any or all of the reports or information which are or may be provided for under subsection (10) of this section or this subsection in order to assure the correctness and verification thereof.
(12) The governing body of each political subdivision shall designate an officer of the subdivision to administer such accounting, reporting and other functions as will be required for the effective operation of this plan within the subdivision, as provided herein. The commissioner of employment security or such other officer as the governor may designate, shall perform or supervise those functions with respect to employees of the subdivision comprising the state, its agencies, instrumentalities and institutions of higher learning; and shall serve as the representative of the participating political subdivisions in the administration of this plan with the secretary of health, education and welfare.
(13) The legislature shall designate the first day of any month beginning with January, 1956, as the effective date of OASI coverage for such employees, except that after January 1, 1958, the effective date may not be prior to the first day of the current year.
The
employer's contribution for any retroactive coverage shall be transferred by
the board of trustees from the teachers' retirement pension reserve ((fund))
to the official designated by the governor to administer the plan at the state
level.
Each employee's contributions for any retroactive coverage shall be transferred by the board of trustees from his accumulated contributions in the teachers' retirement fund, to the official designated above. Each employee, if he so desires, may, within one year from the date of transfer, reimburse his accumulated contributions for the amount so transferred.
(14) The governor may terminate the operation of this plan in its entirety with respect to any political subdivision, in his discretion, if he finds that the subdivision has failed to comply substantially with any requirement or provision of this plan. The plan shall not be so terminated until reasonable notice and opportunity for hearing thereon have been given to the subdivision under such conditions, consistent with the provisions of the social security act, as shall have been established in regulations by the governor.
Sec. 13. RCW 41.32.067 and 1991 c 278 s 2 are each amended to read as follows:
A member may purchase additional benefits subject to the following:
(1) The member shall pay all reasonable administrative and clerical costs; and
(2)
The member shall make ((an annuity fund)) a member reserve
contribution to be actuarially converted to a monthly benefit at the time of
retirement.
Sec. 14. RCW 41.32.300 and 1991 c 35 s 42 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.
(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 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)) member reserve, 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. 15. RCW 41.04.445 and 1990 c 274 s 6 are each amended to read as follows:
(1) This section applies to all members who are:
(a) Judges under the retirement system established under chapter 2.10, 2.12, or 2.14 RCW;
(b) Employees of the state under the retirement system established by chapter 41.32, 41.40, or 43.43 RCW;
(c)
Employees of school districts under the retirement system established by
chapter 41.32 or 41.40 RCW, except for substitute teachers as defined by RCW
41.32.010(((37)));
(d) Employees of educational service districts under the retirement system established by chapter 41.32 or 41.40 RCW; or
(e) Employees of community college districts under the retirement system established by chapter 41.32 or 41.40 RCW.
(2) Only for compensation earned after the effective date of the implementation of this section and as provided by section 414(h) of the federal internal revenue code, the employer of all the members specified in subsection (1) of this section shall pick up only those member contributions as required under:
(a) RCW 2.10.090(1);
(b) RCW 2.12.060;
(c) RCW 2.14.090;
(d)
RCW ((41.32.260(2))) 41.32.263;
(e) RCW 41.32.350;
(f) RCW 41.32.775;
(g) RCW 41.40.330 (1) and (3);
(h) RCW 41.40.650; and
(i) RCW 43.43.300.
(3) Only for the purposes of federal income taxation, the gross income of the member shall be reduced by the amount of the contribution to the respective retirement system picked up by the employer.
(4) All member contributions to the respective retirement system picked up by the employer as provided by this section, plus the accrued interest earned thereon, shall be paid to the member upon the withdrawal of funds or lump-sum payment of accumulated contributions as provided under the provisions of the retirement systems.
(5) At least forty-five days prior to implementing this section, the employer shall provide:
(a) A complete explanation of the effects of this section to all members; and
(b) Notification of such implementation to the director of the department of retirement systems.
Sec. 16. RCW 41.32.013 and 1991 c 343 s 4 are each amended to read as follows:
Substitute teachers may apply to the department to receive service credit or credit for earnable compensation or both after the end of the last day of instruction of the school year during which the service was performed.
(1) The application must:
(a) Include a list of the employers the substitute teacher has worked for;
(b) Include proof of hours worked and compensation earned; and
(c) Be made prior to retirement.
(2) If the department accepts the substitute teacher's application for service credit, the substitute teacher may obtain service credit by paying the required contribution to the retirement system. The employer must pay the required employer contribution upon notice from the department that the substitute teacher has made contributions under this section.
(3) The department shall charge interest prospectively on employee contributions that are submitted under this section more than six months after the end of the school year, as defined in RCW 28A.150.040, for which the substitute teacher is seeking service credit. The interest rate charged to the employee shall take into account interest lost on employer contributions delayed for more than six months after the end of the school year.
(4) Each employer shall quarterly notify each substitute teacher it has employed during the school year of the number of hours worked by, and the compensation paid to, the substitute teacher.
(5) The department shall adopt rules implementing this section.
(6) If
a substitute teacher as defined in RCW ((41.32.010(39)(b)(ii))) 41.32.010(36)(b)(ii)
applies to the department under this section for credit for earnable
compensation earned from an employer the substitute teacher must make
contributions for all periods of service for that employer.
Sec. 17. RCW 41.32.032 and 1991 c 35 s 39 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 41.32.780 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))). 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. 18. RCW 41.32.345 and 1990 c 33 s 570 are each amended to read as follows:
(1)
Subject to the limitations contained in this section, for the purposes of RCW
((41.32.010(11)(a)(ii))) 41.32.010(10)(a)(ii), earnable
compensation means the compensation the member would have received in the same
position if employed on a regular full-time basis for the same contract period.
(2) In order to ensure that the benefit provided by this section is not used to unfairly inflate a member's retirement allowance, the department shall adopt rules having the force of law to govern the application of this section.
(3)(a) In adopting rules which apply to a member employed by a school district, the department may consult the district's salary schedule and related workload provisions, if any, adopted pursuant to RCW 28A.405.200. The rules may require that, in order to be eligible for this benefit, a member's position must either be included on the district's schedule, or the position must have duties, responsibilities, and method of pay which are similar to those found on the district's schedule.
(b) In adopting rules which apply to a member employed by a community college district, the department may consult the district's salary schedule and workload provisions contained in an agreement negotiated pursuant to chapter 28B.52 RCW, or similar documents. The rules may require that, in order to be eligible for this benefit, a member's position must either be included on the district's agreement, or the position must have duties, responsibilities, and method of pay which are similar to those found on the district's agreement. The maximum full-time work week used in calculating the benefit for community college employees paid on an hourly rate shall in no case exceed fifteen credit hours, twenty classroom contact hours, or thirty-five assigned hours.
(4) If the legislature amends or revokes the benefit provided by this section, no affected employee who thereafter retires is entitled to receive the benefit as a matter of contractual right.
Sec. 19. RCW 41.32.812 and 1991 c 343 s 12 are each amended to read as follows:
The
department of retirement systems shall credit at least one-half service credit
month for each month of each school year, as defined by RCW 28A.150.040, from
October 1, 1977, through December 31, 1986, to a member of the teachers'
retirement system plan II who was employed by an employer, as defined by RCW
41.32.010(((12))), under a contract for half-time employment as
determined by the department for such school year and from whose compensation
contributions were paid by the employee or picked up by the employer. Any
withdrawn contributions shall be restored under RCW 41.32.500(1) prior to
crediting any service.
NEW SECTION. Sec. 20. RCW 41.50.225 and 1991 c 35 s 50, 1984 c 236 s 2, 1982 1st ex.s. c 52 s 11, 1973 1st ex.s. c 189 s 8, & 1969 ex.s. c 150 s 12 are each repealed.