HOUSE BILL REPORT

                 SSB 6143

                  As Passed House - Amended

                        March 4, 1994

Title:  An act relating to establishing membership service credit for prior service rendered or restoring membership service credit represented by withdrawn contributions.

Brief Description:  Establishing membership service credit.

Sponsors:  Senators Spanel, Newhouse, Bauer, Nelson, Vognild, Winsley, Moore and Haugen.

Brief History:

  Reported by House Committee on:

Appropriations, February 28, 1994, DPA.

Passed House - Amended, March 4, 1994, 97-0.

HOUSE COMMITTEE ON APPROPRIATIONS

Majority Report:  Do pass as amended.  Signed by 26 members:  Representatives Sommers, Chair; Valle, Vice Chair; Silver, Ranking Minority Member; Carlson, Assistant Ranking Minority Member; Appelwick; Ballasiotes; Basich; Cooke; Dellwo; Dorn; Dunshee; G. Fisher; Foreman; Jacobsen; Lemmon; Leonard; Linville; H. Myers; Peery; Rust; Sehlin; Sheahan; Stevens; Talcott; Wang and Wolfe.

Staff:  Jennifer Priddy (786-7118).

Background:  Members of the Law Enforcement Officers' and Fire Fighters' Retirement System Plans I and II (LEOFF I and II), the Teachers' Retirement System Plans I and II (TRS I and II), the Public Employees' Retirement System Plans I and II (PERS I and II) and the Washington State Patrol Retirement System (WSPRS) who leave public employment can withdraw their retirement contributions to these systems.  Any employee who later returns to an eligible position in the same retirement system can restore previously earned retirement service credit by repaying the withdrawn contributions, plus interest, within five years.

TRS Plan I and PERS Plan I require the Department of Retirement Systems to notify the employer of a returning employee, who in turn must notify the returning employee, of the amount of potential service credit that can be restored, the amount of funds required for the restoration, and the date by which the restoration must be completed.

Members of LEOFF II, TRS II and PERS II may, upon retirement, choose to receive a lump sum payment in lieu of a benefit if their monthly benefit is less than $50.  If such a person subsequently returns to member status, he or she may reinstate all previous service by repaying the lump sum payment plus interest within two years of returning to service or prior to re-retiring, whichever comes first.  The amount of the lump sum payment is reduced by the value of the retirement payments the member would have received if the lump sum payment had not been made.

Members of LEOFF II, TRS II and PERS II may receive up to two years of retirement service credit for periods of unpaid, authorized leaves of absence by paying the member, employer and, in the case of LEOFF, the state contributions plus interest within five years of resuming service.  Members of the Plan II systems may also receive up to four years of service credit for military service that interrupts the members' employment by paying employee contributions plus interest within five years of resuming service in a retirement system.

Members of TRS I who teach less than full time may receive service credit if they make the necessary payments by June 30 of the year following the year in which they were employed part time.

Members of LEOFF II, PERS I and II, TRS I and II, and the WSPRS who were also previously members of another of these systems may become eligible for portability by restoring, within two years of becoming a member of the second system, contributions and interest withdrawn from the previous system.

Summary of Bill:  Members who have failed to meet statutory deadlines for restoring service credit, for establishing allowable membership service not previously credited, or for restoring service credit represented by a lump sum payment in lieu of benefits may receive such service credit by paying the actuarial value of the resulting increase in their benefit.

At the time a member leaves a state-run retirement system and withdraws retirement contributions, the Department of Retirement Systems shall notify the member of the right to restore the contributions upon resuming membership in the retirement system, and the requirements involved in such restoration.

Fiscal Note:  Available.

Effective Date:  This bill takes effect January 1, 1995.

Testimony For:  We support retirement provisions which allow a member with interrupted public service, for military service, to establish retirement service credit for their years in military service.

Testimony Against:  None.

Witnesses:  James E. Alexander (pro); and Walter Ball, Association of Washington School Principals (pro).