Z‑0331.1      _____________________________________________

 

SENATE BILL 5147

 

           _____________________________________________

 

State of Washington      57th Legislature     2001 Regular Session

 

By Senators Winsley, Carlson, Long, Franklin, Honeyford and Fraser; by request of Joint Committee on Pension Policy

 

Read first time 01/12/2001.  Referred to Committee on Ways & Means.

_1      AN ACT Relating to correcting statutes pertaining to the public

_2  employees' and school employees' retirement systems; amending RCW

_3  41.34.060, 41.35.010, and 41.04.270; reenacting and amending RCW

_4  41.45.061; decodifying RCW 41.54.050; and providing an effective

_5  date.

     

_6  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

     

_7      Sec. 1.  RCW 41.45.061 and 2000 c 247 s 506 and 2000 c 230 s 2 are

_8  each reenacted and amended to read as follows:

_9      (1) The required contribution rate for members of the plan 2

10  teachers' retirement system shall be fixed at the rates in effect

11  on July 1, 1996, subject to the following:

12      (a) Beginning September 1, 1997, except as provided in (b) of

13  this subsection, the employee contribution rate shall not exceed

14  the employer plan 2 and 3 rates adopted under RCW 41.45.060 and

15  41.45.070 for the teachers' retirement system;

16      (b) In addition, the employee contribution rate for plan 2

17  shall be increased by fifty percent of the contribution rate

18  increase caused by any plan 2 benefit increase passed after July

19  1, 1996;

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_1      (c) In addition, the employee contribution rate for plan 2

_2  shall not be increased as a result of any distributions pursuant

_3  to section 309, chapter 341, Laws of 1998 and RCW 41.31A.020.

_4      (2) The required contribution rate for members of the school

_5  employees' retirement system plan 2 shall ((be fixed at the rates

_6  in effect on September 1, 2000, for members of the public

_7  employees' retirement system plan 2, subject to the following:

_8      (a) Except as provided in (b) of this subsection, the member

_9  contribution rate shall not exceed)) equal the school employees'

10  retirement system employer plan 2 and 3 contribution rate adopted

11  under RCW 41.45.060 and 41.45.070((;)), except as provided in

12  subsection (3) of this section.

13      (((b))) (3) The member contribution rate for the school

14  employees' retirement system plan 2 shall be increased by fifty

15  percent of the contribution rate increase caused by any plan 2

16  benefit increase passed after September 1, 2000.

17      (((3))) (4) The required contribution rate for members of the

18  public employees' retirement system plan 2 shall be set at the

19  same rate as the employer combined plan 2 and plan 3 rate.

20      (((4))) (5) The required contribution rate for members of the

21  law enforcement officers' and fire fighters' retirement system

22  plan 2 shall be set at fifty percent of the cost of the retirement

23  system.

24      (((5))) (6) The employee contribution rates for plan 2 under

25  subsections (3) and (4) of this section shall not include any

26  increase as a result of any distributions pursuant to RCW

27  41.31A.020 and 41.31A.030.

28      (((6))) (7) The required plan 2 and 3 contribution rates for

29  employers shall be adopted in the manner described in RCW

30  41.45.060.

     

31      Sec. 2.  RCW 41.34.060 and 2000 c 247 s 404 are each amended to

32  read as follows:

33      (1) Except as provided in subsection (3) of this section, the

34  member's account shall be invested by the state investment board.

35  In order to reduce transaction costs and address liquidity issues,

36  based upon recommendations of the state investment board, the

37  department may require members to provide up to ninety days'

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_1  notice prior to moving funds from the state investment board

_2  portfolio to self-directed investment options provided under

_3  subsection (3) of this section.

_4      (a) For members of the retirement system as provided for in

_5  chapter 41.32 RCW of plan 3, investment shall be in the same

_6  portfolio as that of the teachers' retirement system combined plan

_7  2 and 3 fund under RCW 41.50.075(2).

_8      (b) For members of the retirement system as provided for in

_9  chapter 41.35 RCW of plan 3, investment shall be in the same

10  portfolio as that of the school employees' retirement system

11  combined plan 2 and 3 fund under RCW 41.50.075(4).

12      (c) For members of the retirement system as provided for in

13  chapter 41.40 RCW of plan 3, investment shall be in the same

14  portfolio as that of the public employees' retirement system

15  combined plan 2 and 3 fund under RCW 41.50.075(3).

16      (2) The state investment board shall declare monthly unit

17  values for the portfolios or funds, or portions thereof, utilized

18  under subsection (1)(a) ((and)), (b), and (c) of this section. The

19  declared values shall be an approximation of portfolio or fund

20  values, based on internal procedures of the state investment

21  board.  Such declared unit values and internal procedures shall be

22  in the sole discretion of the state investment board.  The state

23  investment board may delegate any of the powers and duties under

24  this subsection, including discretion, pursuant to RCW 43.33A.030.

25  Member accounts shall be credited by the department with a rate of

26  return based on changes to such unit values.

27      (3) Members may elect to self-direct their investments as set

28  forth in RCW 41.34.130 and 43.33A.190.

     

29      Sec. 3.  RCW 41.35.010 and 1998 c 341 s 2 are each amended to read

30  as follows:

31      The definitions in this section apply throughout this chapter,

32  unless the context clearly requires otherwise:

33      (1) "Retirement system" means the Washington school employees'

34  retirement system provided for in this chapter.

35      (2) "Department" means the department of retirement systems

36  created in chapter 41.50 RCW.

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_1      (3) "State treasurer" means the treasurer of the state of

_2  Washington.

_3      (4) "Employer," for plan 2 and plan 3 members, means a school

_4  district or an educational service district.

_5      (5) "Member" means any employee included in the membership of

_6  the retirement system, as provided for in RCW 41.35.030.

_7      (6)(a) "Compensation earnable" for plan 2 and plan 3 members,

_8  means salaries or wages earned by a member during a payroll period

_9  for personal services, including overtime payments, and shall

10  include wages and salaries deferred under provisions established

11  pursuant to sections 403(b), 414(h), and 457 of the United States

12  internal revenue code, but shall exclude nonmoney maintenance

13  compensation and lump sum or other payments for deferred annual

14  sick leave, unused accumulated vacation, unused accumulated annual

15  leave, or any form of severance pay.

16      (b) "Compensation earnable" for plan 2 and plan 3 members also

17  includes the following actual or imputed payments, which are not

18  paid for personal services:

19      (i) Retroactive payments to an individual by an employer on

20  reinstatement of the employee in a position, or payments by an

21  employer to an individual in lieu of reinstatement, which are

22  awarded or granted as the equivalent of the salary or wage which

23  the individual would have earned during a payroll period shall be

24  considered compensation earnable to the extent provided in this

25  subsection, and the individual shall receive the equivalent

26  service credit;

27      (ii) In any year in which a member serves in the legislature,

28  the member shall have the option of having such member's

29  compensation earnable be the greater of:

30      (A) The compensation earnable the member would have received

31  had such member not served in the legislature; or

32      (B) Such member's actual compensation earnable received for

33  nonlegislative public employment and legislative service

34  combined.  Any additional contributions to the retirement system

35  required because compensation earnable under (b)(ii)(A) of this

36  subsection is greater than compensation earnable under this

37  (b)(ii)(B) of this subsection shall be paid by the member for both

38  member and employer contributions;

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_1      (iii) Assault pay only as authorized by RCW 27.04.100,

_2  72.01.045, and 72.09.240;

_3      (iv) Compensation that a member would have received but for a

_4  disability occurring in the line of duty only as authorized by RCW

_5  41.40.038;

_6      (v) Compensation that a member receives due to participation in

_7  the leave sharing program only as authorized by RCW 41.04.650

_8  through 41.04.670; and

_9      (vi) Compensation that a member receives for being in standby

10  status.  For the purposes of this section, a member is in standby

11  status when not being paid for time actually worked and the

12  employer requires the member to be prepared to report immediately

13  for work, if the need arises, although the need may not arise.

14      (7) "Service" for plan 2 and plan 3 members means periods of

15  employment by a member in an eligible position or positions for

16  one or more employers for which compensation earnable is paid.

17  Compensation earnable earned for ninety or more hours in any

18  calendar month shall constitute one service credit month except as

19  provided in RCW 41.35.180.  Compensation earnable earned for at

20  least seventy hours but less than ninety hours in any calendar

21  month shall constitute one-half service credit month of service.

22  Compensation earnable earned for less than seventy hours in any

23  calendar month shall constitute one-quarter service credit month

24  of service.  Time spent in standby status, whether compensated or

25  not, is not service.

26      Any fraction of a year of service shall be taken into account

27  in the computation of such retirement allowance or benefits.

28      (a) Service in any state elective position shall be deemed to

29  be full-time service.

30      (b) A member shall receive a total of not more than twelve

31  service credit months of service for such calendar year.  If an

32  individual is employed in an eligible position by one or more

33  employers the individual shall receive no more than one service

34  credit month during any calendar month in which multiple service

35  for ninety or more hours is rendered.

36      (c) For purposes of plan 2 and 3 "forty-five days" as used in

37  RCW 28A.400.300 is equal to two service credit months.  Use of

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_1  less than forty-five days of sick leave is creditable as allowed

_2  under this subsection as follows:

_3      (i) Less than eleven days equals one-quarter service credit

_4  month;

_5      (ii) Eleven or more days but less than twenty-two days equals

_6  one-half service credit month;

_7      (iii) Twenty-two days equals one service credit month;

_8      (iv) More than twenty-two days but less than thirty-three days

_9  equals one and one-quarter service credit month; and

10      (v) Thirty-three or more days but less than forty-five days

11  equals one and one-half service credit month.

12      (8) "Service credit year" means an accumulation of months of

13  service credit which is equal to one when divided by twelve.

14      (9) "Service credit month" means a month or an accumulation of

15  months of service credit which is equal to one.

16      (10) "Membership service" means all service rendered as a

17  member.

18      (11) "Beneficiary" for plan 2 and plan 3 members means any

19  person in receipt of a retirement allowance or other benefit

20  provided by this chapter resulting from service rendered to an

21  employer by another person.

22      (12) "Regular interest" means such rate as the director may

23  determine.

24      (13) "Accumulated contributions" means the sum of all

25  contributions standing to the credit of a member in the member's

26  individual account, including any amount paid under RCW

27  41.50.165(2), together with the regular interest thereon.

28      (14) "Average final compensation" for plan 2 and plan 3 members

29  means the member's average compensation earnable of the highest

30  consecutive sixty months of service credit months prior to such

31  member's retirement, termination, or death.  Periods constituting

32  authorized leaves of absence may not be used in the calculation of

33  average final compensation except under RCW 41.40.710(2).

34      (15) "Final compensation" means the annual rate of compensation

35  earnable by a member at the time of termination of employment.

36      (16) "Annuity" means payments for life derived from accumulated

37  contributions of a member.  All annuities shall be paid in monthly

38  installments.

SB 5147                        p. 6

 

_1      (17) "Pension" means payments for life derived from

_2  contributions made by the employer.  All pensions shall be paid in

_3  monthly installments.

_4      (18) "Retirement allowance" for plan 2 and plan 3 members means

_5  monthly payments to a retiree or beneficiary as provided in this

_6  chapter.

_7      (19) "Employee" or "employed" means a person who is providing

_8  services for compensation to an employer, unless the person is

_9  free from the employer's direction and control over the

10  performance of work.  The department shall adopt rules and

11  interpret this subsection consistent with common law.

12      (20) "Actuarial equivalent" means a benefit of equal value when

13  computed upon the basis of such mortality and other tables as may

14  be adopted by the director.

15      (21) "Retirement" means withdrawal from active service with a

16  retirement allowance as provided by this chapter.

17      (22) "Eligible position" means any position that, as defined by

18  the employer, normally requires five or more months of service a

19  year for which regular compensation for at least seventy hours is

20  earned by the occupant thereof.  For purposes of this chapter an

21  employer shall not define "position" in such a manner that an

22  employee's monthly work for that employer is divided into more

23  than one position.

24      (23) "Ineligible position" means any position which does not

25  conform with the requirements set forth in subsection (22) of this

26  section.

27      (24) "Leave of absence" means the period of time a member is

28  authorized by the employer to be absent from service without being

29  separated from membership.

30      (25) (("Totally incapacitated for duty" means total inability

31  to perform the duties of a member's employment or office or any

32  other work for which the member is qualified by training or

33  experience.

34      (26))) "Retiree" means any person who has begun accruing a

35  retirement allowance or other benefit provided by this chapter

36  resulting from service rendered to an employer while a member.

37      (((27))) (26) "Director" means the director of the department.

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_1      (((28))) (27) "State elective position" means any position held

_2  by any person elected or appointed to statewide office or elected

_3  or appointed as a member of the legislature.

_4      (((29))) (28) "State actuary" or "actuary" means the person

_5  appointed pursuant to RCW 44.44.010(2).

_6      (((30))) (29) "Plan 2" means the Washington school employees'

_7  retirement system plan 2 providing the benefits and funding

_8  provisions covering persons who first became members of the public

_9  employees' retirement system on and after October 1, 1977, and

10  transferred to the Washington school employees' retirement system

11  under RCW 41.40.750.

12      (((31))) (30) "Plan 3" means the Washington school employees'

13  retirement system plan 3 providing the benefits and funding

14  provisions covering persons who first became members of the system

15  on and after September 1, 2000, or who transfer from plan 2 under

16  RCW 41.35.510.

17      (((32))) (31) "Index" means, for any calendar year, that year's

18  annual average consumer price index, Seattle, Washington area, for

19  urban wage earners and clerical workers, all items, compiled by

20  the bureau of labor statistics, United States department of labor.

21      (((33))) (32) "Index A" means the index for the year prior to

22  the determination of a postretirement adjustment.

23      (((34))) (33) "Index B" means the index for the year prior to

24  index A.

25      (((35))) (34) "Adjustment ratio" means the value of index A

26  divided by index B.

27      (((36))) (35) "Separation from service" occurs when a person

28  has terminated all employment with an employer.

29      (((37))) (36) "Member account" or "member's account" for

30  purposes of plan 3 means the sum of the contributions and earnings

31  on behalf of the member in the defined contribution portion of

32  plan 3.

33      (((38))) (37) "Classified employee" means an employee of a

34  school district or an educational service district who is not

35  eligible for membership in the teachers' retirement system

36  established under chapter 41.32 RCW.

37 

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_1      Sec. 4.  RCW 41.04.270 and 1988 c 195 s 5 are each amended to read

_2  as follows:

_3      (1) Notwithstanding any provision of chapter 2.10, 2.12, 41.26,

_4  41.28, 41.32, 41.35, 41.40, or 43.43 RCW to the contrary, on and

_5  after March 19, 1976, any member or former member who (a) receives

_6  a retirement allowance earned by said former member as deferred

_7  compensation from any public retirement system authorized by the

_8  general laws of this state, or (b) is eligible to receive a

_9  retirement allowance from any public retirement system listed in

10  RCW 41.50.030, but chooses not to apply, or (c) is the beneficiary

11  of a disability allowance from any public retirement system listed

12  in RCW 41.50.030 shall be estopped from becoming a member of or

13  accruing any contractual rights whatsoever in any other public

14  retirement system listed in RCW 41.50.030:  PROVIDED, That (a) and

15  (b) of this subsection shall not apply to persons who have

16  accumulated less than fifteen years service credit in any such

17  system.

18      (2) Nothing in this section is intended to apply to any

19  retirement system except those listed in RCW 41.50.030 and the

20  city employee retirement systems for Seattle, Tacoma, and

21  Spokane.  Subsection (1)(b) of this section does not apply to a

22  dual member as defined in RCW 41.54.010.

     

23      NEW SECTION.  Sec. 5.  RCW 41.54.050 (Election to establish

24  membership in public employees' retirement system) is decodified.

     

25      NEW SECTION.  Sec. 6.  Sections 1 and 2 of this act take effect

26  March 1, 2002.

 

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