AN ACT Relating to the
Washington state teachers' retirement system; amending RCW 41.32.817,
41.32.818, 41.32.840, 41.32.855, 41.32.875, 41.32.895, 41.32.831, 41.34.020,
41.34.040, 41.34.060, 41.50.075, 41.50.110, 41.50.670, 41.54.030, 2.14.080,
41.05.011, and 41.05.080; amending 1995 c 239 s 327 (uncodified); reenacting
and amending RCW 41.32.010; adding new sections to chapter 41.32 RCW; adding a
new section to chapter 41.34 RCW; repealing RCW 41.32.890, 41.32.885, and
41.54.035; providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. 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.
(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. 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 and plan III "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;
(C) Twenty-two days
equals one 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))) (42)
"Index A" means the index for the year prior to the determination of
a postretirement adjustment.
(((44))) (43)
"Index B" means the index for the year prior to index A.
(((45))) (44)
"Index year" means the earliest calendar year in which the index is
more than sixty percent of index A.
(((46))) (45)
"Adjustment ratio" means the value of index A divided by index B.
(((47))) (46)
"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.
(47) "Member
account" or "member's account" for purposes of plan III means
the sum of the contributions and earnings on behalf of the member in the
defined contribution portion of plan III.
Sec. 2. RCW 41.32.817 and 1995 c
239 s 303 are each amended to read as follows:
(1) Every plan II
member employed by an employer in an eligible position may make an irrevocable
option to transfer to plan III. ((For those who elect to transfer:
(a))) (2) Any plan II member who is a substitute
teacher may make an irrevocable option to transfer to plan III at the time the
member purchases substitute service credit pursuant to RCW 41.32.013, pursuant
to time lines and procedures established by the department.
(3) Any plan II
member, other than a substitute teacher, who wishes to transfer to plan III
after December 31, 1997, may transfer during the month of January in any
following year, provided that the member earns service credit for that month.
(4) All service
credit in plan II shall be transferred to the defined benefit portion of plan
III.
(((b))) (5)
The accumulated contributions in plan II less fifty percent of any
contributions made pursuant to RCW 41.50.165(2) shall be transferred to the
member's account in the defined contribution portion established in chapter
41.34 RCW, pursuant to procedures developed by the department and subject to
RCW 41.34.090. Contributions made pursuant to RCW 41.50.165(2) that are not
transferred to the member's account shall be transferred to the fund created in
RCW 41.50.075(2), except that interest earned on all such contributions shall
be transferred to the member's account.
(((c) A member
vested on July 1, 1996, under plan II shall be automatically vested in plan III
upon transfer.
(d) Members employed
by an employer in an eligible position on January 1, 1998, who request to
transfer to plan III by January 1, 1998, shall have their account in the
defined contribution portion of plan III, other than those accumulated
contributions attributable to restorations made under RCW 41.50.165(2),
increased by twenty percent of their plan II accumulated contributions as of
January 1, 1996. If the member who requests to transfer dies before January 1,
1998, the additional payment provided by this subsection shall be paid to the
member's estate, or such person or persons, trust, or organization as the
member shall have nominated by written designation duly executed and filed with
the department.
(e))) (6) The legislature reserves the right
to discontinue the right to transfer under this section.
(((2) This
subsection shall also apply to dual members as provided in RCW 41.54.035.
(3) Any member who
elects to transfer to plan III and has eligible unrestored withdrawn
contributions in plan II, may subsequently restore such contributions under the
provisions of RCW 41.32.825. The restored plan II service credit will be
automatically transferred to plan III. Contributions restored will be
transferred to the member's account in plan III.
(4))) (7) Anyone previously retired from plan
II is prohibited from transferring to plan III.
Sec. 3. RCW 41.32.818 and 1995 c
239 s 304 are each amended to read as follows:
Any ((person)) member
of the public employees' retirement system plan II who is employed in an
eligible position as an educational staff associate and who elected
pursuant to RCW 41.32.032(2)(a) to remain a member of the public employees'
retirement system under chapter 41.40 RCW may make an irrevocable option before
January 1, 1998, to transfer to plan III pursuant to RCW 41.32.817,
PROVIDED THAT:
(1) Only service credit
for previous periods of employment in a position covered by RCW 41.32.010 is
transferred to plan III;
(2) Equivalent
accumulated employee and employer contributions attributable to service covered
by subsection (1) of this section are transferred to plan III;
(3) Employer
contributions transferred under this section shall be paid into the teachers'
retirement system combined plan II and III fund.
((Any person, not
employed as an educational staff associate on July 1, 1996, may choose, within
one year of the person's return to employment as a teacher, to transfer to plan
III under this section.))
Sec. 4. RCW 41.32.840 and 1995 c
239 s 106 are each amended to read as follows:
(1) A member of
the retirement system shall receive a retirement allowance equal to one percent
of such member's average final compensation for each service credit year.
(2) The retirement
allowance payable under RCW 41.32.875 to a member who separates after having
completed at least twenty service credit years shall be increased by
twenty-five one-hundredths of one percent, compounded for each month from the
date of separation to the date that the retirement allowance commences.
Sec. 5. RCW 41.32.855 and 1995 c
239 s 109 are each amended to read as follows:
Any member or
beneficiary eligible to receive a retirement allowance under the provisions of
RCW 41.32.875, 41.32.880, or 41.32.895 shall be eligible to commence receiving
a retirement allowance after having filed written application with the
department.
(1) Retirement
allowances paid to members shall accrue from the first day of the calendar
month immediately following such member's separation from employment.
(2) Retirement
allowances ((paid)) payable to ((vested)) eligible
members no longer in service, but qualifying for such an allowance pursuant to
RCW ((41.32.870)) 41.32.875 shall accrue from the first day of
the calendar month immediately following such qualification.
(3) Disability
allowances paid to disabled members shall accrue from the first day of the
calendar month immediately following such member's separation from employment
for disability.
(4) Retirement
allowances paid as death benefits shall accrue from the first day of the
calendar month immediately following the member's death.
Sec. 6. RCW 41.32.875 and 1995 c
239 s 113 are each amended to read as follows:
(1) NORMAL RETIREMENT.
Any member who ((has vested and attained)) is at least age
sixty-five and who has:
(a) Completed ten
service credit years; or
(b) Completed five
service credit years, including twelve service credit months after attaining
age fifty-four; or
(c) Completed five
service credit years by July 1, 1996, under plan II and who transferred to plan
III under RCW 41.32.817;
shall be eligible to retire
and to receive a retirement allowance computed according to the provisions of
RCW 41.32.840.
(2) EARLY RETIREMENT.
Any member who has attained at least age fifty-five and has completed at least
ten years of service shall be eligible to retire and to receive a retirement
allowance computed according to the provisions of RCW 41.32.840, except that a
member retiring pursuant to this subsection shall have the retirement allowance
actuarially reduced to reflect the difference in the number of years between
age at retirement and the attainment of age sixty-five.
Sec. 7. RCW 41.32.895 and 1995 c
239 s 117 are each amended to read as follows:
If a member ((who is
vested)) dies prior to retirement, the surviving spouse or eligible child
or children shall receive a retirement allowance computed as provided in RCW
41.32.851 actuarially reduced to reflect a joint and one hundred percent
survivor option and if the member was not eligible for normal retirement at the
date of death a further reduction as described in RCW 41.32.875(2).
If the surviving spouse
who is receiving the retirement allowance dies leaving a child or children
under the age of majority, then such child or children shall continue to
receive an allowance in an amount equal to that which was being received by the
surviving spouse, share and share alike, until such child or children reach the
age of majority.
If there is no
surviving spouse eligible to receive an allowance at the time of the member's
death, such member's child or children under the age of majority shall receive
an allowance, share and share alike. The allowance shall be calculated with
the assumption that the age of the spouse and member were equal at the time of
the member's death.
NEW SECTION. Sec.
8. A new section is added
to chapter 41.32 RCW under the subchapter heading "provisions applicable
to plan III" to read as follows:
(1) Anyone who requests
to transfer under RCW 41.32.817 before January 1, l998, and establishes service
credit for January 1998, shall have their member account increased by twenty
percent of:
(a) Plan II accumulated
contributions as of January 1, l996, less fifty percent of any payments made
pursuant to RCW 41.50.165(2); or
(b) All amounts withdrawn
after January 1, l996, which are completely restored before January 1, l998.
(2) Substitute teachers
shall receive the additional payment provided in subsection (1) of this section
if they:
(a) Establish service
credit for January 1998; and
(b) Establish any
service credit from July 1996 through December 1997; and
(c)
Elect to transfer on or before March 1, l999.
(3) If a member who
requests to transfer dies before January 1, 1998, the additional payment
provided by this section shall be paid to the member's estate, or the person or
persons, trust, or organization the member nominated by written designation
duly executed and filed with the department.
(4) The legislature
reserves the right to modify or discontinue the right to an incentive payment
under this section for any plan II members who have not previously transferred
to plan III.
NEW SECTION. Sec.
9. A new section is added
to chapter 41.32 RCW under the subchapter heading "provisions applicable
to plan III" to read as follows:
(1) Any member who
elects to transfer to plan III and has eligible unrestored withdrawn
contributions in plan II, may restore such contributions under the provisions
of RCW 41.32.825(1) with interest as determined by the department. The
restored plan II service credit will be automatically transferred to plan III.
Restoration payments will be transferred to the member account in plan III. If
the member fails to meet the time limitations of RCW 41.32.825(1), they may
restore such contributions under the provisions of RCW 41.50.165(2). The
restored plan II service credit will be automatically transferred to plan III.
One-half of the restoration payments under RCW 41.50.165(2) plus interest shall
be allocated to the member's account.
(2) Any member who
elects to transfer to plan III may purchase plan II service credit under RCW
41.32.810(3). Purchased plan II service credit will be automatically
transferred to plan III. Contributions on behalf of the employer paid by the
employee shall be allocated to the defined benefit portion of plan III and
shall not be refundable when paid to the fund described in RCW 41.50.075(2).
Contributions on behalf of the employee shall be allocated to the member
account. If the member fails to meet the time limitations of RCW 41.32.810(3),
they may subsequently restore such contributions under the provisions of RCW
41.50.165(2). Purchased plan II service credit will be automatically
transferred to plan III. One-half of the payments under RCW 41.50.165(2), plus
interest, shall be allocated to the member's account.
Sec. 10. RCW 41.32.831 and 1995 c
239 s 104 are each amended to read as follows:
(1) RCW 41.32.831
through 41.32.895 shall apply only to plan III members.
(2) Plan III shall
consist of two separate elements: (a) A defined benefit portion covered under
this subchapter; and (b) a defined contribution portion covered under chapter
41.34 RCW. ((All contributions on behalf of the employer paid by an
employee shall be made to the defined benefit portion of plan III and shall be
nonrefundable when paid to the fund described in RCW 41.50.075(3).))
(3) Unless otherwise
specified, all references to "plan III" in this subchapter refer to
the defined benefit portion of plan III.
NEW SECTION. Sec.
11. A new section is added
to chapter 41.32 RCW under the subchapter heading "provisions applicable
to plan III" to read as follows:
(1) Contributions on
behalf of the employer paid by the employee to purchase plan III service credit
shall be allocated to the defined benefit portion of plan III and shall not be
refundable when paid to the fund described in RCW 41.50.075(2). Contributions
on behalf of the employee shall be allocated to the member account. If the
member fails to meet the statutory time limitations to purchase plan III
service credit, it may be purchased under the provisions of RCW 41.50.165(2).
One-half of the purchase payments under RCW 41.50.165(2), plus interest, shall
be allocated to the member's account.
(2) No purchased plan
III membership service will be credited until all payments required of the member
are made, with interest. Upon receipt of all payments owed by the member, the
department shall bill the employer for any contributions, plus interest,
required to purchase membership service.
NEW SECTION. Sec.
12. A new section is added
to chapter 41.34 RCW to read as follows:
A member who separates
from service and then reestablishes membership may restore contributions to the
member account.
Sec. 13. RCW 41.34.020 and 1995 c
239 s 202 are each amended to read as follows:
As used in this
chapter, the following terms have the meanings indicated:
(1) "Actuary"
means the state actuary or the office of the state actuary.
(2) "Board"
means the employee retirement benefits board authorized in chapter 41.50 RCW.
(3)
"Department" means the department of retirement systems.
(4)
"Compensation" for purposes of this chapter is the same as
"earnable compensation" for plan III in chapter 41.32 RCW, except
that the compensation may be reported when paid, rather than when earned.
(5) "Employer"
means the same as "employer" for plan III in chapter 41.32 RCW.
(6)
"Member" means any employee included in the membership of a
retirement system as provided for ((plan III)) in chapter 41.32 RCW of
plan III.
(((6))) (7)
"Member account" or "member's account" means the sum
of the contributions and earnings on behalf of the member.
(((7))) (8)
"Retiree" means any member in receipt of an allowance or other
benefit provided by this chapter resulting from service rendered to an employer
by such member.
Sec. 14. RCW 41.34.040 and 1995 c
239 s 204 are each amended to read as follows:
(1) A member shall
contribute from his or her compensation according to one of the following rate
structures:
Option A Contribution Rate
All Ages 5.0%
fixed
Option B
Up to Age 35 5.0%
Age 35 to 44 6.0%
Age 45 and above 7.5%
Option C
Up to Age 35 6.0%
Age 35 to 44 7.5%
Age 45 and above 8.5%
(2) The board shall
have the right to offer contribution rate options in addition to those listed
in subsection (1) of this section, provided that no significant additional
administrative costs are created. All options offered by the board shall
conform to the requirements stated in subsections (3) and (4) of this section.
(3) Within ninety days
of the date that an employee becomes a member of plan III or changes
employers, he or she has an irrevocable option to choose one of the above
contribution rate structures. If the member does not select an option within
this ninety-day period, he or she shall be assigned option A. Such assignment
shall be irrevocable.
(4) Contributions shall
begin the first day of the ((month immediately following the earlier of the
selection of an option or the end of the ninety-day period)) pay cycle
in which the rate option is made, or the first day of the pay cycle in which
the end of the ninety-day period occurs.
Sec. 15. RCW 41.34.060 and 1995 c
239 s 206 are each amended to read as follows:
(1) Except as
provided in subsection (2) of this section, the member's account shall be
invested by the state investment board ((unless the member elects to self
direct investments as authorized by the board)). All contributions
under this subsection shall be invested in the same portfolio as that of the
teachers' retirement system combined plan II and III fund under RCW
41.50.075(2).
(2) Members ((who
make this election shall pay the expenses for self-directed investment)) may
elect to self direct their investments as authorized by the board, other than
as provided in subsection (1) of this section. Expenses caused by
self-directed investment shall be paid by the member in accordance with rules
established by the board under RCW 41.50.088.
Sec. 16. RCW 41.50.075 and 1995 c
239 s 312 are each amended to read as follows:
(1) Two funds are
hereby created and established in the state treasury to be known as the
Washington law enforcement officers' and fire fighters' system plan I
retirement fund, and the Washington law enforcement officers' and fire
fighters' system plan II retirement fund which shall consist of all moneys paid
into them in accordance with the provisions of this chapter and chapter 41.26
RCW, whether such moneys take the form of cash, securities, or other assets.
The plan I fund shall consist of all moneys paid to finance the benefits
provided to members of the law enforcement officers' and fire fighters'
retirement system plan I, and the plan II fund shall consist of all moneys paid
to finance the benefits provided to members of the law enforcement officers'
and fire fighters' retirement system plan II.
(2) All of the assets
of the Washington state teachers' retirement system shall be credited according
to the purposes for which they are held, to two funds to be maintained in the
state treasury, namely, the teachers' retirement system plan I fund and the
teachers' retirement system combined plan II and III fund. The plan I fund
shall consist of all moneys paid to finance the benefits provided to members of
the Washington state teachers' retirement system plan I, and the combined plan
II and III fund shall consist of all moneys paid to finance the benefits
provided to members of the Washington state teachers' retirement system plan II
and III.
(3) There is hereby
established in the state treasury two separate funds, namely the public
employees' retirement system plan I fund and the public employees' retirement
system plan II fund. The plan I fund shall consist of all moneys paid to
finance the benefits provided to members of the public employees' retirement
system plan I, and the plan II fund shall consist of all moneys paid to finance
the benefits provided to members of the public employees' retirement system
plan II.
(((4)
There is hereby established in the state treasury the plan III defined
contribution fund which shall consist of all contributions and earnings paid on
behalf of members, except as otherwise provided.))
Sec. 17. RCW 41.50.110 and 1995 c
239 s 313 are each amended to read as follows:
(1) ((Notwithstanding
any provision of law to the contrary, the retirement system expense fund is
hereby redesignated as the department of retirement systems expense fund from
which shall be paid the)) Except as provided by RCW 41.50.255 and subsection
(6) of this section, all expenses of the administration of the department
and the expenses of administration of the retirement systems created in
chapters 2.10, 2.12, 41.26, 41.32, 41.40, 41.34, and 43.43 RCW shall be paid
from the department of retirement systems expense fund.
(2) In order to
reimburse the department of retirement systems expense fund on an equitable
basis the department shall ascertain and report to each employer, as defined in
RCW 41.26.030, 41.32.010, or 41.40.010, the sum necessary to defray its
proportional share of the entire expense of the administration of the
retirement system that the employer participates in during the ensuing biennium
or fiscal year whichever may be required. Such sum is to be computed in an
amount directly proportional to the estimated entire expense of the
administration as the ratio of monthly salaries of the employer's members bears
to the total salaries of all members in the entire system. It shall then be the
duty of all such employers to include in their budgets or otherwise provide the
amounts so required.
(3) The department
shall compute and bill each employer, as defined in RCW 41.26.030, 41.32.010,
or 41.40.010, at the end of each month for the amount due for that month to the
department of retirement systems expense fund and the same shall be paid as are
its other obligations. Such computation as to each employer shall be made on a
percentage rate of salary established by the department. However, the department
may at its discretion establish a system of billing based upon calendar year
quarters in which event the said billing shall be at the end of each such
quarter.
(4) The director may
adjust the expense fund contribution rate for each system at any time when
necessary to reflect unanticipated costs or savings in administering the
department.
(5) An employer who
fails to submit timely and accurate reports to the department may be assessed
an additional fee related to the increased costs incurred by the department in
processing the deficient reports. Fees paid under this subsection shall be
deposited in the retirement system expense fund.
(a) Every six months
the department shall determine the amount of an employer's fee by reviewing the
timeliness and accuracy of the reports submitted by the employer in the
preceding six months. If those reports were not both timely and accurate the
department may prospectively assess an additional fee under this subsection.
(b) An additional fee
assessed by the department under this subsection shall not exceed fifty percent
of the standard fee.
(c) The department
shall adopt rules implementing this section.
(6) Expenses ((incurred
pursuant to RCW 41.34.060 shall be deducted from the defined contribution fund
in accordance with rules established by the board under RCW 41.50.088)) other
than those under RCW 41.34.060(2) shall be paid pursuant to subsection (1) of
this section.
Sec. 18. RCW 41.50.670 and 1991 c
365 s 13 are each amended to read as follows:
(1) Nothing in this
chapter regarding mandatory assignment of benefits to enforce a spousal
maintenance obligation shall abridge the right of an obligee to direct payments
of retirement benefits to satisfy a property division obligation ordered
pursuant to a court decree of dissolution or legal separation or any court
order or court-approved property settlement agreement incident to any court
decree of dissolution or legal separation as provided in RCW 2.10.180,
2.12.090, 41.04.310, 41.04.320, 41.04.330, ((41.26.180)) 41.26.053,
41.32.052, 41.34.070(3), 41.40.052, 43.43.310, or 26.09.138, as those
statutes existed before July 1, 1987, and as those statutes exist on and after
July 28, 1991. The department shall pay benefits under this chapter in a lump
sum or as a portion of periodic retirement payments as expressly provided by
the dissolution order. A dissolution order may not order the department to pay
a periodic retirement payment or lump sum unless that payment is specifically
authorized under the provisions of chapter 2.10, 2.12, 41.26, 41.32, 41.34,
41.40, or 43.43 RCW, as applicable.
(2) The department
shall pay directly to an obligee the amount of periodic retirement payments or
lump sum payment, as appropriate, specified in the dissolution order if the
dissolution order filed with the department pursuant to subsection (1) of this
section includes a provision that states in the following form:
If . . . . . .
(the obligor) receives periodic retirement payments as defined in RCW
41.50.500, the department of retirement systems shall pay to
. . . . . . (the obligee)
. . . . . . dollars from such payments or
. . . percent of such payments. If the obligor's debt is expressed
as a percentage of his or her periodic retirement payment and the obligee does
not have a survivorship interest in the obligor's benefit, the amount received
by the obligee shall be the percentage of the periodic retirement payment that
the obligor would have received had he or she selected a standard allowance.
If
. . . . . . (the obligor) requests or has requested a
withdrawal of accumulated contributions as defined in RCW 41.50.500, or becomes
eligible for a lump sum death benefit, the department of retirement systems
shall pay to . . . . . . (the obligee)
. . . . . . dollars plus interest at the rate paid by
the department of retirement systems on member contributions. Such interest to
accrue from the date of this order's entry with the court of record.
(3) This section does
not require a member to select a standard allowance upon retirement nor does it
require the department to recalculate the amount of a retiree's periodic
retirement payment based on a change in survivor option.
(4) A court order under
this section may not order the department to pay more than seventy-five percent
of an obligor's periodic retirement payment to an obligee.
(5) Persons whose court
decrees were entered between July 1, 1987, and July 28, 1991, shall also be
entitled to receive direct payments of retirement benefits to satisfy
court-ordered property divisions if the dissolution orders comply or are
modified to comply with this section and RCW 41.50.680 through 41.50.720 and,
as applicable, RCW 2.10.180, 2.12.090, ((41.26.180)) 41.26.053,
41.32.052, 41.34.070, 41.40.052, 43.43.310, and 26.09.138.
(6) The obligee must
file a copy of the dissolution order with the department within ninety days of
that order's entry with the court of record.
(7) A division of
benefits pursuant to a dissolution order under this section shall be based upon
the obligor's gross benefit prior to any deductions. If the department is
required to withhold a portion of the member's benefit pursuant to 26 U.S.C.
Sec. 3402 and the sum of that amount plus the amount owed to the obligee
exceeds the total benefit, the department shall satisfy the withholding
requirements under 26 U.S.C. Sec. 3402 and then pay the remainder to the
obligee. The provisions of this subsection do not apply to amounts withheld
pursuant to 26 U.S.C. Sec. 3402(i).
Sec. 19. RCW 41.54.030 and 1995 c
239 s 319 are each amended to read as follows:
(1) A dual member may
combine service in all systems for the purpose of:
(a) Determining the
member's eligibility to receive a service retirement allowance; and
(b) Qualifying for a
benefit under RCW ((41.32.885(3))) 41.32.840(2).
(2) A dual member who
is eligible to retire under any system may elect to retire from all the
member's systems and to receive service retirement allowances calculated as
provided in this section. Each system shall calculate the allowance using its
own criteria except that the member shall be allowed to substitute the member's
base salary from any system as the compensation used in calculating the
allowance.
(3) The service
retirement allowances from a system which, but for this section, would not be
allowed to be paid at this date based on the dual member's age shall be either
actuarially adjusted from the earliest age upon which the combined service
would have made such dual member eligible in that system, or the dual member
may choose to defer the benefit until fully eligible.
Sec. 20. RCW 2.14.080 and 1991
sp.s. c 13 s 103 are each amended to read as follows:
(1) The administrator
for the courts shall:
(a) Deposit or invest
the contributions under RCW 2.14.090 in a credit union, savings and loan
association, bank, or mutual savings bank;
(b) Purchase life
insurance, shares of an investment company, or fixed and/or variable annuity
contracts from any insurance company or investment company licensed to contract
business in this state; or
(c) Invest in any of
the class of investments described in RCW 43.84.150.
(2) The state
investment board or the ((committee for deferred compensation)) department
of retirement systems, at the request of the administrator for the courts,
may invest moneys in the principal account. Moneys invested by the investment
board shall be invested in accordance with RCW 43.84.150. Moneys invested by
the ((committee for deferred compensation)) department of retirement
systems shall be invested in accordance with ((RCW 41.04.250)) applicable
law. Except as provided in RCW 43.33A.160 or as necessary to pay a pro
rata share of expenses incurred by the ((committee for deferred compensation))
department of retirement systems, one hundred percent of all earnings
from these investments, exclusive of investment income pursuant to RCW
43.84.080, shall accrue directly to the principal account.
Sec. 21. RCW 41.05.011 and 1995
1st sp.s. c 6 s 2 are each amended to read as follows:
Unless the context
clearly requires otherwise, the definitions in this section shall apply
throughout this chapter.
(1)
"Administrator" means the administrator of the authority.
(2) "State
purchased health care" or "health care" means medical and health
care, pharmaceuticals, and medical equipment purchased with state and federal
funds by the department of social and health services, the department of
health, the basic health plan, the state health care authority, the department
of labor and industries, the department of corrections, the department of
veterans affairs, and local school districts.
(3)
"Authority" means the Washington state health care authority.
(4) "Insuring
entity" means an insurer as defined in chapter 48.01 RCW, a health care
service contractor as defined in chapter 48.44 RCW, or a health maintenance organization
as defined in chapter 48.46 RCW. (5) "Flexible benefit plan" means
a benefit plan that allows employees to choose the level of health care
coverage provided and the amount of employee contributions from among a range
of choices offered by the authority.
(6)
"Employee" includes all full-time and career seasonal employees of
the state, whether or not covered by civil service; elected and appointed
officials of the executive branch of government, including full-time members of
boards, commissions, or committees; and includes any or all part-time and
temporary employees under the terms and conditions established under this
chapter by the authority; justices of the supreme court and judges of the court
of appeals and the superior courts; and members of the state legislature or of
the legislative authority of any county, city, or town who are elected to
office after February 20, 1970. "Employee" also includes: (a)
Employees of a county, municipality, or other political subdivision of the
state if the legislative authority of the county, municipality, or other
political subdivision of the state seeks and receives the approval of the
authority to provide any of its insurance programs by contract with the
authority, as provided in RCW 41.04.205; (b) employees of employee
organizations representing state civil service employees, at the option of each
such employee organization, and, effective October 1, 1995, employees of
employee organizations currently pooled with employees of school districts for
the purpose of purchasing insurance benefits, at the option of each such
employee organization; and (c) employees of a school district if the authority
agrees to provide any of the school districts' insurance programs by contract
with the authority as provided in RCW 28A.400.350.
(7) "Board"
means the public employees' benefits board established under RCW 41.05.055.
(8) "Retired or
disabled school employee" means:
(a) Persons who
separated from employment with a school district or educational service district
and are receiving a retirement allowance under chapter 41.32 or 41.40 RCW as of
September 30, 1993;
(b) Persons who
separate from employment with a school district or educational service district
on or after October 1, 1993, and immediately upon separation receive a
retirement allowance under chapter 41.32 or 41.40 RCW;
(c) Persons who
separate from employment with a school district or educational service district
due to a total and permanent disability, and are eligible to receive a deferred
retirement allowance under chapter 41.32 or 41.40 RCW.
(9) "Benefits
contribution plan" means a premium only contribution plan, a medical
flexible spending arrangement, or a cafeteria plan whereby state and public
employees may agree to a contribution to benefit costs which will allow the
employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125 or
other sections of the internal revenue code.
(10) "Salary"
means a state employee's monthly salary or wages.
(11)
"Participant" means an individual who fulfills the eligibility and
enrollment requirements under the benefits contribution plan.
(12) "Plan
year" means the time period established by the authority.
(13) "Separated
employees" means persons who separate from employment with an employer as
defined in RCW 41.32.010(11) on or after July 1, 1996, and who are at least age
fifty-five and have at least ten years of service under the teachers'
retirement system plan III as defined in RCW 41.32.010(40).
Sec. 22. RCW 41.05.080 and 1994 c
153 s 7 are each amended to read as follows:
(1) Under the
qualifications, terms, conditions, and benefits set by the board:
(a) Retired or
disabled state employees, retired or disabled school employees, or employees of
county, municipal, or other political subdivisions covered by this chapter who
are retired may continue their participation in insurance plans and contracts
after retirement or disablement((, under the qualifications, terms,
conditions, and benefits set by the board: PROVIDED, That the));
(b) Separated
employees may continue their participation in insurance plans and contracts if
participation is selected immediately upon separation from employment.
(2) Rates
charged retired or disabled employees, separated employees, spouses, or
dependent children who are not eligible for parts A and B of medicare shall be
based on the experience of the community rated risk pool established under RCW
41.05.022((: PROVIDED FURTHER, That)).
(3) Rates
charged to retired or disabled employees, separated employees, spouses,
or children who are eligible for parts A and B of medicare shall be calculated
from a separate experience risk pool comprised only of individuals eligible for
parts A and B of medicare; however, the premiums charged to medicare-eligible
retirees and disabled employees shall be reduced by the amount of the subsidy
provided under RCW 41.05.085((: PROVIDED FURTHER, That)).
(4) Retired or
disabled and separated employees shall be responsible for payment of
premium rates developed by the authority which shall include the cost to the
authority of providing insurance coverage including any amounts necessary for
reserves and administration in accordance with this chapter((: PROVIDED
FURTHER, That such)). These self pay rates will be established
based on a separate rate for the employee, the spouse, and the children.
(5) The term
"retired state employees" for the purpose of this section shall
include but not be limited to members of the legislature whether voluntarily or
involuntarily leaving state office.
Sec. 23. 1995 c 239 s 327
(uncodified) is amended to read as follows:
This act shall take
effect July 1, 1996, except that sections 301 and 302 of this act shall take
effect immediately.
NEW SECTION. Sec.
24. The following acts or
parts of acts are each repealed:
(1) RCW 41.32.890 and 1995 c 239 s 116;
(2) RCW 41.32.885 and 1995 c 239 s 115; and
(3) RCW 41.54.035 and 1995 c 239 s 320.
NEW
SECTION. Sec. 25. This act is necessary for
the immediate preservation of the public peace, health, or safety, or support
of the state government and its existing public institutions, and shall take
effect July 1, 1996, with the exception of section 23 of this act, which shall
take effect immediately.
