2910-S.E [atlas:bill]

AN ACT Relating to charter schools; reenacting and amending RCW 41.32.010 and 41.40.010; adding a new section to chapter 28A.150 RCW; adding a new section to chapter 28A.155 RCW; adding a new section to chapter 28A.165 RCW; adding a new section to chapter 28A.175 RCW; adding a new section to chapter 28A.180 RCW; adding a new section to chapter 28A.185 RCW; adding a new section to chapter 28A.210 RCW; adding a new section to chapter 28A.220 RCW; adding a new section to chapter 28A.225 RCW; adding a new section to chapter 28A.230 RCW; adding a new section to chapter 28A.235 RCW; adding a new section to chapter 28A.300 RCW; adding a new section to chapter 28A.305 RCW; adding a new section to chapter 28A.320 RCW; adding a new section to chapter 28A.330 RCW; adding a new section to chapter 28A.400 RCW; adding a new section to chapter 28A.405 RCW; adding a new section to chapter 28A.410 RCW; adding a new section to chapter 28A.600 RCW; adding a new section to chapter 28A.605 RCW; adding a new section to chapter 28A.640 RCW; adding a new chapter to Title 28A RCW; creating new sections; and providing an effective date.

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

NEW SECTION. Sec. 1. FINDINGS AND INTENT. (1) The legislature finds that the state has an obligation to develop and maintain a system of public schools to provide quality education services to the children of our state. The legislature further finds that this interest is served through educational structures emphasizing enhanced school autonomy, expanded parental choice among public schools, meaningful parental involvement, significant community involvement and greater accountability for student and school performance.

(2) The legislature therefore authorizes the establishment of alternative public schools to be called charter schools, operating pursuant to an agreement between the school and a state education agency, including school districts' boards of directors, and in accordance with the terms of this chapter. The approved charter school shall be granted greater autonomy in instructional program and operations in exchange for assurance of accountability for student performance and sound fiscal management.

(3) The purposes of this chapter are:

(a) To improve academic achievement in all public schools;

(b) To provide parents and students with expanded choices in the types of educational opportunities that are available within the public school system;

(d) To match learning environments more closely to the differing educational needs of students;

(e) To create new professional opportunities for teachers, principals, and other certificated staff, including the opportunity to be responsible for the learning process at the school site; and

(f) To hold teachers and school administrators accountable for meeting measurable educational results.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Applicant" means an individual, organization, or public entity as identified in section 6(1) of this act that has submitted an application to a sponsor to obtain approval to operate a charter school.

(2) "Charter" means an agreement between an applicant and a sponsor. The charter establishes, in accordance with this chapter, the terms and conditions for the management, operation, and educational program of the charter school. The terms of a charter shall constitute a contract between the charter school and the sponsor.

(3) "Charter school" means a public school managed by a governing council and operating independently of any school district board under a charter approved in accordance with this chapter.

(4) "Governing council" means a council created in accordance with the school's charter and with this chapter that is responsible for the policy and operational decisions of the charter school.

(5) "Sponsor" means a school district or the superintendent of public instruction, whichever is applicable, that has approved a charter for a charter school.

NEW SECTION. Sec. 3. CHARTER SCHOOLS‑-LEGAL STATUS‑-POWERS. (1) Charter schools sponsored by school district boards under this chapter are local government entities for purposes of RCW 4.96.010. Charter schools sponsored by the superintendent of public instruction under this chapter are state agencies for purposes of RCW 4.92.090.

(2) The members of the charter school's governing council shall be deemed public agents authorized by the state, and by the school district, as appropriate, to operate the charter school. The governing council of a charter school may hire, manage, and discharge any charter school employee in accordance with the terms of this chapter and that school's charter.

(3) A charter school may enter into a contract with any school district, or any other public or private nonsectarian entity also empowered to enter into contracts, for any and all real property, equipment, goods, supplies, and services, to include educational instructional services.

(4) Charter schools may rent, lease, or own property, but may not acquire property by eminent domain. Charter schools may accept gifts and donations from other governmental and private entities, excluding sectarian or religious organizations. Charter schools shall not accept any gifts or donations the conditions of which violate this chapter.

(5) Charter schools shall not charge tuition, levy taxes, or issue bonds.

NEW SECTION. Sec. 4. CHARTER SCHOOLS‑-SCOPE‑-CONDITIONS AND REQUIREMENTS. (1) A charter school shall operate independently of any school district board, under a charter approved by a sponsor pursuant to this chapter. Charter schools are exempt from all state statutes and rules relating to school districts except as provided in this chapter and in the school's approved charter.

(2) All approved charter schools shall:

(a) Be free from sectarian influence or control in their programs, admission policies, employment practices, and all other operations, in accordance with Article IX, section 4 of the state Constitution;

(b) Comply with state and federal health, safety, and civil rights laws and rules applicable to school districts;

(c) Pursuant to a charter approved by the sponsor, establish a governing council that is responsible for the policy and operational decisions of the charter school and that is accountable to the sponsor for compliance with the charter and this chapter;

(d) Provide a comprehensive program of instruction for at least kindergarten or any grade or grades between grades one and twelve, except that a school may offer this curriculum with an emphasis on a specific learning philosophy, teaching style, specialized educational need, or specific subject area, including but not limited to, mathematics, science, fine arts, or foreign languages;

(e) Meet or exceed the student performance and assessment standards as established for students in other public schools;

(f) Participate in nationally normed standardized achievement tests as required in RCW 28A.230.190, 28A.230.230, and 28A.230.240;

(g) Comply with state and federal laws relating to the education of children with disabilities;

(h) Employ certificated instructional staff in accordance with chapter 28A.410 RCW;

(i) Comply with the employee record check requirements in RCW 28A.400.303;

(j) Be subject to the same financial and audit requirements as a school district. The superintendent of public instruction, the state auditor, and the legislative budget committee may conduct financial, program, performance, or compliance audits, as authorized by law;

(k) Comply with the annual school performance report in RCW 28A.320.205;

(l) Report at least annually to its sponsor and to parents of children enrolled at the charter school on progress toward the student performance goals specified in the charter;

(m) Maintain adequate insurance; and

(n) Comply with the open public meetings act in chapter 42.30 RCW and with public disclosure requirements in chapter 42.17 RCW.

NEW SECTION. Sec. 5. ADMISSION REQUIREMENTS. (1) A charter school shall enroll all students who submit a timely application. If capacity is insufficient to enroll all students who submit a timely application, the charter school shall give enrollment priority to students who reside within the boundaries of the school district in which the charter school is physically located. Priority also shall be given to siblings of students who are currently enrolled in the school. Students shall be selected through an equitable selection process, such as a lottery, to fill any remaining spaces.

(2) A charter school shall use the same student admissions criteria as other public schools. A charter school shall not limit admission based on race, religion, ethnicity, national origin, gender, income level, intellectual ability, disabling condition, proficiency in the English language, or athletic ability. A charter school may limit admission to students within a given age group or grade level.

(3) A charter school shall admit students who reside in a school district that is a party to an agreement with the United States department of education office for civil rights directed toward remediating alleged or proven racial discrimination unless notice is received from the resident school that the admission would violate the agreement. If a charter school admits a student after notice is received that the admission would constitute such a violation, the charter school may not include in its student count the students wrongfully admitted.

(4) A student may not be required by a school district to attend a charter school.

NEW SECTION. Sec. 6. CHARTER APPLICATION‑-CONTENT‑-AMENDMENT. (1) Applicants to establish a charter school may include nonprofit corporations or cooperatives, public colleges and universities, existing public schools, other public bodies, private persons, and private organizations.

(2) An applicant seeking to establish a charter school shall submit a written application to the board of directors of the school district in which the proposed school is to be located, as prescribed in this section.

(3) The charter application shall be a proposed agreement and shall include:

(a) The name of the charter applicant or applicants;

(b) A statement of the goals and mission of the proposed charter school;

(d) The proposed mailing address and street address of the school, and the facility or facilities in which it will be housed;

(e) A statement affirming that the applicant has met or is prepared to meet the requirements of sections 4 and 5 of this act, applicable to all charter schools, including, but not limited to, proposed plans to meet applicable health, safety, and insurance requirements;

(f) A description of the proposed charter school's governance structure, organizational structure, and staff responsibilities, including the procedures to be followed to ensure parental involvement;

(g) Evidence that parents of the children who would attend the school support the planned structure, operation, and goals of the school;

(h) Evidence of community support for the school;

(i) A description of the academic performance standards that will be expected of students. Such standards must meet or exceed any standards adopted by the school district in which the charter school is located;

(j) A description of the school's educational program and curriculum, which must be designed to enable each student to achieve the academic performance standards;

(k) A description of the assessment methods that will be used to measure student academic performance, and the corrective actions that will be taken in the event that student performance falls short of such standards. The proposed charter shall require that the school report to the sponsor at least once each year on student progress toward achievement of such standards, as measured by these assessments;

(l) A financial plan for the school's first three years of operation and a description of its financial system for payroll, benefits, and taxes, providing evidence that the plan for the charter school is economically sound;

(m) An explanation of the school's personnel and compensation policies, including procedures for hiring, managing, and discharging staff;

(n) A description of how the school plans to meet the transportation needs of its students;

(o) In the case of an existing school that intends to convert to a charter school, a proposal for reassignment of students who choose not to attend the charter school;

(p) A description of the form, structure, and responsibilities of the charter school's governing council. The applicant shall provide the names of individuals willing to serve on the council; and

(q) A statement of whether or not the school will participate as an employer in the teachers' retirement system and the public employees' retirement system pursuant to chapters 41.32 and 41.40 RCW.

(4) The school board shall hold at least one public hearing on the charter application. The school district board of directors shall either approve or reject the application within sixty days of its receipt, based on a determination that the applicant has or has not met the requirements of this section. The time limit in this subsection may be extended with the mutual consent of the applicant and the school board. Upon approval of the charter application, the board of directors shall appoint the members of the charter school's governing council, pursuant to the provisions of the charter application.

(5) A school board may grant approval for a charter school before the applicant's securing space, equipment, and personnel on the basis of the proposal submitted under this section.

(6) If the school board rejects the application, the school board shall notify the applicant in writing of the reasons for the rejection. The applicant may request, and the school board may provide, technical assistance to improve the application. An applicant may submit a revised application for reconsideration by the school board.

NEW SECTION. Sec. 7. APPEAL PROCESS‑-EDUCATIONAL SERVICE DISTRICTS‑-SUPERINTENDENT OF PUBLIC INSTRUCTION. (1) If the school board rejects a charter application, the superintendent of the educational service district in which the school district is located, at the request of the applicant, shall convene a review panel within sixty days to review the decision of the school district board of directors. The review panel shall consist of three school board members and three teachers from other school districts within the educational service district. The review panel shall hold at least one public hearing for the purpose of receiving testimony on the decision of the school board. If the review panel determines that the school board acted arbitrarily in rejecting the application, the review panel shall request the school district board of directors to reconsider the charter application. In the case of a tie vote of the panel, the educational service district superintendent shall vote to break the tie. Upon request of the review panel, the school board shall reconsider the application in accordance with the terms of this chapter.

(2) If a charter application is rejected by a school district board of directors, it may be submitted by the applicant to the superintendent of public instruction for sponsorship after December 31, 1998. The superintendent of public instruction shall review the application and, within sixty days of receipt of the application, shall approve the application if it meets the requirements of this chapter. Upon approval of the charter application, the superintendent of public instruction shall appoint the members of the charter school's governing council, pursuant to the provisions of the charter application. A school district board of directors has no legal authority over or responsibility for a charter school sponsored by the superintendent of public instruction.

NEW SECTION. Sec. 8. CHARTER AGREEMENT‑-AMENDMENT. (1) A charter application approved by a sponsor shall constitute a charter.

(2) A charter may be amended during its term at the request of the governing council and on the approval of the sponsor.

NEW SECTION. Sec. 9. SUPERINTENDENT OF PUBLIC INSTRUCTION‑-DUTIES. (1) The superintendent of public instruction shall:

(a) Grant charter approval to qualified applicants for charter schools pursuant to section 7 of this act;

(b) Disseminate information about procedures for the establishment, funding, and operation of charter schools, in conformance with this chapter;

(c) Provide technical assistance to charter school applicants in the preparation of applications, and to charter school governing boards in matters related to the educational program, management, and financial operation of the charter school;

(d) Monitor the performance and operation of charter schools; and

(e) Annually report to the education and fiscal committees of the legislature the number of charter school applications received by school districts and by the superintendent of public instruction, the number approved by each, and such other information concerning charter schools as it deems appropriate.

(2) Each school district board shall notify the superintendent of public instruction when it: Receives a charter school application; approves or rejects a charter school application; and renews, fails to renew, or revokes a charter, acting in conformance with this chapter.

NEW SECTION. Sec. 10. CHARTER RENEWAL AND REVOCATION. (1) An approved plan to establish a charter school is effective for five years from the first day of operation. At the conclusion of the first three years of operation, the charter school may apply to the sponsor for renewal.

(2) A charter school renewal application shall include:

(a) A report on the progress of the charter school in achieving the goals, student performance standards, and other terms of the initial approved charter; and

(b) A financial statement that discloses the costs of administration, instruction, and other expenditure objects and activities of the charter school, in a form that is understandable to the general public and that will allow comparison of such costs to those of other public schools.

(3) The sponsor may reject the application for renewal if, in its judgment, any of the following occurred:

(a) The charter school materially violated its contract with the sponsor, as set forth in the initial approved charter;

(b) The students enrolled in the charter school failed to meet or make reasonable progress toward achievement of the student performance standards identified in the initial approved charter;

(d) The charter school violated provisions in law that have not been waived in accordance with this chapter.

(4) A sponsor shall give written notice of its intent not to renew the charter school's request for renewal to the charter school at least twelve months before the expiration of the approved charter to allow the charter school an opportunity to correct identified deficiencies in its operation or to apply to another sponsor for approval of the operation of the charter school. At the request of the governing council of the charter school, the sponsor shall review its decision for nonrenewal after the charter school has corrected any identified deficiencies. If the charter is transferred by application to another sponsor, the five-year term of the charter shall be repeated.

(5) The sponsor may revoke a previously approved charter before the expiration of the term of the charter, and prior to application for renewal, for any of the reasons specified in subsection (3) of this section. In addition, the sponsor may revoke a charter after two years if the academic achievement of students is significantly below the academic achievement of comparable students in the school district. Except in cases of emergency, where the health and safety of children are at risk, no charter may be revoked unless the sponsor first provides written notice of the specific violations alleged, a public hearing, and a reasonable opportunity for the charter school to correct the identified areas of concern. The sponsor of a charter school shall provide for an appeal process upon a determination by the sponsor that grounds exist to revoke a charter.

NEW SECTION. Sec. 11. FUNDING. (1) The superintendent of public instruction shall separately calculate and allocate to charter schools sponsored by school district boards moneys appropriated for basic education under RCW 28A.150.260. The amount of funding for charter schools shall be determined by the number of full-time equivalent students enrolled in the school multiplied by the estimated state-wide annual average per full-time equivalent student allocation under RCW 28A.150.260 and applicable rules.

(2) State funding to charter schools sponsored by school district boards for students who are eligible for special education under chapter 28A.155 RCW; the learning assistance program under chapter 28A.165 RCW; and the transitional bilingual instruction program under chapter 28A.180 RCW shall be determined in accordance with applicable statutes and rules that apply to school districts.

(3) State funding for the transportation of students who are transported shall be based on the average full-time equivalent student transportation allocation for transported students in the district in which the school is located or on the allocation formula used by school districts.

(4) For each annual full-time equivalent student enrolled in a charter school sponsored by a school district board, the charter schools shall be entitled to an amount equal to ninety-eight percent of the maintenance and operation excess tax levy rate per annual average full-time equivalent student of the district in which each full-time equivalent student who attends the charter school resides. These funds shall be paid to the charter school by the school district in which the student resides in equal monthly installments, adjusted for any changes in enrollment, between October and July each year, by the fifteenth of each month.

(5) The superintendent of public instruction shall establish rules for the calculation and payment of state and school district funds to charter schools.

(6) On or before October 15th of each year, the superintendent of public instruction shall transmit to charter schools one-tenth of the total state amount to be apportioned during the fiscal year. The remaining funds shall be apportioned in equal monthly installments, adjusted for any changes in enrollment and other factors, between November and July by the fifteenth of each month.

(7) Charter schools are eligible to apply for education grant programs and special education safety net funding.

(8) Transportation of students attending a charter school may be provided by the sponsoring school district, if applicable, through a cooperative agreement with another school district, through a contract with a third party, or by parents.

NEW SECTION. Sec. 12. STUDY OF FUNDING SUPERINTENDENT OF PUBLIC INSTRUCTION-SPONSORED CHARTER SCHOOLS. The fiscal committees of the house of representatives and the senate shall jointly study alternative means of providing public funding for charter schools sponsored after December 31, 1998, by the superintendent of public instruction, with concern for sufficiency of financial support and equity in relation to other public schools. The committees shall report their findings and recommendations to the legislature before December 1, 1997.

NEW SECTION. Sec. 13. EDUCATIONAL EMPLOYEES‑-LEAVE OF ABSENCE‑- RETIREMENT‑-BARGAINING‑-UNLAWFUL REPRISALS. (1) If a school district employee makes a written request for an extended leave of absence to work at a charter school, the school district shall grant the leave. The school district may require that the request for a leave be made up to ninety days before the employee would otherwise have to report for duty. If the employee returns to the school district, the employee shall be rehired before the district hires anyone else with fewer years of service, with respect to any position for which the returning employee is certificated or otherwise qualified.

(2) An employee taking leave under subsection (1) of this section shall continue to accumulate benefits and credits in the employee's retirement system if the employee makes the appropriate employee and employer contributions. The department of retirement systems may impose reasonable requirements to administer this section efficiently.

(3) Employees of charter schools may, if otherwise eligible, organize under chapters 41.59 and 41.56 RCW and comply with the provisions of these chapters. Charter schools are public employers, for the purposes of chapters 41.59 and 41.56 RCW, upon formation of one or more bargaining units at the school. Bargaining units at the charter school shall be separate from any other units.

(4) School districts shall not discharge, discipline, or otherwise discriminate against an employee of the school district where the sole basis of the district's action is the employee's direct or indirect involvement in an application to establish a charter school.

NEW SECTION. Sec. 14. CHARTER SCHOOL DISTRICTS. (1) In addition to the process prescribed in this chapter for establishing charter schools, a school district board of directors may apply to an educational service district board to receive approval for the school district to be designated a charter school district. Charter school districts are exempt from all state education statutes and rules relating to school districts except as provided in this section and in the charter school district's approved charter.

(2) A school district board of directors that is interested in having its school district be designated a charter school district shall submit a written application to the educational service district in which the school district is located. The application shall include:

(a) A statement of the goals and mission of the school district;

(b) A statement affirming that the school district has met or is prepared to meet the requirements of subsection (3) of this section;

(c) Evidence of community support for being designated a charter school district, and the steps taken to solicit public input on the application;

(d) A description of the academic performance standards that will be expected of students;

(e) A description of the school district's educational program and curriculum, which must be designed to enable each student to achieve the academic performance standards;

(f) A description of the assessment methods that will be used to measure student academic performance, and the corrective actions that will be taken in the event that student performance falls short of such standards;

(g) A listing of state statutes and regulations with which the school district will comply; and

(h) Other information as determined by the superintendent of the educational service district.

(3) A charter school district shall:

(a) Be free from sectarian and religious influence or control in its programs, admission policies, employment practices, and all other operations, in accordance with Article IX, section 4 of the state Constitution;

(b) Comply with state and federal statutes and rules applicable to school districts pertaining to health, safety, civil rights, school board membership and selection, maintenance and operation levy limitations, and employee compensation limitations;

(c) Meet student performance and assessment standards at least as rigorous as those established for students in other public school districts;

(d) Participate in nationally normed standardized achievement tests as required in RCW 28A.230.190, 28A.230.230, and 28A.230.240;

(e) Comply with state and federal laws relating to the education of children with disabilities;

(f) Employ certificated instructional staff in accordance with chapter 28A.410 RCW;

(g) Comply with the employee record check requirements in RCW 28A.400.303;

(h) Be subject to the same financial and audit requirements as other school districts. The superintendent of public instruction, the state auditor, and the legislative budget committee may conduct financial, program, performance, or compliance audits, as authorized by law;

(i) Comply with the annual school performance report requirement in RCW 28A.320.205;

(j) Report at least annually to its sponsor and to parents of children enrolled in the school district on progress toward the student performance standards;

(k) Maintain adequate insurance; and

(l) Comply with the open public meetings act in chapter 42.30 RCW and with public disclosure requirements in chapter 42.17 RCW.

(4) The educational service district board shall approve or deny an application under this section based on a determination that the school district has met the requirements of this section. However, an educational service district shall not approve more than one charter school district. If multiple applications are submitted, the educational service district board of directors shall be given discretion in deciding which application to approve.

(5) The length, renewal, amendment, and revocation of school district charters shall be in accordance with the requirements and criteria in sections 8 and 10 of this act. For purposes of these sections, the educational service district board shall be considered the sponsor.

(6) State funding for charter school districts shall be the same as with other school districts. However, except as required in this section, charter school districts shall not be required to comply with state statutory and regulatory funding requirements and restrictions unless the superintendent of public instruction finds that noncompliance with the requirements and restrictions would likely lead to unacceptable reductions in fiscal and financial accountability.

NEW SECTION. Sec. 15. VACANT BUILDINGS. The superintendent of public instruction, in conjunction with the department of general administration, shall annually publish a list of vacant and unused buildings and vacant and unused portions of buildings that are owned by this state or by school districts and that may be suitable for the operation of a charter school. The superintendent of public instruction shall make the list available to applicants for charter schools and to existing charter schools. The list shall include the address of each building, a short description of the building, and the name of the owner of the building. This section does not require the owner of a building on the list to sell or lease the building or a portion of the building to a charter school or to any other school or to any other prospective buyer or tenant.

Sec. 16. RCW 41.32.010 and 1995 c 345 s 9 and 1995 c 239 s 102 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 and, except for the purpose of withdrawal at the time of retirement, any amount paid under RCW 41.50.165(2) 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, including any amount paid under RCW 41.50.165(2), 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) "Member reserve" means the fund in which all of the accumulated contributions of members are held.

(5)(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 and plan III 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.

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

(7) "Creditable service" means membership service plus prior service for which credit is allowable. This subsection shall apply only to plan I members.

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

(9) "Disability allowance" means monthly payments during disability. This subsection shall apply only to plan I members.

(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.

(ii) "Earnable compensation" for plan I members also includes the following actual or imputed payments, which are not paid for personal services:

(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.

(iii) 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 41.32.345. 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.

(iv) "Earnable compensation" does not include:

(A) Remuneration for unused sick leave authorized under RCW 41.04.340, 28A.400.210, or 28A.310.490;

(B) Remuneration for unused annual leave in excess of thirty days as authorized by RCW 43.01.044 and 43.01.041.

(b) "Earnable compensation" for plan II and plan III 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.

"Earnable compensation" for plan II and plan III members also includes the following actual or imputed payments which, except in the case of (b)(ii)(B) of this subsection, are not paid for personal services:

(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.

(11) "Employer" means the state of Washington, the school district, or any agency of the state of Washington by which the member is paid, and includes charter schools that have elected to participate as employers.

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

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

(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.

(15) "Member" means any teacher included in the membership of the retirement system, and includes teachers employed by charter schools that have elected to participate as employers. 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 member reserve.

(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.

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

(18) "Pension reserve" 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.

(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.

(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.

(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.

(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 member reserve. This subsection shall apply only to plan I members.

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

(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 and plan III members, means monthly payments to a retiree or beneficiary as provided in this chapter.

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

(26)(a) "Service" for plan I members means the time during which a member has been employed by an employer for compensation.

(i) If 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.

(ii) As authorized by RCW 28A.400.300, up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(iii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be applied solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(b) "Service" for plan II and plan III 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.

(iv) 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.

(v) 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.

(vi) As authorized by RCW 28A.400.300, up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.32.470. For purposes of plan II "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than eleven days equals one-quarter service credit month;

(B) Eleven or more days but less than twenty-two days equals one-half service credit month;

(D) More than twenty-two days but less than thirty-three days equals one and one-quarter service credit month;

(E) Thirty-three or more days but less than forty-five days equals one and one-half service credit month.

(vii) As authorized in RCW 41.32.065, service earned in an out-of-state retirement system that covers teachers in public schools may be applied solely for the purpose of determining eligibility to retire under RCW 41.32.470.

(viii) The department shall adopt rules implementing this subsection.

(27) "Service credit year" means an accumulation of months of service credit which is equal to one when divided by twelve.

(28) "Service credit month" means a full service credit month or an accumulation of partial service credit months that are equal to one.

(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 plan II and plan III 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 except under RCW 41.32.810(2).

(31) "Retiree" means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer while a member. A person is in receipt of a retirement allowance as defined in subsection (24) of this section or other benefit as provided by this chapter when the department mails, causes to be mailed, or otherwise transmits the retirement allowance warrant.

(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) "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.

(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 and plan III 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.

(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, and prior to July 1, 1996.

(40) "Plan III" means the teachers' retirement system, plan III providing the benefits and funding provisions covering persons who first become members of the system on and after July 1, 1996, or who transfer under RCW 41.32.817.

(41) "Education association" means an association organized to carry out collective bargaining activities, the majority of whose members are employees covered by chapter 41.59 RCW or academic employees covered by chapter 28B.52 RCW.

(42) "Index" means, for any calendar year, that year's annual average consumer price index, Seattle, Washington area, for urban wage earners and clerical workers, all items compiled by the bureau of labor statistics, United States department of labor.

(43) "Index A" means the index for the year prior to the determination of a postretirement adjustment.

(44) "Index B" means the index for the year prior to index A.

(45) "Index year" means the earliest calendar year in which the index is more than sixty percent of index A.

(46) "Adjustment ratio" means the value of index A divided by index B.

(47) "Annual increase" means, initially, fifty-nine cents per month per year of service which amount shall be increased each July 1st by three percent, rounded to the nearest cent.

Sec. 17. RCW 41.40.010 and 1995 c 345 s 10, 1995 c 286 s 1, and 1995 c 244 s 3 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) "Retirement system" means the public employees' retirement system provided for in this chapter.

(2) "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 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; 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 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, and includes charter schools that have elected to participate as employers.

(5) "Member" means any employee included in the membership of the retirement system, as provided for in RCW 41.40.023. RCW 41.26.045 does not prohibit a person otherwise eligible for membership in the retirement system from establishing such membership effective when he or she first entered an eligible position, and includes noncertificated employees employed by charter schools that have elected to participate as employers.

(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 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.

(i) "Compensation earnable" for plan I members also includes the following actual or imputed payments, which are not paid for personal services:

(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 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;

(B) 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;

(D) Compensation that a member would have received but for a disability occurring in the line of duty only as authorized by RCW 41.40.038;

(E) Compensation that a member receives due to participation in the leave sharing program only as authorized by RCW 41.04.650 through 41.04.670; and

(F) Compensation that a member receives for being in standby status. For the purposes of this section, a member is in standby status when not being paid for time actually worked and the employer requires the member to be prepared to report immediately for work, if the need arises, although the need may not arise. Standby compensation is regular salary for the purposes of RCW 41.50.150(2).

(ii) "Compensation earnable" does not include:

(A) Remuneration for unused sick leave authorized under RCW 41.04.340, 28A.400.210, or 28A.310.490;

(B) Remuneration for unused annual leave in excess of thirty days as authorized by RCW 43.01.044 and 43.01.041.

(b) "Compensation earnable" 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 nonmoney maintenance compensation and lump sum or other payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay.

"Compensation earnable" for plan II members also includes the following actual or imputed payments, which are not paid for personal services:

(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 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;

(ii) 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:

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

(B) 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 (b)(ii)((~~(B)~~))(A) of this subsection is greater than compensation earnable under (b)(ii)((~~(A)~~))(B) of this subsection shall be paid by the member for both member and employer contributions;

(iii) Assault pay only as authorized by RCW 27.04.100, 72.01.045, and 72.09.240;

(iv) Compensation that a member would have received but for a disability occurring in the line of duty only as authorized by RCW 41.40.038;

(v) Compensation that a member receives due to participation in the leave sharing program only as authorized by RCW 41.04.650 through 41.04.670; and

(vi) Compensation that a member receives for being in standby status. For the purposes of this section, a member is in standby status when not being paid for time actually worked and the employer requires the member to be prepared to report immediately for work, if the need arises, although the need may not arise. Standby compensation is regular salary for the purposes of RCW 41.50.150(2).

(9)(a) "Service" for plan I members, except as provided in RCW 41.40.088, means periods of employment in an eligible position or positions for one or more employers rendered to any employer for which compensation is paid, and includes time spent in office as an elected or appointed official of an employer. Compensation earnable earned in full time work for seventy hours or more in any given calendar month shall constitute one service credit month except as provided in RCW 41.40.088. Compensation earnable earned for less than seventy hours in any calendar month shall constitute one-quarter service credit month of service except as provided in RCW 41.40.088. Only service credit months and one-quarter service credit months shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter. Any fraction of a year of service shall be taken into account in the computation of such retirement allowance or benefits. Time spent in standby status, whether compensated or not, is not service.

(i) 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.

(ii) An individual shall receive no more than a total of twelve service credit months of service during any calendar year. If an individual is employed in an eligible position by one or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service for seventy or more hours is rendered.

(iii) A school district employee may count up to forty-five days of sick leave as creditable service solely for the purpose of determining eligibility to retire under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of plan I "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than twenty-two days equals one-quarter service credit month;

(B) Twenty-two days equals one service credit month;

(b) "Service" for plan II members, means periods of employment by a member in an eligible position or positions for one or more employers for which compensation earnable is paid. Compensation earnable earned for ninety or more hours in any calendar month shall constitute one service credit month except as provided in RCW 41.40.088. Compensation earnable earned for at least seventy hours but less than ninety hours in any calendar month shall constitute one-half service credit month of service. Compensation earnable earned for less than seventy hours in any calendar month shall constitute one-quarter service credit month of service. Time spent in standby status, whether compensated or not, is not service.

Any fraction of a year of service shall be taken into account in the computation of such retirement allowance or benefits.

(i) 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.

(ii) A member shall receive a total of not more than twelve service credit months of service for such calendar year. If an individual is employed in an eligible position by one or more employers the individual shall receive no more than one service credit month during any calendar month in which multiple service for ninety or more hours is rendered.

(iii) Up to forty-five days of sick leave may be creditable as service solely for the purpose of determining eligibility to retire under RCW 41.40.180 as authorized by RCW 28A.400.300. For purposes of plan II "forty-five days" as used in RCW 28A.400.300 is equal to two service credit months. Use of less than forty-five days of sick leave is creditable as allowed under this subsection as follows:

(A) Less than eleven days equals one-quarter service credit month;

(B) Eleven or more days but less than twenty-two days equals one-half service credit month;

(D) More than twenty-two days but less than thirty-three days equals one and one-quarter service credit month;

(E) Thirty-three or more days but less than forty-five days equals one and one-half service credit month.

(10) "Service credit year" means an accumulation of months of service credit which is equal to one when divided by twelve.

(11) "Service credit month" means a month or an accumulation of months of service credit which is equal to one.

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

(13) "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 for which member and employer contributions, plus interest as required by RCW 41.50.125, have been paid under RCW 41.40.056 or 41.40.057;

(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.

(14)(a) "Beneficiary" for plan I members, means any person in receipt of a retirement allowance, pension 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.

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

(16) "Accumulated contributions" means the sum of all contributions standing to the credit of a member in the member's individual account, including any amount paid under RCW 41.50.165(2), together with the regular interest thereon.

(17)(a) "Average final compensation" for plan I members, means the annual average of the greatest compensation earnable by a member during any consecutive two year period of service credit months for which service credit is allowed; or if the member has less than two years of service credit months then the annual average compensation earnable during the total years of service for which service credit is allowed.

(b) "Average final compensation" for plan II members, means the member's average compensation earnable of the highest consecutive sixty months of 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 except under RCW 41.40.710(2).

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

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

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

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

(22) "Employee" means any person who may become eligible for membership under this chapter, as set forth in RCW 41.40.023.

(23) "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.

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

(25) "Eligible position" means:

(a) Any position that, as defined by the employer, normally requires five or more months of service a year for which regular compensation for at least seventy hours is earned by the occupant thereof. 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;

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

(26) "Ineligible position" means any position which does not conform with the requirements set forth in subsection (25) of this section.

(27) "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.

(28) "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.

(29) "Retiree" means any person in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer while a member. A person is in receipt of a retirement allowance as defined in subsection (21) of this section or other benefit as provided by this chapter when the department mails, causes to be mailed, or otherwise transmits the retirement allowance warrant.

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

(31) "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.

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

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

(34) "Plan II" means the public employees' 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.

(35) "Index" means, for any calendar year, that year's annual average consumer price index, Seattle, Washington area, for urban wage earners and clerical workers, all items, compiled by the bureau of labor statistics, United States department of labor.

(36) "Index A" means the index for the year prior to the determination of a postretirement adjustment.

(37) "Index B" means the index for the year prior to index A.

(38) "Index year" means the earliest calendar year in which the index is more than sixty percent of index A.

(39) "Adjustment ratio" means the value of index A divided by index B.

(40) "Annual increase" means, initially, fifty-nine cents per month per year of service which amount shall be increased each July 1st by three percent, rounded to the nearest cent.

NEW SECTION. Sec. 18. RETIREMENT BENEFITS STUDY. The legislative joint committee on pension policy shall study alternative means of providing retirement benefits to employees of charter schools and shall report to the fiscal and education committees of the legislature by January 1, 1997.

NEW SECTION. Sec. 19. The department of retirement systems shall implement the provisions of sections 16 and 17 of this act, subject to and conditioned upon receiving any approvals the department deems appropriate from the internal revenue service and the United States department of labor.

NEW SECTION. Sec. 20. A new section is added to chapter 28A.150 RCW to read as follows: